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SEC. 
804. 
STATE 
OPTION 
TO 
PROTECT 
COMMUNITY 
SPOUSES OF INDIVIDUALS WITH DISABIL-
ITIES. 
Section 1924(h)(1)(A) of the Social Security Act (42 
U.S.C. 1396r–5(h)(1)(A)) is amended by striking ‘‘is de-
scribed in section 1902(a)(10)(A)(ii)(VI)’’ and inserting 
‘‘is being provided medical assistance for home and com-
munity-based services under subsection (c), (d), (e), (i), 
or (j) of section 1915 or pursuant to section 1115’’. 
SEC. 805. COUNTY MEDICAID HEALTH INSURING ORGANI-
ZATIONS . 
(a) IN GENERAL.—Section 9517(c)(3) of the Consoli-
dated Omnibus Budget Reconciliation Act of 1985 (42 
U.S.C. 1396b note), as added by section 4734 of the Om-
nibus Budget Reconciliation Act of 1990 and as amended 
by section 704 of the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000, is 
amended— 
(1) in subparagraph (A), by inserting ‘‘, in the 
case of any health insuring organization described in 
such subparagraph that is operated by a public enti-
ty established by Ventura County, and in the case 
of any health insuring organization described in such 
subparagraph that is operated by a public entity es-
tablished by Merced County’’ after ‘‘described in 
subparagraph (B)’’; and 
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(2) in subparagraph (C), by striking ‘‘14 per-
cent’’ and inserting ‘‘16 percent’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act. 
Subtitle B—Payments 
SEC. 811. PAYMENTS FOR PUERTO RICO AND TERRITORIES. 
(a) PAYMENT CEILING.—Section 1108(g) of the So-
cial Security Act (42 U.S.C. 1308(g)) is amended— 
(1) in paragraph (2), by striking ‘‘paragraph 
(3)’’ and inserting ‘‘paragraphs (3) and (4)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(4) FISCAL YEARS 2009 THROUGH 2012 FOR 
CERTAIN INSULAR AREAS.—The amounts otherwise 
determined under this subsection for Puerto Rico, 
the Virgin Islands, Guam, the Northern Mariana Is-
lands, and American Samoa for fiscal years 2009 
through 2012 shall be increased by the following 
amounts: 
‘‘(A) PUERTO
RICO.—For Puerto Rico, 
$250,000,000 
for 
fiscal 
year 
2009, 
$350,000,000 
for 
fiscal 
year 
2010, 
$500,000,000 
for 
fiscal 
year 
2011, 
and 
$600,000,000 for fiscal year 2012. 
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‘‘(B) VIRGIN ISLANDS.—For the Virgin Is-
lands, $5,000,000 for each of fiscal years 2009 
through 2012. 
‘‘(C) GUAM .—For Guam, $5,000,000 for 
each of fiscal years 2009 through 2012. 
‘‘(D) NORTHERN MARIANA ISLANDS.—For 
the Northern Mariana Islands, $4,000,000 for 
each of fiscal years 2009 through 2012. 
‘‘(E) AMERICAN
SAMOA.—For American 
Samoa, $4,000,000 for each of fiscal years 
2009 through 2012. 
Such amounts shall not be taken into account in ap-
plying paragraph (2) for fiscal years 2009 through 
2012 but shall be taken into account in applying 
such paragraph for fiscal year 2013 and subsequent 
fiscal years.’’. 
(b) REMOVAL OF FEDERAL MATCHING PAYMENTS 
FOR IMPROVING DATA REPORTING SYSTEMS FROM THE 
OVERALL LIMIT ON PAYMENTS TO TERRITORIES UNDER 
TITLE XIX.—Such section is further amended by adding 
at the end the following new paragraph: 
‘‘(5) EXCLUSION OF CERTAIN EXPENDITURES 
FROM PAYMENT LIMITS.—With respect to fiscal year 
2008 and each fiscal year thereafter, if Puerto Rico, 
the Virgin Islands, Guam, the Northern Mariana Is-
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lands, or American Samoa qualify for a payment 
under subparagraph (A)(i) or (B) of section 
1903(a)(3) for a calendar quarter of such fiscal year 
with respect to expenditures for improvements in 
data reporting systems described in such subpara-
graph, the limitation on expenditures under title 
XIX for such commonwealth or territory otherwise 
determined under subsection (f) and this subsection 
for such fiscal year shall be determined without re-
gard to payment for such expenditures.’’. 
SEC. 812. MEDICAID DRUG REBATE. 
Paragraph (1)(B)(i) of section 1927(c) of the Social 
Security Act (42 U.S.C. 1396r–8(c)) is amended— 
(1) by striking ‘‘and’’ at the end of subclause 
(IV); 
(2) in subclause (V)— 
(A) by inserting ‘‘and before January 1, 
2008,’’ after ‘‘December 31, 1995,’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
clause: 
‘‘(VI) after December 31, 2007, 
is 22.1 percent.’’. 
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SEC. 813. ADJUSTMENT IN COMPUTATION OF MEDICAID 
FMAP TO DISREGARD AN EXTRAORDINARY 
EMPLOYER PENSION CONTRIBUTION. 
(a) IN GENERAL.—Only for purposes of computing 
the Federal medical assistance percentage under section 
1905(b) of the Social Security Act (42 U.S.C. 1396d(b)) 
for a State for a fiscal year (beginning with fiscal year 
2006), any significantly disproportionate employer pension 
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 Alas-
ka) and Hawaii. 
(b) SIGNIFICANTLY DISPROPORTIONATE EMPLOYER 
PENSION CONTRIBUTION.—For purposes of subsection 
(a), a significantly disproportionate employer pension con-
tribution described in this subsection with respect to a 
State for a fiscal year is an employer contribution towards 
pensions that is allocated to such State for a period if the 
aggregate amount so allocated exceeds 25 percent of the 
total increase in personal income in that State for the pe-
riod involved. 
SEC. 814. MORATORIUM ON CERTAIN PAYMENT RESTRIC-
TIONS. 
Notwithstanding any other provision of law, the Sec-
retary of Health and Human Services shall not, prior to 
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the date that is 1 year after the date of enactment of this 
Act, take any action (through promulgation of regulation, 
issuance of regulatory guidance, use of federal payment 
audit procedures, or other administrative action, policy, or 
practice, including a Medical Assistance Manual trans-
mittal or letter to State Medicaid directors) to restrict cov-
erage or payment under title XIX of the Social Security 
Act for rehabilitation services, or school-based administra-
tion, transportation, or medical services if such restric-
tions are more restrictive in any aspect than those applied 
to such coverage or payment as of July 1, 2007. 
SEC. 815. TENNESSEE DSH. 
The DSH allotments for Tennessee for each fiscal 
year beginning with fiscal year 2008 under subsection 
(f)(3) of section 1923 of the Social Security Act (42 
U.S.C. 13961396r–4) are deemed to be $30,000,000. The 
Secretary of Health and Human Services may impose a 
limitation on the total amount of payments made to hos-
pitals under the TennCare Section 1115 waiver only to 
the extent that such limitation is necessary to ensure that 
a hospital does not receive payment in excess of the 
amounts described in subsection (f) of such section or as 
necessary to ensure that the waiver remains budget neu-
tral. 
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SEC. 816. 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 con-
strued by the Secretary of Health and Human Services 
as prohibiting a State’s use of funds as the non-Federal 
share of expenditures under title XIX of such Act where 
such funds are transferred from or certified by a publicly- 
owned regional medical center located in another State 
and described in subsection (b), so long as the Secretary 
determines 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. 817. EXTENSION OF SSI WEB-BASED ASSET DEM-
ONSTRATION PROJECT TO THE MEDICAID 
PROGRAM. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall provide for the application to asset 
eligibility determinations under the Medicaid program 
under title XIX of the Social Security Act of the auto-
mated, secure, web-based asset verification request and re-
sponse process being applied for determining eligibility for 
benefits under the Supplemental Security Income (SSI) 
program under title XVI of such Act under a demonstra-
tion project conducted under the authority of section 
1631(e)(1)(B)(ii) 
of 
such 
Act 
(42 
U.S.C. 
1383(e)(1)(B)(ii)). 
(b) LIMITATION.—Such application shall only extend 
to those States in which such demonstration project is op-
erating and only for the period in which such project is 
otherwise provided. 
(c) RULES OF APPLICATION.—For purposes of car-
rying out subsection (a), notwithstanding any other provi-
sion of law, information obtained from a financial institu-
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tion that is used for purposes of eligibility determinations 
under such demonstration project with respect to the Sec-
retary of Health and Human Services under the SSI pro-
gram may also be shared and used by States for purposes 
of eligibility determinations under the Medicaid program. 
In applying section 1631(e)(1)(B)(ii) of the Social Secu-
rity Act under this subsection, references to the Commis-
sioner of Social Security and benefits under title XVI of 
such Act shall be treated as including a reference to a 
State described in subsection (b) and medical assistance 
under title XIX of such Act provided by such a State. 
Subtitle C—Miscellaneous 
SEC. 821. DEMONSTRATION PROJECT FOR EMPLOYER BUY- 
IN. 
Title XXI of the Social Security Act, as amended by 
section 133(a)(1), is further amended by adding at the 
end the following new section: 
‘‘SEC. 2112. DEMONSTRATION PROJECT FOR EMPLOYER 
BUY-IN. 
‘‘(a) AUTHORITY.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a demonstration project under which up to 10 
States (each referred to in this section as a ‘partici-
pating State’) that meets the conditions of para-
graph (2) may provide, under its State child health 
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plan (notwithstanding section 2102(b)(3)(C)) for a 
period of 5 years, for child health assistance in rela-
tion to family coverage described in subsection (d) 
for children who would be targeted low-income chil-
dren but for coverage as beneficiaries under a group 
health plan as the children of participants by virtue 
of a qualifying employer’s contribution under sub-
section (b)(2). 
‘‘(2) CONDITIONS.—The conditions described in 
this paragraph for a State are as follows: 
‘‘(A) NO WAITING LISTS.—The State does 
not impose any waiting list, enrollment cap, or 
similar limitation on enrollment of targeted low- 
income children under the State child health 
plan. 
‘‘(B) ELIGIBILITY
OF
ALL
CHILDREN 
UNDER 200 PERCENT OF POVERTY LINE.—The 
State is applying an income eligibility level 
under section 2110(b)(1)(B)(ii)(I) that is at 
least 200 percent of the poverty line. 
‘‘(3) QUALIFYING
EMPLOYER
DEFINED.—In 
this section, the term ‘qualifying employer’ means an 
employer that has a majority of its workforce com-
posed of full-time workers with family incomes rea-
sonably estimated by the employer (based on wage 
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information available to the employer) at or below 
200 percent of the poverty line. In applying the pre-
vious sentence, two part-time workers shall be treat-
ed as a single full-time worker. 
‘‘(b) FUNDING.—A demonstration project under this 
section in a participating State shall be funded, with re-
spect to assistance provided to children described in sub-
section (a)(1), consistent with the following: 
‘‘(1) LIMITED
FAMILY
CONTRIBUTION.—The 
family involved shall be responsible for providing 
payment towards the premium for such assistance of 
such amount as the State may specify, except that 
the limitations on cost-sharing (including premiums) 
under paragraphs (2) and (3) of section 2103(e) 
shall apply to all cost-sharing of such family under 
this section. 
‘‘(2) MINIMUM
EMPLOYER
CONTRIBUTION.— 
The qualifying employer involved shall be responsible 
for providing payment to the State child health plan 
in the State of at least 50 percent of the portion of 
the cost (as determined by the State) of the family 
coverage in which the employer is enrolling the fam-
ily that exceeds the amount of the family contribu-
tion under paragraph (1) applied towards such cov-
erage. 
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