150 
(3) REMOVAL OF COST-SHARING FOR TOBACCO 
CESSATION
COUNSELING
AND
PHARMACOTHERAPY 
SERVICES FOR PREGNANT WOMEN.—Section 1916 of 
the Social Security Act (42 U.S.C. 1396o) is amend-
ed in each of subsections (a)(2)(B) and (b)(2)(B), 
by inserting ‘‘, and counseling for cessation of to-
bacco use (as defined in section 1861(ddd))’’ after 
‘‘complicate the pregnancy’’. 
(c) COVERAGE UNDER FEHBP.—The last sentence 
of section 8904(a) of title 5, United States Code, is 
amended by striking ‘‘both for costs associated with care 
in a general hospital and for other health services of a 
catastrophic nature’’ and inserting ‘‘for costs associated 
with care in a general hospital, for other health services 
of a catastrophic nature, and for counseling and 
pharmacotherapy for cessation of tobacco use (as defined 
in section 1861(ddd)(1) of the Social Security Act)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in the enact-
ment of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (Public Law 108–173; 117 
Stat. 2066) and shall apply to services furnished on and 
after January 1, 2008. 
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151 
SEC. 505. RECOGNITION OF SCHOOL-BASED HEALTH CEN-
TERS AS MODEL FOR DELIVERY OF PRIMARY 
CARE FOR CHILDREN UNDER THE MEDICAID 
AND STATE CHILDREN’S HEALTH INSURANCE 
PROGRAMS. 
(a) IN GENERAL.—Title XIX of the Social Security 
Act (42 U.S.C. 1396 et seq.) is amended by inserting after 
section 1911 the following: 
‘‘SCHOOL-BASED HEALTH CENTERS 
‘‘SEC. 1911A. Not later than 12 months after the 
date of enactment of this section, the Secretary shall es-
tablish procedures to encourage a State program estab-
lished under this title, title XXI, or both, to recognize 
school-based health centers as a model of delivery for pri-
mary care for children who are eligible for medical assist-
ance under this title or child health assistance under title 
XXI. Such procedures shall include the following: 
‘‘(1) RECOGNITION OF, AND REIMBURSEMENT 
FOR, SERVICES PROVIDED THROUGH SCHOOL-BASED 
HEALTH
CENTERS.—Procedures that encourage a 
State to recognize as primary care providers under 
this title and title XXI, providers who furnish phys-
ical or mental health services that are available as 
medical assistance under this title or child health as-
sistance under title XXI to children who are eligible 
for such assistance through school-based health cen-
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152 
ters, and to reimburse such providers or centers (as 
appropriate) for furnishing such services to such 
children. 
‘‘(2) EXCEPTIONS
TO
THE
‘FREE
CARE’ 
RULE.—Procedures that allow a State the option to 
permit school-based health centers to bill the State 
for physical or mental health services that are avail-
able as medical assistance under this title or child 
health assistance under title XXI and that are fur-
nished to children who are eligible for such assist-
ance through such centers without billing all chil-
dren who are provided such services. 
‘‘(3) EXCEPTIONS TO THE ‘THIRD PARTY LI-
ABILITY’ 
COST
AVOIDANCE
POLICY.—Procedures 
that encourage a State to include physical or mental 
health services that are available as medical assist-
ance under this title and that are provided through 
school-based health centers in the list of diagnosis 
billing codes for preventive pediatric care services 
that the State will pay for under this title and then 
seek reimbursement from any liable third party in 
accordance 
with 
the 
requirements 
of 
section 
1902(a)(25). 
‘‘(4) ASSURANCE OF PAYMENT FOR SERVICES 
COVERED BY A CONTRACT WITH A MANAGED CARE 
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ENTITY.—Procedures that encourage a State to in-
clude in any contract entered into with a managed 
care entity (as defined in section 1932(a)(1)(B)) 
under this title or title XXI provisions which ensure 
that the entity will make prompt payment to a 
school-based health center for furnishing physical or 
mental health services to a child who is eligible for 
medical assistance under this title or child health as-
sistance under title XXI that are within the scope of 
items and services for which benefits are available 
with respect to the child under the contract between 
the entity and the State (or to a provider who fur-
nishes such services to such a child through a 
school-based health center), regardless of whether 
the center (or provider) is a participating provider 
with respect to such entity, at a rate established by 
the entity for such services that is not less than the 
level and amount of payment which the entity would 
make for the services if the services were furnished 
by a participating provider.’’. 
(b) REPORT
TO CONGRESS.—Not later than 36 
months after the date of enactment of this section, the 
Secretary of Health and Human Services shall submit a 
report to Congress on the effectiveness of the procedures 
established in accordance with section 1911A of the Social 
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Security Act (as added by subsection (a)) in encouraging 
the use of school-based health centers for the delivery of 
primary care physical and mental health services to chil-
dren who are eligible for medical assistance under title 
XIX of the Social Security Act (42 U.S.C. 1396 et seq.) 
or child health assistance under title XXI of such Act (42 
U.S.C. 1397aa et seq.), together with such recommenda-
tions for administrative or legislative action as the Sec-
retary determines to be appropriate. 
SEC. 506. PREVENTIVE HEALTH CARE DEMONSTRATION 
PROGRAM. 
(a) ESTABLISHMENT.— 
(1) IN GENERAL.—Not later than 18 months 
after the date of enactment of this Act, the Sec-
retary of Health and Human Services (in this sec-
tion referred to as the ‘‘Secretary’’) shall conduct a 
5-year demonstration program under part B of title 
XVIII of the Social Security Act under which the 
Secretary establishes demonstration projects to con-
tract with appropriate entities to provide preventive 
health care to eligible beneficiaries through the de-
velopment and implementation of a disease preven-
tion plan (as described in subsection (b)). 
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