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† HR 2 EAS 
ergy and Commerce of the House of Representatives 
and the Committee on Finance of the Senate. 
‘‘(8) VOTING AND REPORTING REQUIREMENTS.— 
With respect to each recommendation contained in a 
report submitted under paragraph (1), each member 
of MACPAC shall vote on the recommendation, and 
MACPAC shall include, by member, the results of that 
vote in the report containing the recommendation. 
‘‘(9) 
EXAMINATION
OF
BUDGET
CON-
SEQUENCES.—Before making any recommendations, 
MACPAC shall examine the budget consequences of 
such recommendations, directly or through consulta-
tion with appropriate expert entities. 
‘‘(c) MEMBERSHIP.— 
‘‘(1) NUMBER
AND
APPOINTMENT.—MACPAC 
shall be composed of 17 members appointed by the 
Comptroller General of the United States. 
‘‘(2) QUALIFICATIONS.— 
‘‘(A) IN
GENERAL.—The membership of 
MACPAC shall include individuals who have 
had direct experience as enrollees or parents of 
enrollees in Medicaid or CHIP and individuals 
with national recognition for their expertise in 
Federal safety net health programs, health fi-
nance and economics, actuarial science, health
232 
† HR 2 EAS 
facility management, health plans and inte-
grated delivery systems, reimbursement of health 
facilities, health information technology, pedi-
atric physicians, dentists, and other providers of 
health services, and other related fields, who pro-
vide a mix of different professionals, broad geo-
graphic representation, and a balance between 
urban and rural representatives. 
‘‘(B) 
INCLUSION.—The 
membership 
of 
MACPAC shall include (but not be limited to) 
physicians and other health professionals, em-
ployers, third-party payers, and individuals 
with expertise in the delivery of health services. 
Such membership shall also include consumers 
representing children, pregnant women, the el-
derly, and individuals with disabilities, current 
or former representatives of State agencies re-
sponsible for administering Medicaid, and cur-
rent or former representatives of State agencies 
responsible for administering CHIP. 
‘‘(C) MAJORITY
NONPROVIDERS.—Individ-
uals who are directly involved in the provision, 
or management of the delivery, of items and 
services covered under Medicaid or CHIP shall
233 
† HR 2 EAS 
not constitute a majority of the membership of 
MACPAC. 
‘‘(D) ETHICAL
DISCLOSURE.—The Comp-
troller General of the United States shall estab-
lish a system for public disclosure by members of 
MACPAC of financial and other potential con-
flicts of interest relating to such members. Mem-
bers of MACPAC shall be treated as employees of 
Congress for purposes of applying title I of the 
Ethics in Government Act of 1978 (Public Law 
95–521). 
‘‘(3) TERMS.— 
‘‘(A) IN GENERAL.—The terms of members 
of MACPAC shall be for 3 years except that the 
Comptroller General of the United States shall 
designate staggered terms for the members first 
appointed. 
‘‘(B) VACANCIES.—Any member appointed 
to fill a vacancy occurring before the expiration 
of the term for which the member’s predecessor 
was appointed shall be appointed only for the re-
mainder of that term. A member may serve after 
the expiration of that member’s term until a suc-
cessor has taken office. A vacancy in MACPAC
234 
† HR 2 EAS 
shall be filled in the manner in which the origi-
nal appointment was made. 
‘‘(4) COMPENSATION.—While serving on the busi-
ness of MACPAC (including travel time), a member 
of MACPAC shall be entitled to compensation at the 
per diem equivalent of the rate provided for level IV 
of the Executive Schedule under section 5315 of title 
5, United States Code; and while so serving away 
from home and the member’s regular place of busi-
ness, a member may be allowed travel expenses, as 
authorized by the Chairman of MACPAC. Physicians 
serving as personnel of MACPAC may be provided a 
physician comparability allowance by MACPAC in 
the same manner as Government physicians may be 
provided such an allowance by an agency under sec-
tion 5948 of title 5, United States Code, and for such 
purpose subsection (i) of such section shall apply to 
MACPAC in the same manner as it applies to the 
Tennessee Valley Authority. For purposes of pay 
(other than pay of members of MACPAC) and em-
ployment benefits, rights, and privileges, all personnel 
of MACPAC shall be treated as if they were employees 
of the United States Senate. 
‘‘(5) CHAIRMAN; VICE CHAIRMAN.—The Comp-
troller General of the United States shall designate a
235 
† HR 2 EAS 
member of MACPAC, at the time of appointment of 
the member as Chairman and a member as Vice 
Chairman for that term of appointment, except that 
in the case of vacancy of the Chairmanship or Vice 
Chairmanship, the Comptroller General of the United 
States may designate another member for the remain-
der of that member’s term. 
‘‘(6) MEETINGS.—MACPAC shall meet at the 
call of the Chairman. 
‘‘(d) DIRECTOR AND STAFF; EXPERTS AND CONSULT-
ANTS.—Subject to such review as the Comptroller General 
of the United States deems necessary to assure the efficient 
administration of MACPAC, MACPAC may— 
‘‘(1) employ and fix the compensation of an Ex-
ecutive Director (subject to the approval of the Comp-
troller General of the United States) and such other 
personnel as may be necessary to carry out its duties 
(without regard to the provisions of title 5, United 
States Code, governing appointments in the competi-
tive service); 
‘‘(2) seek such assistance and support as may be 
required in the performance of its duties from appro-
priate Federal departments and agencies; 
‘‘(3) enter into contracts or make other arrange-
ments, as may be necessary for the conduct of the
236 
† HR 2 EAS 
work of MACPAC (without regard to section 3709 of 
the Revised Statutes (41 U.S.C. 5)); 
‘‘(4) make advance, progress, and other pay-
ments which relate to the work of MACPAC; 
‘‘(5) provide transportation and subsistence for 
persons serving without compensation; and 
‘‘(6) prescribe such rules and regulations as it 
deems necessary with respect to the internal organiza-
tion and operation of MACPAC. 
‘‘(e) POWERS.— 
‘‘(1) OBTAINING
OFFICIAL
DATA.—MACPAC 
may secure directly from any department or agency 
of the United States information necessary to enable 
it to carry out this section. Upon request of the 
Chairman, the head of that department or agency 
shall furnish that information to MACPAC on an 
agreed upon schedule. 
‘‘(2) DATA COLLECTION.—In order to carry out 
its functions, MACPAC shall— 
‘‘(A) utilize existing information, both pub-
lished and unpublished, where possible, collected 
and assessed either by its own staff or under 
other arrangements made in accordance with 
this section;
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† HR 2 EAS 
‘‘(B) carry out, or award grants or con-
tracts for, original research and experimentation, 
where existing information is inadequate; and 
‘‘(C) adopt procedures allowing any inter-
ested party to submit information for MACPAC’s 
use in making reports and recommendations. 
‘‘(3) ACCESS
OF
GAO
TO
INFORMATION.—The 
Comptroller General of the United States shall have 
unrestricted access to all deliberations, records, and 
nonproprietary data of MACPAC, immediately upon 
request. 
‘‘(4) PERIODIC AUDIT.—MACPAC shall be sub-
ject to periodic audit by the Comptroller General of 
the United States. 
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.— 
‘‘(1) 
REQUEST
FOR
APPROPRIATIONS.— 
MACPAC shall submit requests for appropriations in 
the same manner as the Comptroller General of the 
United States submits requests for appropriations, 
but amounts appropriated for MACPAC shall be sep-
arate from amounts appropriated for the Comptroller 
General of the United States. 
‘‘(2) AUTHORIZATION.—There are authorized to 
be appropriated such sums as may be necessary to 
carry out the provisions of this section.’’.
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† HR 2 EAS 
(b) DEADLINE
FOR INITIAL APPOINTMENTS.—Not 
later than January 1, 2010, the Comptroller General of the 
United States shall appoint the initial members of the Med-
icaid and CHIP Payment and Access Commission estab-
lished under section 1900 of the Social Security Act (as 
added by subsection (a)). 
(c) ANNUAL REPORT ON MEDICAID.—Not later than 
January 1, 2010, and annually thereafter, the Secretary, 
in consultation with the Secretary of the Treasury, the Sec-
retary of Labor, and the States (as defined for purposes of 
Medicaid), shall submit an annual report to Congress on 
the financial status of, enrollment in, and spending trends 
for, Medicaid for the fiscal year ending on September 30 
of the preceding year. 
TITLE VI—PROGRAM INTEGRITY 
AND OTHER MISCELLANEOUS 
PROVISIONS 
Subtitle A—Program Integrity and 
Data Collection 
SEC. 601. PAYMENT ERROR RATE MEASUREMENT (‘‘PERM’’). 
(a) EXPENDITURES RELATED TO COMPLIANCE WITH 
REQUIREMENTS.— 
(1) ENHANCED PAYMENTS.—Section 2105(c) (42 
U.S.C. 1397ee(c)), as amended by section 301(a), is
239 
† HR 2 EAS 
amended by adding at the end the following new 
paragraph: 
‘‘(11) ENHANCED
PAYMENTS.—Notwithstanding 
subsection (b), the enhanced FMAP with respect to 
payments under subsection (a) for expenditures re-
lated to the administration of the payment error rate 
measurement (PERM) requirements applicable to the 
State child health plan in accordance with the Im-
proper Payments Information Act of 2002 and parts 
431 and 457 of title 42, Code of Federal Regulations 
(or any related or successor guidance or regulations) 
shall in no event be less than 90 percent.’’. 
(2) EXCLUSION OF FROM CAP ON ADMINISTRA-
TIVE
EXPENDITURES.—Section 2105(c)(2)(C) (42 
U.S.C. 1397ee(c)(2)C)), as amended by section 
302(b)), is amended by adding at the end the fol-
lowing: 
‘‘(iv) PAYMENT
ERROR
RATE
MEAS-
UREMENT
(PERM)
EXPENDITURES.—Ex-
penditures related to the administration of 
the 
payment 
error 
rate 
measurement 
(PERM) requirements applicable to the 
State child health plan in accordance with 
the Improper Payments Information Act of 
2002 and parts 431 and 457 of title 42,
240 
† HR 2 EAS 
Code of Federal Regulations (or any related 
or successor guidance or regulations).’’. 
(b) FINAL RULE REQUIRED TO BE IN EFFECT FOR 
ALL STATES.—Notwithstanding parts 431 and 457 of title 
42, Code of Federal Regulations (as in effect on the date 
of enactment of this Act), the Secretary shall not calculate 
or publish any national or State-specific error rate based 
on the application of the payment error rate measurement 
(in this section referred to as ‘‘PERM’’) requirements to 
CHIP until after the date that is 6 months after the date 
on which a new final rule (in this section referred to as 
the ‘‘new final rule’’) promulgated after the date of the en-
actment of this Act and implementing such requirements 
in accordance with the requirements of subsection (c) is in 
effect for all States. Any calculation of a national error rate 
or a State specific error rate after such new final rule in 
effect for all States may only be inclusive of errors, as de-
fined in such new final rule or in guidance issued within 
a reasonable time frame after the effective date for such new 
final rule that includes detailed guidance for the specific 
methodology for error determinations. 
(c) REQUIREMENTS FOR NEW FINAL RULE.—For pur-
poses of subsection (b), the requirements of this subsection 
are that the new final rule implementing the PERM re-
quirements shall—
241 
† HR 2 EAS 
(1) include— 
(A) clearly defined criteria for errors for 
both States and providers; 
(B) a clearly defined process for appealing 
error determinations by— 
(i) review contractors; or 
(ii) the agency and personnel described 
in section 431.974(a)(2) of title 42, Code of 
Federal Regulations, as in effect on Sep-
tember 1, 2007, responsible for the develop-
ment, direction, implementation, and eval-
uation of eligibility reviews and associated 
activities; and 
(C) clearly defined responsibilities and 
deadlines for States in implementing any correc-
tive action plans; and 
(2) provide that the payment error rate deter-
mined for a State shall not take into account pay-
ment errors resulting from the State’s verification of 
an applicant’s self-declaration or self-certification of 
eligibility for, and the correct amount of, medical as-
sistance or child health assistance, if the State process 
for verifying an applicant’s self-declaration or self- 
certification satisfies the requirements for such process
242 
† HR 2 EAS 
applicable under regulations promulgated by the Sec-
retary or otherwise approved by the Secretary. 
(d) OPTION FOR APPLICATION OF DATA FOR STATES 
IN FIRST APPLICATION CYCLE UNDER THE INTERIM FINAL 
RULE.—After the new final rule implementing the PERM 
requirements in accordance with the requirements of sub-
section (c) is in effect for all States, a State for which the 
PERM requirements were first in effect under an interim 
final rule for fiscal year 2007 or under a final rule for fiscal 
year 2008 may elect to accept any payment error rate deter-
mined in whole or in part for the State on the basis of 
data for that fiscal year or may elect to not have any pay-
ment error rate determined on the basis of such data and, 
instead, shall be treated as if fiscal year 2010 or fiscal year 
2011 were the first fiscal year for which the PERM require-
ments apply to the State. 
(e) HARMONIZATION OF MEQC AND PERM.— 
(1) REDUCTION OF REDUNDANCIES.—The Sec-
retary shall review the Medicaid Eligibility Quality 
Control (in this subsection referred to as the 
‘‘MEQC’’) requirements with the PERM requirements 
and coordinate consistent implementation of both sets 
of requirements, while reducing redundancies. 
(2) STATE OPTION TO APPLY PERM DATA.—A 
State may elect, for purposes of determining the erro-
243 
† HR 2 EAS 
neous excess payments for medical assistance ratio 
applicable to the State for a fiscal year under section 
1903(u) of the Social Security Act (42 U.S.C. 
1396b(u)) to substitute data resulting from the appli-
cation of the PERM requirements to the State after 
the new final rule implementing such requirements is 
in effect for all States for data obtained from the ap-
plication of the MEQC requirements to the State with 
respect to a fiscal year. 
(3) STATE OPTION TO APPLY MEQC DATA.—For 
purposes of satisfying the requirements of subpart Q 
of part 431 of title 42, Code of Federal Regulations, 
relating to Medicaid eligibility reviews, a State may 
elect to substitute data obtained through MEQC re-
views conducted in accordance with section 1903(u) of 
the Social Security Act (42 U.S.C. 1396b(u)) for data 
required for purposes of PERM requirements, but 
only if the State MEQC reviews are based on a broad, 
representative sample of Medicaid applicants or en-
rollees in the States. 
(f) IDENTIFICATION
OF IMPROVED STATE-SPECIFIC 
SAMPLE SIZES.—The Secretary shall establish State-spe-
cific sample sizes for application of the PERM requirements 
with respect to State child health plans for fiscal years be-
ginning with the first fiscal year that begins on or after
244 
† HR 2 EAS 
the date on which the new final rule is in effect for all 
States, on the basis of such information as the Secretary 
determines appropriate. In establishing such sample sizes, 
the Secretary shall, to the greatest extent practicable— 
(1) minimize the administrative cost burden on 
States under Medicaid and CHIP; and 
(2) maintain State flexibility to manage such 
programs. 
(g) TIME FOR PROMULGATION OF FINAL RULE.—The 
final rule implementing the PERM requirements under sub-
section (b) shall be promulgated not later than 6 months 
after the date of enactment of this Act. 
SEC. 602. IMPROVING DATA COLLECTION. 
(a) INCREASED APPROPRIATION.—Section 2109(b)(2) 
(42 
U.S.C. 
1397ii(b)(2)) 
is 
amended 
by 
striking 
‘‘$10,000,000 for fiscal year 2000’’ and inserting 
‘‘$20,000,000 for fiscal year 2009’’. 
(b) USE OF ADDITIONAL FUNDS.—Section 2109(b) (42 
U.S.C. 1397ii(b)), as amended by subsection (a), is amend-
ed— 
(1) by redesignating paragraph (2) as para-
graph (4); and 
(2) by inserting after paragraph (1), the fol-
lowing new paragraphs:
245 
† HR 2 EAS 
‘‘(2) ADDITIONAL REQUIREMENTS.—In addition 
to making the adjustments required to produce the 
data described in paragraph (1), with respect to data 
collection occurring for fiscal years beginning with 
fiscal year 2009, in appropriate consultation with the 
Secretary of Health and Human Services, the Sec-
retary of Commerce shall do the following: 
‘‘(A) Make appropriate adjustments to the 
Current Population Survey to develop more ac-
curate State-specific estimates of the number of 
children enrolled in health coverage under title 
XIX or this title. 
‘‘(B) Make appropriate adjustments to the 
Current Population Survey to improve the sur-
vey estimates used to determine the child popu-
lation growth factor under section 2104(m)(5)(B) 
and any other data necessary for carrying out 
this title. 
‘‘(C) Include health insurance survey infor-
mation in the American Community Survey re-
lated to children. 
‘‘(D) Assess whether American Community 
Survey estimates, once such survey data are first 
available, produce more reliable estimates than
246 
† HR 2 EAS 
the Current Population Survey with respect to 
the purposes described in subparagraph (B). 
‘‘(E) On the basis of the assessment required 
under subparagraph (D), recommend to the Sec-
retary of Health and Human Services whether 
American Community Survey estimates should 
be used in lieu of, or in some combination with, 
Current Population Survey estimates for the 
purposes described in subparagraph (B). 
‘‘(F) Continue making the adjustments de-
scribed in the last sentence of paragraph (1) with 
respect to expansion of the sample size used in 
State sampling units, the number of sampling 
units in a State, and using an appropriate 
verification element. 
‘‘(3) AUTHORITY
FOR
THE
SECRETARY
OF 
HEALTH AND HUMAN SERVICES TO TRANSITION TO 
THE USE OF ALL, OR SOME COMBINATION OF, ACS ES-
TIMATES UPON RECOMMENDATION OF THE SECRETARY 
OF COMMERCE.—If, on the basis of the assessment re-
quired under paragraph (2)(D), the Secretary of 
Commerce recommends to the Secretary of Health and 
Human Services that American Community Survey 
estimates should be used in lieu of, or in some com-
bination with, Current Population Survey estimates
247 
† HR 2 EAS 
for the purposes described in paragraph (2)(B), the 
Secretary of Health and Human Services, in con-
sultation with the States, may provide for a period 
during which the Secretary may transition from car-
rying out such purposes through the use of Current 
Population Survey estimates to the use of American 
Community Survey estimates (in lieu of, or in com-
bination with the Current Population Survey esti-
mates, as recommended), provided that any such 
transition is implemented in a manner that is de-
signed to avoid adverse impacts upon States with ap-
proved State child health plans under this title.’’. 
SEC. 603. UPDATED FEDERAL EVALUATION OF CHIP. 
Section 2108(c) (42 U.S.C. 1397hh(c)) is amended by 
striking paragraph (5) and inserting the following: 
‘‘(5) SUBSEQUENT EVALUATION USING UPDATED 
INFORMATION.— 
‘‘(A) IN GENERAL.—The Secretary, directly 
or through contracts or interagency agreements, 
shall conduct an independent subsequent evalua-
tion of 10 States with approved child health 
plans. 
‘‘(B) SELECTION OF STATES AND MATTERS 
INCLUDED.—Paragraphs (2) and (3) shall apply 
to such subsequent evaluation in the same man-
248 
† HR 2 EAS 
ner as such provisions apply to the evaluation 
conducted under paragraph (1). 
‘‘(C) SUBMISSION TO CONGRESS.—Not later 
than December 31, 2011, the Secretary shall sub-
mit to Congress the results of the evaluation con-
ducted under this paragraph. 
‘‘(D) FUNDING.—Out of any money in the 
Treasury of the United States not otherwise ap-
propriated, there are appropriated $10,000,000 
for fiscal year 2010 for the purpose of conducting 
the evaluation authorized under this paragraph. 
Amounts appropriated under this subparagraph 
shall remain available for expenditure through 
fiscal year 2012.’’. 
SEC. 604. ACCESS TO RECORDS FOR IG AND GAO AUDITS 
AND EVALUATIONS. 
Section 2108(d) (42 U.S.C. 1397hh(d)) is amended to 
read as follows: 
‘‘(d) ACCESS TO RECORDS FOR IG AND GAO AUDITS 
AND EVALUATIONS.—For the purpose of evaluating and au-
diting the program established under this title, or title XIX, 
the Secretary, the Office of Inspector General, and the 
Comptroller General shall have access to any books, ac-
counts, records, correspondence, and other documents that 
are related to the expenditure of Federal funds under this
249 
† HR 2 EAS 
title and that are in the possession, custody, or control of 
States receiving Federal funds under this title or political 
subdivisions thereof, or any grantee or contractor of such 
States or political subdivisions.’’. 
SEC. 605. NO FEDERAL FUNDING FOR ILLEGAL ALIENS; DIS-
ALLOWANCE FOR UNAUTHORIZED EXPENDI-
TURES. 
Nothing in this Act allows Federal payment for indi-
viduals who are not legal residents. Titles XI, XIX, and 
XXI of the Social Security Act provide for the disallowance 
of Federal financial participation for erroneous expendi-
tures under Medicaid and under CHIP, respectively. 
Subtitle B—Miscellaneous Health 
Provisions 
SEC. 611. DEFICIT REDUCTION ACT TECHNICAL CORREC-
TIONS. 
(a) CLARIFICATION OF REQUIREMENT TO PROVIDE 
EPSDT SERVICES FOR ALL CHILDREN IN BENCHMARK 
BENEFIT
PACKAGES
UNDER
MEDICAID.—Section 
1937(a)(1) (42 U.S.C. 1396u–7(a)(1)), as inserted by sec-
tion 6044(a) of the Deficit Reduction Act of 2005 (Public 
Law 109–171, 120 Stat. 88), is amended— 
(1) in subparagraph (A)— 
(A) in the matter before clause (i)—
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† HR 2 EAS 
(i) by striking ‘‘Notwithstanding any 
other provision of this title’’ and inserting 
‘‘Notwithstanding section 1902(a)(1) (relat-
ing 
to 
statewideness), 
section 
1902(a)(10)(B) (relating to comparability) 
and any other provision of this title which 
would be directly contrary to the authority 
under this section and subject to subsection 
(E)’’; and 
(ii) by striking ‘‘enrollment in coverage 
that provides’’ and inserting ‘‘coverage 
that’’; 
(B) in clause (i), by inserting ‘‘provides’’ 
after ‘‘(i)’’; and 
(C) by striking clause (ii) and inserting the 
following: 
‘‘(ii) for any individual described in 
section 1905(a)(4)(B) who is eligible under 
the State plan in accordance with para-
graphs (10) and (17) of section 1902(a), 
consists of the items and services described 
in section 1905(a)(4)(B) (relating to early 
and periodic screening, diagnostic, and 
treatment 
services 
defined 
in 
section
251 
† HR 2 EAS 
1905(r)) and provided in accordance with 
the requirements of section 1902(a)(43).’’; 
(2) in subparagraph (C)— 
(A) in the heading, by striking ‘‘WRAP- 
AROUND’’ and inserting ‘‘ADDITIONAL’’; and 
(B) by striking ‘‘wrap-around or’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(E) RULE OF CONSTRUCTION.—Nothing in 
this paragraph shall be construed as— 
‘‘(i) requiring a State to offer all or 
any of the items and services required by 
subparagraph (A)(ii) through an issuer of 
benchmark coverage described in subsection 
(b)(1) or benchmark equivalent coverage de-
scribed in subsection (b)(2); 
‘‘(ii) preventing a State from offering 
all or any of the items and services required 
by subparagraph (A)(ii) through an issuer 
of benchmark coverage described in sub-
section (b)(1) or benchmark equivalent cov-
erage described in subsection (b)(2); or 
‘‘(iii) affecting a child’s entitlement to 
care and services described in subsections 
(a)(4)(B) and (r) of section 1905 and pro-
252 
† HR 2 EAS 
vided 
in 
accordance 
with 
section 
1902(a)(43) 
whether 
provided 
through 
benchmark coverage, benchmark equivalent 
coverage, or otherwise.’’. 
(b) CORRECTION OF REFERENCE TO CHILDREN IN 
FOSTER CARE RECEIVING CHILD WELFARE SERVICES.— 
Section 
1937(a)(2)(B)(viii) 
(42 
U.S.C. 
1396u– 
7(a)(2)(B)(viii)), as inserted by section 6044(a) of the Def-
icit Reduction Act of 2005, is amended by striking ‘‘aid 
or assistance is made available under part B of title IV 
to children in foster care and individuals’’ and inserting 
‘‘child welfare services are made available under part B of 
title IV on the basis of being a child in foster care or’’. 
(c) TRANSPARENCY.—Section 1937 (42 U.S.C. 1396u– 
7), as inserted by section 6044(a) of the Deficit Reduction 
Act of 2005, is amended by adding at the end the following: 
‘‘(c) PUBLICATION OF PROVISIONS AFFECTED.—With 
respect to a State plan amendment to provide benchmark 
benefits in accordance with subsections (a) and (b) that is 
approved by the Secretary, the Secretary shall publish on 
the Internet website of the Centers for Medicare & Medicaid 
Services, a list of the provisions of this title that the Sec-
retary has determined do not apply in order to enable the 
State to carry out the plan amendment and the reason for 
each such determination on the date such approval is made,
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† HR 2 EAS 
and shall publish such list in the Federal Register and not 
later than 30 days after such date of approval.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
subsections (a), (b), and (c) of this section shall take effect 
as if included in the amendment made by section 6044(a) 
of the Deficit Reduction Act of 2005. 
SEC. 612. REFERENCES TO TITLE XXI. 
Section 704 of the Medicare, Medicaid, and SCHIP 
Balanced Budget Refinement Act of 1999, as enacted into 
law by division B of Public Law 106–113 (113 Stat. 
1501A–402) is repealed. 
SEC. 613. PROHIBITING INITIATION OF NEW HEALTH OP-
PORTUNITY ACCOUNT DEMONSTRATION PRO-
GRAMS. 
After the date of the enactment of this Act, the Sec-
retary of Health and Human Services may not approve any 
new demonstration programs under section 1938 of the So-
cial Security Act (42 U.S.C. 1396u–8). 
SEC. 614. ADJUSTMENT IN COMPUTATION OF MEDICAID 
FMAP TO DISREGARD AN EXTRAORDINARY 
EMPLOYER PENSION CONTRIBUTION. 
(a) IN GENERAL.—Only for purposes of computing the 
FMAP (as defined in subsection (e)) for a State for a fiscal 
year (beginning with fiscal year 2006) and applying the 
FMAP under title XIX of the Social Security Act, any sig-
254 
† HR 2 EAS 
nificantly disproportionate employer pension or insurance 
fund contribution described in subsection (b) shall be dis-
regarded in computing the per capita income of such State, 
but shall not be disregarded in computing the per capita 
income for the continental United States (and Alaska) and 
Hawaii. 
(b) SIGNIFICANTLY DISPROPORTIONATE EMPLOYER 
PENSION AND INSURANCE FUND CONTRIBUTION.— 
(1) IN GENERAL.—For purposes of this section, 
a significantly disproportionate employer pension 
and insurance fund contribution described in this 
subsection with respect to a State is any identifiable 
employer contribution towards pension or other em-
ployee insurance funds that is estimated to accrue to 
residents of such State for a calendar year (beginning 
with calendar year 2003) if the increase in the 
amount so estimated exceeds 25 percent of the total 
increase in personal income in that State for the year 
involved. 
(2) DATA TO BE USED.—For estimating and ad-
justment a FMAP already calculated as of the date of 
the enactment of this Act for a State with a signifi-
cantly disproportionate employer pension and insur-
ance fund contribution, the Secretary shall use the
255 
† HR 2 EAS 
personal income data set originally used in calcu-
lating such FMAP. 
(3) 
SPECIAL
ADJUSTMENT
FOR
NEGATIVE 
GROWTH.—If in any calendar year the total personal 
income growth in a State is negative, an employer 
pension and insurance fund contribution for the pur-
poses of calculating the State’s FMAP for a calendar 
year shall not exceed 125 percent of the amount of 
such contribution for the previous calendar year for 
the State. 
(c) HOLD HARMLESS.—No State shall have its FMAP 
for a fiscal year reduced as a result of the application of 
this section. 
(d) REPORT.—Not later than May 15, 2009, the Sec-
retary shall submit to the Congress a report on the problems 
presented by the current treatment of pension and insur-
ance fund contributions in the use of Bureau of Economic 
Affairs calculations for the FMAP and for Medicaid and 
on possible alternative methodologies to mitigate such prob-
lems. 
(e) FMAP DEFINED.—For purposes of this section, the 
term ‘‘FMAP’’ means the Federal medical assistance per-
centage, as defined in section 1905(b) of the Social Security 
Act (42 U.S.C. 1396(d)).
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SEC. 615. CLARIFICATION TREATMENT OF REGIONAL MED-
ICAL CENTER. 
(a) IN GENERAL.—Nothing in section 1903(w) of the 
Social Security Act (42 U.S.C. 1396b(w)) shall be construed 
by the Secretary of Health and Human Services as prohib-
iting a State’s use of funds as the non-Federal share of ex-
penditures under title XIX of such Act where such funds 
are transferred from or certified by a publicly-owned re-
gional medical center located in another State and de-
scribed in subsection (b), so long as the Secretary deter-
mines that such use of funds is proper and in the interest 
of the program under title XIX. 
(b) CENTER DESCRIBED.—A center described in this 
subsection is a publicly-owned regional medical center 
that— 
(1) provides level 1 trauma and burn care serv-
ices; 
(2) provides level 3 neonatal care services; 
(3) is obligated to serve all patients, regardless of 
ability to pay; 
(4) is located within a Standard Metropolitan 
Statistical Area (SMSA) that includes at least 3 
States; 
(5) provides services as a tertiary care provider 
for patients residing within a 125-mile radius; and
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(6) meets the criteria for a disproportionate 
share hospital under section 1923 of such Act (42 
U.S.C. 1396r–4) in at least one State other than the 
State in which the center is located. 
SEC. 616. EXTENSION OF MEDICAID DSH ALLOTMENTS FOR 
TENNESSEE AND HAWAII. 
Section 1923(f)(6) (42 U.S.C. 1396r–4(f)(6)), as 
amended by section 202 of the Medicare Improvements for 
Patients and Providers Act of 2008 (Public Law 110–275) 
is amended— 
(1) in the paragraph heading, by striking ‘‘2009 
AND THE FIRST CALENDAR QUARTER OF FISCAL YEAR 
2010’’ and inserting ‘‘2011 AND THE FIRST CALENDAR 
QUARTER OF FISCAL YEAR 2012’’; 
(2) in subparagraph (A)— 
(A) in clause (i)— 
(i) in the second sentence— 
(I) by striking ‘‘and 2009’’ and 
inserting ‘‘, 2009, 2010, and 2011’’; 
and 
(II) by striking ‘‘such portion of’’; 
and 
(ii) in the third sentence, by striking 
‘‘2010 for the period ending on December
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31, 2009’’ and inserting ‘‘2012 for the pe-
riod ending on December 31, 2011’’; 
(B) in clause (ii), by striking ‘‘or for a pe-
riod in fiscal year 2010’’ and inserting ‘‘2010, 
2011, or for period in fiscal year 2012’’; and 
(C) in clause (iv)— 
(i) in the clause heading, by striking 
‘‘2009 AND THE FIRST CALENDAR QUARTER 
OF FISCAL YEAR 2010’’ and inserting ‘‘2011 
AND
THE
FIRST
CALENDAR
QUARTER
OF 
FISCAL YEAR 2012’’; and 
(ii) in each of subclauses (I) and (II), 
by striking ‘‘ or for a period in fiscal year 
2010’’ and inserting ‘‘2010, 2011, or for a 
period in fiscal year 2012’’; and 
(3) in subparagraph (B)— 
(A) in clause (i)— 
(i) in the first sentence, by striking 
‘‘2009’’ and inserting ‘‘2011’’; and 
(ii) in the second sentence, by striking 
‘‘2010 for the period ending on December 
31, 2009’’ and inserting ‘‘2012 for the pe-
riod ending on December 31, 2011’’.
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SEC. 617. GAO REPORT ON MEDICAID MANAGED CARE PAY-
MENT RATES. 
Not later than 18 months after the date of the enact-
ment of this Act, the Comptroller General of the United 
States shall submit a report to the Committee on Finance 
of the Senate and the Committee on Energy and Commerce 
of the House of Representatives analyzing the extent to 
which State payment rates for medicaid managed care or-
ganizations under Medicaid are actuarially sound. 
Subtitle C—Other Provisions 
SEC. 621. OUTREACH REGARDING HEALTH INSURANCE OP-
TIONS AVAILABLE TO CHILDREN. 
(a) DEFINITIONS.—In this section— 
(1) the terms ‘‘Administration’’ and ‘‘Adminis-
trator’’ means the Small Business Administration 
and the Administrator thereof, respectively; 
(2) the term ‘‘certified development company’’ 
means a development company participating in the 
program under title V of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 695 et seq.); 
(3) the term ‘‘Medicaid program’’ means the pro-
gram established under title XIX of the Social Secu-
rity Act (42 U.S.C. 1396 et seq.); 
(4) the term ‘‘Service Corps of Retired Execu-
tives’’ means the Service Corps of Retired Executives
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† HR 2 EAS 
authorized by section 8(b)(1) of the Small Business 
Act (15 U.S.C. 637(b)(1)); 
(5) the term ‘‘small business concern’’ has the 
meaning given that term in section 3 of the Small 
Business Act (15 U.S.C. 632); 
(6) the term ‘‘small business development center’’ 
means a small business development center described 
in section 21 of the Small Business Act (15 U.S.C. 
648); 
(7) the term ‘‘State’’ has the meaning given that 
term for purposes of title XXI of the Social Security 
Act (42 U.S.C. 1397aa et seq.); 
(8) the term ‘‘State Children’s Health Insurance 
Program’’ means the State Children’s Health Insur-
ance Program established under title XXI of the So-
cial Security Act (42 U.S.C. 1397aa et seq.); 
(9) the term ‘‘task force’’ means the task force es-
tablished under subsection (b)(1); and 
(10) the term ‘‘women’s business center’’ means 
a women’s business center described in section 29 of 
the Small Business Act (15 U.S.C. 656). 
(b) ESTABLISHMENT OF TASK FORCE.— 
(1) ESTABLISHMENT.—There is established a 
task force to conduct a nationwide campaign of edu-
cation and outreach for small business concerns re-
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† HR 2 EAS 
garding the availability of coverage for children 
through private insurance options, the Medicaid pro-
gram, and the State Children’s Health Insurance Pro-
gram. 
(2) MEMBERSHIP.—The task force shall consist 
of the Administrator, the Secretary of Health and 
Human Services, the Secretary of Labor, and the Sec-
retary of the Treasury. 
(3) RESPONSIBILITIES.—The campaign con-
ducted under this subsection shall include— 
(A) efforts to educate the owners of small 
business concerns about the value of health cov-
erage for children; 
(B) information regarding options available 
to the owners and employees of small business 
concerns to make insurance more affordable, in-
cluding Federal and State tax deductions and 
credits for health care-related expenses and 
health insurance expenses and Federal tax exclu-
sion for health insurance options available under 
employer-sponsored cafeteria plans under section 
125 of the Internal Revenue Code of 1986; 
(C) efforts to educate the owners of small 
business concerns about assistance available 
through public programs; and
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† HR 2 EAS 
(D) efforts to educate the owners and em-
ployees of small business concerns regarding the 
availability of the hotline operated as part of the 
Insure Kids Now program of the Department of 
Health and Human Services. 
(4) IMPLEMENTATION.—In carrying out this sub-
section, the task force may— 
(A) use any business partner of the Admin-
istration, including— 
(i) a small business development cen-
ter; 
(ii) a certified development company; 
(iii) a women’s business center; and 
(iv) the Service Corps of Retired Ex-
ecutives; 
(B) enter into— 
(i) a memorandum of understanding 
with a chamber of commerce; and 
(ii) a partnership with any appro-
priate small business concern or health ad-
vocacy group; and 
(C) designate outreach programs at regional 
offices of the Department of Health and Human 
Services to work with district offices of the Ad-
ministration.
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† HR 2 EAS 
(5) WEBSITE.—The Administrator shall ensure 
that links to information on the eligibility and enroll-
ment requirements for the Medicaid program and 
State Children’s Health Insurance Program of each 
State are prominently displayed on the website of the 
Administration. 
(6) REPORT.— 
(A) IN GENERAL.—Not later than 2 years 
after the date of enactment of this Act, and every 
2 years thereafter, the Administrator shall sub-
mit to the Committee on Small Business and 
Entrepreneurship of the Senate and the Com-
mittee on Small Business of the House of Rep-
resentatives a report on the status of the nation-
wide campaign conducted under paragraph (1). 
(B) CONTENTS.—Each report submitted 
under subparagraph (A) shall include a status 
update on all efforts made to educate owners and 
employees of small business concerns on options 
for providing health insurance for children 
through public and private alternatives. 
SEC. 622. SENSE OF THE SENATE REGARDING ACCESS TO 
AFFORDABLE AND MEANINGFUL HEALTH IN-
SURANCE COVERAGE. 
(a) FINDINGS.—The Senate finds the following:
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† HR 2 EAS 
(1) There are approximately 45 million Ameri-
cans currently without health insurance. 
(2) More than half of uninsured workers are em-
ployed by businesses with less than 25 employees or 
are self-employed. 
(3) Health insurance premiums continue to rise 
at more than twice the rate of inflation for all con-
sumer goods. 
(4) Individuals in the small group and indi-
vidual health insurance markets usually pay more for 
similar coverage than those in the large group market. 
(5) The rapid growth in health insurance costs 
over the last few years has forced many employers, 
particularly small employers, to increase deductibles 
and co-pays or to drop coverage completely. 
(b) SENSE OF THE SENATE.—The Senate— 
(1) recognizes the necessity to improve afford-
ability and access to health insurance for all Ameri-
cans; 
(2) acknowledges the value of building upon the 
existing private health insurance market; and 
(3) affirms its intent to enact legislation this 
year that, with appropriate protection for consumers, 
improves access to affordable and meaningful health
265 
† HR 2 EAS 
insurance coverage for employees of small businesses 
and individuals by— 
(A) facilitating pooling mechanisms, in-
cluding pooling across State lines, and 
(B) providing assistance to small businesses 
and individuals, including financial assistance 
and tax incentives, for the purchase of private 
insurance coverage. 
TITLE VII—REVENUE 
PROVISIONS 
SEC. 701. INCREASE IN EXCISE TAX RATE ON TOBACCO 
PRODUCTS. 
(a) CIGARS.—Section 5701(a) of the Internal Revenue 
Code of 1986 is amended— 
(1) by striking ‘‘$1.828 cents per thousand 
($1.594 cents per thousand on cigars removed during 
2000 or 2001)’’ in paragraph (1) and inserting 
‘‘$50.33 per thousand’’, 
(2) by striking ‘‘20.719 percent (18.063 percent 
on cigars removed during 2000 or 2001)’’ in para-
graph (2) and inserting ‘‘52.75 percent’’, and 
(3) by striking ‘‘$48.75 per thousand ($42.50 per 
thousand on cigars removed during 2000 or 2001)’’ in 
paragraph (2) and inserting ‘‘40.26 cents per cigar’’.
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† HR 2 EAS 
(b) CIGARETTES.—Section 5701(b) of such Code is 
amended— 
(1) by striking ‘‘$19.50 per thousand ($17 per 
thousand on cigarettes removed during 2000 or 
2001)’’ in paragraph (1) and inserting ‘‘$50.33 per 
thousand’’, and 
(2) by striking ‘‘$40.95 per thousand ($35.70 per 
thousand on cigarettes removed during 2000 or 
2001)’’ in paragraph (2) and inserting ‘‘$105.69 per 
thousand’’. 
(c) CIGARETTE PAPERS.—Section 5701(c) of such 
Code is amended by striking ‘‘1.22 cents (1.06 cents on ciga-
rette papers removed during 2000 or 2001)’’ and inserting 
‘‘3.15 cents’’. 
(d) CIGARETTE TUBES.—Section 5701(d) of such Code 
is amended by striking ‘‘2.44 cents (2.13 cents on cigarette 
tubes removed during 2000 or 2001)’’ and inserting ‘‘6.30 
cents’’. 
(e) SMOKELESS TOBACCO.—Section 5701(e) of such 
Code is amended— 
(1) by striking ‘‘58.5 cents (51 cents on snuff re-
moved during 2000 or 2001)’’ in paragraph (1) and 
inserting ‘‘$1.51’’, and
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† HR 2 EAS 
(2) by striking ‘‘19.5 cents (17 cents on chewing 
tobacco removed during 2000 or 2001)’’ in paragraph 
(2) and inserting ‘‘50.33 cents’’. 
(f) PIPE TOBACCO.—Section 5701(f) of such Code is 
amended by striking ‘‘$1.0969 cents (95.67 cents on pipe 
tobacco removed during 2000 or 2001)’’ and inserting 
‘‘$2.8311 cents’’. 
(g) ROLL-YOUR-OWN TOBACCO.—Section 5701(g) of 
such Code is amended by striking ‘‘$1.0969 cents (95.67 
cents on roll-your-own tobacco removed during 2000 or 
2001)’’ and inserting ‘‘$24.78’’. 
(h) FLOOR STOCKS TAXES.— 
(1) IMPOSITION OF TAX.—On tobacco products 
(other than cigars described in section 5701(a)(2) of 
the Internal Revenue Code of 1986) and cigarette pa-
pers and tubes manufactured in or imported into the 
United States which are removed before April 1, 
2009, and held on such date for sale by any person, 
there is hereby imposed a tax in an amount equal to 
the excess of— 
(A) the tax which would be imposed under 
section 5701 of such Code on the article if the ar-
ticle had been removed on such date, over 
(B) the prior tax (if any) imposed under 
section 5701 of such Code on such article.
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† HR 2 EAS 
(2) CREDIT AGAINST TAX.—Each person shall be 
allowed as a credit against the taxes imposed by 
paragraph (1) an amount equal to $500. Such credit 
shall not exceed the amount of taxes imposed by para-
graph (1) on April 1, 2009, for which such person is 
liable. 
(3) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.— 
(A) LIABILITY FOR TAX.—A person holding 
tobacco products, cigarette papers, or cigarette 
tubes on April 1, 2009, to which any tax im-
posed by paragraph (1) applies shall be liable for 
such tax. 
(B) METHOD OF PAYMENT.—The tax im-
posed by paragraph (1) shall be paid in such 
manner as the Secretary shall prescribe by regu-
lations. 
(C) TIME FOR PAYMENT.—The tax imposed 
by paragraph (1) shall be paid on or before Au-
gust 1, 2009. 
(4) ARTICLES IN FOREIGN TRADE ZONES.—Not-
withstanding the Act of June 18, 1934 (commonly 
known as the Foreign Trade Zone Act, 48 Stat. 998, 
19 U.S.C. 81a et seq.) or any other provision of law, 
any article which is located in a foreign trade zone