not less than 95 percent of such total for 
the State for the preceding fiscal year, ex-
cept that any increase under this clause—
‘‘(I) may not result in a grant 
pursuant to paragraph (1) that is 
more than 95 percent of the amount 
of such grant for the preceding fiscal 
year; and 
‘‘(II) may not result in a grant 
pursuant to subparagraph (G) that is 
more than 95 percent of the amount 
of such grant for such preceding fiscal 
year. 
‘‘(ii) FISCAL
YEAR
2007.—For pur-
poses of clause (i) as applied for fiscal year 
2007, the references in such clause to sub-
paragraph (G) are deemed to be references 
to subparagraph (I) as such subparagraph 
was in effect for fiscal year 2006. 
‘‘(iii) SOURCE
OF
FUNDS
FOR
IN-
CREASE.—
‘‘(I) IN
GENERAL.—From the 
amount 
reserved 
under 
section 
2623(b)(2) for a fiscal year, and from 
amounts available for such section
pursuant to subsection (d) of this sec-
tion, the Secretary shall make avail-
able such amounts as may be nec-
essary to comply with clause (i). 
‘‘(II) PRO RATA REDUCTION.—If 
the amounts referred to in subclause 
(I) for a fiscal year are insufficient to 
fully comply with clause (i) for the 
year, the Secretary, in order to pro-
vide the additional funds necessary for 
such compliance, shall reduce on a pro 
rata basis the amount of each grant 
pursuant to paragraph (1) for the fis-
cal year, other than grants for States 
for which increases under clause (i) 
apply and other than States described 
in paragraph (1)(A)(i)(I). A reduction 
under the preceding sentence may not 
be made in an amount that would re-
sult in the State involved becoming el-
igible for such an increase. 
‘‘(iv) 
APPLICABILITY.—This 
para-
graph may not be construed as having any 
applicability after fiscal year 2009.’’.
(e) ADMINISTRATIVE EXPENSES; CLINICAL QUALITY 
MANAGEMENT.—Section 2618(b) of the Public Health 
Service Act (42 U.S.C. 300ff-28(b)) is amended—
(1) by redesignating paragraphs (2) through 
(7) as paragraphs (1) through (6); 
(2) in paragraph (2) (as so redesignated)—
(A) by striking ‘‘paragraph (5)’’ and in-
serting ‘‘paragraph (4)’’; and 
(B) by striking ‘‘paragraph (6)’’ and in-
serting ‘‘paragraph (5)’’; 
(3) in paragraph (3) (as so redesignated)—
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) IN GENERAL.—Subject to paragraph 
(4,) and except as provided in paragraph (5), a 
State may not use more than 10 percent of 
amounts received under a grant awarded under 
section 2611 for administration.’’; 
(B) by redesignating subparagraphs (B) 
and (C) as subparagraphs (C) and (D), respec-
tively; 
(C) by inserting after subparagraph (A) 
the following: 
‘‘(B) ALLOCATIONS.—In the case of enti-
ties and subcontractors to which a State allo-
cates amounts received by the State under a 
grant under section 2611, the State shall en-
sure that, of the aggregate amount so allocated, 
the total of the expenditures by such entities for 
administrative expenses does not exceed 10 per-
cent (without regard to whether particular enti-
ties expend more than 10 percent for such ex-
penses).’’; 
(D) in subparagraph (C) (as so redesig-
nated), by inserting before the period the fol-
lowing: ‘‘, including a clinical quality manage-
ment program under subparagraph (E)’’; and 
(E) by adding at the end the following: 
‘‘(E) CLINICAL QUALITY MANAGEMENT.—
‘‘(i) REQUIREMENT.—Each State that 
receives a grant under section 2611 shall 
provide for the establishment of a clinical 
quality management program to assess the 
extent to which HIV health services pro-
vided to patients under the grant are con-
sistent with the most recent Public Health 
Service guidelines for the treatment of 
HIV/AIDS and related opportunistic infec-
tion, and as applicable, to develop strate-
gies for ensuring that such services are
consistent with the guidelines for improve-
ment in the access to and quality of HIV 
health services. 
‘‘(ii) USE OF FUNDS.—
‘‘(I) 
IN
GENERAL.—From 
amounts received under a grant 
awarded under section 2611 for a fis-
cal year, a State may use for activities 
associated with the clinical quality 
management program required in 
clause (i) not to exceed the lesser of—
‘‘(aa) 5 percent of amounts 
received under the grant; or 
‘‘(bb) $3,000,000. 
‘‘(II) RELATION TO LIMITATION 
ON ADMINISTRATIVE EXPENSES.—The 
costs of a clinical quality management 
program under clause (i) may not be 
considered administrative expenses for 
purposes of the limitation established 
in subparagraph (A).’’; 
(4) in paragraph (4) (as so redesignated)—
(A) by striking ‘‘paragraph (6)’’ and in-
serting ‘‘paragraph (5)’’; and
(B) by striking ‘‘paragraphs (3) and (4)’’ 
and inserting ‘‘paragraphs (2) and (3)’’; and 
(5) in paragraph (5) (as so redesignated), by 
striking ‘‘paragraphs (3)’’ and all that follows 
through ‘‘(5),’’ and inserting the following: ‘‘para-
graphs (2) and (3), may, notwithstanding para-
graphs (2) through (4),’’. 
(f) REALLOCATION FOR SUPPLEMENTAL GRANTS.—
Section 2618(d) of the Public Health Service Act (42 
U.S.C. 300ff-28(d)) is amended to read as follows: 
‘‘(d) REALLOCATION.—Any portion of a grant made 
to a State under section 2611 for a fiscal year that has 
not been obligated as described in subsection (c) ceases 
to be available to the State and shall be made available 
by the Secretary for grants under section 2620, in addi-
tion to amounts made available for such grants under sec-
tion 2623(b)(2).’’. 
(g) DEFINITIONS; OTHER
TECHNICAL
AMEND-
MENTS.—Section 2618(a) of the Public Health Service 
Act (42 U.S.C. 300ff–28(a)) is amended—
(1) in paragraph (1), in the matter preceding 
subparagraph (A), by striking ‘‘section 2677’’ and 
inserting ‘‘section 2623’’; 
(2) in paragraph (1)(A)—
(A) in the matter preceding clause (i), by 
striking ‘‘each of the several States and the 
District of Columbia’’ and inserting ‘‘each of 
the 50 States, the District of Columbia, Guam, 
and the Virgin Islands (referred to in this para-
graph as a ‘covered State’)’’; and 
(B) in clause (i)—
(i) in subclause (I), by striking ‘‘State 
or District’’ and inserting ‘‘covered State’’; 
and 
(ii) in subclause (II)—
(I) by striking ‘‘State or Dis-
trict’’ and inserting ‘‘covered State’’; 
and 
(II) by inserting ‘‘and’’ after the 
semicolon; and 
(3) in paragraph (1)(B), by striking ‘‘each ter-
ritory of the United States, as defined in paragraph 
(3),’’ and inserting ‘‘each territory other than Guam 
and the Virgin Islands’’; 
(4) in paragraph (2)(C)(i), by striking ‘‘or ter-
ritory’’; and 
(5) by striking paragraph (3).
SEC. 204. ADDITIONAL AMENDMENTS TO SUBPART I OF 
PART B. 
(a) REFERENCES TO PART B.—Subpart I of part B 
of title XXVI of the Public Health Service Act (42 U.S.C. 
300ff-21 et seq.) is amended by striking ‘‘this part’’ each 
place such term appears and inserting ‘‘section 2611’’. 
(b) HEPATITIS.—Section 2614(a)(3) of the Public 
Health Service Act (42 U.S.C. 300ff-24(a)(3)) is amended 
by inserting ‘‘, including specialty care and vaccinations 
for hepatitis co-infection,’’ after ‘‘health services’’. 
(c) APPLICATION FOR GRANT.—
(1) COORDINATION.—Section 2617(b) of the 
Public Health Service Act (42 U.S.C. 300ff-27(b)) is 
amended—
(A) 
by 
redesignating 
paragraphs 
(4) 
through (6) as paragraphs (5) through (7), re-
spectively; 
(B) by inserting after paragraph (3), the 
following: 
‘‘(4) the designation of a lead State agency that 
shall—
‘‘(A) administer all assistance received 
under this part; 
‘‘(B) conduct the needs assessment and 
prepare the State plan under paragraph (3);
‘‘(C) prepare all applications for assistance 
under this part; 
‘‘(D) receive notices with respect to pro-
grams under this title; 
‘‘(E) every 2 years, collect and submit to 
the Secretary all audits, consistent with Office 
of Management and Budget circular A133, 
from grantees within the State, including audits 
regarding funds expended in accordance with 
this part; and 
‘‘(F) carry out any other duties determined 
appropriate by the Secretary to facilitate the 
coordination of programs under this title.’’; 
(C) in paragraph (5) (as so redesig-
nated)—
(i) in subparagraph (E), by striking 
‘‘and’’ at the end; and 
(ii) by inserting after subparagraph 
(F) the following: 
‘‘(G) includes key outcomes to be measured 
by all entities in the State receiving assistance 
under this title; and’’; and 
(D) in paragraph (7) (as so redesignated), 
in subparagraph (A)—
(i) by striking ‘‘paragraph (5)’’ and 
inserting ‘‘paragraph (6)’’; and 
(ii) by striking ‘‘paragraph (4)’’ and 
inserting ‘‘paragraph (5)’’. 
(2) NATIVE
AMERICAN
REPRESENTATION.—
Section 2617(b)(6) of the Public Health Service Act, 
as redesignated by paragraph (1)(A) of this sub-
section, is amended by inserting before ‘‘representa-
tives of grantees’’ the following: ‘‘members of a Fed-
erally recognized Indian tribe as represented in the 
State,’’. 
(3) 
PAYER
OF
LAST
RESORT.—Section 
2617(b)(7)(F)(ii) of the Public Health Service Act, 
as redesignated by paragraph (1)(A) of this sub-
section, is amended by inserting before the semicolon 
the following: ‘‘(except for a program administered 
by or providing the services of the Indian Health 
Service)’’. 
(d) MATCHING FUNDS; APPLICABILITY OF REQUIRE-
MENT.—Section 2617(d)(3) of the Public Health Service 
Act (42 U.S.C. 300ff-27(d)(3)) is amended—
(1) in subparagraph (A), by striking ‘‘acquired 
immune deficiency syndrome’’ and inserting ‘‘HIV/
AIDS’’; and
(2) in subparagraph (C), by striking ‘‘acquired 
immune deficiency syndrome’’ and inserting ‘‘HIV/
AIDS’’. 
SEC. 205. SUPPLEMENTAL GRANTS ON BASIS OF DEM-
ONSTRATED NEED. 
Subpart I of part B of title XXVI of the Public 
Health Service Act (42 U.S.C. 300ff-21 et seq.) is amend-
ed—
(1) by redesignating section 2620 as section 
2621; and 
(2) by inserting after section 2619 the fol-
lowing: 
‘‘SEC. 2620. SUPPLEMENTAL GRANTS. 
‘‘(a) IN GENERAL.—For the purpose of providing 
services described in section 2612(a), the Secretary shall 
make grants to States—
‘‘(1) whose applications under section 2617 
have demonstrated the need in the State, on an ob-
jective and quantified basis, for supplemental finan-
cial assistance to provide such services; and 
‘‘(2) that did not, for the most recent grant 
year 
pursuant 
to 
section 
2618(a)(1) 
or 
2618(a)(2)(G)(i) for which data is available, have 
more than 2 percent of grant funds under such sec-
tions canceled or covered by any waivers under sec-
tion 2622(c). 
‘‘(b) DEMONSTRATED NEED.—The factors consid-
ered by the Secretary in determining whether an eligible 
area has a demonstrated need for purposes of subsection 
(a)(1) may include any or all of the following: 
‘‘(1) The unmet need for such services, as de-
termined under section 2617(b). 
‘‘(2) An increasing need for HIV/AIDS-related 
services, including relative rates of increase in the 
number of cases of HIV/AIDS. 
‘‘(3) The relative rates of increase in the num-
ber of cases of HIV/AIDS within new or emerging 
subpopulations. 
‘‘(4) The current prevalence of HIV/AIDS. 
‘‘(5) Relevant factors related to the cost and 
complexity of delivering health care to individuals 
with HIV/AIDS in the eligible area. 
‘‘(6) The impact of co-morbid factors, including 
co-occurring conditions, determined relevant by the 
Secretary. 
‘‘(7) The prevalence of homelessness. 
‘‘(8) The prevalence of individuals described 
under section 2602(b)(2)(M).
‘‘(9) The relevant factors that limit access to 
health care, including geographic variation, adequacy 
of health insurance coverage, and language barriers. 
‘‘(10) The impact of a decline in the amount re-
ceived pursuant to section 2618 on services available 
to all individuals with HIV/AIDS identified and eli-
gible under this title. 
‘‘(c) PRIORITY IN MAKING GRANTS.—The Secretary 
shall provide funds under this section to a State to address 
the decline in services related to the decline in the amounts 
received pursuant to section 2618 consistent with the 
grant award to the State for fiscal year 2006, to the extent 
that the factor under subsection (b)(10) (relating to a de-
cline in funding) applies to the State. 
‘‘(d) CORE MEDICAL SERVICES.—The provisions of 
section 2612(b) apply with respect to a grant under this 
section to the same extent and in the same manner as 
such provisions apply with respect to a grant made pursu-
ant to section 2618(a)(1). 
‘‘(e) APPLICABILITY OF GRANT AUTHORITY.—The 
authority to make grants under this section applies begin-
ning with the first fiscal year for which amounts are made 
available for such grants under section 2623(b)(1).’’.
SEC. 206. EMERGING COMMUNITIES. 
Section 2621 of the Public Health Service Act, as re-
designated by section 205(1) of this Act, is amended—
(1) in the heading for the section, by striking 
‘‘SUPPLEMENTAL
GRANTS’’ 
and 
inserting 
‘‘EMERGING COMMUNITIES’’; 
(2) in subsection (b)—
(A) in paragraph (2), by striking ‘‘and’’ at 
the end; 
(B) by redesignating paragraph (3) as 
paragraph (4); and 
(C) by inserting after paragraph (2) the 
following: 
‘‘(3) agree that the grant will be used to pro-
vide funds directly to emerging communities in the 
State, separately from other funds under this title 
that are provided by the State to such communities; 
and’’. 
(3) by striking subsections (d) and (e) and in-
serting the following: 
‘‘(d) DEFINITIONS OF EMERGING COMMUNITY.—For 
purposes of this section, the term ‘emerging community’ 
means a metropolitan area (as defined in section 2607) 
for which there has been reported to and confirmed by 
the Director of the Centers for Disease Control and Pre-
vention a cumulative total of at least 500, but fewer than
1,000, cases of AIDS during the most recent period of 
5 calendar years for which such data are available. 
‘‘(e) CONTINUED STATUS
AS EMERGING COMMU-
NITY.—Notwithstanding any other provision of this sec-
tion, a metropolitan area that is an emerging community 
for a fiscal year continues to be an emerging community 
until the metropolitan area fails, for three consecutive fis-
cal years—
‘‘(1) to meet the requirements of subsection (d); 
and 
‘‘(2) to have a cumulative total of 750 or more 
living cases of AIDS (reported to and confirmed by 
the Director of the Centers for Disease Control and 
Prevention) as of December 31 of the most recent 
calendar year for which such data is available. 
‘‘(f) DISTRIBUTION.—The amount of a grant under 
subsection (a) for a State for a fiscal year shall be an 
amount equal to the product of—
‘‘(1) the amount available under section 
2623(b)(1) for the fiscal year; and 
‘‘(2) a percentage equal to the ratio constituted 
by the number of living cases of HIV/AIDS in 
emerging communities in the State to the sum of the 
respective numbers of such cases in such commu-
nities for all States.’’.
SEC. 207. TIMEFRAME FOR OBLIGATION AND EXPENDI-
TURE OF GRANT FUNDS. 
Subpart I of part B of title XXVI of the Public 
Health Service Act (42 U.S.C. 300ff-21 et seq.), as 
amended by section 205, is further amended by adding 
at the end the following: 
‘‘SEC. 2622. TIMEFRAME FOR OBLIGATION AND EXPENDI-
TURE OF GRANT FUNDS. 
‘‘(a) OBLIGATION BY END OF GRANT YEAR.—Effec-
tive for fiscal year 2007 and subsequent fiscal years, funds 
from a grant award made to a State for a fiscal year pur-
suant to section 2618(a)(1) or 2618(a)(2)(G), or under 
section 2620 or 2621, are available for obligation by the 
State through the end of the one-year period beginning 
on the date in such fiscal year on which funds from the 
award first become available to the State (referred to in 
this section as the ‘grant year for the award’), except as 
provided in subsection (c)(1). 
‘‘(b) SUPPLEMENTAL GRANTS; CANCELLATION OF 
UNOBLIGATED BALANCE OF GRANT AWARD.—Effective 
for fiscal year 2007 and subsequent fiscal years, if a grant 
award made to a State for a fiscal year pursuant to section 
2618(a)(2)(G)(ii), or under section 2620 or 2621, has an 
unobligated balance as of the end of the grant year for 
the award—
‘‘(1) the Secretary shall cancel that unobligated 
balance of the award, and shall require the State to 
return any amounts from such balance that have 
been disbursed to the State; and 
‘‘(2) the funds involved shall be made available 
by the Secretary as additional amounts for grants 
pursuant to section 2620 for the first fiscal year be-
ginning after the fiscal year in which the Secretary 
obtains the information necessary for determining 
that the balance is required under paragraph (1) to 
be canceled, except that the availability of the funds 
for such grants is subject to section 2618(a)(2)(H) 
as applied for such year. 
‘‘(c) FORMULA GRANTS; CANCELLATION OF UNOBLI-
GATED BALANCE OF GRANT AWARD; WAIVER PERMIT-
TING CARRYOVER.—
‘‘(1) IN
GENERAL.—Effective for fiscal year 
2007 and subsequent fiscal years, if a grant award 
made to a State for a fiscal year pursuant to section 
2618(a)(1) or 2618(a)(2)(G)(i) has an unobligated 
balance as of the end of the grant year for the 
award, the Secretary shall cancel that unobligated 
balance of the award, and shall require the State to 
return any amounts from such balance that have 
been disbursed to the State, unless—