161 
thorization for every secondary use that is with-
in the authorized original purpose. 
(2) RULES FOR PRIMARY USE OF RECORDS FOR 
HEALTH CARE PURPOSES.—With respect to the elec-
tronic health record of an IHRT participant (or 
specified parts of such electronic health record) 
maintained by an IHRT standards for access to 
such record shall provide for the following: 
(A) ACCESS
BY
IHRT
PARTICIPANTS
TO 
THEIR ELECTRONIC HEALTH RECORDS.— 
(i) 
OWNERSHIP.—The 
participant 
maintains ownership over the entire elec-
tronic health record (and all portions of 
such record) and shall have the right to 
electronically access and review the con-
tents of the entire record (and any portion 
of such record) at any time, in accordance 
with this subparagraph. 
(ii) ADDITION OF PERSONAL INFOR-
MATION.—The participant may add per-
sonal health information to the health 
record of that participant, except that such 
participant shall not alter information that 
is entered into the electronic health record 
by any authorized EHR data user. Such 
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participant shall have the right to propose 
an amendment to information that is en-
tered by an authorized EHR data user 
pursuant to standards prescribed by the 
Federal Trade Commission for purposes of 
amending such information. 
(iii) IDENTIFICATION
OF
INFORMA-
TION ENTERED BY PARTICIPANT.—Any ad-
ditions or amendments made by the partic-
ipant to the health record shall be identi-
fied and disclosed within such record as 
being made by such participant. 
(B) ACCESS
BY
ENTITIES
OTHER
THAN 
IHRT PARTICIPANT.— 
(i) AUTHORIZED ACCESS ONLY.—Ex-
cept as provided under subparagraph (C) 
and paragraph (4), access to the electronic 
health record (or any portion of the 
record)— 
(I) may be made only by author-
ized EHR data users and only to such 
portions of the record as specified by 
the participant; and 
(II) may be limited by the partic-
ipant for purposes of entering infor-
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163 
mation into such record, retrieving in-
formation from such record, or both. 
(ii) IDENTIFICATION OF ENTITY THAT 
ENTERS
INFORMATION.—Any information 
that is added by an authorized EHR data 
user to the health record shall be identified 
and disclosed within such record as being 
made by such user. 
(iii) SATISFACTION OF HIPAA PRIVACY 
REGULATIONS.—In the case of a record of 
a covered entity (as defined for purposes of 
HIPAA privacy regulations), with respect 
to an individual, if such individual is an 
IHRT participant with an independent 
health record trust and such covered entity 
is an authorized EHR data user, the re-
quirement under the HIPAA privacy regu-
lations for such entity to provide the 
record to the participant shall be deemed 
met if such entity, without charge to the 
IHRT or the participant— 
(I) forwards to the trust an ap-
propriately formatted electronic copy 
of the record (and updates to such 
records) for inclusion in the electronic 
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164 
health record of the participant main-
tained by the trust; 
(II) enters such record into the 
electronic health record of the partici-
pant so maintained; or 
(III) 
otherwise 
makes 
such 
record available for electronic access 
by the IHRT or the individual in a 
manner that permits such record to 
be included in the account of the indi-
vidual contained in the IHRT. 
(iv) NOTIFICATION OF SENSITIVE IN-
FORMATION.—Any information, with re-
spect to the participant, that is sensitive 
information, as specified by the Federal 
Trade Commission, shall not be forwarded 
or entered by an authorized EHR data 
user into the electronic health record of the 
participant maintained by the trust unless 
the user certifies that the participant has 
been notified of such information. 
(C) DEEMED AUTHORIZATION FOR ACCESS 
FOR EMERGENCY HEALTH CARE.— 
(i) FINDINGS.—Congress finds that— 
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(I) given the size and nature of 
visits to emergency departments in 
the United States, readily available 
health information could make the dif-
ference between life and death; and 
(II) because of the case mix and 
volume of patients treated, emergency 
departments are well positioned to 
provide information for public health 
surveillance, community risk assess-
ment, research, education, training, 
quality improvement, and other uses. 
(ii) USE OF INFORMATION.—With re-
spect to the electronic health record of an 
IHRT participant (or specified parts of 
such electronic health record) maintained 
by an IHRT, the participant shall be 
deemed as providing authorization (in the 
form of affirmative consent) for health 
care providers to access, in connection with 
providing emergency care services to the 
participant, a limited, authenticated infor-
mation set concerning the participant for 
emergency response purposes, unless the 
participant specifies that such information 
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set (or any portion of such information 
set) may not be so accessed. Such limited 
information set may include information— 
(I) patient identification data, as 
determined appropriate by the partici-
pant; 
(II) provider identification that 
includes the use of unique provider 
identifiers; 
(III) payment information; 
(IV) information related to the 
individual’s vitals, allergies, and medi-
cation history; 
(V) information related to exist-
ing chronic problems and active clin-
ical conditions of the participant; and 
(VI) 
information 
concerning 
physical examinations, procedures, re-
sults, and diagnosis data. 
(3) RULES FOR SECONDARY USES OF RECORDS 
FOR RESEARCH AND OTHER PURPOSES.— 
(A) IN
GENERAL.—With respect to the 
electronic health record of an IHRT participant 
(or specified parts of such electronic health 
record) maintained by an IHRT, the IHRT 
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may sell such record (or specified parts of such 
record) only if— 
(i) the transfer is authorized by the 
participant pursuant to an agreement be-
tween the participant and the IHRT and is 
in accordance with the privacy protection 
agreement described in subsection (b)(1) 
entered into between such participant and 
such IHRT; 
(ii) such agreement includes param-
eters with respect to the disclosure of in-
formation involved and a process for the 
authorization of the further disclosure of 
information in such record; 
(iii) the information involved is to be 
used for research or other activities only as 
provided for in the agreement; 
(iv) the recipient of the information 
provides assurances that the information 
will not be further transferred or reused in 
violation of such agreement; and 
(v) the transfer otherwise meets the 
requirements and standards prescribed by 
the Federal Trade Commission. 
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(B) TREATMENT OF PUBLIC HEALTH RE-
PORTING.—Nothing in this paragraph shall be 
construed as prohibiting or limiting the use of 
health care information of an individual, includ-
ing an individual who is an IHRT participant, 
for public health reporting (or other research) 
purposes prior to the inclusion of such informa-
tion in an electronic health record maintained 
by an IHRT. 
(4) LAW
ENFORCEMENT
CLARIFICATION.— 
Nothing in this part shall prevent an IHRT from 
disclosing information contained in an electronic 
health record maintained by the IHRT when re-
quired for purposes of a lawful investigation or offi-
cial proceeding inquiring into a violation of, or fail-
ure to comply with, any criminal or civil statute or 
any regulation, rule, or order issued pursuant to 
such a statute. 
(5) RULE OF CONSTRUCTION.—Nothing in this 
section shall be construed to require a health care 
provider that does not utilize electronic methods or 
appropriate levels of health information technology 
on the date of the enactment of this Act to adopt 
such electronic methods or technology as a require-
ment for participation or compliance under this part. 
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169 
(b) PRIVACY PROTECTION AGREEMENT; TREATMENT 
OF STATE PRIVACY AND SECURITY LAWS.— 
(1) PRIVACY PROTECTION AGREEMENT.—A pri-
vacy protection agreement described in this sub-
section is an agreement, with respect to an electronic 
health record of an IHRT participant to be main-
tained by an independent health record trust, be-
tween the participant and the trust— 
(A) that is consistent with the standards 
described in subsection (a)(2); 
(B) under which the participant specifies 
the portions of the record that may be accessed, 
under what circumstances such portions may be 
accessed, any authorizations for indicated au-
thorized EHR data users to access information 
contained in the record, and the purposes for 
which the information (or portions of the infor-
mation) in the record may be used; 
(C) which provides a process for the au-
thorization of the transfer of information con-
tained in the record to a third party, including 
for the sale of such information for purposes of 
research, by an authorized EHR data user and 
reuse of such information by such third party, 
including a provision requiring that such trans-
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fer and reuse is not in violation of any privacy 
or transfer restrictions placed by the partici-
pant on the independent health record of such 
participant; and 
(D) under which the trust provides assur-
ances that the trust will not transfer, disclose, 
or provide access to the record (or any portion 
of the record) in violation of the parameters es-
tablished in the agreement or to any person or 
entity who has not agreed to use and transfer 
such record (or portion of such record) in ac-
cordance with such agreement. 
(2) TREATMENT OF STATE LAWS.— 
(A) IN
GENERAL.—Except as provided 
under subparagraph (B), the provisions of a 
privacy protection agreement entered into be-
tween an IHRT and an IHRT participant shall 
preempt any provision of State law (or any 
State regulation) relating to the privacy and 
confidentiality of individually identifiable health 
information or to the security of such health in-
formation. 
(B) EXCEPTION FOR PRIVILEGED INFOR-
MATION.—The provisions of a privacy protec-
tion agreement shall not preempt any provision 
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of State law (or any State regulation) that rec-
ognizes privileged communications between phy-
sicians, health care practitioners, and patients 
of such physicians or health care practitioners, 
respectively. 
(C) STATE
DEFINED.—For purposes of 
this section, the term ‘‘State’’ has the meaning 
given such term when used in title XI of the 
Social Security Act, as provided under section 
1101(a) of such Act (42 U.S.C. 1301(a)). 
SEC. 187. VOLUNTARY NATURE OF TRUST PARTICIPATION 
AND INFORMATION SHARING. 
(a) IN GENERAL.—Participation in an independent 
health record trust, or authorizing access to information 
from such a trust, is voluntary. No employer, health insur-
ance issuer, group health plan, health care provider, or 
other person may require, as a condition of employment, 
issuance of a health insurance policy, coverage under a 
group health plan, the provision of health care services, 
payment for such services, or otherwise, that an individual 
participate in, or authorize access to information from, an 
independent health record trust. 
(b) ENFORCEMENT.—The penalties provided for in 
subsection (a) of section 1177 of the Social Security Act 
(42 U.S.C. 1320d–6) shall apply to a violation of sub-
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172 
section (a) in the same manner as such penalties apply 
to a person in violation of subsection (a) of such section. 
SEC. 188. FINANCING OF ACTIVITIES. 
(a) IN GENERAL.—Except as provided in subsection 
(b), an IHRT may generate revenue to pay for the oper-
ations of the IHRT through— 
(1) charging IHRT participants account fees 
for use of the trust; 
(2) charging authorized EHR data users for ac-
cessing electronic health records maintained in the 
trust; 
(3) the sale of information contained in the 
trust (as provided for in section 186(a)(3)(A)); and 
(4) any other activity determined appropriate 
by the Federal Trade Commission. 
(b) PROHIBITION
AGAINST
ACCESS
FEES
FOR 
HEALTH CARE PROVIDERS.—For purposes of providing 
incentives to health care providers to access information 
maintained in an IHRT, as authorized by the IHRT par-
ticipants involved, the IHRT may not charge a fee for 
services specified by the IHRT. Such services shall include 
the transmittal of information from a health care provider 
to be included in an independent electronic health record 
maintained by the IHRT (or permitting such provider to 
input such information into the record), including the 
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transmission of or access to information described in sec-
tion 186(a)(2)(C)(ii) by appropriate emergency respond-
ers. 
(c) REQUIRED
DISCLOSURES.—The sources and 
amounts of revenue derived under subsection (a) for the 
operations of an IHRT shall be fully disclosed to each 
IHRT participant of such IHRT and to the public. 
(d) TREATMENT OF INCOME.—For purposes of the 
Internal Revenue Code of 1986, any revenue described in 
subsection (a) shall not be included in gross income of any 
IHRT, IHRT participant, or authorized EHR data user. 
SEC. 189. REGULATORY OVERSIGHT. 
(a) IN GENERAL.—In carrying out this part, the Fed-
eral Trade Commission shall promulgate regulations for 
independent health record trusts. 
(b) ESTABLISHMENT
OF INTERAGENCY STEERING 
COMMITTEE.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall establish an Interagency 
Steering Committee in accordance with this sub-
section. 
(2) CHAIRPERSON.—The Secretary of Health 
and Human Services shall serve as the chairperson 
of the Interagency Steering Committee. 
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(3) MEMBERSHIP.—The members of the Inter-
agency Steering Committee shall consist of the At-
torney General, the Chairperson of the Federal 
Trade Commission, the Chairperson for the National 
Committee for Vital and Health Statistics, a rep-
resentative of the Federal Reserve, and other Fed-
eral officials determined appropriate by the Sec-
retary of Health and Human Services. 
(4) DUTIES.—The Interagency Steering Com-
mittee shall coordinate the implementation of this 
part, including the implementation of policies de-
scribed in subsection (d) based upon the rec-
ommendations provided under such subsection, and 
regulations promulgated under this part. 
(c) FEDERAL ADVISORY COMMITTEE.— 
(1) IN GENERAL.—The National Committee for 
Vital and Health Statistics shall serve as an advisory 
committee for the IHRTs. The membership of such 
advisory committee shall include a representative 
from the Federal Trade Commission and the chair-
person of the Interagency Steering Committee. Not 
less than 60 percent of such membership shall con-
sist of representatives of nongovernment entities, at 
least one of whom shall be a representative from an 
organization representing health care consumers. 
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(2) DUTIES.—The National Committee for 
Vital and Health Statistics shall issue periodic re-
ports and review policies concerning IHRTs based 
on each of the following factors: 
(A) Privacy and security policies. 
(B) Economic progress. 
(C) Interoperability standards. 
(d) POLICIES RECOMMENDED BY FEDERAL TRADE 
COMMISSION.—The Federal Trade Commission, in con-
sultation with the National Committee for Vital and 
Health Statistics, shall recommend policies to— 
(1) provide assistance to encourage the growth 
of independent health record trusts; 
(2) track economic progress as it pertains to 
operators of independent health records trusts and 
individuals receiving nontaxable income with respect 
to accounts; 
(3) conduct public education activities regarding 
the creation and usage of the independent health 
records trusts; 
(4) establish standards for the interoperability 
of health information technology to ensure that in-
formation contained in such record may be shared 
between the trust involved, the participant, and au-
thorized EHR data users, including for the stand-
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ardized collection and transmission of individual 
health records (or portions of such records) to au-
thorized EHR data users through a common inter-
face and for the portability of such records among 
independent health record trusts; and 
(5) carry out any other activities determined 
appropriate by the Federal Trade Commission. 
(e) REGULATIONS
PROMULGATED
BY
FEDERAL 
TRADE COMMISSION.—The Federal Trade Commission 
shall promulgate regulations based on, at a minimum, the 
following factors: 
(1) Requiring that an IHRT participant, who 
has an electronic health record that is maintained by 
an IHRT, be notified of a security breech with re-
spect to such record, and any corrective action taken 
on behalf of the participant. 
(2) Requiring that information sent to, or re-
ceived from, an IHRT that has been designated as 
high-risk should be authenticated through the use of 
methods such as the periodic changing of passwords, 
the use of biometrics, the use of tokens or other 
technology as determined appropriate by the council. 
(3) Requiring a delay in releasing sensitive 
health care test results and other similar informa-
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tion to patients directly in order to give physicians 
time to contact the patient. 
(4) Recommendations for entities operating 
IHRTs, including requiring analysis of the potential 
risk of health transaction security breeches based on 
set criteria. 
(5) The conduct of audits of IHRTs to ensure 
that they are in compliance with the requirements 
and standards established under this part. 
(6) Disclosure to IHRT participants of the 
means by which such trusts are financed, including 
revenue from the sale of patient data. 
(7) Prevention of certification of an entity seek-
ing independent heath record trust certification 
based on— 
(A) the potential for conflicts between the 
interests of such entity and the security of the 
health information involved; and 
(B) the involvement of the entity in any 
activity that is contrary to the best interests of 
a patient. 
(8) Prevention of the use of revenue sources 
that are contrary to a patient’s interests. 
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(9) Public disclosure of audits in a manner 
similar to financial audits required for publicly trad-
ed stock companies. 
(10) Requiring notification to a participating 
entity that the information contained in such record 
may not be representative of the complete or accu-
rate electronic health record of such account holder. 
(f) COMPLIANCE REPORT.—Not later than 1 year 
after the date of the enactment of this Act, and annually 
thereafter, the Commission shall submit to the Committee 
on Health, Education, Labor, and Pensions and the Com-
mittee on Finance of the Senate and the Committee on 
Energy and Commerce and the Committee on Ways and 
Means of the House of Representatives, a report on com-
pliance by and progress of independent health record 
trusts with this part. Such report shall describe the fol-
lowing: 
(1) The number of complaints submitted about 
independent health record trusts, which shall be di-
vided by complaints related to security breaches, and 
complaints not related to security breaches, and may 
include other categories as the Interagency Steering 
Committee established under subsection (b) deter-
mines appropriate. 
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(2) The number of enforcement actions under-
taken by the Commission against independent health 
record trusts in response to complaints under para-
graph (1), which shall be divided by enforcement ac-
tions related to security breaches and enforcement 
actions not related to security breaches and may in-
clude other categories as the Interagency Steering 
Committee established under subsection (b) deter-
mines appropriate. 
(3) The economic progress of the individual 
owner or institution operator as achieved through 
independent health record trust usage and existing 
barriers to such usage. 
(4) The progress in security auditing as pro-
vided for by the Interagency Steering Committee 
council under subsection (b). 
(5) The other core responsibilities of the Com-
mission as described in subsection (a). 
(g) 
INTERAGENCY
MEMORANDUM
OF
UNDER-
STANDING.—The Interagency Steering Committee shall 
ensure, through the execution of an interagency memo-
randum of understanding, that— 
(1) regulations, rulings, and interpretations 
issued by Federal officials relating to the same mat-
ter over which 2 or more such officials have respon-
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sibility under this part are administered so as to 
have the same effect at all times; and 
(2) the memorandum provides for the coordina-
tion of policies related to enforcing the same require-
ments through such officials in order to have coordi-
nated enforcement strategy that avoids duplication 
of enforcement efforts and assigns priorities in en-
forcement. 
TITLE II—FAIRNESS FOR EVERY 
AMERICAN PATIENT 
Subtitle A—Medicaid 
Modernization 
SEC. 201. MEDICAID MODERNIZATION. 
(a) IN GENERAL.—Effective January 1, 2011, title 
XIX of the Social Security Act (42 U.S.C. 1396 et seq.) 
is amended to read as follows: 
‘‘TITLE XIX—GRANTS TO STATES 
FOR 
MEDICAL 
ASSISTANCE 
PROGRAMS 
‘‘TABLE OF CONTENTS OF TITLE 
‘‘Sec. 1900. References to pre-modernized Medicaid provisions; continuity for 
commonwealths and territories. 
‘‘PART A—GRANTS TO STATES FOR ACUTE CARE FOR INDIVIDUALS WITH 
DISABILITIES AND CERTAIN LOW-INCOME INDIVIDUALS 
‘‘Sec. 1901. Purpose; appropriation. 
‘‘Sec. 1902. Payments to States for acute care medical assistance. 
‘‘Sec. 1903. Definitions of eligible individuals and acute care medical assist-
ance. 
‘‘Sec. 1904. State plan requirements for acute care medical assistance. 
‘‘Sec. 1905. Definitions. 
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‘‘Sec. 1906. Enrollment of individuals under group health plans and other ar-
rangements. 
‘‘Sec. 1907. Drug rebates. 
‘‘Sec. 1908. Managed care. 
‘‘Sec. 1909. Annual reports. 
‘‘PART B—GRANTS TO STATES FOR LONG-TERM CARE SERVICES AND 
SUPPORTS 
‘‘Sec. 1911. Purpose. 
‘‘Sec. 1912. State plan. 
‘‘Sec. 1913. State allotments. 
‘‘Sec. 1914. Use of grants. 
‘‘Sec. 1915. Administrative provisions. 
‘‘Sec. 1916. Definition of long-term care services and supports. 
‘‘Sec. 1917. Provision requirements for long-term care services and supports, 
including option for self-directed services and supports. 
‘‘Sec. 1918. Treatment of income and resources for certain institutionalized 
spouses. 
‘‘Sec. 1919. Annual reports. 
‘‘PART C—GRANTS TO STATES FOR SURVEY AND CERTIFICATION OF 
MEDICAL FACILITIES AND OTHER REQUIREMENTS 
‘‘Sec. 1931. Authorization of appropriations. 
‘‘Sec. 1932. Application of certain requirements under pre-modernized Med-
icaid. 
‘‘PART D—GRANTS TO STATES FOR PROGRAM INTEGRITY 
‘‘Sec. 1941. Authorization of appropriations. 
‘‘Sec. 1942. Application of certain requirements under pre-modernized Med-
icaid. 
‘‘PART E—GRANTS TO STATES FOR ADMINISTRATION 
‘‘Sec. 1951. Authorization of appropriations; payments to states. 
‘‘Sec. 1952. Cost-sharing protections. 
‘‘Sec. 1953. Application of certain requirements under pre-modernized Med-
icaid. 
‘‘PART F—OTHER PROVISIONS 
‘‘Sec. 1961. Application of certain requirements under pre-modernized Med-
icaid. 
‘‘SEC. 1900. REFERENCES TO PRE-MODERNIZED MEDICAID 
PROVISIONS; 
CONTINUITY 
FOR 
COMMON-
WEALTHS AND TERRITORIES. 
‘‘(a) IN GENERAL.—In this title, if a reference to this 
title or to a provision of this title is prefaced by the term 
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‘old’, such reference is to this title or a provision of this 
title as in effect on December 31, 2010. 
‘‘(b) REGULATIONS.—The Secretary shall promul-
gate regulations to bring requirements imposed under an 
old provision of this title that applies under this title after 
December 31, 2010, into conformity with the policies em-
bodied in this title as in effect on and after January 1, 
2011. 
‘‘(c) CONTINUITY FOR COMMONWEALTHS AND TER-
RITORIES.—In the case of Puerto Rico, the United States 
Virgin Islands, Guam, the Northen Mariana Islands, and 
American Samoa, this title as in effect on and after Janu-
ary 1, 2011, shall not apply to such commonwealths and 
territories, and old title XIX shall apply to a Medicaid pro-
gram operated by such commonwealths or territories on 
and after that date. 
‘‘PART A—GRANTS TO STATES FOR ACUTE CARE 
FOR INDIVIDUALS WITH DISABILITIES AND 
CERTAIN LOW-INCOME INDIVIDUALS 
‘‘SEC. 1901. PURPOSE; APPROPRIATION. 
‘‘(a) PURPOSE.—It is the purpose of this part to en-
able each State, as far as practicable under the conditions 
in the State, to provide acute care medical assistance to 
eligible individuals described in section 1903 whose income 
and resources are insufficient to meet the costs of nec-
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essary medical services, and (2) rehabilitation and other 
services to help such individuals attain or retain capability 
for independence or self-care. 
‘‘(b) APPROPRIATION.—For the purpose of making 
payments to States under this part, there is appropriated 
out of any money in the Treasury not otherwise appro-
priated, such sums as are necessary for fiscal year 2011 
and each fiscal year thereafter. 
‘‘SEC. 1902. PAYMENTS TO STATES FOR ACUTE CARE MED-
ICAL ASSISTANCE. 
‘‘(a) IN GENERAL.—From the amounts appropriated 
under section 1901 for a fiscal year, the Secretary shall 
pay to each State which has a plan approved under this 
part, for each quarter, beginning with the quarter com-
mencing January 1, 2011, an amount equal to the Federal 
medical assistance percentage (as defined in section 
1905(b)) of the total amount expended during such quar-
ter as acute care medical assistance under the State plan 
under this part. 
‘‘(b) ADMINISTRATIVE EXPENSES.—Each State with 
a plan approved under this part shall receive a payment 
determined in accordance with part E for administrative 
expenses incurred in carrying out the plan under this part 
and part B (if the State has a plan approved under that 
part). 
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‘‘SEC. 1903. DEFINITIONS OF ELIGIBLE INDIVIDUALS AND 
ACUTE CARE MEDICAL ASSISTANCE. 
‘‘(a) ELIGIBLE INDIVIDUALS.— 
‘‘(1) IN GENERAL.—In this part, the term ‘eli-
gible individual’ means an individual— 
‘‘(A) who is— 
‘‘(i) a blind or disabled individual; or 
‘‘(ii) an individual described in para-
graph (2); and 
‘‘(B) who the State determines satisfies— 
‘‘(i) the income and resources eligi-
bility requirements established by the State 
under the State plan under this part; and 
‘‘(ii) such other requirements for as-
sistance as are imposed under this title, in-
cluding documentation of citizenship or 
status as a qualified alien under title IV of 
the Personal Responsibility and Work Op-
portunity Reconciliation Act of 1996. 
‘‘(2) INDIVIDUALS DESCRIBED.—For purposes 
of paragraph (1)(A)(ii), the following individuals are 
described in this paragraph: 
‘‘(A) A child in foster care under the re-
sponsibility of the State. 
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‘‘(B) A low-income woman with breast or 
cervical 
cancer 
described 
in 
old 
section 
1902(aa). 
‘‘(C) Certain TB-infected individuals de-
scribed in old section 1902(z)(1). 
‘‘(3) GRANDFATHERED INDIVIDUALS.—An indi-
vidual shall be an eligible individual under the State 
plan under this part if— 
‘‘(A) the individual is described in para-
graph (1)(A); 
‘‘(B) the individual satisfies the docu-
mentation requirements referred to in para-
graph (1)(B)(ii); and 
‘‘(C) the State would have provided med-
ical assistance under the State plan under old 
title XIX to the individual, but only so long as 
the individual continues to satisfy such old eligi-
bility requirements. 
‘‘(4) CONCURRENT ELIGIBILITY FOR PART B.— 
An eligible individual under this part may be eligible 
under part B, but only if the individual satisfies the 
eligibility requirements of part B in addition to sat-
isfying the requirements for eligibility under this 
part. 
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‘‘(5) PRESUMPTIVE ELIGIBILITY FOR CERTAIN 
BREAST OR CERVICAL CANCER PATIENTS.—Old sec-
tion 1920B (relating to presumptive eligibility for 
certain breast or cervical cancer patients) shall apply 
under this part. 
‘‘(b) BENEFITS.—Subject to paragraph (3), in this 
part, the term ‘acute care medical assistance’ means the 
following: 
‘‘(1) MANDATORY
BENEFITS.—The care and 
services listed in paragraphs (1) through (5), (17), 
and (21) of old section 1905(a) (but, in the case of 
paragraph (4)(A) of such section, without regard to 
any limitation based on age or services in an institu-
tion for mental diseases). 
‘‘(2) OPTIONAL BENEFITS.—Any care or serv-
ices listed in a paragraph of old section 1905(a) 
(other than paragraph (16)). 
‘‘(3) EXCEPTIONS.— 
‘‘(A) CERTAIN SERVICES LIMITED TO PART 
B.—Services described in paragraphs (15), 
(22), (23), (24), and (26) of old section 
1905(a) shall only be provided under the State 
plan under part B. 
‘‘(B) LIMIT ON PROVISION OF LONG-TERM 
CARE
SERVICES
AND
SUPPORTS.—A care or 
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service that the Secretary determines is a long- 
term care service and support (including nurs-
ing facility services described in old section 
1905(a)(4)(A)) shall not be provided to an indi-
vidual under the State plan under this part for 
more than 30 days within any 12-month period. 
‘‘(C) EXCLUSIONS.—Such term shall not 
include any payments with respect to care or 
services for any individual who is an inmate of 
a public institution or a patient in an institu-
tion for mental diseases (regardless of age). 
‘‘SEC. 1904. STATE PLAN REQUIREMENTS FOR ACUTE CARE 
MEDICAL ASSISTANCE. 
‘‘(a) IN GENERAL.—In order to receive payments 
under this part, a State shall have an approved State plan 
for acute care medical assistance. For purposes of this 
part, such assistance includes payments for preventive 
care, primary care, diagnosis and treatment of acute and 
chronic health conditions, emergency care, diagnosis and 
treatment of mental illnesses and related conditions, and 
rehabilitation and other services to help eligible individuals 
attain or retain capability for independence or self-care. 
A State medical assistance plan shall include a descrip-
tion, consistent with the requirements of this part of— 
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‘‘(1) eligibility standards, including income and 
asset standards; 
‘‘(2) benefits, including the amount, duration, 
and scope of covered items and services; 
‘‘(3) strategies for improving access and quality 
of care; and 
‘‘(4) methods of service delivery. 
‘‘(b) PUBLIC AVAILABILITY OF STATE PLAN.—The 
State shall make available to the public the State plan 
under this part and any amendments submitted by the 
State to the plan. 
‘‘(c) AMOUNT, DURATION, AND SCOPE.—The State 
plan shall provide that the acute care medical assistance 
made available to any eligible individual shall not be less 
in amount, duration, or scope than the acute care medical 
assistance made available to any other eligible individual. 
‘‘(d) APPLICATION OF CERTAIN PRE-MODERNIZED 
MEDICAID REQUIREMENTS.— 
‘‘(1) OLD STATE PLAN REQUIREMENTS.—The 
following provisions of old section 1902 shall apply 
to the State plans under this part: 
‘‘(A) Old section 1902(a)(10)(C) (relating 
to certain eligibility and other requirements). 
‘‘(B) Old section 1902(a)(10)(D) (relating 
to home health services). 
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‘‘(C) Old section 1902(a)(10)(G) (relating 
to nonapplication of certain supplemental secu-
rity income eligibility criteria). 
‘‘(D) The subclauses in the flush matter 
following old section 1902(a)(10)(G) (relating 
to the provision of certain services) other than 
subclauses (V), (VII), (VIII), and (IX). 
‘‘(E) Old section 1902(a)(17) (relating to 
reasonable standards for determining eligi-
bility). 
‘‘(F) Old section 1902(a)(19) (relating to 
eligibility safeguards). 
‘‘(G) Old section 1902(a)(34) (relating to 
eligibility beginning with the third month prior 
to the month of application). 
‘‘(H) Subparagraphs (A), (B), and (C) of 
old section 1902(a)(43) (relating to early and 
periodic screening, diagnostic, and treatment 
services). 
‘‘(I) Old section 1902(a)(46)(A) (relating 
to compliance with section 1137 requirements). 
‘‘(J) The fourth and sixth sentences of old 
section 1902(a) (relating to eligibility for cer-
tain individuals). 
‘‘(2) OTHER OLD TITLE XIX REQUIREMENTS.— 
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‘‘(A) Old section 1902(e)(3) (relating to 
optional eligibility for certain disabled individ-
uals). 
‘‘(B) Old section 1902(e)(9) (relating to 
optional respiratory care services). 
‘‘(C) Old section 1902(f) (relating to eligi-
bility of certain aged, blind, or disabled individ-
uals). 
‘‘(D) Old section 1902(m) (relating to eli-
gibility of certain aged or disabled individuals), 
other than paragraph (4). 
‘‘(E) Old section 1902(o) (relating to dis-
regard of certain supplemental security income 
benefits). 
‘‘(F) Old section 1902(v) (relating to eligi-
bility determinations of blind or disabled indi-
viduals). 
‘‘(e) OTHER REQUIREMENTS.—The State plan under 
this part shall— 
‘‘(1) comply with the requirements of the other 
parts of this title; and 
‘‘(2) provide that the State will make the con-
tributions specified under section 340A–1(e) of the 
Public Health Service Act . 
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‘‘SEC. 1905. DEFINITIONS. 
‘‘(a) IN GENERAL.—The definitions specified in this 
section shall apply for purposes of this part and, to the 
extent applicable and consistent with the policy embodied 
in such part, parts B, C, D, E, and F. 
‘‘(b) FEDERAL MEDICAL ASSISTANCE PERCENT-
AGE.—The term ‘Federal medical assistance percentage’ 
for any State shall be 100 percent less the State percent-
age; and the State percentage shall be that percentage 
which bears the same ratio to 45 percent as the square 
of the per capita income of such State bears to the square 
of the per capita income of the continental United States 
(including Alaska) and Hawaii, except that the Federal 
medical assistance percentage shall in no case be less than 
50 percent or more than 83 percent. The Federal medical 
assistance percentage for any State shall be determined 
and promulgated in accordance with the provisions of sec-
tion 1101(a)(8)(B). 
‘‘(c) APPLICATION OF CERTAIN PRE-MODERNIZED 
MEDICAID PROVISIONS.—The following old provisions 
shall apply under this part: 
‘‘(1) OLD SECTION 1905 PROVISIONS.—The fol-
lowing provisions of old section 1905: 
‘‘(A) Old section 1905(d) (relating to the 
definition of an intermediate care facility for 
the mentally retarded). 
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‘‘(B) Old section 1905(e) (relating to the 
definition of physicians services). 
‘‘(C) Old section 1905(f) (relating to the 
definition of nursing facility services). 
‘‘(D) Old section 1905(g) (relating to the 
provision of chiropractors’ services). 
‘‘(E) Old section 1905(j) (relating to State 
supplementary payments). 
‘‘(F) Old section 1905(k) (relating to sup-
plemental security income benefits payable pur-
suant to section 211 of Public Law 93–66). 
‘‘(G) Old section 1905(l)(1) (relating to 
rural health clinic services). 
‘‘(H) Old section 1905(o) (relating to hos-
pice care). 
‘‘(I) Old section 1905(q) (relating to the 
definition of a qualified severely impaired indi-
vidual). 
‘‘(J) Old section 1905(r) (relating to the 
definition of early and periodic screening, diag-
nostic, and treatment services). 
‘‘(K) Old section 1905(s) (relating to the 
definition of a qualified disabled and working 
individual). 
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‘‘(L) Old section 1905(t) (relating to the 
definition of primary care case management 
services). 
‘‘(M) Old section 1905(v) (relating to the 
definition of an employed individual with a 
medically improved disability). 
‘‘(N) Paragraphs (1) and (3) of old section 
1905(w) (relating to the definition of an inde-
pendent foster care adolescent). 
‘‘(O) Old section 1905(x) (relating to 
strategies, treatment, and services for individ-
uals with Sickle Cell Disease). 
‘‘(2) OTHER OLD PROVISIONS.— 
‘‘(A) Old section 1903(m) (relating to the 
definition of a medicaid managed care organiza-
tion). 
‘‘SEC. 1906. ENROLLMENT OF INDIVIDUALS UNDER GROUP 
HEALTH PLANS AND OTHER ARRANGEMENTS. 
‘‘The following old provisions shall apply under this 
part: 
‘‘(1) Old section 1906 (relating to enrollment of 
individuals under group health plans). 
‘‘(2) Old section 1902(a)(70) (relating to State 
option to establish a non-emergency medical trans-
portation brokerage program). 
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‘‘(3) Paragraphs (2) and (11) of old section 
1902(e) (relating to eligibility for individuals en-
rolled with a group health plan or under a managed 
care arrangement during a minimum enrollment pe-
riod). 
‘‘SEC. 1907. DRUG REBATES. 
‘‘Old sections 1902(a)(54) and 1927 (relating to pay-
ment for covered outpatient drugs and rebates) shall apply 
under this part. 
‘‘SEC. 1908. MANAGED CARE. 
‘‘The following old provisions shall apply under this 
part: 
‘‘(1) Old section 1932 (relating to managed 
care), other than subsection (a)(2) of such section. 
‘‘(2) Old section 1903(k) (relating to technical 
and actuarial assistance for States). 
‘‘SEC. 1909. ANNUAL REPORTS. 
‘‘(a) IN GENERAL.—Each State that receives pay-
ments under this part shall submit an annual report to 
the Secretary, in such form and manner as the Secretary 
shall specify. 
‘‘(b) APPLICATION OF OLD EPSDT REPORTING RE-
QUIREMENTS.—Each annual report shall include the in-
formation required to be reported under old section 
1902(a)(43)(D)(iv). 
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‘‘PART B—GRANTS TO STATES FOR LONG-TERM 
CARE SERVICES AND SUPPORTS 
‘‘SEC. 1911. PURPOSE. 
‘‘(a) IN GENERAL.—The purpose of this part is to 
increase the flexibility of States in operating a system of 
long-term care services and supports designed to— 
‘‘(1) provide assistance to needy families so that 
individuals with disabilities and low-income senior 
citizens may be served and supported in their own 
homes and communities; 
‘‘(2) emphasize the independence and dignity of 
the person served by public programs; 
‘‘(3) end the institutional bias that existed 
under the Medicaid program prior to January 1, 
2011; 
‘‘(4) provide stable and predictable funding for 
States as they rebalance their long-term care sys-
tems from institutions to communities; 
‘‘(5) provide flexibility to States to adopt new 
and innovative service delivery methods; and 
‘‘(6) promote independence and support activi-
ties that will enable individuals to return or main-
tain ties to the community, including through em-
ployment. 
‘‘(b) NO INDIVIDUAL ENTITLEMENT.—No individual 
determined eligible for long-term care services and sup-
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ports under this part shall be entitled to a specific service 
or type of delivery of service. 
‘‘SEC. 1912. STATE PLAN. 
‘‘(a) IN GENERAL.—In order to receive payments 
under this part, a State must have an approved State plan 
for long-term care services and supports. A State long 
term care services and supports plan shall include a de-
scription, consistent with the requirements of this part, 
of— 
‘‘(1) income and assets eligibility standards and 
spousal impoverishment protections consistent with 
subsection (b); 
‘‘(2) the standardized assessments tools used to 
determine eligibility for specific long-term care serv-
ices and supports; 
‘‘(3) the person-centered plans used to provide 
such services and supports; 
‘‘(4) the proposed uses of funding, if applicable, 
to provide targeted methods to meet individual level 
of support needs including tiering (preventive, emer-
gency, low, medium, high); and 
‘‘(5) the long-term care services and supports to 
be available under the plan based on individual as-
sessment of need in accordance with sections 1916 
and 1917. 
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‘‘(b) MINIMUM ELIGIBILITY STANDARDS.— 
‘‘(1) POPULATIONS COVERED.—The State plan 
shall specify the disabled and elderly populations 
who are eligible for long-term care services and sup-
ports. 
‘‘(2) NEEDS-BASED CRITERIA.—The plan shall 
include a description of the needs-based criteria the 
State will use to assess an individual’s need for spe-
cific services and supports available under the State 
plan. 
‘‘(3) OTHER ELIGIBILITY REQUIREMENTS.— 
‘‘(A) INCOME AND ASSETS.—A State may 
use different income and asset standards and 
methodologies for determining eligibility than 
those used for determining eligibility for acute 
care medical assistance under part A. A State 
may not make eligibility standards related to 
income, asset, and spousal impoverishment pro-
tection more restrictive than the Federal min-
imum requirements of December 31, 2008. 
‘‘(B) APPLICATION OF SPOUSAL IMPOVER-
ISHMENT PROTECTIONS.—The State plan shall 
provide that the State shall comply with the re-
quirements of section 1918 (relating to spousal 
impoverishment protections). 
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‘‘(C) STATEWIDENESS.—The State plan 
shall provide that, except with respect to meth-
ods used for determining homestead exemp-
tions, the income and asset standards and 
methodologies shall be in effect in all political 
subdivisions of the State. 
‘‘(4) TRANSITION ASSISTANCE.—The State plan 
shall specify how the State will provide transition as-
sistance for individuals who, on December 31, 2010, 
are enrolled under the State plan under old title 
XIX (or under a waiver of that plan) and receiving 
long-term care services or supports on that date. 
The State shall provide such assistance to individ-
uals who are and are not likely to be determined eli-
gible for long-term care services and supports under 
the State plan under this part, as in effect on Janu-
ary 1, 2011 (or the first day on which the State plan 
is in effect under this part). 
‘‘(c) PAYMENT METHODOLOGIES TO PROVIDERS.— 
‘‘(1) IN GENERAL.—The State plan shall de-
scribe the methodologies used to determine payments 
to providers. Such methodologies— 
‘‘(A) 
may 
be 
varied 
to 
assist 
in 
transitioning from facilities-based to commu-
nity-based care; and 
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‘‘(B) shall not be subject to Secretarial ap-
proval. 
‘‘(2) TRANSPARENCY.—The State plan shall 
provide that the State shall make publicly avail-
able— 
‘‘(A) the payment methodologies applicable 
under the plan; and 
‘‘(B) the name of any provider that re-
ceives $1,000,000 or more in any 12-month pe-
riod and the actual amount paid to the provider 
during that period. 
‘‘(d) COORDINATION OF EFFORT WITH OTHER RE-
LATED PUBLIC AND PRIVATE PROGRAMS.—The plan shall 
include a description of the State’s efforts to coordinate 
the delivery of services and supports under the plan with 
other related public and private programs that serve indi-
viduals with disabilities or aged populations that need or 
may be at risk of needing long term care. 
‘‘(e) PUBLIC AVAILABILITY OF STATE PLAN.—The 
State shall make available to the public the State plan 
under this part and any amendments submitted by the 
State to the plan. 
‘‘(f) APPLICATION OF OLD TITLE XIX REQUIRE-
MENTS.—The following old title XIX provisions shall 
apply to a State plan under this part: 
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‘‘(1) Subsections (a)(50) and (q) of old section 
1902 (relating to a monthly personal needs allow-
ance for certain institutionalized individuals and 
couples). 
‘‘(2) Old section 1902(a)(67) (relating to pay-
ment for certain services furnished to a PACE pro-
gram eligible individual). 
‘‘(3) Paragraph (1) of old section 1902(r) (re-
lating to the post-eligibility treatment of income for 
certain individuals) and paragraph (2) of such sec-
tion (relating to methodologies for determining in-
come and resource eligibility for individuals, but only 
with respect to individuals who are eligible under 
this part on or after January 1, 2011). 
‘‘(4) Old section 1905(i) (relating to the defini-
tion of an institution for mental diseases). 
‘‘(g) OTHER REQUIREMENTS OF OTHER PARTS.— 
The State plan under this part shall— 
‘‘(1) comply with the requirements of the other 
parts of this title; and 
‘‘(2) provide that the State will make the con-
tributions specified under section 340A–1(e) of the 
Public Health Service Act. 
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‘‘SEC. 1913. STATE ALLOTMENTS. 
‘‘(a) APPROPRIATION.—For the purpose of providing 
allotments to States under this section, there is appro-
priated out of any money in the Treasury not otherwise 
appropriated— 
‘‘(1) for fiscal year 2011, $65,274,560,000; 
‘‘(2) for fiscal year 2012, $67,885,540,000; 
‘‘(3) for fiscal year 2013, $70,600,964,100; 
‘‘(4) for fiscal year 2014, $73,425,000,000; 
‘‘(5) for fiscal year 2015, $76,362,000,000; 
‘‘(6) for fiscal year 2016, $79,416,480,000; 
‘‘(7) for fiscal year 2017, $82,593,140,000; 
‘‘(8) for fiscal year 2018, $85,896,870,000; and 
‘‘(9) for fiscal year 2019, $89,332,743,000. 
‘‘(b) ALLOTMENTS TO 50 STATES AND THE DISTRICT 
OF COLUMBIA.— 
‘‘(1) FISCAL YEAR 2011 ALLOTMENTS.—Subject 
to subsection (e), the Secretary shall allot to each 
State with a long term care plan approved under 
this title an amount in fiscal year 2011 equal to the 
Federal expenditures made by the State for long- 
term care as defined in section 1916 in fiscal year 
2008, increased by 8 percent. 
‘‘(2) 
SUBSEQUENT
FISCAL
YEAR
ALLOT-
MENTS.—For fiscal year 2012 and each subsequent 
fiscal year through fiscal year 2019, the allotment 
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for a State under this section is equal to the allot-
ment for the State determined for the preceding fis-
cal year, increased by 4 percent. 
‘‘(c) LIMITATION.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no other Federal funds are available 
under this title for expenditures incurred for long- 
term care services and supports after December 31, 
2010, except as provided under a State plan ap-
proved under this part. 
‘‘(2) EXCEPTION.— 
‘‘(A) IN GENERAL.—If a State does not 
have an approved State plan by October 1, 
2010, the Secretary may make payments equal 
to 85 percent of the State’s estimated quarterly 
allotment until June 30, 2011. 
‘‘(B) FULL FUNDING.—A State shall re-
ceive 100 percent of its allotment for fiscal year 
2011 if the State has a plan approved under 
this part by June 30, 2011. 
‘‘(d) MAINTENANCE OF EFFORT.—In order to qualify 
for the grant payable under this section, the State must 
demonstrate in each fiscal year that it made long-term 
care service and supports expenditures (including funding 
from local government sources) equal to the amount of 
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not less than 95 percent of the nonfederal share amount 
spent in fiscal year 2009 under the State plan under old 
title XIX on long term care services and supports (as de-
fined in section 1916). Expenditures not made under this 
part shall not be recognized by the Secretary for purposes 
of this requirement. 
‘‘(e) GRANTS REDUCED IF INSUFFICIENT APPRO-
PRIATIONS.— 
‘‘(1) IN GENERAL.—If the amount appropriated 
for fiscal year 2011 under subsection (a)(1) is less 
than the amount necessary to fund each State’s al-
lotment for that fiscal year, the Secretary shall re-
duce the allotment for each State for that fiscal year 
based on the applicable percentage determined for 
the State under paragraph (2) provide a reduced 
percentage basis as follows: Each state shall receive 
a percentage of its allotment based on the ratio of 
non-institutional spending to total long term care 
spending in FY 2009. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage deter-
mined with respect to a State is as follows: 
‘‘If the ratio of the State’s non-institutional 
spending to total long-term care spending 
for fiscal year 2009 is: 
The applicable 
percentage is: 
50 percent or greater .............................................
100 
at least 46, but less than 50 percent .....................
at least 40, but less than 46 percent .....................
at least 36, but less than 40 ..................................
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at least 30, but less than 36 ..................................
less than 30 percent ...............................................
95. 
‘‘(f) ADMINISTRATIVE EXPENSES.— 
‘‘(1) IN GENERAL.—Each State with a plan ap-
proved under this part shall receive a payment deter-
mined in accordance with amounts appropriated for 
part E for administrative expenses incurred in car-
rying out the plan under this part and part A. 
‘‘(2) ASSESSMENT-RELATED COSTS.—Costs at-
tributable to providing an individualized needs-based 
assessment for purposes of identifying the long-term 
care services and supports to be provided under the 
State plan to an individual shall be considered a 
long-term care service and support and shall not be 
treated as an administrative expense. 
‘‘SEC. 1914. USE OF GRANTS. 
‘‘(a) IN GENERAL.—A State shall use funds for long- 
term care services and supports as defined in section 
1916. 
‘‘(b) SELF-DIRECTION.—A State shall offer individ-
uals the opportunity to self-direct their long-term care 
services and supports. 
‘‘SEC. 1915. ADMINISTRATIVE PROVISIONS. 
‘‘(a) FUNDING ON A QUARTERLY BASIS.—The Sec-
retary shall make payments to States in equal amounts 
of a State’s annual allotment on a quarterly basis. Each 
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quarterly payment shall remain available for use by the 
State for twelve succeeding fiscal year quarters. 
‘‘(b) PUBLICATION.—The Secretary shall public each 
State’s applicable allotment. 
‘‘SEC. 1916. DEFINITION OF LONG-TERM CARE SERVICES 
AND SUPPORTS. 
‘‘(a) DEFINITION.— 
‘‘(1) IN GENERAL.—Subject to subsection (e), 
in this part, the term ‘long-term care services and 
supports’ means any of the services or supports 
specified in paragraphs (2) or (3) that may be pro-
vided in a nursing facility, an institution, a home, or 
other setting. 
‘‘(2) SERVICES AND SUPPORTS DESCRIBED.— 
For purposes of paragraph (1), the services and sup-
ports described in this paragraph include assistive 
technology, adaptive equipment, remote monitoring 
equipment, case management for the aged, case 
management for individuals with disabilities, nursing 
home services, long-term rehabilitative services nec-
essary to restore functional abilities, services pro-
vided in intermediate care facilities for people with 
disabilities, habilitation services (including adult day 
care programs), community treatment teams for in-
dividuals with mental illness, home health services, 
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services provided in an institution for mental dis-
ease, a Program of All-Inclusive Care for the Elderly 
(PACE), personal care (including personal assist-
ance services), recovery support including peer coun-
seling, supportive employment, training skills nec-
essary to assist the individual in achieving or main-
taining independence, training of family members in-
cluding foster parents in supportive and behavioral 
modification skills, ongoing and periodic training to 
maintain life skills, transitional care including room 
and board not to exceed 60 days within a 12-month 
period. 
‘‘(3) INCLUSION OF CERTAIN BENEFITS UNDER 
OLD TITLE XIX.—Such services and supports may 
include any of the following services: 
‘‘(A) Old section 1905(a)(15) (relating to 
services in an intermediate care facility for the 
mentally retarded). 
‘‘(B) Services described in subsections 
(a)(16) and (h) of old section 1905, but without 
regard to any restriction on such services on 
the basis of age (relating to inpatient psy-
chiatric hospital services). 
‘‘(C) Old section 1905(a)(22) (relating to 
home and community care (to the extent al-
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lowed and as defined in old section 1929) for 
functionally disabled elderly individuals). 
‘‘(D) Old section 1905(a)(23) (relating to 
community supported living arrangements serv-
ices (to the extent allowed and as defined in old 
section 1930)). 
‘‘(E) Subject to subsection (e), old section 
1905(a)(24) but without regard to any restric-
tion on furnishing services to patients or resi-
dents of facilities or institutions (relating to 
personal care services). 
‘‘(F) Old sections 1905(a)(26) and 1934 
(relating to services furnished under a PACE 
program under old section 1934 to PACE pro-
gram eligible individuals enrolled under the pro-
gram under such old section). 
‘‘(G) Old section 1915(c)(5) (relating to 
the definition of habilitation services). 
‘‘(4) LIMITATION.—Long-term care services 
and supports cannot be used for services and admin-
istrative costs provided through the foster care (with 
the exception of training of foster care parents), 
child welfare, adult protective services, juvenile jus-
tice, public guardianship, or correctional systems. 
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‘‘(b) REHABILITATIVE CARE.—For purposes of reha-
bilitation due to acute care medical needs, a State may 
claim rehabilitative services provided in an institutional 
setting, nursing home, or as part of home health expendi-
tures as acute care benefits under the State plan under 
part A rather than under the State plan under this part 
for a cumulative period of 30 days within a 12-month pe-
riod if such care is directly related to the onset of an acute 
care need. A State shall demonstrate the services were 
provided as a direct result of an acute care need. 
‘‘(c) MANAGED CARE.—If a State provides long-term 
care services and supports through managed care, the 
State shall submit a methodology for determining the level 
of expenditures attributed to long term care for approval 
by the Secretary. 
‘‘(d) APPLICATION OF PART A DEFINITIONS.—A def-
inition specified in section 1905 shall apply to the same 
term used in this part, unless the Secretary determines 
that the application of such definition would be incon-
sistent with the purpose of this part. 
‘‘(e) EXCLUSION.—No payments shall be made under 
the State plan under this part with respect to long-term 
care supports and services provided for any individual who 
is an inmate of a public institution. Nothing in the pre-
ceding sentence shall be construed as precluding the provi-
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‘‘(B) CRITERIA
FOR
INSTITUTIONALIZED 
VERSUS
NON-INSTITUTIONALIZED
SERVICES.— 
In establishing needs-based criteria, the State 
may establish criteria for determining eligibility 
for, and receipt of, services and supports pro-
vided in a facility or institution that are more 
stringent that the criteria established for eligi-
bility and receipt of services and supports in a 
non-facility or non-institutionalized setting. 
‘‘(C) AUTHORITY
TO
LIMIT
NUMBER
OF 
ELIGIBLE INDIVIDUALS.—A State may limit the 
number of individuals who are eligible for such 
services and supports and may establish waiting 
lists for the receipt of such services and sup-
ports. 
‘‘(D) CRITERIA BASED ON INDIVIDUAL AS-
SESSMENT.— 
‘‘(i) IN GENERAL.—The criteria estab-
lished by the State shall require an assess-
ment of an individual’s support needs and 
capabilities, and may take into account the 
inability of the individual to perform 2 or 
more activities of daily living (as defined in 
section 7702B(c)(2)(B) of the Internal 
Revenue Code of 1986) or the need for sig-
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211 
nificant assistance to perform such activi-
ties, and such other risk factors as the 
State determines to be appropriate. 
‘‘(ii) ADJUSTMENT AUTHORITY.—The 
State plan amendment provides the State 
with the option to modify the criteria es-
tablished under subparagraph (A) (without 
having to obtain prior approval from the 
Secretary) in the event that the enrollment 
of individuals eligible for services exceeds 
the projected enrollment, but only if— 
‘‘(I) the State provides at least 
60 days notice to the Secretary and 
the public of the proposed modifica-
tion; 
‘‘(II) the State deems an indi-
vidual receiving long-term care serv-
ices and supports on the basis of the 
most recent version of the criteria in 
effect prior to the effective date of the 
modification to be eligible for such 
services and supports for a period of 
at least 12 months beginning on the 
date the individual first received med-
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212 
ical assistance for such services and 
supports; and 
‘‘(III) after the effective date of 
such modification, the State, at a 
minimum, applies the criteria for de-
termining whether an individual re-
quires the level of care provided in a 
facility or institutionalized setting 
which applied under the State plan 
immediately prior to the application of 
the modified criteria. 
‘‘(E) INDEPENDENT EVALUATION AND AS-
SESSMENT.— 
‘‘(i) ELIGIBILITY DETERMINATION.— 
The State uses an independent evaluation 
for making the determinations described in 
subparagraph (A). 
‘‘(ii) ASSESSMENT.—In the case of an 
individual who is determined to be eligible 
for long-term care services and supports, 
the State uses an independent assessment, 
based on the needs of the individual to— 
‘‘(I) determine a necessary level 
of services and supports to be pro-
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213 
vided, consistent with an individual’s 
physical and mental capacity; 
‘‘(II) prevent the provision of un-
necessary or inappropriate care; and 
‘‘(III) establish an individualized 
care plan for the individual in accord-
ance with subparagraph (G). 
‘‘(F) ASSESSMENT.—The independent as-
sessment required under subparagraph (E)(ii) 
shall include the following: 
‘‘(i) An objective evaluation of an in-
dividual’s inability to perform 2 or more 
activities of daily living (as defined in sec-
tion 7702B(c)(2)(B) of the Internal Rev-
enue Code of 1986) or the need for signifi-
cant assistance to perform such activities. 
‘‘(ii) A face-to-face evaluation of the 
individual by an individual trained in the 
assessment and evaluation of individuals 
whose physical or mental conditions trigger 
a potential need for long-term care services 
and supports. 
‘‘(iii) Where appropriate, consultation 
with the individual’s family, spouse, guard-
ian, or other responsible individual. 
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‘‘(iv) Consultation with appropriate 
treating and consulting health and support 
professionals caring for the individual. 
‘‘(v) An examination of the individ-
ual’s relevant history, medical records, and 
care and support needs, guided by best 
practices and research on effective strate-
gies that result in improved health and 
quality of life outcomes. 
‘‘(vi) An evaluation of the ability of 
the individual or the individual’s represent-
ative to self-direct the purchase of, or con-
trol the receipt of, such services and sup-
ports if the individual so elects. 
‘‘(G) INDIVIDUALIZED CARE PLAN.— 
‘‘(i) IN GENERAL.—In the case of an 
individual who is determined to be eligible 
for long-term care services and supports, 
the State uses the independent assessment 
required under subparagraph (E)(ii) to es-
tablish a written individualized care plan 
for the individual. 
‘‘(ii) 
PLAN
REQUIREMENTS.—The 
State ensures that the individualized care 
plan for an individual— 
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‘‘(I) is developed— 
‘‘(aa) in consultation with 
the individual, the individual’s 
treating physician, health care or 
support professional, or other ap-
propriate individuals, as defined 
by the State, and, where appro-
priate the individual’s family, 
caregiver, or representative; and 
‘‘(bb) taking into account 
the extent of, and need for, any 
family or other supports for the 
individual; 
‘‘(II) identifies the long-term care 
services and supports to be furnished 
to the individual (or, if the individual 
elects to self-direct the purchase of, or 
control the receipt of, such services 
and supports, funded for the indi-
vidual); and 
‘‘(III) is reviewed at least annu-
ally and as needed when there is a 
significant change in the individual’s 
circumstances. 
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216 
‘‘(iii) STATE REQUIREMENT TO OFFER 
ELECTION FOR SELF-DIRECTED SERVICES 
AND SUPPORTS.— 
‘‘(I) INDIVIDUAL
CHOICE.—The 
State shall allow an individual or the 
individual’s representative the oppor-
tunity to elect to receive self-directed 
long-term care services and supports 
in a manner which gives them the 
most control over such services and 
supports consistent with the individ-
ual’s abilities and the requirements of 
subclauses (II) and (III). 
‘‘(II) 
SELF-DIRECTED.—The 
term ‘self-directed’ means, with re-
spect to the long-term care services 
and supports offered under the State 
plan amendment, such services and 
supports for the individual which are 
planned and purchased under the di-
rection and control of such individual 
or the individual’s authorized rep-
resentative, including the amount, du-
ration, scope, provider, and location of 
such services and supports, under the 
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217 
State plan consistent with the fol-
lowing requirements: 
‘‘(aa) ASSESSMENT.—There 
is an assessment of the needs, ca-
pabilities, and preferences of the 
individual with respect to such 
services and supports. 
‘‘(bb) 
SERVICE
PLAN.— 
Based on such assessment, there 
is developed jointly with such in-
dividual or the individual’s au-
thorized representative a plan for 
such services and supports for 
such individual that is approved 
by the State and that satisfies 
the requirements of subclause 
(III). 
‘‘(III) PLAN
REQUIREMENTS.— 
For purposes of subclause (II)(bb), 
the requirements of this subclause are 
that the plan— 
‘‘(aa) specifies those services 
and supports which the individual 
or the individual’s authorized 
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218 
representative would be respon-
sible for directing; 
‘‘(bb) identifies the methods 
by which the individual or the in-
dividual’s authorized representa-
tive will select, manage, and dis-
miss providers of such services 
and supports; 
‘‘(cc) specifies the role of 
family members and others whose 
participation is sought by the in-
dividual or the individual’s au-
thorized representative with re-
spect to such services and sup-
ports; 
‘‘(dd) is developed through a 
person-centered process that is 
directed by the individual or the 
individual’s authorized represent-
ative, builds upon the individual’s 
capacity to engage in activities 
that promote community life and 
that respects the individual’s 
preferences, choices, and abilities, 
and involves families, friends, 
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219 
and professionals as desired or 
required by the individual or the 
individual’s authorized represent-
ative; 
‘‘(ee) includes appropriate 
risk management techniques that 
recognize the roles and sharing of 
responsibilities in obtaining serv-
ices and supports in a self-di-
rected manner and assure the ap-
propriateness of such plan based 
upon the resources and capabili-
ties of the individual or the indi-
vidual’s authorized representa-
tive; and 
‘‘(ff) may include an individ-
ualized budget which identifies 
the dollar value of the services 
and supports under the control 
and direction of the individual or 
the individual’s authorized rep-
resentative. 
‘‘(IV) BUDGET
PROCESS.—With 
respect to individualized budgets de-
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220 
scribed in subclause (III)(ff), the 
State plan amendment— 
‘‘(aa) describes the method 
for calculating the dollar values 
in such budgets based on reliable 
costs and service utilization; 
‘‘(bb) defines a process for 
making adjustments in such dol-
lar values to reflect changes in 
individual assessments and serv-
ice plans; and 
‘‘(cc) provides a procedure 
to evaluate expenditures under 
such budgets. 
‘‘(H) QUALITY ASSURANCE; CONFLICT OF 
INTEREST STANDARDS.— 
‘‘(i) 
QUALITY
ASSURANCE.—The 
State ensures that the provision of long- 
term care services and supports meets 
Federal and State guidelines for quality 
assurance. 
‘‘(ii) CONFLICT OF INTEREST STAND-
ARDS.—The State establishes standards 
for the conduct of the independent evalua-
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221 
tion and the independent assessment to 
safeguard against conflicts of interest. 
‘‘(I) REDETERMINATIONS AND APPEALS.— 
The State allows for at least annual redeter-
minations of eligibility, and appeals in accord-
ance with the frequency of, and manner in 
which, redeterminations and appeals of eligi-
bility are made under the State plan. 
‘‘(J) PRESUMPTIVE ELIGIBILITY FOR AS-
SESSMENT.—The State, at its option, elects to 
provide for a period of presumptive eligibility 
(not to exceed a period of 60 days) only for 
those individuals that the State has reason to 
believe may be eligible for long-term care serv-
ices and supports. Such presumptive eligibility 
shall be limited to medical assistance for car-
rying out the independent evaluation and as-
sessment under subparagraph (E) to determine 
an individual’s eligibility for such services and 
if the individual is so eligible, the specific long- 
term care services and supports that the indi-
vidual will receive. 
‘‘(2) 
DEFINITION
OF
INDIVIDUAL’S
REP-
RESENTATIVE.—In this section, the term ‘individ-
ual’s representative’ means, with respect to an indi-
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222 
vidual, a parent, a family member, or a guardian of 
the individual, an advocate for the individual, or any 
other individual who is authorized to represent the 
individual. 
‘‘(b) SELF-DIRECTED PERSONAL ASSISTANCE SERV-
ICES.—If a State includes personal care or personal assist-
ance services in the long-term care services and supports 
available under the State plan, the State shall comply with 
the requirements of old section 1915(j) in the case of an 
individual who elects to self-direct the receipt of such care 
or services. 
‘‘SEC. 1918. TREATMENT OF INCOME AND RESOURCES FOR 
CERTAIN INSTITUTIONALIZED SPOUSES. 
‘‘Old section 1924 (relating to treatment of income 
and resources for certain institutionalized spouses), other 
than paragraphs (2) and (4)(A) of subsection (a) of such 
section, shall apply under this part. 
‘‘SEC. 1919. ANNUAL REPORTS. 
‘‘(a) IN GENERAL.—Each State that receives pay-
ments under this part shall submit an annual report to 
the Secretary, in such form and manner as the Secretary 
shall specify. 
‘‘(b) REQUIREMENTS.—The report shall include the 
following with respect to the most recent fiscal year ended: 
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‘‘(1) The number of individuals served under 
the plan. 
‘‘(2) The number of individuals served by tier 
(preventive, emergency, low, medium, and high 
needs). 
‘‘(3) The number of individuals known to the 
State on waiting list for services (if any) and type 
of disability (physical, developmental, mental health) 
or aged. 
‘‘(4) Expenditures by service category. 
‘‘PART C—GRANTS TO STATES FOR SURVEY AND 
CERTIFICATION 
OF 
MEDICAL 
FACILITIES 
AND OTHER REQUIREMENTS 
‘‘SEC. 1931. AUTHORIZATION OF APPROPRIATIONS. 
‘‘For the purpose of carrying our Federal activities 
and providing grants to States for expenses necessary to 
carry out this part, there is authorized to be appro-
priated— 
‘‘(1) for fiscal year 2011, $300,000,000; and 
‘‘(2) for each succeeding fiscal year, the amount 
authorized under this section for the preceding fiscal 
year, increased by 5 percent. 
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224 
‘‘SEC. 1932. APPLICATION OF CERTAIN REQUIREMENTS 
UNDER PRE-MODERNIZED MEDICAID. 
‘‘The following old provisions shall apply under this 
part: 
‘‘(1) Old section 1902(a)(9) (relating to health 
standards and applicable requirements for laboratory 
services). 
‘‘(2) Old section 1902(a)(28) (relating to nurs-
ing facilities and nursing facility services). 
‘‘(3) Old sections 1902(a)(29) and 1908 (relat-
ing to a State program for the licensing of adminis-
trators of nursing homes). 
‘‘(4) Old section 1902(a)(33)(B) (relating to li-
censing health institutions). 
‘‘(5) Old section 1902(d) (relating to medical or 
utilization review functions). 
‘‘(6) Old section 1902(i) (relating to inter-
mediate care facilities for the mentally retarded). 
‘‘(7) Old section 1902(y) (relating to psy-
chiatric hospitals). 
‘‘(8) Paragraphs (2) and (6) of old section 
1903(g) (relating to the Secretarial requirement to 
conduct sample onsite surveys of private and public 
institutions and recertifications for the need for cer-
tain services). 
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‘‘(9) Old section 1903(q)(4)(B) (relating to the 
definition of a board and care facility). 
‘‘(10) Old section 1910 (relating to certification 
and approval of rural health clinics and intermediate 
care facilities for the mentally retarded). 
‘‘(11) Old section 1911 (relating to Indian 
Health Service facilities). 
‘‘(12) Old section 1913 (relating to hospital 
providers of nursing facility services). 
‘‘(13) Old section 1919 (relating to require-
ments for nursing facilities). 
‘‘PART D—GRANTS TO STATES FOR PROGRAM 
INTEGRITY 
‘‘SEC. 1941. AUTHORIZATION OF APPROPRIATIONS. 
‘‘(a) IN GENERAL.—For the purpose of carrying out 
Federal activities under this part and providing grants to 
States for expenses necessary to carry out this part, there 
is authorized to be appropriated— 
‘‘(1) for fiscal year 2011, $100,000,000; and 
‘‘(2) for each succeeding fiscal year, the amount 
authorized under this section for the preceding fiscal 
year, increased by 5 percent. 
‘‘(b) AVAILABILITY; AUTHORITY
FOR
USE
OF 
FUNDS.— 
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‘‘(1) 
AVAILABILITY.—Amounts 
appropriated 
pursuant to subsection (a) shall remain available 
until expended. 
‘‘(2) AUTHORITY
FOR
USE
OF
FUNDS
FOR 
TRANSPORTATION
AND
TRAVEL
EXPENSES
FOR 
ATTENDEES
AT
EDUCATION, TRAINING, OR
CON-
SULTATIVE ACTIVITIES.— 
‘‘(A) IN
GENERAL.—The Secretary may 
use amounts appropriated pursuant to sub-
section (a) to pay for transportation and the 
travel expenses, including per diem in lieu of 
subsistence, at rates authorized for employees 
of agencies under subchapter I of chapter 57 of 
title 5, United States Code, while away from 
their homes or regular places of business, of in-
dividuals described in subsection (b)(4) who at-
tend education, training, or consultative activi-
ties conducted under the authority of that sub-
section. 
‘‘(B) PUBLIC DISCLOSURE.—The Secretary 
shall make available on a website of the Centers 
for Medicare & Medicaid Services that is acces-
sible to the public— 
‘‘(i) the total amount of funds ex-
pended for each conference conducted 
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227 
under the authority of subsection (b)(4); 
and 
‘‘(ii) the amount of funds expended 
for each such conference that were for 
transportation and for travel expenses. 
‘‘(c) ANNUAL REPORT.—Not later than 180 days 
after the end of each fiscal year, the Secretary shall sub-
mit a report to Congress which identifies— 
‘‘(1) the use of funds appropriated pursuant to 
subsection (a); and 
‘‘(2) the effectiveness of the use of such funds. 
‘‘SEC. 1942. APPLICATION OF CERTAIN REQUIREMENTS 
UNDER PRE-MODERNIZED MEDICAID. 
‘‘The following old provisions shall apply under this 
part: 
‘‘(1) Old subsections (a)(25) (other than sub-
paragraph (E)) and (g) of section 1902 and section 
1903(o) (relating to third party liability). 
‘‘(2) Old section 1902(a)(30)(B) (relating to 
hospital, intermediate care facility for the mentally 
retarded, or hospital for mental diseases admission 
screening and review requirements). 
‘‘(3) Old section 1902(a)(32) (relating to cer-
tain payment requirements). 
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228 
‘‘(4) Old section 1902(a)(35) (relating to dis-
closing entities under section 1124). 
‘‘(5) Old section 1902(a)(37) and the fifth sen-
tence (relating to claims payment procedures). 
‘‘(6) Old section 1902(a)(44) (relating to pay-
ment for inpatient hospital services, services in an 
intermediate care facility for the mentally retarded, 
or inpatient mental hospital services). 
‘‘(7) Old sections 1902(a)(45) and 1912 (relat-
ing to assignment of rights of payment). 
‘‘(8) Old sections 1902(a)(49) and 1921 (relat-
ing to information and access to information con-
cerning sanctions taken by State licensing authori-
ties against health care practitioners and providers). 
‘‘(9) Old sections 1902(a)(61) and 1903(q) (re-
lating to requirements for a medicaid fraud and 
abuse control unit). 
‘‘(10) Old section 1902(a)(64) (relating to re-
ports from beneficiaries and others and data com-
pilation requirements concerning alleged instances of 
waste, fraud, and abuse). 
‘‘(11) Old section 1902(a)(65) (relating to pro-
vider number and surety bond requirement for sup-
pliers of durable medical equipment). 
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229 
‘‘(12) Old section 1902(a)(68) (relating to re-
quirements for certain entities). 
‘‘(13) Old sections 1902(a)(69) and 1936 (re-
lating to the Medicaid Integrity Program) other 
than paragraphs (1), (2)(A), and (3) of old section 
1936(e). 
‘‘(14) Old section 1902(a)(70)(B)(iv) (relating 
to prohibitions on referrals and conflict of interest 
for certain brokers of non-emergency medical trans-
portation). 
‘‘(15) Old sections 1902(a)(71) and 1940 (re-
lating to a required asset verification program). 
‘‘(16) Old section 1902(p) (relating to exclusion 
of certain individuals or entities). 
‘‘(17) Old section 1902(x) (relating to unique 
identifiers for physicians). 
‘‘(18) Old section 1903(p) (relating to inter-
state collection of rights of support). 
‘‘(19) Old section 1903(r)(2) (relating to re-
quirements for mechanized claims processing and in-
formation retrieval systems). 
‘‘(20) Old section 1903(u) (relating to erro-
neous excess payments), other than clause (v) of 
paragraph (1)(D). 
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230 
‘‘(21) Old section 1903(v) and the seventh sen-
tence of old section 1902(a) (relating to limitations 
on payments for services furnished to aliens), other 
than subparagraphs (A) and (B) of paragraph (4). 
‘‘(22) Old section 1903(x) (relating to citizen-
ship documentation). 
‘‘(23) Old section 1909 (relating to State false 
claims act requirements for increased State share of 
recoveries). 
‘‘(24) Old section 1914 (relating to withholding 
of Federal share of payments for certain Medicare 
providers). 
‘‘(25) Old section 1917 (relating to liens, ad-
justments and recoveries, and transfers of assets). 
‘‘(26) Old section 1922 (relating to correction 
and reduction plans for intermediate care facilities 
for the mentally retarded). 
‘‘PART E—GRANTS TO STATES FOR 
ADMINISTRATION 
‘‘SEC. 1951. AUTHORIZATION OF APPROPRIATIONS; PAY-
MENTS TO STATES. 
‘‘(a) IN GENERAL.—For the purpose of providing 
grants to States for administrative expenses necessary to 
carry out parts A and B, there is authorized to be appro-
priated— 
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231 
‘‘(1) for fiscal year 2011, $7,000,000,000; and 
‘‘(2) for each succeeding fiscal year, the amount 
authorized under this subsection for the preceding 
fiscal year, increased by 3 percent. 
‘‘(b) PAYMENTS TO STATES.— 
‘‘(1) IN GENERAL.—From the amount appro-
priated pursuant to subsection (a) for a fiscal year, 
the Secretary shall pay each State with approved 
plans under parts A and B for the fiscal year an 
amount equal to the product of the amount appro-
priated for the fiscal year and the ratio of the total 
amount of payments made to the State under para-
graphs (2) through (7) of section 1903(a) for fiscal 
year 2008 (as such section was in effect for that fis-
cal year) to the total amount of such payments made 
to all States for such fiscal year. 
‘‘(2) PRO RATA ADJUSTMENT.—The Secretary 
shall make pro rata adjustments to the amounts de-
termined under paragraph (1) for a fiscal year as 
necessary so as to not exceed the amount appro-
priated pursuant to subsection (a) for the fiscal 
year. 
‘‘SEC. 1952. COST-SHARING PROTECTIONS. 
‘‘(a) IN GENERAL.—A State may impose cost-sharing 
for individuals provided acute care medical assistance 
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232 
under a State plan under part A or long-term care services 
and supports under a State plan under part B consistent 
with the following: 
‘‘(1) The State may (in a uniform manner) re-
quire payment of monthly premiums or other cost- 
sharing set on a sliding scale based on family in-
come. 
‘‘(2) A premium or other cost-sharing require-
ment imposed under paragraph (1) may only apply 
to the extent that, in the case of an individual whose 
family income— 
‘‘(A) exceeds 150 percent of the poverty 
line, the aggregate annual amount of such pre-
mium and other cost-sharing charges imposed 
under the plan does not exceed 5 percent of the 
individual’s annual income; and 
‘‘(B) exceeds 250 percent of the poverty 
line, the aggregate annual amount of such pre-
mium and other cost-sharing charges do not ex-
ceed 7.5 percent of the individual’s annual in-
come. 
‘‘(3) A State shall not require prepayment of 
any premium or cost-sharing imposed pursuant to 
paragraph (1) and shall not terminate eligibility of 
an individual under the State plan on the basis of 
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233 
failure to pay any such premium or cost-sharing 
until such failure continues for a period of at least 
60 days from the date on which the premium or 
cost-sharing became past due. The State may waive 
payment of any such premium or cost-sharing in any 
case where the State determines that requiring such 
payment would create an undue hardship. 
‘‘(b) APPLICATION TO INSTITUTIONALIZED INDIVID-
UALS.—A State may impose cost-sharing consistent with 
subsection (a) to individuals who are patients in, or resi-
dents of, a medical institution or nursing facility except 
that rules relating to the post-eligibility treatment of in-
come (including a minium monthly personal needs allow-
ance) applicable to institutionalized individuals under old 
title XIX shall apply in the same manner to individuals 
eligible for long-term care services and supports under a 
State plan under part B. 
‘‘(c) POVERTY LINE DEFINED.—In this section, the 
term ‘poverty line’ has the meaning given such term in 
section 673(2) of the Community Services Block Grant 
Act (42 U.S.C. 9902(2)), including any revision required 
by such section. 
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‘‘SEC. 1953. APPLICATION OF CERTAIN REQUIREMENTS 
UNDER PRE-MODERNIZED MEDICAID. 
‘‘The following old provisions shall apply to the State 
plans under this title: 
‘‘(1) OLD STATE PLAN REQUIREMENTS.— 
‘‘(A) Old section 1902(a)(1) (relating to 
the requirement for plans to be in effect in all 
political subdivisions of the State). 
‘‘(B) Old section 1902(a)(2) (relating to 
State financial participation). 
‘‘(C) Old section 1902(a)(3) (relating to 
opportunity for a fair hearing). 
‘‘(D) Old section 1902(a)(4) (relating to 
administration). 
‘‘(E) Old section 1902(a)(5) (relating to 
designation of a single State agency). 
‘‘(F) Old section 1902(a)(6) (relating to 
reporting requirements). 
‘‘(G) Old section 1902(a)(7) (relating to 
restrictions on the use or disclosure of informa-
tion). 
‘‘(H) Old section 1902(a)(8) (relating to 
applications for assistance). 
‘‘(I) Old section 1902(a)(11) (relating to 
cooperative agreements with other State agen-
cies). 
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235 
‘‘(J) Old section 1902(a)(12) (relating to 
determinations of blindness). 
‘‘(K) Old section 1902(a)(13) (relating to 
determination of rates of payment for certain 
services), other than clause (iv) of subpara-
graph (A). 
‘‘(L) Subsections (a)(15) and (bb) of old 
section 1902(a) (relating to payment for serv-
ices provided by rural health clinics and feder-
ally qualified health centers). 
‘‘(M) Old section 1902(a)(16) (relating to 
furnishing services to individuals when absent 
from the State). 
‘‘(N) Old section 1902(a)(22) (relating to 
certain administrative provisions). 
‘‘(O) Paragraphs (23) and (25)(D) of old 
section 1902(a) (relating to any willing provider 
requirements). 
‘‘(P) Old section 1902(a)(24) (relating to 
consultative services by other agencies). 
‘‘(Q) Old section 1902(a)(26) (relating to 
review of need for inpatient mental hospital 
services and written plan of care requirements). 
‘‘(R) Old section 1902(a)(27) (relating to 
provider record keeping requirements). 
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236 
‘‘(S) Old section 1902(a)(30)(A) (relating 
to utilization review). 
‘‘(T) Old section 1902(a)(31) (relating to 
written plan of care for services and review for 
intermediate care facility for the mentally re-
tarded services). 
‘‘(U) Old section 1902(a)(33)(A) (relating 
to quality review requirements). 
‘‘(V) Old section 1902(a)(36) (relating to 
public availability of facility surveys). 
‘‘(W) Old section 1902(a)(38) (relating to 
the provision of information described in section 
1128(b)(9) by certain entities). 
‘‘(X) Old section 1902(a)(39) (relating to 
the exclusion of certain entities). 
‘‘(Y) Old section 1902(a)(40) (relating to 
requirement for uniform reporting systems). 
‘‘(Z) Old section 1902(a)(41) (relating to 
notice to State medical licensing boards). 
‘‘(AA) Old section 1902(a)(42) (relating to 
certain audit requirements). 
‘‘(BB) Old section 1902(a)(48) (relating to 
eligibility cards). 
‘‘(CC) Old section 1902(a)(55) (relating to 
the receipt and initial processing of applica-
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237 
tions, but only to the extent such section is con-
sistent with the policy embodied in the State 
plans under parts A and B). 
‘‘(DD) Subsections (a)(56) and (s) of old 
section 1902 (relating to adjusted payments for 
certain inpatient hospital services). 
‘‘(EE) Old section 1902(a)(59) (relating to 
maintenance of list of participating physicians). 
‘‘(FF) The second sentence of old section 
1902 (relating to designation of certain State 
agencies). 
‘‘(GG) Old section 1902(b) (relating to 
limitations on approval of plans). 
‘‘(HH) Old section 1902(j) (relating to ap-
plication of requirements to American Samoa 
and the Northern Mariana Islands). 
‘‘(2) OTHER OLD TITLE XIX REQUIREMENTS.— 
‘‘(A) Old section 1903(b)(4) (relating to 
limitations on payments to enrollment brokers). 
‘‘(B) Old section 1903(c) (relating to fur-
nishing of services included in a program or 
plan under part B or C of the Individuals with 
Disabilities Education Act). 
‘‘(C) Old section 1903(d) (relating to pay-
ments). 
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238 
‘‘(D) Old section 1903(e) (relating to costs 
with respect to certain hospital services). 
‘‘(E) Old section 1903(i) (relating to limi-
tations on payments). 
‘‘(F) Old section 1903(r) (relating to re-
quirements for mechanized claims processing 
and information retrieval systems). 
‘‘(G) Subsections (b)(5) and (w) of old sec-
tion 1903 (relating to limitations on payments 
related to provider taxes). 
‘‘(H) Old section 1904 (relating to oper-
ation of State plans). 
‘‘(I) Old sections 1902(a)(60) and 1908A 
(relating to medical child support). 
‘‘(J) Paragraphs (32)(D) and (62) of old 
section 1902(a) and section 1928 (relating to 
program for distribution of pediatric vaccines). 
‘‘PART F—OTHER PROVISIONS 
‘‘SEC. 1961. APPLICATION OF CERTAIN REQUIREMENTS 
UNDER PRE-MODERNIZED MEDICAID. 
‘‘The following old provisions shall apply under this 
part: 
‘‘(1) The third sentence of old section 1902 (re-
lating to nonapplication of certain old provisions to 
a religious nonmedical health care institution). 
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239 
‘‘(2) Old section 1918 (relating to application of 
provisions of title II relating to subpoenas). 
‘‘(3) Old section 1939 (relating to references to 
laws directly affecting the Medicaid program.’’. 
(b) REPEAL OF TITLE XXI.—Effective January 1, 
2011, title XXI of the Social Security Act (42 U.S.C. 
1397aa et seq.) is repealed. 
SEC. 202. OUTREACH. 
(a) AUTHORIZATION OF APPROPRIATIONS.—The fol-
lowing amounts are authorized to be appropriated to the 
Secretary of Health and Human Services: 
(1) For fiscal year 2010, $100,000,000 for the 
design and implementation of a public outreach cam-
paign to inform the public about the changes to the 
programs under such titles that take effect on Janu-
ary 1, 2011, as a result of the amendment made by 
section 201. 
(2) For each of fiscal years 2011and 2012, 
$200,000,000 to carry out such public outreach 
campaign. 
(3) For fiscal year 2013, $50,000,000 to carry 
out such public outreach campaign. 
(b) AVAILABILITY.—Funds appropriated under sub-
section (a) shall remain available for expenditure through 
September 30, 2012. 
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(c) AUTHORITY FOR USE OF FUNDS.—The Secretary 
may use funds made available under paragraphs (2) and 
(3) of subsection (a) to award grants to, or enter into con-
tracts with, public or private entities, including States, 
local governments, schools, churches, and community 
groups. 
SEC. 203. TRANSITION RULES; MISCELLANEOUS PROVI-
SIONS. 
(a) IN GENERAL.— 
(1) Not later than June 30, 2011, a State that 
is one of the 50 States or the District of Columbia 
shall inform all individuals enrolled in a State plan 
under title XIX or XXI of the Social Security Act 
on such date (and any new enrollees after such date) 
of the changes to the programs under such titles 
that take effect on January 1, 2012, as a result of 
the amendment made by section 201. 
(2) No State that is one of the 50 States or the 
District of Columbia shall approve any applications 
for medical assistance or child health assistance 
under a State plan under title XIX or XXI (as in 
effect for fiscal year 2011) after December 31, 
2011. 
(b) SUBMISSION OF LEGISLATIVE PROPOSAL FOR 
TECHNICAL AND CONFORMING AMENDMENTS.—Not later 
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241 
than 6 months after the date of enactment of this Act, 
the Secretary of Health and Human Services shall submit 
to Congress a legislative proposal for such technical and 
conforming amendments as are necessary to carry out the 
amendments made by this Act. 
Subtitle B—Supplemental Health 
Care Assistance for Low-Income 
Families 
SEC. 211. SUPPLEMENTAL HEALTH CARE ASSISTANCE FOR 
LOW-INCOME FAMILIES. 
Part D of title III of the Public Health Service Act 
(42 U.S.C. 254b et seq.) is amended by adding at the end 
the following: 
‘‘Subpart XI—Health Care Assistance to Low-income 
Families 
‘‘SEC. 340A–1. FINANCIAL ASSISTANCE TO LOW-INCOME 
FAMILIES. 
‘‘(a) IN GENERAL.—The Secretary shall supplement 
the costs of private health insurance for eligible low-in-
come families through the distribution of supplemental 
debit cards to eligible families, which may be used to pay 
for costs associated with health care for the members of 
such eligible families and provide direct support to such 
families in accessing health care. 
‘‘(b) ELIGIBILITY.— 
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‘‘(1) ELIGIBLE FAMILIES.—To be eligible for fi-
nancial assistance under this section— 
‘‘(A) a family shall— 
‘‘(i) consist of 2 or more individuals 
living together who are related by mar-
riage, birth, adoption, or guardianship; 
‘‘(ii) have a gross income that does 
not exceed 200 percent of the poverty line, 
as applicable to a family of the size in-
volved; and 
‘‘(iii) include at least 1 individual who 
is a dependent under the age of 19; and 
‘‘(B) no member of the family shall be cov-
ered by private health insurance. 
‘‘(2) DETERMINATION OF GROSS INCOME.—The 
gross income of a family shall be determined by tak-
ing the sum of the income of each family member 
who is at least age 21 but not older than age 65, 
except that the income of any member of the family 
who qualifies for coverage under Medicaid Part A or 
B shall not be counted. 
‘‘(3) LIMITATION ON INDIVIDUAL ELIGIBILITY; 
ASSISTANCE.— 
‘‘(A) IN GENERAL.—No individual who is a 
member of an eligible family under paragraph 
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243 
(1) is eligible to qualify separately for financial 
assistance under this section. 
‘‘(B) ALIENS.—The Secretary shall ensure 
that financial assistance under this section is 
not provided for costs associated with health 
care for any member of an eligible family who 
is an alien individual who is not a lawful per-
manent resident of the United States. 
‘‘(c) SUPPLEMENTAL DEBIT CARD
FOR HEALTH 
CARE EXPENDITURES.— 
‘‘(1) IN GENERAL.—The Secretary shall issue 
to each eligible family that enrolls in the program in 
accordance with subsection (f) a supplemental debit 
card with a dollar-amount value, in accordance with 
subsection (d), that may be used to pay for quali-
fying health care expenses. 
‘‘(2) USE OF THE DEBIT CARD.— 
‘‘(A) QUALIFYING
HEALTH
CARE
EX-
PENSES.—A supplemental debit card issued 
under this section may be used by members of 
the eligible family to pay for— 
‘‘(i) the purchase of health care insur-
ance for any member of the family; 
‘‘(ii) cost sharing expenses related to 
health care, including deductibles, copay-
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244 
ments, and coinsurance, for any member of 
the family; and 
‘‘(iii) the direct purchase of health 
care services and supplies for any member 
of the family. 
‘‘(B) GEOGRAPHIC RANGE.—Each supple-
mental debit card may be used to pay for quali-
fying health care expenses incurred anywhere in 
the 50 States or the District of Columbia. 
‘‘(C) 
LIMITATIONS.—No 
supplemental 
debit card shall be used to make a payment for 
any cost— 
‘‘(i) incurred prior to the determina-
tion of the family’s eligibility for assistance 
under this section; or 
‘‘(ii) that is not a health-related ex-
pense. 
‘‘(3) ROLLOVER
OF
UNUSED
AMOUNTS.—Not 
more than one-quarter of the annual dollar amount 
of a supplemental debit card that is unexpended at 
the end of each 12-month period may rollover— 
‘‘(A) to the family’s supplemental debit 
card for expenditure during the subsequent 12- 
month period, provided that the family to which 
the supplemental debit card was issued in the 
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245 
previous 12-month period is eligible to receive a 
supplemental debit card in the subsequent 12- 
month period; or 
‘‘(B) to the family’s health savings account 
(as defined in section 223(g)(2) of the Internal 
Revenue Code of 1986). 
‘‘(4) MONTHLY
STATEMENTS.—The Secretary 
shall issue a monthly statement to each family to 
which a supplemental debit card has been issued 
under this section, which shall state each payment 
made with the family’s supplemental debit card dur-
ing the month covered by the statement, the dollar 
amount of each such payment, and the provider to 
which each such payment was made. 
‘‘(d) AMOUNT OF FINANCIAL ASSISTANCE.— 
‘‘(1) AMOUNTS FOR CALENDAR YEAR 2011.— 
Subject to paragraph (5), the amount of financial 
assistance available to each eligible family during the 
calendar year 2011 shall be determined as follows: 
‘‘(A) Each family whose annual income 
does not exceed 100 percent of the poverty 
level, as applicable to a family of the size in-
volved, shall receive $5,000. 
‘‘(B) Each family whose annual income ex-
ceeds 100 percent, but does not exceed 200 per-
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cent, of the poverty level, as applicable to a 
family of the size involved, shall receive an 
amount as follows: 
‘‘(i) For families whose annual income 
exceeds 100 percent but does not exceed 
120 percent, of the poverty level, $4,000. 
‘‘(ii) For families whose annual in-
come exceeds 120 percent but does not ex-
ceed 140 percent, of the poverty level, 
$3,500. 
‘‘(iii) For families whose annual in-
come exceeds 140 percent but does not ex-
ceed 160 percent, of the poverty level, 
$3,000. 
‘‘(iv) For families whose annual in-
come exceeds 160 percent but does not ex-
ceed 180 percent, of the poverty level, 
$2,500. 
‘‘(v) For families whose annual in-
come exceeds 180 percent but does not ex-
ceed 200 percent, of the poverty level, 
$2,000. 
‘‘(2) ADDITIONAL
AMOUNTS.—In addition to 
the amounts under paragraph (1), subject to para-
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graph (5), the following amounts shall be added to 
the supplemental debit cards of qualifying families: 
‘‘(A) For each pregnancy during which a 
pregnant woman’s family is eligible for assist-
ance under this section, an additional amount 
of $1,000 shall be added to the family’s supple-
mental debit card, except that no family shall 
receive such additional $1,000 for any preg-
nancy for which the family received such 
amount in the previous 12-month period. 
‘‘(B) For each member of an eligible fam-
ily who is less than 1 year old on any day with-
in the calendar year in which the family is eligi-
ble for assistance, an additional amount of 
$500 shall be added to the family’s supple-
mental debit card. 
‘‘(3) COST OF LIVING ADJUSTMENTS.—In the 
case of any taxable year beginning in a calendar 
year after 2011, each dollar amount contained in 
paragraphs (1) and (2) shall be increased in the 
same manner as the dollar amounts specified in sec-
tion 25E(b)(3) of the Internal Revenue Code of 
1986 are increased by the blended cost-of-living ad-
justment determined under subsection (k)(2) of sec-
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248 
tion 25E of the Internal Revenue Code for the tax-
able year involved. 
‘‘(4) STATE OPTION TO INCREASE AMOUNTS.— 
At the option of each State, amounts in excess of 
the annual dollar amounts under paragraphs (1) and 
(2) may be provided through the supplemental debit 
card to eligible families in that State, but no Federal 
funds shall be paid to any State for any amount pro-
vided in excess of such annual dollar amount. 
‘‘(5) RISK ADJUSTMENT.—The Secretary may 
adjust the amount of financial assistance available to 
an eligible family for a calendar year under this sec-
tion based on age, health indicators, and other fac-
tors that represent distinct patterns of health care 
services utilization and costs. 
‘‘(e) CONTRIBUTIONS OF STATES.— 
‘‘(1) IN GENERAL.—As a condition for receiving 
Federal funds under Part A or Part B of Medicaid, 
each State shall contribute 50 percent of the total 
amount expended under the supplemental debit card 
program by the participating families that reside 
within the State during the time that the family re-
sides in that State. For purposes of this section, the 
residency of a family is determined by the residency 
the legally responsible head of the household. 
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‘‘(2) PAYMENTS FROM STATES.— 
‘‘(A) BILLING NOTIFICATION.— 
‘‘(i) TIMING.—On June 30th and De-
cember 31st of each year, the Secretary 
shall send written notification to each 
State of that State’s 50 percent share of 
expenses, as described in paragraph (1), 
for the 6-month period ending on the last 
day of the month previous to such notifica-
tion. 
‘‘(ii) CONTENTS.—Each such notifica-
tion to a State shall clearly state— 
‘‘(I) the payment amount due 
from the State; 
‘‘(II) the name of each individual 
for whom payment was made through 
the supplemental debit card program; 
‘‘(III) the health care provider to 
whom each payment was made; 
‘‘(IV) the amount of each pay-
ment; and 
‘‘(V) any other information, as 
the Secretary requires. 
‘‘(B) PAYMENTS.—Each State shall make 
a payment to the Secretary, in the amount 
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billed, not later than 30 days after the billing 
notification date, in accordance with subpara-
graph (A)(i). 
‘‘(C) PENALTIES.—If a State fails to pay 
to the Secretary an amount required under sub-
paragraph (B), interest shall accrue on such 
amount at the rate provided under old section 
1903(d)(5) of the Social Security Act. The 
amount so owed and applicable interest shall be 
immediately offset against amounts otherwise 
payable to the State under this section, in ac-
cordance with the Federal Claims Collection Act 
of 1996 and applicable regulations. 
‘‘(f) ENROLLMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish procedures and times for enrollment in the sup-
plemental debit card program. Open enrollment shall 
be available not less than 4 times per calendar year. 
‘‘(2) TRANSITION OF INDIVIDUALS ENROLLED 
IN MEDICAID OR THE STATE CHILDREN’S HEALTH 
INSURANCE PROGRAM.— 
‘‘(A) INFORMATION FROM THE STATES.— 
Each State shall— 
‘‘(i) not later than June 30, 2011, in-
form all individuals then enrolled in Med-
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251 
icaid or the State Children’s Health Insur-
ance Program (SCHIP), of the changes in 
effect beginning on January 1, 2012; and 
‘‘(ii) not later than October 31, 2011, 
redetermine the eligibility of each indi-
vidual enrolled in Medicaid or SCHIP, 
other than those individuals who qualify 
for Medicaid or SCHIP as disabled, elder-
ly, or a special population, for the supple-
mental debit card program, according to 
the eligibility criteria under subsection (b). 
‘‘(B) 
AUTOMATIC
ENROLLMENT.—The 
Secretary shall provide for the automatic enroll-
ment in the supplemental debit card program of 
all individuals who are enrolled in Medicaid or 
SCHIP and who have been redetermined by a 
State under subparagraph (A) to be eligible for 
Medicaid or SCHIP. Any individual who is de-
termined by a State not to qualify for the sup-
plemental debit card program may retain cov-
erage under Medicaid or SCHIP until June 30, 
2012. 
‘‘(3) ASSISTANCE WITH QUALIFIED HEALTH IN-
SURANCE CREDIT.—Each State shall, to the extent 
practicable, provide individuals residing within the 
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252 
State with information regarding the qualified health 
insurance credit described in section 25E of the In-
ternal Revenue Code of 1986, including information 
regarding eligibility for, and how to claim, such 
credit. 
‘‘(g) ADMINISTRATION.— 
‘‘(1) NATIONAL SYSTEM.—The Secretary may 
enter into contracts or agreements with a State, a 
consortium of States, or a private entity, including 
a bank, enrollment broker, or similar entity, to es-
tablish and maintain a unified national system to 
support the processes and transactions necessary to 
administer this section. 
‘‘(2) AUTOMATED
SYSTEM.—The Secretary 
shall establish an automated means, such as an elec-
tronic benefit transfer system, by which the benefits 
under this section shall be transferred to eligible 
families. 
‘‘(3) VERIFICATION
OF
APPLICANT
INFORMA-
TION.—The Secretary may verify information pro-
vided by applicants with the appropriate Federal, 
State, and local agencies, including the Internal Rev-
enue Service, the Social Security Administration, the 
Department of Labor, and child support enforce-
ment agencies. 
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‘‘(4) CHOICE
COUNSELING.—The Secretary 
may enter into contracts or agreements with a State, 
a consortium of a State, or a private entity, includ-
ing an enrollment broker or community organization 
or other organization, to educate eligible families 
about their options and to assist in their enrollment 
in the supplemental debit card plan. 
‘‘(5) APPEALS.—The Secretary shall establish 
an independent appeals process, to be administered 
by an entity separate from the entity that makes ini-
tial eligibility determinations, which shall be avail-
able to individuals who are denied benefits under the 
supplemental debit card program. 
‘‘(6) RESOLUTION OF ERRORS.—The Secretary 
shall provide for a reconciliation process with the 
States to resolve any errors and adjudicate disputes 
due to incomplete or false information in a family’s 
application or in the billing process described in sub-
section (e). 
‘‘(7) PENALTIES FOR FALSE INFORMATION.— 
Any person who provides false information to qualify 
for the supplemental debit card program shall pay a 
penalty in the amount of 110 percent of the amount 
of assistance paid on behalf of such person and all 
members of such person’s family. 
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‘‘(h) IMPLEMENTATION PLAN.—Not later than 6 
months after the date of enactment of this section, the 
Secretary shall submit to Congress a plan for imple-
menting this program. 
‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— 
‘‘(1) ADMINISTRATION OF THE SUPPLEMENTAL 
DEBIT CARD PROGRAM.—To administer the program 
under this section, there are authorized to be appro-
priated— 
‘‘(A) for fiscal year 2009, $300,000,000, 
for the design of a unified, national system of 
conducting the supplemental debit card pro-
gram; 
‘‘(B) for fiscal year 2010, $1,000,000,000 
for start-up costs, including, contracting, hiring 
and training employees, and testing the pro-
gram; and 
‘‘(C) for fiscal year 2011 and each subse-
quent fiscal year, $3,000,000,000. 
‘‘(2) AUTHORIZATION
OF
BENEFITS
UNDER 
THE
SUPPLEMENTAL
DEBIT
CARD
PROGRAM.—To 
provide the supplemental debit card benefits de-
scribed in this section, there are authorized to be ap-
propriated— 
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‘‘(A) 
for 
fiscal 
year 
2011, 
$24,020,000,000; 
‘‘(B) 
for 
fiscal 
year 
2012, 
$25,220,000,000; 
‘‘(C) 
for 
fiscal 
year 
2013, 
$26,480,000,000; 
‘‘(D) 
for 
fiscal 
year 
2014, 
$27,810,000,000; and 
‘‘(E) 
for 
fiscal 
year 
2015, 
$29,200,000,000.’’. 
TITLE III—MEDICARE REFORM 
Subtitle A—New Medicare Program 
SEC. 301. BENEFIT CHANGES. 
Title XVIII of the Social Security Act is amended by 
inserting after section 1808 the following new section: 
‘‘PROGRAM FOR NEW MEDICARE BENEFICIARIES 
BEGINNING IN 2021 
‘‘SEC. 1810. (a) APPLICATION.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law (including sections 226 and 226A), 
the provisions of this section shall apply to individ-
uals (other than individuals entitled to benefits only 
because of the application of section 1881(d)) who 
first become entitled to benefits under part A, or 
whose coverage period under part B begins, on or 
after January 1, 2021. 
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‘‘(2) NO
IMPACT
ON
FICA/SECA
TAX
REVE-
NUES.—Nothing in this section shall be construed as 
affecting revenues through the payment of hospital 
insurance taxes under sections 1401(b), 3101(b), 
and 3111(b) of the Internal Revenue Code of 1986. 
‘‘(3) NO IMPACT ON OTHER BENEFICIARIES.— 
‘‘(A) IN GENERAL.—This section shall not 
apply to individuals not described in paragraph 
(1). 
‘‘(B) NO
IMPACT
ON
COMPUTATION
OF 
MEDICARE
PREMIUMS
FOR
OLDER
MEDICARE 
BENEFICIARIES.—Premiums under parts A, B, 
and D shall be computed for individuals not de-
scribed in paragraph (1) based on the average 
costs that the Secretary estimates would have 
been applicable if this section did not apply. 
‘‘(b) ALTERNATIVE BENEFITS.— 
‘‘(1) IN GENERAL.—An individual described in 
subsection (a)(1) is only entitled to benefits under 
this title in accordance with this section. In the case 
of such an individual who has qualified health insur-
ance coverage, the individual is entitled under this 
section— 
‘‘(A) to an income-related payment under 
subsection (c); and 
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‘‘(B) in the case of a low-income individual 
(as defined in paragraph (3) of subsection (d)), 
to a contribution to a medical savings account 
of the individual in the amount specified in 
such subsection. 
‘‘(2) ALTERNATIVE PREMIUM OBLIGATIONS.— 
An individual described in subsection (a)(1)— 
‘‘(A) is not responsible for payment of any 
premium otherwise applicable under part B or 
D; but 
‘‘(B) is responsible for payment of the pre-
mium for qualified health insurance coverage 
referred to in paragraph (1) and may apply the 
income-related payment under subsection (c) to-
ward such premium. 
‘‘(3) QUALIFIED
HEALTH
INSURANCE
COV-
ERAGE.— 
‘‘(A) PUBLICATION
OF
LIST.—The Sec-
retary of Health and Human Services shall 
publish an annual list of health insurance plans 
that meet the definition of qualified health in-
surance coverage, as described in subparagraph 
(B) below, at least one of such plans must ad-
dress the special needs of Medicare’s highest- 
cost seniors, as determined by the Secretary. 
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‘‘(B) QUALIFIED HEALTH INSURANCE COV-
ERAGE DEFINED.—In this subsection, the term 
‘qualified health insurance coverage’ means 
health benefits coverage, whether under a group 
health plan, health insurance coverage or other-
wise, but does not include coverage under a 
health plan if substantially all of its coverage is 
coverage described in section 223(c)(1)(B) of 
the Internal Revenue Code of 1986. 
‘‘(c) INCOME-RELATED PAYMENT.— 
‘‘(1) IN GENERAL.—The amount of the income- 
related payment under this subsection for an indi-
vidual for a year is equal to— 
‘‘(A) the annual amount specified for the 
year in paragraph (2); 
‘‘(B) subject to reduction under paragraph 
(3) (relating to higher income individuals); 
‘‘(C) further subject to adjustment under 
paragraph (4); and 
‘‘(D) subject to pro-ration under para-
graph (5). 
‘‘(2) ANNUAL AMOUNT.— 
‘‘(A) IN
GENERAL.—The annual amount 
specified in this paragraph— 
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‘‘(i) for 2011 is the average nominal 
dollar value of the Medicare benefit; and 
‘‘(ii) for any subsequent year is the 
annual amount specified in this paragraph 
for the preceding year increased by the an-
nual inflation adjustment described in sub-
paragraph (B) for such subsequent year. 
Any amount computed under clause (ii) that is 
not a multiple of $12 shall be rounded to the 
nearest multiple of $12. 
‘‘(B) ANNUAL INFLATION ADJUSTMENT.— 
The annual inflation adjustment under this 
subparagraph for a year is equal to the average 
of— 
‘‘(i) the annual rate of increase in the 
consumer price index for urban consumers 
(all items; U.S. city average) for the year, 
as projected by the Secretary in consulta-
tion with the Bureau of Labor Statistics 
before the beginning of the year; and 
‘‘(ii) the annual rate of increase in the 
medical care component of the consumer 
price index for all urban consumers (U.S. 
city average) for the year, as projected by 
the Secretary in consultation with the Bu-
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260 
reau of Labor Statistics before the begin-
ning of the year. 
‘‘(3) REDUCTION FOR HIGHER-INCOME INDIVID-
UALS.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual whose modified adjusted gross income 
exceeds the threshold amount specified in para-
graph (2) of section 1839(i), as adjusted under 
paragraph (5) of such section, the annual 
amount under paragraph (2) shall be reduced 
by the adjustment percentage specified in sub-
paragraph (B). 
‘‘(B) ADJUSTMENT PERCENTAGE.—In the 
case of an individual for whom the applicable 
percentage specified in section 1839(i)(3)(C)— 
‘‘(i) is less than 80 percent, the ad-
justment percentage under this subpara-
graph shall be 50 percent; or 
‘‘(ii) is equal to 80 percent, the ad-
justment percentage under this subpara-
graph shall be 70 percent. 
‘‘(C) APPLICATION
OF
CERTAIN
PROVI-
SIONS.—The provisions of paragraphs (4) 
through (6) of section 1839(i) shall apply under 
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261 
this paragraph in the same manner as they 
apply for purposes of such section. 
‘‘(4) RISK, GEOGRAPHIC AREA, AND OTHER AD-
JUSTMENTS.— 
‘‘(A) RISK
ADJUSTMENT.—The payment 
amount under this subsection for an individual 
shall be adjusted, using a methodology specified 
by the Secretary, in a manner that takes into 
account the relative risk factors (such as those 
described in section 1853(a)(1)(C)(i)) associ-
ated with such individual. Such adjustment 
shall be made in such a manner as not to 
change the total amount of payments made 
under this subsection as a result of such adjust-
ment. 
‘‘(B) PARTIAL GEOGRAPHIC AREA ADJUST-
MENT.—Such payment amount for an indi-
vidual also shall be adjusted, using a method-
ology specified by the Secretary, in a manner 
that takes into account the relative differences 
in area health care costs for the area in which 
the individual resides compared to other areas. 
Such adjustment shall be made in such a man-
ner as not to change the total amount of pay-
ments made under this subsection as a result of 
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262 
such adjustment. The Secretary shall provide 
for a decrease over time in the adjustment 
made under this subparagraph. 
‘‘(C) CERTAIN
PART
A
BUY-IN
INDIVID-
UALS.—Such payment amount for an individual 
who is not eligible for benefits under part A 
pursuant to section 226 or 226A shall be ad-
justed by such proportion or amount as the 
Secretary determines appropriate to take into 
account premiums that would otherwise be pay-
able under section 1818 or 1818A for benefits 
under part A. 
‘‘(5) PRO-RATIO FOR PARTIAL YEAR OF ELIGI-
BILITY.—In the case of an individual whose entitle-
ment under this section is for less than an entire 
year, the payment amount under this subsection 
shall be pro-rated to reflect the portion of the year 
included in such entitlement. 
‘‘(6) PAYMENT ON PERIODIC BASIS.—The Sec-
retary shall provide for the payment under this sub-
section on an appropriate monthly or other periodic 
basis. 
‘‘(d) CONTRIBUTION TO A MEDICAL SAVINGS AC-
COUNT (MSA) FOR LOW-INCOME INDIVIDUALS.— 
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263 
‘‘(1) IN GENERAL.—The amount of the con-
tribution under subsection (b)(1)(B) to a medical 
savings account of a low-income individual is 
equal— 
‘‘(A) in the case of an individual described 
in clause (i) or (ii) of paragraph (4)(A), to the 
full MSA contribution amount (as defined in 
paragraph (2)); or 
‘‘(B) in the case of any other individual, to 
75 percent of the full MSA contribution 
amount. 
‘‘(2) FULL MSA CONTRIBUTION AMOUNT.—For 
purposes of this subsection, the term ‘full MSA con-
tribution amount’ means, for a year for an indi-
vidual, an amount to be equivalent to the full 
amount of the average deductible of a high-deduct-
ible health plan (as defined in section 223(c)(2) of 
the Internal Revenue Code of 1986) as determined 
by the Secretary. 
‘‘(3) NO MEDICAID COVERAGE FOR MEDICARE- 
COVERED SERVICES.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is eligible to be provided a contribu-
tion to a medical savings account under this 
subsection, the individual is not entitled to any 
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264 
payment under a State plan under title XIX 
with respect to any benefits relating to items 
and services for which coverage is provided 
under this title. 
‘‘(B) CONSTRUCTION.—Subparagraph (A) 
shall not affect the continued provision of med-
ical assistance under title XIX for items and 
services, such as dental, vision, or long-term 
care facility services, for which benefits are not 
provided under this title regardless of medical 
necessity. 
‘‘(4) PERIODIC PAYMENT.—The Secretary shall 
provide for the contribution into medical savings ac-
counts of amounts under this subsection on an ap-
propriate monthly or other periodic basis. 
‘‘(5) LOW-INCOME INDIVIDUAL DEFINED.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘low-income individual’ means 
an individual described in subsection (a)(1)— 
‘‘(i) who meets the requirement of 
section 1936(c)(6)(A)(ii) (relating to a full- 
benefit dual eligible individual); 
‘‘(ii) whose income (as determined 
under section 1612 for purposes of the 
supplemental security income program, ex-
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265 
cept as provided in subparagraph (B)) 
does not exceed 100 percent of the official 
income poverty line (referred to in section 
1905(p)(1)) applicable to a family of the 
size involved; or 
‘‘(iii) whose income (as so determined) 
exceeds 100 percent, but does not exceed 
150 percent, of such official income pov-
erty line applicable to a family of the size 
involved. 
‘‘(B) APPLICATION OF SPECIAL RULE RE-
GARDING APPLICATION OF SOCIAL SECURITY IN-
CREASES.—The provisions of subparagraph (D) 
of section 1905(p)(2) shall apply to determina-
tions of income under subparagraph (A) in the 
same manner they apply under such section. 
‘‘(C) 
DETERMINATION
PROCESS.—The 
Secretary shall specify a process for the deter-
mination of whether individuals are low-income 
individuals.’’. 
SEC. 302. INCREASE IN MEDICARE ELIGIBILITY AGE. 
Section 226 of the Social Security Act (42 U.S.C. 
426) is amended by adding at the end the following new 
subsection: 
‘‘(k) INCREASING MEDICARE QUALIFYING AGE.— 
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‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, any reference in this section or title 
XVIII (or title XIX insofar as it refers to title 
XVIII) to ‘age 65’ shall be deemed a reference to 
the medicare qualifying age specified in paragraph 
(2). 
‘‘(2) MEDICARE QUALIFYING AGE SPECIFIED.— 
The medicare qualifying age specified in this para-
graph is determined as follows: 
‘‘(A) In the case of an individual who at-
tains 65 years of age before January 1, 2021, 
the medicare qualifying age is 65 years of age. 
‘‘(B) In the case of an individual who at-
tains 65 years of age in a year after 2018 and 
before 2027, the medicare qualifying age is the 
medicare qualifying age specified in this para-
graph for the previous year increased by 2 
months. 
‘‘(C) In the case of an individual who at-
tains 65 years of age— 
‘‘(i) in the 2-year period beginning on 
January 1, 2027, the medicare qualifying 
age is 67 years and 1 month; or 
‘‘(ii) in a subsequent 2-year period be-
ginning before 2087, the medicare quali-
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267 
fying age is the medicare qualifying age 
specified in this paragraph for the previous 
2-year period (or, in the case of the first 
2-year period, specified for 2026) increased 
by 1 month. 
‘‘(D) In the case of an individual who at-
tains 65 years of age on or after January 1, 
2086, the medicare qualifying age is the medi-
care qualifying age specified in this paragraph 
is 69 years and 6 months.’’. 
SEC. 303. UNIFIED MEDICARE TRUST FUND. 
(a) IN GENERAL.—The Federal Hospital Insurance 
Trust Fund (established under section 1817 of the Social 
Security Act) and the Federal Supplementary Medical In-
surance Trust Fund (established under section 1841 of 
such Act) are hereby consolidated into a unified Medicare 
trust fund. Such trust fund shall have separate accounts 
for parts A, B, and D of such title and shall be adminis-
tered by the same board of trustees that administers the 
current Trust Funds. 
(b) CONSTRUCTION.—Nothing in this section shall be 
construed as affecting the actual transfer of funds or com-
putations of amounts of premiums under any part of the 
Medicare program. 
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268 
(c) SOLVENCY.—The Medicare trustee shall establish 
a measure of program solvency for the Medicare program 
of total outlays as a measure of gross domestic product. 
Subtitle B—Changes in Current 
Medicare Program 
SEC. 311. INCOME-RELATED REDUCTION IN PART D PRE-
MIUM SUBSIDY. 
(a) INCOME-RELATED REDUCTION IN PART D PRE-
MIUM SUBSIDY.— 
(1) IN GENERAL.—Section 1860D–13(a) of the 
Social Security Act (42 U.S.C. 1395w–113(a)) is 
amended by adding at the end the following new 
paragraph: 
‘‘(7) REDUCTION IN PREMIUM SUBSIDY BASED 
ON INCOME.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual whose modified adjusted gross income 
exceeds the threshold amount applicable under 
paragraph (2) of section 1839(i) (including ap-
plication of paragraph (5) of such section) for 
the calendar year, the monthly amount of the 
premium subsidy applicable to the premium 
under this section for a month after December 
2010 shall be reduced (and the monthly bene-
ficiary premium shall be increased) by the 
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monthly adjustment amount specified in sub-
paragraph (B). 
‘‘(B) MONTHLY ADJUSTMENT AMOUNT.— 
The monthly adjustment amount specified in 
this subparagraph for an individual for a month 
in a year is equal to the product of— 
‘‘(i) the quotient obtained by divid-
ing— 
‘‘(I) the applicable percentage de-
termined under paragraph (3)(C) of 
section 1839(i) (including application 
of paragraph (5) of such section) for 
the individual for the calendar year 
reduced by 25.5 percent; by 
‘‘(II) 25.5 percent; and 
‘‘(ii) the base beneficiary premium (as 
computed under paragraph (2)). 
‘‘(C) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the 
term ‘modified adjusted gross income’ has the 
meaning given such term in subparagraph (A) 
of section 1839(i)(4), determined for the tax-
able year applicable under subparagraphs (B) 
and (C) of such section. 
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‘‘(D) DETERMINATION BY COMMISSIONER 
OF
SOCIAL
SECURITY.—The Commissioner of 
Social Security shall make any determination 
necessary to carry out the income-related reduc-
tion in premium subsidy under this paragraph. 
‘‘(E) PROCEDURES TO ASSURE CORRECT 
INCOME-RELATED
REDUCTION
IN
PREMIUM 
SUBSIDY.— 
‘‘(i) DISCLOSURE
OF
BASE
BENE-
FICIARY
PREMIUM.—Not later than Sep-
tember 15 of each year beginning with 
2011, the Secretary shall disclose to the 
Commissioner 
of 
Social 
Security 
the 
amount of the base beneficiary premium 
(as computed under paragraph (2)) for the 
purpose of carrying out the income-related 
reduction in premium subsidy under this 
paragraph with respect to the following 
year. 
‘‘(ii) ADDITIONAL DISCLOSURE.—Not 
later than October 15 of each year begin-
ning with 2010, the Secretary shall dis-
close to the Commissioner of Social Secu-
rity the following information for the pur-
pose of carrying out the income-related re-
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duction in premium subsidy under this 
paragraph with respect to the following 
year: 
‘‘(I) The modified adjusted gross 
income threshold applicable under 
paragraph (2) of section 1839(i) (in-
cluding application of paragraph (5) 
of such section). 
‘‘(II) The applicable percentage 
determined under paragraph (3)(C) of 
section 1839(i) (including application 
of paragraph (5) of such section). 
‘‘(III) The monthly adjustment 
amount specified in subparagraph 
(B). 
‘‘(IV) Any other information the 
Commissioner of Social Security de-
termines necessary to carry out the 
income-related reduction in premium 
subsidy under this paragraph. 
‘‘(F) RULE OF CONSTRUCTION.—The for-
mula used to determine the monthly adjustment 
amount specified under subparagraph (B) shall 
only be used for the purpose of determining 
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272 
such monthly adjustment amount under such 
subparagraph.’’. 
(2) COLLECTION
OF
MONTHLY
ADJUSTMENT 
AMOUNT.—Section 1860D–13(c) of the Social Secu-
rity Act (42 U.S.C. 1395w–113(c)) is amended— 
(A) in paragraph (1), by striking ‘‘(2) and 
(3)’’ and inserting ‘‘(2), (3), and (4)’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) COLLECTION OF MONTHLY ADJUSTMENT 
AMOUNT.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this subsection or section 
1854(d)(2), subject to subparagraph (B), the 
amount of the income-related reduction in pre-
mium subsidy for an individual for a month (as 
determined under subsection (a)(7)) shall be 
paid through withholding from benefit pay-
ments in the manner provided under section 
1840. 
‘‘(B) AGREEMENTS.—In the case where 
the monthly benefit payments of an individual 
that are withheld under subparagraph (A) are 
insufficient to pay the amount described in such 
subparagraph, the Commissioner of Social Se-
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273 
curity shall enter into agreements with the Sec-
retary, the Director of the Office of Personnel 
Management, and the Railroad Retirement 
Board as necessary in order to allow other 
agencies to collect the amount described in sub-
paragraph (A) that was not withheld under 
such subparagraph.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) MEDICARE.—Part D of title XVIII of the 
Social Security Act (42 U.S.C. 1395w–101 et seq.) 
is amended— 
(A) in section 1860D–13(a)(1)— 
(i) by redesignating subparagraph (F) 
as subparagraph (G); 
(ii) in subparagraph (G), as redesig-
nated by clause (i), by striking ‘‘(D) and 
(E)’’ and inserting ‘‘(D), (E), and (F)’’; 
and 
(iii) by inserting after subparagraph 
(E) the following new subparagraph: 
‘‘(F) INCREASE BASED ON INCOME.—The 
monthly beneficiary premium shall be increased 
pursuant to paragraph (7).’’; and 
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274 
(B) in section 1860D–15(a)(1)(B), by 
striking ‘‘paragraph (1)(B)’’ and inserting 
‘‘paragraphs (1)(B) and (1)(F)’’. 
(2) 
INTERNAL
REVENUE
CODE.—Section 
6103(l)(20) of the Internal Revenue Code of 1986 
(relating to disclosure of return information to carry 
out Medicare part B premium subsidy adjustment) 
is amended— 
(A) in the heading, by striking ‘‘PART B 
PREMIUM SUBSIDY ADJUSTMENT’’ and inserting 
‘‘PARTS B AND D PREMIUM SUBSIDY ADJUST-
MENTS’’; 
(B) in subparagraph (A)— 
(i) in the matter preceding clause (i), 
by inserting ‘‘or 1860D–13(a)(7)’’ after 
‘‘1839(i)’’; and 
(ii) in clause (vii), by inserting after 
‘‘subsection (i) of such section’’ the fol-
lowing: ‘‘or under section 1860D–13(a)(7) 
of such Act’’; and 
(C) in subparagraph (B)— 
(i) by inserting ‘‘or such section 
1860D–13(a)(7)’’ before the period at the 
end; 
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275 
(ii) as amended by clause (i), by in-
serting ‘‘or for the purpose of resolving tax 
payer appeals with respect to any such pre-
mium adjustment’’ before the period at the 
end; and 
(iii) by adding at the end the fol-
lowing new sentence: ‘‘Officers, employees, 
and contractors of the Social Security Ad-
ministration may disclose such return in-
formation to officers, employees, and con-
tractors of the Department of Health and 
Human Services, the Office of Personnel 
Management, the Railroad Retirement 
Board, the Department of Justice, and the 
courts of the United States to the extent 
necessary to carry out the purposes de-
scribed in the preceding sentence.’’; and 
(D) by adding at the end the following new 
subparagraph: 
‘‘(C) TIMING OF DISCLOSURE.—Return in-
formation shall be disclosed to officers, employ-
ees, and contractors of the Social Security Ad-
ministration under subparagraph (A) not later 
than the date that is 90 days prior to the date 
on which the taxpayer first becomes entitled to 
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276 
benefits under part A of title XVIII of the So-
cial Security Act or eligible to enroll for benefits 
under part B of such title.’’. 
SEC. 312. REDUCTION IN HOSPITAL MARKETBASKET IN-
CREASES. 
Notwithstanding any other provision of law: 
(1) OUTPATIENT
HOSPITAL
SERVICES.—For 
2010 and each succeeding year, the OPD fee sched-
ule increase factor otherwise computed under section 
1833(t)(3)(C)(iv) of the Social Security Act (42 
U.S.C. 1395l(t)(3)(C)(iv)) shall be reduced by .4 
percentage points. 
(2) INPATIENT HOSPITAL SERVICES.—For fis-
cal year 2010 and each succeeding fiscal year, the 
applicable percentage increase otherwise computed 
under clauses (i) and (ii) of section 1886(b)(3)(B) of 
such Act (42 U.S.C. 1395ww(b)(3)(B)) shall be re-
duced by .4 percentage points. 
SEC. 313. ELIMINATION OF INDEXING OF INCOME THRESH-
OLDS FOR PART B INCOME-RELATED PRE-
MIUMS. 
(a) IN GENERAL.—Section 1839(i) of the Social Se-
curity Act (42 U.S.C. 1395r(i)) is amended by striking 
paragraph (5). 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to premiums for years beginning 
with 2010. 
SEC. 314. REINSTATEMENT OF THE MEDICARE TRIGGER. 
(a) REINSTATEMENT OF THE MEDICARE TRIGGER.— 
(1) DETERMINATIONS
OF
EXCESS
GENERAL 
REVENUE MEDICARE FUNDING.— 
(A) IN GENERAL.—The Board of Trustees 
of each medicare trust fund shall include in the 
annual reports submitted under subsection 
(b)(2) of sections 1817 and 1841 of the Social 
Security Act (42 U.S.C. 1395i and 1395t)— 
(i) the information described in para-
graph (2); and 
(ii) a determination as to whether 
there is projected to be excess general rev-
enue medicare funding (as defined in para-
graph (3)) for the fiscal year in which the 
report is submitted or for the previous fis-
cal year. 
(B) MEDICARE FUNDING WARNING.—For 
purposes of section 1105(h) of title 31, United 
States Code, and this subsection, an affirmative 
determination under subparagraph (A)(i) in 2 
consecutive annual reports shall be treated as a 
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278 
medicare funding warning in the year in which 
the second such report is made. 
(2) INFORMATION.—The information described 
in this subsection for an annual report in a year is 
as follows: 
(A) PROJECTIONS
OF
GROWTH
OF
GEN-
ERAL REVENUE SPENDING.—A statement of the 
general revenue medicare funding as a percent-
age of the total medicare outlays for each of the 
following: 
(i) The previous fiscal year. 
(ii) Previous fiscal years and as of 10, 
50, and 75 years after such year. 
(B) COMPARISON
WITH
OTHER
GROWTH 
TRENDS.—A comparison of the trend of such 
percentages with the annual growth rate in the 
following: 
(i) The gross domestic product. 
(ii) Private health costs. 
(iii) National health expenditures. 
(iv) Other appropriate measures. 
(C) PART D SPENDING.—Expenditures, in-
cluding trends in expenditures, under part D of 
title XVIII of the Social Security Act, as added 
by section 101 of the Medicare Prescription 
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Drug, Improvement, and Modernization Act of 
2003 (Public Law 108–173). 
(D) COMBINED
MEDICARE
TRUST
FUND 
ANALYSIS.—A financial analysis of the com-
bined medicare trust funds if general revenue 
medicare funding were limited to the percentage 
specified in paragraph (3)(A)(ii) of total medi-
care outlays. 
(3) DEFINITIONS.—For purposes of this sec-
tion: 
(A) EXCESS
GENERAL
REVENUE
MEDI-
CARE FUNDING.—The term ‘‘excess general rev-
enue medicare funding’’ means, with respect to 
a fiscal year, that— 
(i) general revenue medicare funding 
(as defined in subparagraph (B)), ex-
pressed as a percentage of total medicare 
outlays (as defined in subparagraph (D)) 
for the fiscal year; exceeds 
(ii) 45 percent. 
(B) GENERAL REVENUE MEDICARE FUND-
ING.—The term ‘‘general revenue medicare 
funding’’ means for a year— 
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(i) the total medicare outlays (as de-
fined in subparagraph (D)) for the year; 
minus 
(ii) the dedicated medicare financing 
sources (as defined in subparagraph (C)) 
for the year. 
(C) DEDICATED
MEDICARE
FINANCING 
SOURCES.—The term ‘‘dedicated medicare fi-
nancing sources’’ means the following: 
(i) 
HOSPITAL
INSURANCE
TAX.— 
Amounts appropriated to the Hospital In-
surance Trust Fund under the third sen-
tence of section 1817(a) of the Social Se-
curity Act (42 U.S.C. 1395i(a)) and 
amounts transferred to such Trust Fund 
under section 7(c)(2) of the Railroad Re-
tirement 
Act 
of 
1974 
(45 
U.S.C. 
231f(c)(2)). 
(ii) TAXATION
OF
CERTAIN
OASDI 
BENEFITS.—Amounts appropriated to the 
Hospital Insurance Trust Fund under sec-
tion 121(e)(1)(B) of the Social Security 
Amendments of 1983 (Public Law 98–21), 
as inserted by section 13215(c) of the Om-
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281 
nibus Budget Reconciliation Act of 1993 
(Public Law 103–66). 
(iii) STATE
TRANSFERS.—The State 
share of amounts paid to the Federal Gov-
ernment by a State under section 1843 of 
the Social Security Act (42 U.S.C. 1395v) 
or pursuant to section 1935(c) of such Act. 
(iv) PREMIUMS.—The following pre-
miums: 
(I) PART A.—Premiums paid by 
non-Federal sources under sections 
1818 and section 1818A (42 U.S.C. 
1395i–2 and 1395i–2a) of such Act. 
(II) PART B.—Premiums paid by 
non-Federal sources under section 
1839 of such Act (42 U.S.C. 1395r), 
including any adjustments in pre-
miums under such section. 
(III) PART
D.—Monthly bene-
ficiary premiums paid under part D of 
title XVIII of such Act, as added by 
section 101 of the Medicare Prescrip-
tion Drug, Improvement, and Mod-
ernization Act of 2003 (Public Law 
108–173), and MA monthly prescrip-
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282 
tion drug beneficiary premiums paid 
under part C of such title insofar as 
they are attributable to basic prescrip-
tion drug coverage. 
(IV) 
DESCRIPTION.—Premiums 
under subclauses (II) and (III) shall 
be determined without regard to any 
reduction in such premiums attrib-
utable to a beneficiary rebate under 
section 1854(b)(1)(C) of such title, as 
amended by section 222(b)(1) of the 
Medicare Prescription Drug, Improve-
ment, and Modernization Act of 2003 
(Public Law 108–173), and premiums 
under clause (iii) are deemed to in-
clude any amounts paid under section 
1860D–13(b) of such title, as added 
by section 101 of the Medicare Pre-
scription Drug, Improvement, and 
Modernization Act of 2003 (Public 
Law 108–173). 
(v) GIFTS.—Amounts received by the 
medicare trust funds under section 201(i) 
of the Social Security Act (42 U.S.C. 
401(i)). 
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283 
(D) TOTAL
MEDICARE
OUTLAYS.—The 
term ‘‘total medicare outlays’’ means total out-
lays from the medicare trust funds and shall— 
(i) include payments made to plans 
under part C of title XVIII of the Social 
Security Act that are attributable to any 
rebates under section 1854(b)(1)(C) of 
such Act (42 U.S.C. 1395w–24(b)(1)(C)), 
as amended by section 222(b)(1) of the 
Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (Public 
Law 108–173); 
(ii) include administrative expendi-
tures made in carrying out title XVIII of 
the Social Security Act and Federal out-
lays under section 1935(b) of such Act, as 
added by section 103(a)(2) of the Medicare 
Prescription 
Drug, 
Improvement, 
and 
Modernization Act of 2003 (Public Law 
108–173); and 
(iii) offset outlays by the amount of 
fraud and abuse collections insofar as they 
are applied or deposited into a medicare 
trust fund. 
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284 
(E) MEDICARE TRUST FUND.—The term 
‘‘medicare trust fund’’ means— 
(i) the Federal Hospital Insurance 
Trust Fund established under section 1817 
of the Social Security Act (42 U.S.C. 
1395i); and 
(ii) the Federal Supplementary Med-
ical Insurance Trust Fund established 
under section 1841 of such Act (42 U.S.C. 
1395t), including the Medicare Prescrip-
tion Drug Account under such Trust 
Fund. 
(4) CONFORMING AMENDMENTS.— 
(A) 
FEDERAL
HOSPITAL
INSURANCE 
TRUST
FUND.—The last sentence of section 
1817(b)(2) (42 U.S.C. 1395i(b)(2)) is amended 
to read as follows: ‘‘Each report provided under 
paragraph (2) beginning with the report in 
2010 shall include the information specified in 
section 314 of the Roadmap for America’s Fu-
ture Act of 2010.’’. 
(B) FEDERAL SUPPLEMENTARY MEDICAL 
INSURANCE TRUST FUND.—The last sentence of 
section 1841(b)(2) (42 U.S.C. 1395t(b)(2)) is 
amended to read as follows: ‘‘Each report pro-
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285 
vided under paragraph (2) beginning with the 
report in 2010 shall include the information 
specified in section 314 of the Roadmap for 
America’s Future Act of 2010.’’. 
(5) NOTICE
OF
MEDICARE
FUNDING
WARN-
ING.—Whenever any report described in subsection 
(a) contains a determination that for the previous 
fiscal year reporting period there will be excess gen-
eral revenue medicare funding, Congress and the 
President should address the matter under existing 
rules and procedures. 
(b) PRESIDENTIAL SUBMISSION OF LEGISLATION.— 
(1) IN GENERAL.—Section 1105(h) of title 31, 
United States Code, is amended to read as follows: 
‘‘(h)(1) If there is a medicare funding warning under 
section 314 of the Roadmap for America’s Future Act of 
2010 made in a year, the President shall submit to Con-
gress, within the 15-day period beginning on the date of 
the budget submission to Congress under subsection (a) 
for the succeeding year, proposed legislation to respond 
to such warning. 
‘‘(2) Paragraph (1) does not apply if, during the year 
in which the warning is made, legislation is enacted which 
eliminates excess general revenue medicare funding (as de-
fined in section 314 of the Roadmap for America’s Future 
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286 
Act of 2010) for the previous fiscal year, as certified by 
the Board of Trustees of each medicare trust fund (as de-
fined in section 314 of such Act) not later than 30 days 
after the date of the enactment of such legislation.’’. 
(2) SENSE OF CONGRESS.—It is the sense of 
Congress that legislation submitted pursuant to sec-
tion 1105(h) of title 31, United States Code, in a 
year should be designed to reduce payments by 1 
percent for services furnished in Medicare’s fee-for- 
service sector for the fiscal year that begins in such 
year. 
(c) PROCEDURES IN THE HOUSE OF REPRESENTA-
TIVES.— 
(1) INTRODUCTION AND REFERRAL OF PRESI-
DENT’S LEGISLATIVE PROPOSAL.— 
(A) INTRODUCTION.—In the case of a leg-
islative proposal submitted by the President 
pursuant to section 1105(h) of title 31, United 
States Code, within the 15-day period specified 
in paragraph (1) of such section, the majority 
leader of the House of Representatives (or his 
designee) and the minority leader of the House 
of Representatives (or his designee) shall intro-
duce such proposal (by request), the title of 
which is as follows: ‘‘A bill to respond to a 
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287 
medicare funding warning.’’. Such bill shall be 
introduced within 3 legislative days after Con-
gress receives such proposal. 
(B) REFERRAL.—Any legislation intro-
duced pursuant to paragraph (1) shall be re-
ferred to the appropriate committees of the 
House of Representatives. 
(2) DIRECTION TO THE APPROPRIATE HOUSE 
COMMITTEES.— 
(A) IN GENERAL.—In the House, in any 
year during which the President is required to 
submit proposed legislation to Congress under 
section 1105(h) of title 31, United States Code, 
the appropriate committees shall report medi-
care funding legislation by not later than June 
30 of such year. 
(B) MEDICARE FUNDING LEGISLATION.— 
For purposes of this section, the term ‘‘medi-
care funding legislation’’ means— 
(i) legislation introduced pursuant to 
subsection (c)(1), but only if the legislative 
proposal upon which the legislation is 
based was submitted within the 15-day pe-
riod referred to in such subsection; or 
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288 
(ii) any bill the title of which is as fol-
lows: ‘‘A bill to respond to a medicare 
funding warning.’’. 
(C) CERTIFICATION.—With respect to any 
medicare funding legislation or any amendment 
to such legislation to respond to a medicare 
funding warning, the chairman of the Com-
mittee on the Budget of the House shall cer-
tify— 
(i) whether or not such legislation 
eliminates excess general revenue medicare 
funding (as defined in subsection (a)(3)) 
for the previous fiscal year; and 
(ii) with respect to such an amend-
ment, whether the legislation, as amended, 
would reduce payments by 1 percent for 
services furnished in Medicare’s fee-for- 
service sector for the fiscal year that be-
gins in such year. 
(3) FALLBACK PROCEDURE FOR FLOOR CON-
SIDERATION
IF
THE
HOUSE
FAILS
TO
VOTE
ON 
FINAL PASSAGE BY JULY 30.— 
(A) After July 30 of any year during 
which the President is required to submit pro-
posed legislation to Congress under section 
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289 
1105(h) of title 31, United States Code, unless 
the House of Representatives has voted on final 
passage of any medicare funding legislation for 
which there is an affirmative certification under 
paragraph (2)(C)(i), then, after the expiration 
of not less than 30 calendar days (and concur-
rently 5 legislative days), it is in order to move 
to discharge any committee to which medicare 
funding legislation which has such a certifi-
cation and which has been referred to such 
committee for 30 calendar days from further 
consideration of the legislation. 
(B) A motion to discharge may be made 
only by an individual favoring the legislation, 
may be made only if supported by one-fifth of 
the total membership of the House (a quorum 
being present), and is highly privileged in the 
House. Debate thereon shall be limited to not 
more than one hour, the time to be divided in 
the House equally between those favoring and 
those opposing the motion. An amendment to 
the motion is not in order, and it is not in order 
to move to reconsider the vote by which the mo-
tion is agreed to or disagreed to. 
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(C) Only one motion to discharge a par-
ticular committee may be adopted under this 
subsection in any session of a Congress. 
(D) Notwithstanding subparagraph (A), it 
shall not be in order to move to discharge a 
committee from further consideration of medi-
care funding legislation pursuant to this sub-
section during a session of a Congress if, dur-
ing the previous session of the Congress, the 
House passed medicare funding legislation for 
which there is an affirmative certification under 
paragraph (2)(C)(i). 
(4) FLOOR CONSIDERATION IN THE HOUSE OF 
DISCHARGED LEGISLATION.— 
(A) In the House, not later than 3 legisla-
tive days after any committee has been dis-
charged from further consideration of legisla-
tion under paragraph (3), the Speaker shall re-
solve the House into the Committee of the 
Whole for consideration of the legislation. 
(B) The first reading of the legislation 
shall be dispensed with. All points of order 
against consideration of the legislation are 
waived. General debate shall be confined to the 
legislation and shall not exceed five hours, 
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291 
which shall be divided equally between those fa-
voring and those opposing the legislation. After 
general debate the legislation shall be consid-
ered for amendment under the five-minute rule. 
During consideration of the legislation, no 
amendments shall be in order in the House or 
in the Committee of the Whole except those for 
which there has been an affirmative certifi-
cation under paragraph (2)(C)(ii). All points of 
order against consideration of any such amend-
ment in the Committee of the Whole are 
waived. The legislation, together with any 
amendments which shall be in order, shall be 
considered as read. During the consideration of 
the bill for amendment, the Chairman of the 
Committee of the Whole may accord priority in 
recognition on the basis of whether the Member 
offering an amendment has caused it to be 
printed in the portion of the Congressional 
Record designated for that purpose in clause 8 
of Rule XVIII of the Rules of the House of 
Representatives. Debate on any amendment 
shall not exceed one hour, which shall be di-
vided equally between those favoring and those 
opposing the amendment, and no pro forma 
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292 
amendments shall be offered during the debate. 
The total time for debate on all amendments 
shall not exceed 10 hours. At the conclusion of 
consideration of the legislation for amendment, 
the Committee shall rise and report the legisla-
tion to the House with such amendments as 
may have been adopted. The previous question 
shall be considered as ordered on the legislation 
and amendments thereto to final passage with-
out intervening motion except one motion to re-
commit with or without instructions. If the 
Committee of the Whole rises and reports that 
it has come to no resolution on the bill, then on 
the next legislative day the House shall, imme-
diately after the third daily order of business 
under clause 1 of Rule XIV of the Rules of the 
House of Representatives, resolve into the Com-
mittee of the Whole for further consideration of 
the bill. 
(C) All appeals from the decisions of the 
Chair relating to the application of the Rules of 
the House of Representatives to the procedure 
relating to any such legislation shall be decided 
without debate. 
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293 
(D) Except to the extent specifically pro-
vided in the preceding provisions of this sub-
section, consideration of any such legislation 
and amendments thereto (or any conference re-
port thereon) shall be governed by the Rules of 
the House of Representatives applicable to 
other bills and resolutions, amendments, and 
conference reports in similar circumstances. 
(5) LEGISLATIVE DAY DEFINED.—As used in 
this section, the term ‘‘legislative day’’ means a day 
on which the House of Representatives is in session. 
(6) RESTRICTION ON WAIVER.—In the House, 
the provisions of this section may be waived only by 
a rule or order proposing only to waive such provi-
sions. 
(7) RULEMAKING
POWER.—The provisions of 
this section are enacted by the Congress— 
(A) as an exercise of the rulemaking power 
of the House of Representatives and, as such, 
shall be considered as part of the rules of that 
House and shall supersede other rules only to 
the extent that they are inconsistent therewith; 
and 
(B) with full recognition of the constitu-
tional right of that House to change the rules 
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294 
(so far as they relate to the procedures of that 
House) at any time, in the same manner, and 
to the same extent as in the case of any other 
rule of that House. 
(d) PROCEDURES IN THE SENATE.— 
(1) INTRODUCTION AND REFERRAL OF PRESI-
DENT’S LEGISLATIVE PROPOSAL.— 
(A) INTRODUCTION.—In the case of a leg-
islative proposal submitted by the President 
pursuant to section 1105(h) of title 31, United 
States Code, within the 15-day period specified 
in paragraph (1) of such section, the majority 
leader and minority leader of the Senate (or 
their designees) shall introduce such proposal 
(by request), the title of which is as follows: ‘‘A 
bill to respond to a medicare funding warn-
ing.’’. Such bill shall be introduced within 3 
days of session after Congress receives such 
proposal. 
(B) REFERRAL.—Any legislation intro-
duced pursuant to paragraph (1) shall be re-
ferred to the Committee on Finance. 
(2) MEDICARE
FUNDING
LEGISLATION.—For 
purposes of this section, the term ‘‘medicare funding 
legislation’’ means— 
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295 
(A) legislation introduced pursuant to sub-
section (d)(1), but only if the legislative pro-
posal upon which the legislation is based was 
submitted within the 15-day period referred to 
in such subsection; or 
(B) any bill the title of which is as follows: 
‘‘A bill to respond to a medicare funding warn-
ing.’’. 
(3) QUALIFICATION
FOR
SPECIAL
PROCE-
DURES.— 
(A) IN GENERAL.—The special procedures 
set forth in paragraphs (4) and (5) shall apply 
to medicare funding legislation, as described in 
paragraph (2), only if the legislation— 
(i) is medicare funding legislation that 
is passed by the House of Representatives; 
or 
(ii) contains matter within the juris-
diction of the Committee on Finance in the 
Senate. 
(B) FAILURE
TO
QUALIFY
FOR
SPECIAL 
PROCEDURES.—If the medicare funding legisla-
tion does not satisfy subparagraph (A), then 
the legislation shall be considered under the or-
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296 
dinary procedures of the Standing Rules of the 
Senate. 
(4) DISCHARGE.— 
(A) IN
GENERAL.—If the Committee on 
Finance has not reported medicare funding leg-
islation described in subparagraph (3)(A) by 
June 30 of a year in which the President is re-
quired to submit medicare funding legislation to 
Congress under section 1105(h) of title 31, 
United States Code, then any Senator may 
move to discharge the Committee of any single 
medicare funding legislation measure. Only one 
such motion shall be in order in any session of 
Congress. 
(B) DEBATE LIMITS.—Debate in the Sen-
ate on any such motion to discharge, and all 
appeals in connection therewith, shall be limited 
to not more than 2 hours. The time shall be 
equally divided between, and controlled by, the 
maker of the motion and the majority leader, or 
their designees, except that in the event the ma-
jority leader is in favor of such motion, the time 
in opposition thereto shall be controlled by the 
minority leader or the minority leader’s des-
ignee. A point of order under this subsection 
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297 
may be made at any time. It is not in order to 
move to proceed to another measure or matter 
while such motion (or the motion to reconsider 
such motion) is pending. 
(C) AMENDMENTS.—No amendment to the 
motion to discharge shall be in order. 
(D) EXCEPTION
IF
CERTIFIED
LEGISLA-
TION
ENACTED.—Notwithstanding 
subpara-
graph (A), it shall not be in order to discharge 
the Committee from further consideration of 
medicare funding legislation pursuant to this 
subsection during a session of a Congress if the 
chairman of the Committee on the Budget of 
the Senate certifies that medicare funding legis-
lation has been enacted that reduce payments 
by 1 percent for services furnished in Medi-
care’s fee-for-service sector for the next fiscal 
year. 
(5) CONSIDERATION.—After the date on which 
the Committee on Finance has reported medicare 
funding legislation described in paragraph (3)(A), or 
has been discharged (under paragraph (4)) from fur-
ther consideration of, such legislation, it is in order 
(even though a previous motion to the same effect 
has been disagreed to) for any Member of the Sen-
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298 
ate to move to proceed to the consideration of such 
legislation. 
(6) RULES OF THE SENATE.—This section is 
enacted by the Senate— 
(A) as an exercise of the rulemaking power 
of the Senate and as such it is deemed a part 
of the rules of the Senate, but applicable only 
with respect to the procedure to be followed in 
the Senate in the case of a bill described in this 
paragraph, and it supersedes other rules only to 
the extent that it is inconsistent with such 
rules; and 
(B) with full recognition of the constitu-
tional right of the Senate to change the rules 
(so far as relating to the procedure of the Sen-
ate) at any time, in the same manner, and to 
the same extent as in the case of any other rule 
of the Senate. 
SEC. 315. ELIMINATING INEFFICIENCIES AND INCREASING 
CHOICE IN MEDICARE ADVANTAGE. 
(a) REIMBURSEMENT
BENCHMARKS.—In imple-
menting section 1853 of the Social Security Act (42 
U.S.C. 1395w–23)— 
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(1) in calculating the benchmark amounts 
under subsection (k), the Secretary shall use the av-
erage amount of local plan bids; and 
(2) in addition to the amounts under subsection 
(k), the Secretary may provide bonus payments to 
local plans that implement care coordination pro-
grams, as defined by the Secretary. 
Subtitle C—Medical Liability 
Reform 
PART 1—ENACTING REAL MEDICAL LIABILITY 
REFORM 
SEC. 321. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 
(a) TIMING OF LAWSUIT.—The time for the com-
mencement of a health care lawsuit shall be 3 years after 
the date of manifestation of injury or 1 year after the 
claimant discovers, or through the use of reasonable dili-
gence should have discovered, the injury, whichever occurs 
first. In no event shall the time for commencement of a 
health care lawsuit exceed 3 years after the date of mani-
festation of injury unless tolled for any of the following: 
(1) Upon proof of fraud. 
(2) Intentional concealment. 
(3) The presence of a foreign body, which has 
no therapeutic or diagnostic purpose or effect, in the 
person of the injured person. 
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(b) ACTIONS BY MINORS.—Actions by a minor shall 
be commenced within 3 years from the date of the alleged 
manifestation of injury except that actions by a minor 
under the full age of 6 years shall be commenced within 
3 years of manifestation of injury or prior to the minor’s 
8th birthday, whichever provides a longer period. Such 
time limitation shall be tolled for minors for any period 
during which a parent or guardian and a health care pro-
vider or health care organization have committed fraud or 
collusion in the failure to bring an action on behalf of the 
injured minor. 
SEC. 322. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this part shall limit a 
claimant’s recovery of the full amount of the available eco-
nomic damages, notwithstanding the limitation in sub-
section (b). 
(b) ADDITIONAL NONECONOMIC DAMAGES.—In any 
health care lawsuit, the amount of noneconomic damages, 
if available, may be as much as $250,000, regardless of 
the number of parties against whom the action is brought 
or the number of separate claims or actions brought with 
respect to the same injury. 
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301 
(c) NO DISCOUNT OF AWARD FOR NONECONOMIC 
DAMAGES.—For purposes of applying the limitation in 
subsection (b), future noneconomic damages shall not be 
discounted to present value. The jury shall not be in-
formed about the maximum award for noneconomic dam-
ages. An award for noneconomic damages in excess of 
$250,000 shall be reduced either before the entry of judg-
ment, or by amendment of the judgment after entry of 
judgment, and such reduction shall be made before ac-
counting for any other reduction in damages required by 
law. If separate awards are rendered for past and future 
noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be re-
duced first. 
(d) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a sepa-
rate judgment shall be rendered against each such party 
for the amount allocated to such party. For purposes of 
this section, the trier of fact shall determine the propor-
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302 
tion of responsibility of each party for the claimant’s 
harm. 
SEC. 323. MAXIMIZING PATIENT RECOVERY. 
(a) COURT SUPERVISION OF SHARE OF DAMAGES 
ACTUALLY PAID TO CLAIMANTS.—In any health care law-
suit, the court shall supervise the arrangements for pay-
ment of damages to protect against conflicts of interest 
that may have the effect of reducing the amount of dam-
ages awarded that are actually paid to claimants. In par-
ticular, in any health care lawsuit in which the attorney 
for a party claims a financial stake in the outcome by vir-
tue of a contingent fee, the court shall have the power 
to restrict the payment of a claimant’s damage recovery 
to such attorney, and to redirect such damages to the 
claimant based upon the interests of justice and principles 
of equity. In no event shall the total of all contingent fees 
for representing all claimants in a health care lawsuit ex-
ceed the following limits: 
(1) 40 percent of the first $50,000 recovered by 
the claimant(s). 
(2) 331⁄3 percent of the next $50,000 recovered 
by the claimant(s). 
(3) 25 percent of the next $500,000 recovered 
by the claimant(s). 
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(4) 15 percent of any amount by which the re-
covery by the claimant(s) is in excess of $600,000. 
(b) APPLICABILITY.—The limitations in this section 
shall apply whether the recovery is by judgment, settle-
ment, mediation, arbitration, or any other form of alter-
native dispute resolution. In a health care lawsuit involv-
ing a minor or incompetent person, a court retains the 
authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The require-
ment for court supervision in the first two sentences of 
subsection (a) applies only in civil actions. 
SEC. 324. ADDITIONAL HEALTH BENEFITS. 
In any health care lawsuit involving injury or wrong-
ful death, any party may introduce evidence of collateral 
source benefits. If a party elects to introduce such evi-
dence, any opposing party may introduce evidence of any 
amount paid or contributed or reasonably likely to be paid 
or contributed in the future by or on behalf of the oppos-
ing party to secure the right to such collateral source bene-
fits. No provider of collateral source benefits shall recover 
any amount against the claimant or receive any lien or 
credit against the claimant’s recovery or be equitably or 
legally subrogated to the right of the claimant in a health 
care lawsuit involving injury or wrongful death. This sec-
tion shall apply to any health care lawsuit that is settled 
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304 
as well as a health care lawsuit that is resolved by a fact 
finder. This section shall not apply to section 1862(b) (42 
U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) of the Social Security Act. 
SEC. 325. PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may, if other-
wise permitted by applicable State or Federal law, be 
awarded against any person in a health care lawsuit only 
if it is proven by clear and convincing evidence that such 
person acted with malicious intent to injure the claimant, 
or that such person deliberately failed to avoid unneces-
sary injury that such person knew the claimant was sub-
stantially certain to suffer. In any health care lawsuit 
where no judgment for compensatory damages is rendered 
against such person, no punitive damages may be awarded 
with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a mo-
tion by the claimant and after a finding by the court, upon 
review of supporting and opposing affidavits or after a 
hearing, after weighing the evidence, that the claimant has 
established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the re-
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quest of any party in a health care lawsuit, the trier of 
fact shall consider in a separate proceeding— 
(1) whether punitive damages are to be award-
ed and the amount of such award; and 
(2) the amount of punitive damages following a 
determination of punitive liability. 
(b) SEPARATE PROCEEDING.—If a separate pro-
ceeding is requested, evidence relevant only to the claim 
for punitive damages, as determined by applicable State 
law, shall be inadmissible in any proceeding to determine 
whether compensatory damages are to be awarded. 
(c) DETERMINING AMOUNT
OF PUNITIVE DAM-
AGES.— 
(1) FACTORS
CONSIDERED.—In determining 
the amount of punitive damages, if awarded, in a 
health care lawsuit, the trier of fact shall consider 
only the following— 
(A) the severity of the harm caused by the 
conduct of such party; 
(B) the duration of the conduct or any 
concealment of it by such party; 
(C) the profitability of the conduct to such 
party; 
(D) the number of products sold or med-
ical procedures rendered for compensation, as 
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306 
the case may be, by such party, of the kind 
causing the harm complained of by the claim-
ant; 
(E) any criminal penalties imposed on such 
party, as a result of the conduct complained of 
by the claimant; and 
(F) the amount of any civil fines assessed 
against such party as a result of the conduct 
complained of by the claimant. 
(2) MAXIMUM AWARD.—The amount of punitive 
damages, if awarded, in a health care lawsuit may 
be as much as $250,000 or as much as two times 
the amount of economic damages awarded, which-
ever is greater. The jury shall not be informed of 
this limitation. 
SEC. 326. AUTHORIZATION OF PAYMENT OF FUTURE DAM-
AGES TO CLAIMANTS IN HEALTH CARE LAW-
SUITS. 
(a) IN GENERAL.—In any health care lawsuit, if an 
award of future damages, without reduction to present 
value, equaling or exceeding $50,000 is made against a 
party with sufficient insurance or other assets to fund a 
periodic payment of such a judgment, the court shall, at 
the request of any party, enter a judgment ordering that 
the future damages be paid by periodic payments. In any 
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307 
health care lawsuit, the court may be guided by the Uni-
form Periodic Payment of Judgments Act promulgated by 
the National Conference of Commissioners on Uniform 
State Laws. 
(b) APPLICABILITY.—This section applies to all ac-
tions which have not been first set for trial or retrial be-
fore the effective date of this part. 
SEC. 327. DEFINITIONS. 
In this part: 
(1) 
ALTERNATIVE
DISPUTE
RESOLUTION; 
ADR.—The term ‘‘alternative dispute resolution sys-
tem’’ or ‘‘ADR’’ means a system that provides for 
the resolution of health care lawsuits in a manner 
other than through a civil action brought in a State 
or Federal court. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
ing a person who asserts or claims a right to legal 
or equitable contribution, indemnity, or subrogation, 
arising out of a health care liability claim or action, 
and any person on whose behalf such a claim is as-
serted or such an action is brought, whether de-
ceased, incompetent, or a minor. 
(3) COLLATERAL
SOURCE
BENEFITS.—The 
term ‘‘collateral source benefits’’ means any amount 
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308 
paid or reasonably likely to be paid in the future to 
or on behalf of the claimant, or any service, product, 
or other benefit provided or reasonably likely to be 
provided in the future to or on behalf of the claim-
ant, as a result of the injury or wrongful death, pur-
suant to— 
(A) any State or Federal health, sickness, 
income-disability, accident, or workers’ com-
pensation law; 
(B) any health, sickness, income-disability, 
or accident insurance that provides health bene-
fits or income-disability coverage; 
(C) any contract or agreement of any 
group, organization, partnership, or corporation 
to provide, pay for, or reimburse the cost of 
medical, hospital, dental, or income-disability 
benefits; and 
(D) any other publicly or privately funded 
program. 
(4) 
COMPENSATORY
DAMAGES.—The 
term 
‘‘compensatory 
damages’’ 
means 
objectively 
verifiable monetary losses incurred as a result of the 
provision of, use of, or payment for (or failure to 
provide, use, or pay for) health care services or med-
ical products, such as past and future medical ex-
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309 
penses, loss of past and future earnings, cost of ob-
taining domestic services, loss of employment, and 
loss of business or employment opportunities, dam-
ages for physical and emotional pain, suffering, in-
convenience, physical impairment, mental anguish, 
disfigurement, loss of enjoyment of life, loss of soci-
ety and companionship, loss of consortium (other 
than loss of domestic service), hedonic damages, in-
jury to reputation, and all other nonpecuniary losses 
of any kind or nature. The term ‘‘compensatory 
damages’’ includes economic damages and non-
economic damages, as such terms are defined in this 
section. 
(5) CONTINGENT FEE.—The term ‘‘contingent 
fee’’ includes all compensation to any person or per-
sons which is payable only if a recovery is effected 
on behalf of one or more claimants. 
(6) ECONOMIC DAMAGES.—The term ‘‘economic 
damages’’ means objectively verifiable monetary 
losses incurred as a result of the provision of, use 
of, or payment for (or failure to provide, use, or pay 
for) health care services or medical products, such as 
past and future medical expenses, loss of past and 
future earnings, cost of obtaining domestic services, 
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310 
loss of employment, and loss of business or employ-
ment opportunities. 
(7) 
HEALTH
CARE
LAWSUIT.—The 
term 
‘‘health care lawsuit’’ means any health care liability 
claim concerning the provision of health care goods 
or services or any medical product affecting inter-
state commerce, or any health care liability action 
concerning the provision of health care goods or 
services or any medical product affecting interstate 
commerce, brought in a State or Federal court or 
pursuant to an alternative dispute resolution system, 
against a health care provider, a health care organi-
zation, or the manufacturer, distributor, supplier, 
marketer, promoter, or seller of a medical product, 
regardless of the theory of liability on which the 
claim is based, or the number of claimants, plain-
tiffs, defendants, or other parties, or the number of 
claims or causes of action, in which the claimant al-
leges a health care liability claim. Such term does 
not include a claim or action which is based on 
criminal liability; which seeks civil fines or penalties 
paid to Federal, State, or local government; or which 
is grounded in antitrust. 
(8) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
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311 
tion brought in a State or Federal court or pursuant 
to an alternative dispute resolution system, against 
a health care provider, a health care organization, or 
the manufacturer, distributor, supplier, marketer, 
promoter, or seller of a medical product, regardless 
of the theory of liability on which the claim is based, 
or the number of plaintiffs, defendants, or other par-
ties, or the number of causes of action, in which the 
claimant alleges a health care liability claim. 
(9) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
by any person, whether or not pursuant to ADR, 
against a health care provider, health care organiza-
tion, or the manufacturer, distributor, supplier, mar-
keter, promoter, or seller of a medical product, in-
cluding, but not limited to, third-party claims, cross- 
claims, counter-claims, or contribution claims, which 
are based upon the provision of, use of, or payment 
for (or the failure to provide, use, or pay for) health 
care services or medical products, regardless of the 
theory of liability on which the claim is based, or the 
number of plaintiffs, defendants, or other parties, or 
the number of causes of action. 
(10) HEALTH CARE ORGANIZATION.—The term 
‘‘health care organization’’ means any person or en-
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312 
tity which is obligated to provide or pay for health 
benefits under any health plan, including any person 
or entity acting under a contract or arrangement 
with a health care organization to provide or admin-
ister any health benefit. 
(11) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any person or entity 
required by State or Federal laws or regulations to 
be licensed, registered, or certified to provide health 
care services, and being either so licensed, reg-
istered, or certified, or exempted from such require-
ment by other statute or regulation. 
(12) HEALTH CARE GOODS OR SERVICES.—The 
term ‘‘health care goods or services’’ means any 
goods or services provided by a health care organiza-
tion, provider, or by any individual working under 
the supervision of a health care provider, that relates 
to the diagnosis, prevention, or treatment of any 
human disease or impairment, or the assessment or 
care of the health of human beings. 
(13) MALICIOUS
INTENT
TO
INJURE.—The 
term ‘‘malicious intent to injure’’ means inten-
tionally causing or attempting to cause physical in-
jury other than providing health care goods or serv-
ices. 
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313 
(14) MEDICAL PRODUCT.—The term ‘‘medical 
product’’ means a drug, device, or biological product 
intended for humans, and the terms ‘‘drug’’, ‘‘de-
vice’’, and ‘‘biological product’’ have the meanings 
given such terms in sections 201(g)(1) and 201(h) 
of the Federal Food, Drug and Cosmetic Act (21 
U.S.C. 321(g)(1) and (h)) and section 351(a) of the 
Public Health Service Act (42 U.S.C. 262(a)), re-
spectively, including any component or raw material 
used therein, but excluding health care services. 
(15) 
NONECONOMIC
DAMAGES.—The 
term 
‘‘noneconomic damages’’ means damages for phys-
ical and emotional pain, suffering, inconvenience, 
physical impairment, mental anguish, disfigurement, 
loss of enjoyment of life, loss of society and compan-
ionship, loss of consortium (other than loss of do-
mestic service), hedonic damages, injury to reputa-
tion, and all other nonpecuniary losses of any kind 
or nature. 
(16) PUNITIVE DAMAGES.—The term ‘‘punitive 
damages’’ means damages awarded, for the purpose 
of punishment or deterrence, and not solely for com-
pensatory purposes, against a health care provider, 
health care organization, or a manufacturer, dis-
tributor, or supplier of a medical product. Punitive 
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314 
damages are neither economic nor noneconomic 
damages. 
(17) RECOVERY.—The term ‘‘recovery’’ means 
the net sum recovered after deducting any disburse-
ments or costs incurred in connection with prosecu-
tion or settlement of the claim, including all costs 
paid or advanced by any person. Costs of health care 
incurred by the plaintiff and the attorneys’ office 
overhead costs or charges for legal services are not 
deductible disbursements or costs for such purpose. 
(18) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana Is-
lands, the Trust Territory of the Pacific Islands, and 
any other territory or possession of the United 
States, or any political subdivision thereof. 
SEC. 328. EFFECT ON OTHER LAWS. 
(a) VACCINE INJURY.— 
(1) IN GENERAL.—To the extent that title XXI 
of the Public Health Service Act establishes a Fed-
eral rule of law applicable to a civil action brought 
for a vaccine-related injury or death— 
(A) this part does not affect the applica-
tion of the rule of law to such an action; and 
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315 
(B) any rule of law prescribed by this part 
in conflict with a rule of law of such title XXI 
shall not apply to such action. 
(2) APPLICATION.—If there is an aspect of a 
civil action brought for a vaccine-related injury or 
death to which a Federal rule of law under title XXI 
of the Public Health Service Act does not apply, 
then this part or otherwise applicable law (as deter-
mined under this part) will apply to such aspect of 
such action. 
(b) OTHER FEDERAL LAW.—Except as provided in 
this section, nothing in this part shall be deemed to affect 
any defense available to a defendant in a health care law-
suit or action under any other provision of Federal law. 
SEC. 
329. 
STATE 
FLEXIBILITY 
AND 
PROTECTION 
OF 
STATES’ RIGHTS. 
(a) HEALTH CARE LAWSUITS.—The provisions gov-
erning health care lawsuits set forth in this part preempt, 
subject to subsections (b) and (c), State law to the extent 
that State law prevents the application of any provisions 
of law established by or under this part. The provisions 
governing health care lawsuits set forth in this part super-
sede chapter 171 of title 28, United States Code, to the 
extent that such chapter— 
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316 
(1) provides for a greater amount of damages 
or contingent fees, a longer period in which a health 
care lawsuit may be commenced, or a reduced appli-
cability or scope of periodic payment of future dam-
ages, than provided in this part; or 
(2) prohibits the introduction of evidence re-
garding collateral source benefits, or mandates or 
permits subrogation or a lien on collateral source 
benefits. 
(b) PROTECTION OF STATES’ RIGHTS AND OTHER 
LAWS.— 
(1) IN GENERAL.—Any issue that is not gov-
erned by any provision of law established by or 
under this part (including State standards of neg-
ligence) shall be governed by otherwise applicable 
State or Federal law. 
(2) PREEMPTION.—This part shall not preempt 
or supersede any State or Federal law that imposes 
greater procedural or substantive protections for 
health care providers and health care organizations 
from liability, loss, or damages than those provided 
by this part or create a cause of action. 
(c) STATE FLEXIBILITY.—No provision of this part 
shall be construed to preempt— 
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317 
(1) any State law (whether effective before, on, 
or after the date of the enactment of this Act) that 
specifies a particular monetary amount of compen-
satory or punitive damages (or the total amount of 
damages) that may be awarded in a health care law-
suit, regardless of whether such monetary amount is 
greater or lesser than is provided for under this 
part, notwithstanding section 323(a); or 
(2) any defense available to a party in a health 
care lawsuit under any other provision of State or 
Federal law. 
SEC. 330. APPLICABILITY; EFFECTIVE DATE. 
This part shall apply to any health care lawsuit 
brought in a Federal or State court, or subject to an alter-
native dispute resolution system, that is initiated on or 
after the date of the enactment of this Act, except that 
any health care lawsuit arising from an injury occurring 
prior to the date of the enactment of this Act shall be 
governed by the applicable statute of limitations provisions 
in effect at the time the injury occurred. 
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318 
PART 2—ENDING LAWSUIT ABUSE 
SEC. 331. STATE GRANTS TO CREATE HEALTH COURT SOLU-
TIONS. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 399R. STATE GRANTS TO CREATE HEALTH COURT SO-
LUTIONS. 
‘‘(a) IN GENERAL.—The Secretary may award grants 
to States for the development, implementation, and eval-
uation of alternatives to current tort litigation that comply 
with this section, for the resolution of disputes concerning 
injuries allegedly caused by health care providers or health 
care organizations. 
‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 
‘‘(1) APPLICATION.—To be eligible to receive a 
grant under this section, a State shall submit to the 
Secretary an application at such time, in such man-
ner, and containing such information as may be re-
quired by the Secretary. A grant shall be awarded 
under this section on such terms and conditions as 
the Secretary determines appropriate. 
‘‘(2) STATE REQUIREMENTS.—To be eligible to 
receive a grant under this section, a State shall— 
‘‘(A) develop and implement an alternative 
to current tort litigation for resolving disputes 
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319 
over injuries allegedly caused by health care 
providers or health care organizations based on 
one or more of the models described in sub-
section (d); and 
‘‘(B) implement policies that provide for a 
reduction in health care errors through the col-
lection and analysis by organizations that en-
gage in voluntary efforts to improve patient 
safety and the quality of health care delivery, of 
patient safety data related to disputes resolved 
under the alternatives under subparagraph (A). 
‘‘(3) DEMONSTRATION
OF
EFFECTIVENESS.— 
To be eligible to receive a grant under subsection 
(a), a State shall demonstrate how the proposed al-
ternative to be implemented under paragraph (2)(A) 
will— 
‘‘(A) make the medical liability system of 
the State more reliable through the prompt and 
fair resolution of disputes; 
‘‘(B) encourage the early disclosure of 
health care errors; 
‘‘(C) enhance patient safety; and 
‘‘(D) maintain access to medical liability 
insurance. 
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320 
‘‘(4) SOURCES OF COMPENSATION.—To be eligi-
ble to receive a grant under subsection (a), a State 
shall identify the sources from, and methods by 
which, compensation would be paid for medical li-
ability claims resolved under the proposed alter-
native to current tort litigation implemented under 
paragraph (2)(A). Funding methods shall, to the ex-
tent practicable, provide financial incentives for ac-
tivities that improve patient safety. 
‘‘(5) SCOPE.— 
‘‘(A) IN GENERAL.—To be eligible to re-
ceive a grant under subsection (a), a State shall 
utilize the proposed alternative identified under 
paragraph (2)(A) for the resolution of all types 
of disputes concerning injuries allegedly caused 
by health care providers or health care organi-
zations. 
‘‘(B) CURRENT STATE EFFORTS TO ESTAB-
LISH ALTERNATIVE TO TORT LITIGATION.— 
‘‘(i) IN
GENERAL.—Nothing in this 
section shall be construed to limit the ef-
forts that any State has made prior to the 
date of enactment of this section to estab-
lish any alternative to tort litigation. 
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321 
‘‘(ii) ALTERNATIVE
FOR
PRACTICE 
AREAS
OR
INJURIES.—In the case of a 
State that has established an alternative to 
tort litigation for a certain area of health 
care practice or a category of injuries, the 
alternative selected as provided for in this 
section shall supplement not replace or in-
validate such established alternative unless 
the State intends otherwise. 
‘‘(6) NOTIFICATION OF PATIENTS.—To be eligi-
ble to receive a grant under subsection (a), the State 
shall demonstrate how patients will be notified when 
they are receiving health care services that fall with-
in the scope of the alternative selected under this 
section by the State to current tort litigation. 
‘‘(c) REPRESENTATION BY COUNSEL.—A State that 
receives a grant under this section may not preclude any 
party to a dispute that falls within the jurisdiction of the 
alternative to current tort litigation that is implemented 
under the grant from obtaining legal representation at any 
point during the consideration of the claim under such al-
ternative. 
‘‘(d) MODELS.— 
‘‘(1) IN GENERAL.—The models in this section 
are the following: 
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322 
‘‘(2) EXPERT
PANEL
REVIEW
AND
EARLY 
OFFER GUIDELINES.— 
‘‘(A) IN
GENERAL.—A State may use 
amounts received under a grant under this sec-
tion to develop and implement an expert panel 
and early offer review system that meets the re-
quirements of this paragraph. 
‘‘(B) ESTABLISHMENT OF PANEL.—Under 
the system under this paragraph, the State 
shall establish an expert panel to review any 
disputes concerning injuries allegedly caused by 
health care providers or health care organiza-
tions according to the guidelines described in 
this paragraph. 
‘‘(C) COMPOSITION.— 
‘‘(i) IN GENERAL.—An expert panel 
under this paragraph shall be composed of 
3 medical experts (either physicians or 
health care professionals) and 3 attorneys 
to be appointed by the head of the State 
agency responsible for health. 
‘‘(ii) LICENSURE AND EXPERTISE.— 
Each physician or health care professional 
appointed to an expert panel under clause 
(i) shall— 
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323 
‘‘(I) be appropriately credentialed 
or licensed in the State in which the 
dispute takes place to deliver health 
care services; and 
‘‘(II) typically treat the condi-
tion, make the diagnosis, or provide 
the type of treatment that is under re-
view. 
‘‘(iii) INDEPENDENCE.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), each individual ap-
pointed to an expert panel under this 
paragraph shall— 
‘‘(aa) not have a material 
familial, financial, or professional 
relationship with a party involved 
in the dispute reviewed by the 
panel; and 
‘‘(bb) not otherwise have a 
conflict of interest with such a 
party. 
‘‘(II) EXCEPTION.—Nothing in 
subclause (I) shall be construed to 
prohibit an individual who has staff 
privileges at an institution where the 
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324 
treatment involved in the dispute was 
provided from serving as a member of 
an expert panel merely on the basis of 
such affiliation, if the affiliation is 
disclosed to the parties and neither 
party objects. 
‘‘(iv) PRACTICING HEALTH CARE PRO-
FESSIONAL IN SAME FIELD.— 
‘‘(I) IN GENERAL.—In a dispute 
before an expert panel that involves 
treatment, or the provision of items or 
services— 
‘‘(aa) by a physician, the 
medical experts on the expert 
panel shall be practicing physi-
cians (allopathic or osteopathic) 
of the same or similar specialty 
as a physician who typically 
treats the condition, makes the 
diagnosis, or provides the type of 
treatment under review; or 
‘‘(bb) by a health care pro-
fessional other than a physician, 
at least two medical experts on 
the expert panel shall be prac-
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325 
ticing physicians (allopathic or 
osteopathic) of the same or simi-
lar specialty as the health care 
professional who typically treats 
the condition, makes the diag-
nosis, or provides the type of 
treatment under review, and, if 
determined appropriate by the 
State agency, the third medical 
expert shall be a practicing 
health care professional (other 
than such a physician) of such a 
same or similar specialty. 
‘‘(II) PRACTICING DEFINED.—In 
this paragraph, the term ‘practicing’ 
means, with respect to an individual 
who is a physician or other health 
care professional, that the individual 
provides health care services to indi-
vidual patients on average at least 2 
days a week. 
‘‘(v) PEDIATRIC EXPERTISE.—In the 
case of dispute relating to a child, at least 
1 medical expert on the expert panel shall 
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326 
have expertise described in clause (iv)(I) in 
pediatrics. 
‘‘(D) DETERMINATION.—After a review, 
an expert panel shall make a determination as 
to the liability of the parties involved and com-
pensation based on a schedule of compensation 
that is developed by the panel. Such a schedule 
shall at least include— 
‘‘(i) payment for the net economic loss 
incurred by the patient, on a periodic 
basis, reduced by any payments received by 
the patient under— 
‘‘(I) any health or accident insur-
ance; 
‘‘(II) any wage or salary continu-
ation plan; or 
‘‘(III) any disability income in-
surance; 
‘‘(ii) payment for the non-economic 
damages incurred by the patient, if appro-
priate for the injury, based on a defined 
payment schedule developed by the State, 
in consultation with relevant experts and 
with the Secretary; 
‘‘(iii) reasonable attorney’s fees; and 
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327 
‘‘(iv) regular updates of the schedule 
under clause (ii) as necessary. 
‘‘(E) ACCEPTANCE.—If the parties to a 
dispute who come before an expert panel under 
this paragraph accept the determination of the 
expert panel concerning liability and compensa-
tion, such compensation shall be paid to the 
claimant and the claimant shall agree to forgo 
any further action against the health care pro-
viders or health care organizations involved. 
‘‘(F) FAILURE TO ACCEPT.—If any party 
decides not to accept the expert panel’s deter-
mination under this paragraph, the State may 
choose whether to allow the panel to review the 
determination de novo, with deference, or to 
provide an opportunity for parties to reject the 
determination of the panel. 
‘‘(G) REVIEW BY STATE COURT AFTER EX-
HAUSTION OF ADMINISTRATIVE REMEDIES.— 
‘‘(i) RIGHT
TO
FILE.—If the State 
elects not to permit the expert panel under 
this paragraph to conduct its own reviews 
of determinations, or if the State elects to 
permit such reviews but a party is not sat-
isfied with the final decision of the panel 
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