540 
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connected in a manner that provides, in 
accordance with law and standards appli-
cable to the exchange of information, for 
the electronic exchange of health informa-
tion to improve the quality of health care, 
such as promoting care coordination. 
‘‘(iii)
REPORTING
ON
MEASURES 
USING
EHR.—Subject
to
subparagraph 
(B)(ii) and using such certified EHR tech-
nology, the eligible hospital submits infor-
mation for such period, in a form and 
manner specified by the Secretary, on such 
clinical quality measures and such other 
measures
as
selected
by
the
Secretary 
under subparagraph (B)(i). 
The Secretary shall seek to improve the use of 
electronic health records and health care quality 
over time by requiring more stringent measures 
of meaningful use selected under this para-
graph. 
‘‘(B) REPORTING ON MEASURES.— 
‘‘(i) SELECTION.—The Secretary shall 
select measures for purposes of subpara-
graph (A)(iii) but only consistent with the 
following: 
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‘‘(I) The Secretary shall provide 
preference to clinical quality measures 
that have been selected for purposes 
of applying subsection (b)(3)(B)(viii) 
or that have been endorsed by the en-
tity with a contract with the Secretary 
under section 1890(a). 
‘‘(II) Prior to any measure (other 
than a clinical quality measure that 
has been selected for purposes of ap-
plying
subsection
(b)(3)(B)(viii)) 
being selected under this subpara-
graph, the Secretary shall publish in 
the Federal Register such measure 
and provide for a period of public 
comment on such measure. 
‘‘(ii)
LIMITATIONS.—The
Secretary 
may not require the electronic reporting of 
information on clinical quality measures 
under
subparagraph
(A)(iii)
unless
the 
Secretary has the capacity to accept the in-
formation electronically, which may be on 
a pilot basis. 
‘‘(iii) COORDINATION OF REPORTING 
OF
INFORMATION.—In
selecting
such 
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measures, and in establishing the form and 
manner for reporting measures under sub-
paragraph (A)(iii), the Secretary shall seek 
to avoid redundant or duplicative reporting 
with reporting otherwise required, includ-
ing
reporting
under
subsection 
(b)(3)(B)(viii). 
‘‘(C) DEMONSTRATION
OF
MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY AND IN-
FORMATION EXCHANGE.— 
‘‘(i) IN
GENERAL.—A hospital may 
satisfy the demonstration requirement of 
clauses (i) and (ii) of subparagraph (A) 
through means specified by the Secretary, 
which may include— 
‘‘(I) an attestation; 
‘‘(II) the submission of claims 
with appropriate coding (such as a 
code indicating that inpatient care 
was documented using certified EHR 
technology); 
‘‘(III) a survey response; 
‘‘(IV) reporting under subpara-
graph (A)(iii); and 
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‘‘(V) other means specified by the 
Secretary. 
‘‘(ii) USE
OF
PART
D
DATA.—Not-
withstanding sections 1860D–15(d)(2)(B) 
and 1860D–15(f)(2), the Secretary may 
use data regarding drug claims submitted 
for purposes of section 1860D–15 that are 
necessary for purposes of subparagraph 
(A). 
‘‘(4) APPLICATION.— 
‘‘(A)
LIMITATIONS
ON
REVIEW.—There 
shall be no administrative or judicial review 
under section 1869, section 1878, or otherwise 
of the determination of any incentive payment 
under this subsection and the payment adjust-
ment under subsection (b)(3)(B)(ix), including 
the determination of a meaningful EHR user 
under paragraph (3), determination of meas-
ures applicable to services furnished by eligible 
hospitals under this subsection, and the excep-
tion under subsection (b)(3)(B)(ix)(II). 
‘‘(B) POSTING
ON
WEBSITE.—The Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services, in an 
easily understandable format, a list of the 
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names of the eligible hospitals that are mean-
ingful EHR users under this subsection or sub-
section (b)(3)(B)(ix) and other relevant data as 
determined appropriate by the Secretary. The 
Secretary shall ensure that a hospital has the 
opportunity to review the other relevant data 
that are to be made public with respect to the 
hospital prior to such data being made public. 
‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 
The term ‘certified EHR technology’ has the mean-
ing given such term in section 1848(o)(4). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eli-
gible hospital’ means a subsection (d) hospital. 
‘‘(B) REPORTING PERIOD.—The term ‘re-
porting period’ means any period (or periods), 
with respect to a payment year, as specified by 
the Secretary.’’. 
(b) INCENTIVE MARKET BASKET ADJUSTMENT.— 
Section 1886(b)(3)(B) of the Social Security Act (42 
U.S.C. 1395ww(b)(3)(B)) is amended— 
(1) in clause (viii)(I), by inserting ‘‘(or, begin-
ning with fiscal year 2016, by one-quarter)’’ after 
‘‘2.0 percentage points’’; and 
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(2) by adding at the end the following new 
clause: 
‘‘(ix)(I) For purposes of clause (i) for fiscal year 
2016 and each subsequent fiscal year, in the case of an 
eligible hospital (as defined in subsection (n)(6)(A)) that 
is not a meaningful EHR user (as defined in subsection 
(n)(3)) for the reporting period for such fiscal year, three- 
quarters of the applicable percentage increase otherwise 
applicable under clause (i) for such fiscal year shall be 
reduced by 331⁄3 percent for fiscal year 2016, 662⁄3 per-
cent for fiscal year 2017, and 100 percent for fiscal year 
2018 and each subsequent fiscal year. Such reduction 
shall apply only with respect to the fiscal year involved 
and the Secretary shall not take into account such reduc-
tion in computing the applicable percentage increase under 
clause (i) for a subsequent fiscal year. 
‘‘(II) The Secretary may, on a case-by-case basis, ex-
empt a subsection (d) hospital from the application of sub-
clause (I) with respect to a fiscal year if the Secretary 
determines, subject to annual renewal, that requiring such 
hospital to be a meaningful EHR user during such fiscal 
year would result in a significant hardship, such as in the 
case of a hospital in a rural area without sufficient Inter-
net access. In no case may a hospital be granted an ex-
emption under this subclause for more than 5 years. 
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‘‘(III) For fiscal year 2016 and each subsequent fis-
cal year, a State in which hospitals are paid for services 
under section 1814(b)(3) shall adjust the payments to 
each subsection (d) hospital in the State that is not a 
meaningful EHR user (as defined in subsection (n)(3)) 
in a manner that is designed to result in an aggregate 
reduction in payments to hospitals in the State that is 
equivalent to the aggregate reduction that would have oc-
curred if payments had been reduced to each subsection 
(d) hospital in the State in a manner comparable to the 
reduction under the previous provisions of this clause. The 
State shall report to the Secretary the methodology it will 
use to make the payment adjustment under the previous 
sentence. 
‘‘(IV) For purposes of this clause, the term ‘reporting 
period’ means, with respect to a fiscal year, any period 
(or periods), with respect to the fiscal year, as specified 
by the Secretary.’’. 
(c) APPLICATION
TO CERTAIN HMO-AFFILIATED 
ELIGIBLE HOSPITALS.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23), as amended by section 
4311(c), is further amended by adding at the end the fol-
lowing new subsection: 
‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN-
TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION 
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AND MEANINGFUL USE
OF CERTIFIED EHR TECH-
NOLOGY.— 
‘‘(1) APPLICATION.—Subject to paragraphs (3) 
and (4), in the case of a qualifying MA organization, 
the
provisions
of
sections
1886(n)
and 
1886(b)(3)(B)(ix) shall apply with respect to eligible 
hospitals described in paragraph (2) of the organiza-
tion which the organization attests under subsection 
(l)(6) to be meaningful EHR users in a similar man-
ner as they apply to eligible hospitals under such 
sections. Incentive payments under paragraph (3) 
shall be made to and payment adjustments under 
paragraph (4) shall apply to such qualifying organi-
zations. 
‘‘(2) ELIGIBLE
HOSPITAL
DESCRIBED.—With 
respect to a qualifying MA organization, an eligible 
hospital described in this paragraph is an eligible 
hospital that is under common corporate governance 
with such organization and serves individuals en-
rolled under an MA plan offered by such organiza-
tion. 
‘‘(3)
ELIGIBLE
HOSPITAL
INCENTIVE
PAY-
MENTS.— 
‘‘(A) IN
GENERAL.—In applying section 
1886(n)(2) under paragraph (1), instead of the 
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additional
payment
amount
under
section 
1886(n)(2),
there
shall
be
substituted
an 
amount determined by the Secretary to be simi-
lar to the estimated amount in the aggregate 
that would be payable if payment for services 
furnished by such hospitals was payable under 
part A instead of this part. In implementing the 
previous sentence, the Secretary— 
‘‘(i) shall, insofar as data to deter-
mine the discharge related amount under 
section 1886(n)(2)(C) for an eligible hos-
pital are not available to the Secretary, use 
such alternative data and methodology to 
estimate such discharge related amount as 
the Secretary determines appropriate; and 
‘‘(ii) shall, insofar as data to deter-
mine the medicare share described in sec-
tion 1886(n)(2)(D) for an eligible hospital 
are not available to the Secretary, use such 
alternative data and methodology to esti-
mate such share, which data and method-
ology may include use of the inpatient bed 
days (or discharges) with respect to an eli-
gible hospital during the appropriate pe-
riod which are attributable to both individ-
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549 
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uals for whom payment may be made 
under part A or individuals enrolled in an 
MA plan under a Medicare Advantage or-
ganization under this part as a proportion 
of the total number of patient-bed-days (or 
discharges) with respect to such hospital 
during such period. 
‘‘(B)
AVOIDING
DUPLICATION
OF
PAY-
MENTS.— 
‘‘(i) IN GENERAL.—In the case of a 
hospital that for a payment year is an eli-
gible hospital described in paragraph (2), 
is
an
eligible
hospital
under
section 
1886(n), and for which at least one-third 
of their discharges (or bed-days) of Medi-
care patients for the year are covered 
under part A, payment for the payment 
year shall be made only under section 
1886(n) and not under this subsection. 
‘‘(ii) METHODS.—In the case of a 
hospital that is an eligible hospital de-
scribed in paragraph (2) and also is eligi-
ble for an incentive payment under section 
1886(n) but is not described in clause (i) 
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for the same payment period, the Secretary 
shall develop a process— 
‘‘(I) to ensure that duplicate pay-
ments are not made with respect to 
an eligible hospital both under this 
subsection and under section 1886(n); 
and 
‘‘(II) to collect data from Medi-
care Advantage organizations to en-
sure against such duplicate payments. 
‘‘(4) PAYMENT ADJUSTMENT.— 
‘‘(A) Subject to paragraph (3), in the case 
of a qualifying MA organization (as defined in 
section 1853(l)(5)), if, according to the attesta-
tion of the organization submitted under sub-
section (l)(6) for an applicable period, one or 
more eligible hospitals (as defined in section 
1886(n)(6)(A)) that are under common cor-
porate governance with such organization and 
that serve individuals enrolled under a plan of-
fered by such organization are not meaningful 
EHR users (as defined in section 1886(n)(3)) 
with respect to a period, the payment amount 
payable under this section for such organization 
for such period shall be the percent specified in 
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subparagraph (B) for such period of the pay-
ment amount otherwise provided under this sec-
tion for such period. 
‘‘(B) SPECIFIED
PERCENT.—The percent 
specified under this subparagraph for a year is 
100 percent minus a number of percentage 
points equal to the product of— 
‘‘(i) the number of the percentage 
point
reduction
effected
under
section 
1886(b)(3)(B)(ix)(I) for the period; and 
‘‘(ii) the Medicare hospital expendi-
ture proportion specified in subparagraph 
(C) for the year. 
‘‘(C) MEDICARE HOSPITAL EXPENDITURE 
PROPORTION.—The Medicare hospital expendi-
ture proportion under this subparagraph for a 
year is the Secretary’s estimate of the propor-
tion, of the expenditures under parts A and B 
that are not attributable to this part, that are 
attributable to expenditures for inpatient hos-
pital services. 
‘‘(D) APPLICATION OF PAYMENT ADJUST-
MENT.—In the case that a qualifying MA orga-
nization attests that not all eligible hospitals 
are meaningful EHR users with respect to an 
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applicable period, the Secretary shall apply the 
payment
adjustment
under
this
paragraph 
based on a methodology specified by the Sec-
retary, taking into account the proportion of 
such eligible hospitals, or discharges from such 
hospitals, that are not meaningful EHR users 
for such period.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1814(b) of the Social Security Act 
(42 U.S.C. 1395f(b)) is amended— 
(A) in paragraph (3), in the matter pre-
ceding subparagraph (A), by inserting ‘‘, sub-
ject to section 1886(d)(3)(B)(ix)(III),’’ after 
‘‘then’’; and 
(B) by adding at the end the following: 
‘‘For purposes of applying paragraph (3), there 
shall be taken into account incentive payments, 
and
payment
adjustments
under
subsection 
(b)(3)(B)(ix) or (n) of section 1886.’’. 
(2) Section 1851(i)(1) of the Social Security 
Act (42 U.S.C. 1395w–21(i)(1)) is amended by 
striking
‘‘and
1886(h)(3)(D)’’
and
inserting 
‘‘1886(h)(3)(D), and 1853(m)’’. 
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(3) Section 1853 of the Social Security Act (42 
U.S.C.
1395w–23),
as
amended
by
section 
4311(d)(1), is amended— 
(A) in subsection (c)— 
(i) in paragraph (1)(D)(i), by striking 
‘‘1848(o)’’ and inserting ‘‘, 1848(o), and 
1886(n)’’; and 
(ii) in paragraph (6)(A), by inserting 
‘‘and subsections (b)(3)(B)(ix) and (n) of 
section 1886’’ after ‘‘section 1848’’; and 
(B) in subsection (f), by inserting ‘‘and 
subsection (m)’’ after ‘‘under subsection (l)’’. 
SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IM-
PLEMENTATION FUNDING. 
(a) PREMIUM HOLD HARMLESS.— 
(1) IN GENERAL.—Section 1839(a)(1) of the 
Social Security Act (42 U.S.C. 1395r(a)(1)) is 
amended by adding at the end the following: ‘‘In ap-
plying this paragraph there shall not be taken into 
account additional payments under section 1848(o) 
and section 1853(l)(3) and the Government con-
tribution under section 1844(a)(3).’’. 
(2) PAYMENT.—Section 1844(a) of such Act 
(42 U.S.C. 1395w(a)) is amended— 
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(A) in paragraph (2), by striking the pe-
riod at the end and inserting ‘‘; plus’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) a Government contribution equal to the 
amount of payment incentives payable under sec-
tions 1848(o) and 1853(l)(3).’’. 
(b) MEDICARE IMPROVEMENT FUND.—Section 1898 
of the Social Security Act (42 U.S.C. 1395iii), as added 
by section 7002(a) of the Supplemental Appropriations 
Act, 2008 (Public Law 110–252) and as amended by sec-
tion 188(a)(2) of the Medicare Improvements for Patients 
and Providers Act of 2008 (Public Law 110–275; 122 
Stat. 2589) and by section 6 of the QI Program Supple-
mental Funding Act of 2008, is amended— 
(1) in subsection (a)— 
(A) by inserting ‘‘medicare’’ before ‘‘fee- 
for-service’’; and 
(B) by inserting before the period at the 
end the following: ‘‘including, but not limited 
to, an increase in the conversion factor under 
section 1848(d) to address, in whole or in part, 
any projected shortfall in the conversion factor 
for 2014 relative to the conversion factor for 
2008 and adjustments to payments for items 
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and services furnished by providers of services 
and suppliers under such original medicare fee- 
for-service program’’; and 
(2) in subsection (b)— 
(A) in paragraph (1), by striking ‘‘during 
fiscal year 2014,’’ and all that follows and in-
serting the following: ‘‘during— 
‘‘(A) fiscal year 2014, $22,290,000,000; 
and 
‘‘(B) fiscal year 2020 and each subsequent 
fiscal year, the Secretary’s estimate, as of July 
1 of the fiscal year, of the aggregate reduction 
in expenditures under this title during the pre-
ceding fiscal year directly resulting from the re-
duction in payment amounts under sections 
1848(a)(7),
1853(l)(4),
1853(m)(4),
and 
1886(b)(3)(B)(ix).’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) NO
EFFECT
ON
PAYMENTS
IN
SUBSE-
QUENT YEARS.—In the case that expenditures from 
the Fund are applied to, or otherwise affect, a pay-
ment rate for an item or service under this title for 
a year, the payment rate for such item or service 
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shall be computed for a subsequent year as if such 
application or effect had never occurred.’’. 
(c) IMPLEMENTATION FUNDING.—In addition to 
funds otherwise available, out of any funds in the Treas-
ury not otherwise appropriated, there are appropriated to 
the Secretary of Health and Human Services for the Cen-
ter for Medicare & Medicaid Services Program Manage-
ment Account, $60,000,000 for each of fiscal years 2009 
through 2015 and $30,000,000 for each succeeding fiscal 
year through fiscal year 2019, which shall be available for 
purposes of carrying out the provisions of (and amend-
ments made by) this part. Amounts appropriated under 
this subsection for a fiscal year shall be available until ex-
pended. 
SEC. 4314. STUDY ON APPLICATION OF EHR PAYMENT IN-
CENTIVES FOR PROVIDERS NOT RECEIVING 
OTHER INCENTIVE PAYMENTS. 
(a) STUDY.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall conduct a study to determine 
the extent to which and manner in which payment 
incentives (such as under title XVIII or XIX of the 
Social Security Act) and other funding for purposes 
of implementing and using certified EHR technology 
(as defined in section 3000 of the Public Health 
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Service Act) should be made available to health care 
providers who are receiving minimal or no payment 
incentives or other funding under this Act, under 
title XVIII or XIX of the Social Security Act, or 
otherwise, for such purposes. 
(2) DETAILS OF STUDY.—Such study shall in-
clude an examination of— 
(A) the adoption rates of certified EHR 
technology by such health care providers; 
(B) the clinical utility of such technology 
by such health care providers; 
(C) whether the services furnished by such 
health care providers are appropriate for or 
would benefit from the use of such technology; 
(D) the extent to which such health care 
providers work in settings that might otherwise 
receive an incentive payment or other funding 
under this Act, title XVIII or XIX of the Social 
Security Act, or otherwise; 
(E) the potential costs and the potential 
benefits of making payment incentives and 
other funding available to such health care pro-
viders; and 
(F) any other issues the Secretary deems 
to be appropriate. 
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(b) REPORT.—Not later than June 30, 2010, the 
Secretary shall submit to Congress a report on the find-
ings and conclusions of the study conducted under sub-
section (a). 
PART III—MEDICAID FUNDING 
SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPER-
ATION PAYMENTS; IMPLEMENTATION FUND-
ING. 
(a) IN GENERAL.—Section 1903 of the Social Secu-
rity Act (42 U.S.C. 1396b) is amended— 
(1) in subsection (a)(3)— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (D); 
(B) by striking ‘‘plus’’ at the end of sub-
paragraph (E) and inserting ‘‘and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(F)(i) 100 percent of so much of the 
sums expended during such quarter as are at-
tributable to payments for certified EHR tech-
nology (and support services including mainte-
nance and training that is for, or is necessary 
for the adoption and operation of, such tech-
nology) by Medicaid providers described in sub-
section (t)(1); and 
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‘‘(ii) 90 percent of so much of the sums ex-
pended during such quarter as are attributable 
to payments for reasonable administrative ex-
penses related to the administration of pay-
ments described in clause (i) if the State meets 
the condition described in subsection (t)(9); 
plus’’; and 
(2) by inserting after subsection (s) the fol-
lowing new subsection: 
‘‘(t)(1)(A) For purposes of subsection (a)(3)(F), the 
payments for certified EHR technology (and support serv-
ices including maintenance that is for, or is necessary for 
the operation of, such technology) by Medicaid providers 
described in this paragraph are payments made by the 
State in accordance with this subsection of the applicable 
percent (as specified in subparagraph (B)) of the net al-
lowable costs of Medicaid providers (as defined in para-
graph (2)) for such technology (and support services). 
‘‘(B) For purposes of subparagraph (A), the applica-
ble percent is— 
‘‘(i) in the case of a Medicaid provider de-
scribed in paragraph (2)(A), 85 percent; and 
‘‘(ii) in the case of a Medicaid provider de-
scribed in paragraph (2)(B), 100 percent. 
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‘‘(2) In this subsection and subsection (a)(3)(F), the 
term ‘Medicaid provider’ means— 
‘‘(A) an eligible professional (as defined in 
paragraph (3)(B)) who is not hospital-based and has 
at least 30 percent of the professional’s patient vol-
ume (as estimated in accordance with standards es-
tablished by the Secretary) attributable to individ-
uals who are receiving medical assistance under this 
title; and 
‘‘(B)(i) a children’s hospital, (ii) an acute-care 
hospital that is not described in clause (i) and that 
has at least 10 percent of the hospital’s patient vol-
ume (as estimated in accordance with standards es-
tablished by the Secretary) attributable to individ-
uals who are receiving medical assistance under this 
title, or (iii) a Federally-qualified health center or 
rural health clinic that has at least 30 percent of the 
center’s or clinic’s patient volume (as estimated in 
accordance with standards established by the Sec-
retary) attributable to individuals who are receiving 
medical assistance under this title. 
An eligible professional shall not qualify as a Medicaid 
provider under this subsection unless the eligible profes-
sional has waived, in a manner specified by the Secretary, 
any right to payment under section 1848(o) with respect 
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to the adoption or support of certified EHR technology 
by the professional. In applying clauses (ii) and (iii) of 
subparagraph (B), the standards established by the Sec-
retary for patient volume shall include individuals enrolled 
in a Medicaid managed care plan (under section 1903(m) 
or section 1932). 
‘‘(3) In this subsection and subsection (a)(3)(F): 
‘‘(A)
The
term
‘certified
EHR
technology’ 
means a qualified electronic health record (as de-
fined in 3000(13) of the Public Health Service Act) 
that is certified pursuant to section 3001(c)(5) of 
such Act as meeting standards adopted under sec-
tion 3004 of such Act that are applicable to the type 
of record involved (as determined by the Secretary, 
such as an ambulatory electronic health record for 
office-based physicians or an inpatient hospital elec-
tronic health record for hospitals). 
‘‘(B) The term ‘eligible professional’ means a 
physician as defined in paragraphs (1) and (2) of 
section 1861(r), and includes a certified nurse mid- 
wife and a nurse practitioner. 
‘‘(C) The term ‘hospital-based’ means, with re-
spect to an eligible professional, a professional (such 
as a pathologist, anesthesiologist, or emergency phy-
sician) who furnishes substantially all of the individ-
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ual’s
professional
services
in
a
hospital
setting 
(whether inpatient or outpatient) and through the 
use of the facilities and equipment, including com-
puter equipment, of the hospital. 
‘‘(4)(A) The term ‘allowable costs’ means, with re-
spect to certified EHR technology of a Medicaid provider, 
costs of such technology (and support services including 
maintenance and training that is for, or is necessary for 
the adoption and operation of, such technology) as deter-
mined by the Secretary to be reasonable. 
‘‘(B) The term ‘net allowable costs’ means allowable 
costs reduced by any payment that is made to the Med-
icaid provider involved from any other source that is di-
rectly attributable to payment for certified EHR tech-
nology or services described in subparagraph (A). 
‘‘(C) In no case shall— 
‘‘(i) the aggregate allowable costs under this 
subsection (covering one or more years) with respect 
to
a
Medicaid
provider
described
in
paragraph 
(2)(A) for purchase and initial implementation of 
certified EHR technology (and services described in 
subparagraph (A)) exceed $25,000 or include costs 
over a period of longer than 5 years; 
‘‘(ii) for costs not described in clause (i) relat-
ing to the operation, maintenance, or use of certified 
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EHR technology, the annual allowable costs under 
this subsection with respect to such a Medicaid pro-
vider for costs not described in clause (i) for any 
year exceed $10,000; 
‘‘(iii) payment described in paragraph (1) for 
costs described in clause (ii) be made with respect 
to such a Medicaid provider over a period of more 
than 5 years; 
‘‘(iv) the aggregate allowable costs under this 
subsection with respect to such a Medicaid provider 
for all costs exceed $75,000; or 
‘‘(v) the allowable costs, whether for purchase 
and initial implementation, maintenance, or other-
wise, for a Medicaid provider described in paragraph 
(2)(B)(iii) exceed such aggregate or annual limita-
tion as the Secretary shall establish, based on an 
amount determined by the Secretary as being ade-
quate to adopt and maintain certified EHR tech-
nology, consistent with paragraph (6). 
‘‘(5) Payments described in paragraph (1) are not in 
accordance with this subsection unless the following re-
quirements are met: 
‘‘(A) The State provides assurances satisfactory 
to the Secretary that amounts received under sub-
section (a)(3)(F) with respect to costs of a Medicaid 
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provider are paid directly to such provider without 
any deduction or rebate. 
‘‘(B) Such Medicaid provider is responsible for 
payment of the costs described in such paragraph 
that are not provided under this title. 
‘‘(C) With respect to payments to such Med-
icaid provider for costs other than costs related to 
the initial adoption of certified EHR technology, the 
Medicaid provider demonstrates meaningful use of 
certified EHR technology through a means that is 
approved by the State and acceptable to the Sec-
retary, and that may be based upon the methodolo-
gies applied under section 1848(o) or 1886(n). 
‘‘(D) To the extent specified by the Secretary, 
the certified EHR technology is compatible with 
State or Federal administrative management sys-
tems. 
‘‘(6)(A) In no case shall the payments described in 
paragraph (1), with respect to a hospital, exceed in the 
aggregate the product of— 
‘‘(i) the overall hospital EHR amount for the 
hospital computed under subparagraph (B); and 
‘‘(ii) the Medicaid share for such hospital com-
puted under subparagraph (C). 
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‘‘(B) For purposes of this paragraph, the overall hos-
pital EHR amount, with respect to a hospital, is the sum 
of
the
applicable
amounts
specified
in
section 
1886(n)(2)(A) for such hospital for the first 4 payment 
years (as estimated by the Secretary) determined as if the 
Medicare share specified in clause (ii) of such section were 
1. The Secretary shall publish in the Federal Register the 
overall hospital EHR amount for each hospital eligible for 
payments under this subsection. In computing amounts 
under paragraph 1886(n)(2)(C) for payment years after 
the first payment year, the Secretary shall assume that 
in subsequent payment years discharges increase at the 
average annual rate of growth of the most recent 3 years 
for which discharge data are available per year. 
‘‘(C) The Medicaid share computed under this sub-
paragraph, for a hospital for a period specified by the Sec-
retary, shall be calculated in the same manner as the 
Medicare share under section 1886(n)(2)(D) for such a 
hospital and period, except that there shall be substituted 
for the numerator under clause (i) of such section the 
amount that is equal to the number of inpatient-bed-days 
(as established by the Secretary) which are attributable 
to individuals who are receiving medical assistance under 
this
title
and
who
are
not
described
in
section 
1886(n)(2)(D)(i). In computing inpatient-bed-days under 
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the previous sentence, the Secretary shall take into ac-
count inpatient-bed-days attributable to inpatient-bed- 
days that are paid for individuals enrolled in a Medicaid 
managed care plan (under section 1903(m) or section 
1932). 
‘‘(7) With respect to health care providers other than 
hospitals, the Secretary shall ensure coordination of the 
different programs for payment of such health care pro-
viders for adoption or use of health information technology 
(including certified EHR technology), as well as payments 
for such health care providers provided under this title or 
title XVIII, to assure no duplication of funding. 
‘‘(8) In carrying out paragraph (5)(C), the State and 
Secretary shall seek, to the maximum extent practicable, 
to avoid duplicative requirements from Federal and State 
Governments to demonstrate meaningful use of certified 
EHR technology under this title and title XVIII. In doing 
so, the Secretary may deem satisfaction of requirements 
for such meaningful use for a payment year under title 
XVIII to be sufficient to qualify as meaningful use under 
this subsection. The Secretary may also specify the report-
ing periods under this subsection in order to carry out this 
paragraph. 
‘‘(9) In order to be provided Federal financial partici-
pation under subsection (a)(3)(F)(ii), a State must dem-
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onstrate to the satisfaction of the Secretary, that the 
State— 
‘‘(A) is using the funds provided for the pur-
poses of administering payments under this sub-
section, including tracking of meaningful use by 
Medicaid providers; 
‘‘(B) is conducting adequate oversight of the 
program under this subsection, including routine 
tracking of meaningful use attestations and report-
ing mechanisms; and 
‘‘(C) is pursuing initiatives to encourage the 
adoption of certified EHR technology to promote 
health care quality and the exchange of health care 
information under this title, subject to applicable 
laws and regulations governing such exchange. 
‘‘(10) The Secretary shall periodically submit reports 
to the Committee on Energy and Commerce of the House 
of Representatives and the Committee on Finance of the 
Senate on status, progress, and oversight of payments 
under paragraph (1).’’. 
(b) IMPLEMENTATION FUNDING.—In addition to 
funds otherwise available, out of any funds in the Treas-
ury not otherwise appropriated, there are appropriated to 
the Secretary of Health and Human Services for the Cen-
ter for Medicare & Medicaid Services Program Manage-
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ment Account, $40,000,000 for each of fiscal years 2009 
through 2015 and $20,000,000 for each succeeding fiscal 
year through fiscal year 2019, which shall be available for 
purposes of carrying out the provisions of (and the amend-
ments made by) this part. Amounts appropriated under 
this subsection for a fiscal year shall be available until ex-
pended. 
SEC. 4322. MEDICAID NURSING FACILITY GRANT PROGRAM. 
(a) IN GENERAL.—The Secretary shall establish a 
grant program to enhance the meaningful use of certified 
electronic health records in nursing facilities. In estab-
lishing such program, the Secretary shall use payment in-
centives for meaningful use of certified EHR technology, 
similar to those specified in sections 4311, 4312, and 
4321, as appropriate. For the purpose of such incentives, 
the Secretary shall define meaningful use in a manner so 
as to be consistent with such sections to the extent prac-
ticable. The Secretary shall award funds to not more than 
10 States to carry out activities under this section. 
(b) ACTIVITIES.—The Secretary shall require a State 
participating in the grant program to— 
(1) provide payment incentives to nursing facili-
ties contingent on the demonstration of meaningful 
use of certified electronic health records; 
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(2) require participating nursing facilities to en-
gage in programs to improve the quality and coordi-
nation of care through the use of certified EHR 
technology, including for persons who are repeatedly 
admitted to acute care hospitals from the nursing 
facility and persons who receive services across mul-
tiple medical and social services providers (including 
facility and community-based providers); and 
(3) provide for training of appropriate per-
sonnel in the use of certified electronic health 
records. 
(c) TARGETING.—The Secretary shall require a State 
participating in the grant program to target nursing facili-
ties with a significant percentage (but not less than the 
average in the State) of the facility’s patient volume (as 
estimated in accordance with standards established by the 
Secretary) attributable to individuals who are receiving 
medical assistance under title XIX of the Social Security 
Act. 
(d) PRIORITY.—In making grants under this section, 
the Secretary shall give priority to States with a high pro-
portion of total national nursing facility days paid under 
title XIX of the Social Security Act. 
(e) LIMITATIONS ON USE OF FUNDS.—A State may 
not make payments to a nursing facility in excess of 90 
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percent of the costs of such nursing facility for the adop-
tion and operation of certified EHR technology. 
(f) APPLICATION.—No grant may be made to a State 
under this section unless the State submits an application 
to the Secretary in a form and manner specified by the 
Secretary. 
(g) REPORT.—Not later than the end of the 3-year 
period beginning on the date that grants under this sec-
tion are first awarded, the Secretary shall submit a report 
to Congress on the activities under this grant program and 
the effect of this program on quality and coordination of 
care under title XIX of the Social Security Act. 
(h) APPROPRIATION.—Out of any money in the 
Treasury not otherwise appropriated, there is appro-
priated to the Secretary of Health and Human Services 
to carry out this section $600,000,000, to remain available 
until expended. 
Subtitle D—Privacy 
SEC. 4400. DEFINITIONS. 
In this subtitle, except as specified otherwise: 
(1) BREACH.—The term ‘‘breach’’ means the 
unauthorized acquisition, access, use, or disclosure 
of protected health information which compromises 
the security, privacy, or integrity of protected health 
information maintained by or on behalf of a person. 
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Such term does not include any unintentional acqui-
sition, access, use, or disclosure of such information 
by an employee or agent of the covered entity or 
business associate involved if such acquisition, ac-
cess, use, or disclosure, respectively, was made in 
good faith and within the course and scope of the 
employment or other contractual relationship of such 
employee or agent, respectively, with the covered en-
tity or business associate and if such information is 
not further acquired, accessed, used, or disclosed by 
such employee or agent. 
(2) BUSINESS ASSOCIATE.—The term ‘‘business 
associate’’ has the meaning given such term in sec-
tion 160.103 of title 45, Code of Federal Regula-
tions. 
(3) COVERED ENTITY.—The term ‘‘covered en-
tity’’ has the meaning given such term in section 
160.103 of title 45, Code of Federal Regulations. 
(4) DISCLOSE.—The terms ‘‘disclose’’ and ‘‘dis-
closure’’ have the meaning given the term ‘‘disclo-
sure’’ in section 160.103 of title 45, Code of Federal 
Regulations. 
(5) ELECTRONIC HEALTH RECORD.—The term 
‘‘electronic
health
record’’
means
an
electronic 
record of health-related information on an individual 
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that is created, gathered, managed, and consulted by 
authorized health care clinicians and staff. 
(6) HEALTH
CARE
OPERATIONS.—The term 
‘‘health care operation’’ has the meaning given such 
term in section 164.501 of title 45, Code of Federal 
Regulations. 
(7)
HEALTH
CARE
PROVIDER.—The
term 
‘‘health care provider’’ has the meaning given such 
term in section 160.103 of title 45, Code of Federal 
Regulations. 
(8) HEALTH PLAN.—The term ‘‘health plan’’ 
has the meaning given such term in section 1171(5) 
of the Social Security Act. 
(9) NATIONAL COORDINATOR.—The term ‘‘Na-
tional Coordinator’’ means the head of the Office of 
the National Coordinator for Health Information 
Technology established under section 3001(a) of the 
Public Health Service Act, as added by section 
4101. 
(10) PAYMENT.—The term ‘‘payment’’ has the 
meaning given such term in section 164.501 of title 
45, Code of Federal Regulations. 
(11) PERSONAL HEALTH RECORD.—The term 
‘‘personal health record’’ means an electronic record 
of individually identifiable health information on an 
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individual that can be drawn from multiple sources 
and that is managed, shared, and controlled by or 
for the individual. 
(12) PROTECTED HEALTH INFORMATION.—The 
term ‘‘protected health information’’ has the mean-
ing given such term in section 160.103 of title 45, 
Code of Federal Regulations. 
(13)
SECRETARY.—The
term
‘‘Secretary’’ 
means the Secretary of Health and Human Services. 
(14) SECURITY.—The term ‘‘security’’ has the 
meaning given such term in section 164.304 of title 
45, Code of Federal Regulations. 
(15) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, 
and the Northern Mariana Islands. 
(16) TREATMENT.—The term ‘‘treatment’’ has 
the meaning given such term in section 164.501 of 
title 45, Code of Federal Regulations. 
(17) USE.—The term ‘‘use’’ has the meaning 
given such term in section 160.103 of title 45, Code 
of Federal Regulations. 
(18)
VENDOR
OF
PERSONAL
HEALTH 
RECORDS.—The term ‘‘vendor of personal health 
records’’ means an entity, other than a covered enti-
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ty (as defined in paragraph (3)), that offers or 
maintains a personal health record. 
PART I—IMPROVED PRIVACY PROVISIONS AND 
SECURITY PROVISIONS 
SEC. 4401. APPLICATION OF SECURITY PROVISIONS AND 
PENALTIES
TO
BUSINESS
ASSOCIATES
OF 
COVERED ENTITIES; ANNUAL GUIDANCE ON 
SECURITY PROVISIONS. 
(a) APPLICATION OF SECURITY PROVISIONS.—Sec-
tions 164.308, 164.310, 164.312, and 164.316 of title 45, 
Code of Federal Regulations, shall apply to a business as-
sociate of a covered entity in the same manner that such 
sections apply to the covered entity. The additional re-
quirements of this title that relate to security and that 
are made applicable with respect to covered entities shall 
also be applicable to such a business associate and shall 
be incorporated into the business associate agreement be-
tween the business associate and the covered entity. 
(b) APPLICATION
OF CIVIL
AND CRIMINAL PEN-
ALTIES.—In the case of a business associate that violates 
any security provision specified in subsection (a), sections 
1176 and 1177 of the Social Security Act (42 U.S.C. 
1320d–5, 1320d–6) shall apply to the business associate 
with respect to such violation in the same manner such 
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sections apply to a covered entity that violates such secu-
rity provision. 
(c) ANNUAL GUIDANCE.—For the first year begin-
ning after the date of the enactment of this Act and annu-
ally thereafter, the Secretary of Health and Human Serv-
ices shall, in consultation with industry stakeholders, an-
nually issue guidance on the most effective and appro-
priate technical safeguards for use in carrying out the sec-
tions referred to in subsection (a) and the security stand-
ards in subpart C of part 164 of title 45, Code of Federal 
Regulations, including the use of standards developed 
under section 3002(b)(2)(B)(vi) of the Public Health 
Service Act, as added by section 4101, as such provisions 
are in effect as of the date before the enactment of this 
Act. 
SEC. 4402. NOTIFICATION IN THE CASE OF BREACH. 
(a) IN GENERAL.—A covered entity that accesses, 
maintains, retains, modifies, records, stores, destroys, or 
otherwise holds, uses, or discloses unsecured protected 
health information (as defined in subsection (h)(1)) shall, 
in the case of a breach of such information that is discov-
ered by the covered entity, notify each individual whose 
unsecured protected health information has been, or is 
reasonably believed by the covered entity to have been, 
accessed, acquired, or disclosed as a result of such breach. 
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(b) NOTIFICATION OF COVERED ENTITY BY BUSI-
NESS ASSOCIATE.—A business associate of a covered enti-
ty that accesses, maintains, retains, modifies, records, 
stores, destroys, or otherwise holds, uses, or discloses un-
secured protected health information shall, following the 
discovery of a breach of such information, notify the cov-
ered entity of such breach. Such notice shall include the 
identification of each individual whose unsecured protected 
health information has been, or is reasonably believed by 
the business associate to have been, accessed, acquired, 
or disclosed during such breach. 
(c) BREACHES TREATED AS DISCOVERED.—For pur-
poses of this section, a breach shall be treated as discov-
ered by a covered entity or by a business associate as of 
the first day on which such breach is known to such entity 
or associate, respectively, (including any person, other 
than the individual committing the breach, that is an em-
ployee, officer, or other agent of such entity or associate, 
respectively) or should reasonably have been known to 
such entity or associate (or person) to have occurred. 
(d) TIMELINESS OF NOTIFICATION.— 
(1) IN GENERAL.—Subject to subsection (g), all 
notifications required under this section shall be 
made without unreasonable delay and in no case 
later than 60 calendar days after the discovery of a 
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breach by the covered entity involved (or business 
associate involved in the case of a notification re-
quired under subsection (b)). 
(2) BURDEN OF PROOF.—The covered entity in-
volved (or business associate involved in the case of 
a notification required under subsection (b)), shall 
have the burden of demonstrating that all notifica-
tions were made as required under this part, includ-
ing evidence demonstrating the necessity of any 
delay. 
(e) METHODS OF NOTICE.— 
(1)
INDIVIDUAL
NOTICE.—Notice
required 
under this section to be provided to an individual, 
with respect to a breach, shall be provided promptly 
and in the following form: 
(A) Written notification by first-class mail 
to the individual (or the next of kin of the indi-
vidual if the individual is deceased) at the last 
known address of the individual or the next of 
kin, respectively, or, if specified as a preference 
by the individual, by electronic mail. The notifi-
cation may be provided in one or more mailings 
as information is available. 
(B) In the case in which there is insuffi-
cient, or out-of-date contact information (in-
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cluding a phone number, email address, or any 
other form of appropriate communication) that 
precludes direct written (or, if specified by the 
individual under subparagraph (A), electronic) 
notification to the individual, a substitute form 
of notice shall be provided, including, in the 
case that there are 10 or more individuals for 
which there is insufficient or out-of-date contact 
information, a conspicuous posting for a period 
determined by the Secretary on the home page 
of the Web site of the covered entity involved or 
notice in major print or broadcast media, in-
cluding major media in geographic areas where 
the individuals affected by the breach likely re-
side. Such a notice in media or web posting will 
include a toll-free phone number where an indi-
vidual can learn whether or not the individual’s 
unsecured protected health information is pos-
sibly included in the breach. 
(C) In any case deemed by the covered en-
tity involved to require urgency because of pos-
sible imminent misuse of unsecured protected 
health information, the covered entity, in addi-
tion to notice provided under subparagraph (A), 
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may provide information to individuals by tele-
phone or other means, as appropriate. 
(2) MEDIA NOTICE.—Notice shall be provided 
to prominent media outlets serving a State or juris-
diction, following the discovery of a breach described 
in subsection (a), if the unsecured protected health 
information of more than 500 residents of such 
State or jurisdiction is, or is reasonably believed to 
have been, accessed, acquired, or disclosed during 
such breach. 
(3) NOTICE TO SECRETARY.—Notice shall be 
provided to the Secretary by covered entities of un-
secured protected health information that has been 
acquired or disclosed in a breach. If the breach was 
with respect to 500 or more individuals than such 
notice must be provided immediately. If the breach 
was with respect to less than 500 individuals, the 
covered entity involved may maintain a log of any 
such breach occurring and annually submit such a 
log to the Secretary documenting such breaches oc-
curring during the year involved. 
(4) POSTING ON HHS PUBLIC WEBSITE.—The 
Secretary shall make available to the public on the 
Internet website of the Department of Health and 
Human Services a list that identifies each covered 
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entity involved in a breach described in subsection 
(a) in which the unsecured protected health informa-
tion of more than 500 individuals is acquired or dis-
closed. 
(f) CONTENT OF NOTIFICATION.—Regardless of the 
method by which notice is provided to individuals under 
this section, notice of a breach shall include, to the extent 
possible, the following: 
(1) A brief description of what happened, in-
cluding the date of the breach and the date of the 
discovery of the breach, if known. 
(2) A description of the types of unsecured pro-
tected health information that were involved in the 
breach (such as full name, Social Security number, 
date of birth, home address, account number, or dis-
ability code). 
(3) The steps individuals should take to protect 
themselves from potential harm resulting from the 
breach. 
(4) A brief description of what the covered enti-
ty involved is doing to investigate the breach, to 
mitigate losses, and to protect against any further 
breaches. 
(5) Contact procedures for individuals to ask 
questions or learn additional information, which 
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shall include a toll-free telephone number, an e-mail 
address, Web site, or postal address. 
(g) DELAY OF NOTIFICATION AUTHORIZED FOR LAW 
ENFORCEMENT PURPOSES.—If a law enforcement official 
determines that a notification, notice, or posting required 
under this section would impede a criminal investigation 
or cause damage to national security, such notification, 
notice, or posting shall be delayed in the same manner 
as provided under section 164.528(a)(2) of title 45, Code 
of Federal Regulations, in the case of a disclosure covered 
under such section. 
(h) UNSECURED PROTECTED HEALTH INFORMA-
TION.— 
(1) DEFINITION.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), for purposes of this section, the 
term ‘‘unsecured protected health information’’ 
means protected health information that is not 
secured through the use of a technology or 
methodology specified by the Secretary in the 
guidance issued under paragraph (2). 
(B) EXCEPTION
IN
CASE
TIMELY
GUID-
ANCE NOT ISSUED.—In the case that the Sec-
retary does not issue guidance under paragraph 
(2) by the date specified in such paragraph, for 
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purposes of this section, the term ‘‘unsecured 
protected health information’’ shall mean pro-
tected health information that is not secured by 
a technology standard that renders protected 
health information unusable, unreadable, or in-
decipherable to unauthorized individuals and is 
developed or endorsed by a standards devel-
oping organization that is accredited by the 
American National Standards Institute. 
(2) GUIDANCE.—For purposes of paragraph (1) 
and section 407(f)(3), not later than the date that 
is 60 days after the date of the enactment of this 
Act, the Secretary shall, after consultation with 
stakeholders, issue (and annually update) guidance 
specifying the technologies and methodologies that 
render
protected
health
information
unusable, 
unreadable, or indecipherable to unauthorized indi-
viduals, including use of standards developed under 
section 3002(b)(2)(B)(vi) of the Public Health Serv-
ice Act, as added by section 4101. 
(i) REPORT TO CONGRESS ON BREACHES.— 
(1) IN GENERAL.—Not later than 12 months 
after the date of the enactment of this Act and an-
nually thereafter, the Secretary shall prepare and 
submit to the Committee on Finance and the Com-
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mittee on Health, Education, Labor, and Pensions 
of the Senate and the Committee on Ways and 
Means and the Committee on Energy and Commerce 
of the House of Representatives a report containing 
the information described in paragraph (2) regard-
ing breaches for which notice was provided to the 
Secretary under subsection (e)(3). 
(2) INFORMATION.—The information described 
in this paragraph regarding breaches specified in 
paragraph (1) shall include— 
(A)
the
number
and
nature
of
such 
breaches; and 
(B) actions taken in response to such 
breaches. 
(j) REGULATIONS; EFFECTIVE DATE.—To carry out 
this section, the Secretary of Health and Human Services 
shall promulgate interim final regulations by not later 
than the date that is 180 days after the date of the enact-
ment of this title. The provisions of this section shall apply 
to breaches that are discovered on or after the date that 
is 30 days after the date of publication of such interim 
final regulations. 
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SEC.
4403.
EDUCATION
ON
HEALTH
INFORMATION
PRI-
VACY. 
(a) REGIONAL OFFICE PRIVACY ADVISORS.—Not 
later than 6 months after the date of the enactment of 
this Act, the Secretary shall designate an individual in 
each regional office of the Department of Health and 
Human Services to offer guidance and education to cov-
ered entities, business associates, and individuals on their 
rights and responsibilities related to Federal privacy and 
security requirements for protected health information. 
(b) EDUCATION INITIATIVE ON USES OF HEALTH IN-
FORMATION.—Not later than 12 months after the date of 
the enactment of this Act, the Office for Civil Rights with-
in the Department of Health and Human Services shall 
develop and maintain a multi-faceted national education 
initiative to enhance public transparency regarding the 
uses of protected health information, including programs 
to educate individuals about the potential uses of their 
protected health information, the effects of such uses, and 
the rights of individuals with respect to such uses. Such 
programs shall be conducted in a variety of languages and 
present information in a clear and understandable man-
ner. 
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SEC. 4404. APPLICATION OF PRIVACY PROVISIONS AND 
PENALTIES
TO
BUSINESS
ASSOCIATES
OF 
COVERED ENTITIES. 
(a) APPLICATION OF CONTRACT REQUIREMENTS.— 
In the case of a business associate of a covered entity that 
obtains or creates protected health information pursuant 
to a written contract (or other written arrangement) de-
scribed in section 164.502(e)(2) of title 45, Code of Fed-
eral Regulations, with such covered entity, the business 
associate may use and disclose such protected health infor-
mation only if such use or disclosure, respectively, is in 
compliance with each applicable requirement of section 
164.504(e) of such title. The additional requirements of 
this subtitle that relate to privacy and that are made ap-
plicable with respect to covered entities shall also be appli-
cable to such a business associate and shall be incor-
porated into the business associate agreement between the 
business associate and the covered entity. 
(b) APPLICATION OF KNOWLEDGE ELEMENTS ASSO-
CIATED WITH CONTRACTS.—Section 164.504(e)(1)(ii) of 
title 45, Code of Federal Regulations, shall apply to a 
business associate described in subsection (a), with respect 
to compliance with such subsection, in the same manner 
that such section applies to a covered entity, with respect 
to compliance with the standards in sections 164.502(e) 
and 164.504(e) of such title, except that in applying such 
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section 164.504(e)(1)(ii) each reference to the business as-
sociate, with respect to a contract, shall be treated as a 
reference to the covered entity involved in such contract. 
(c) APPLICATION
OF CIVIL
AND CRIMINAL PEN-
ALTIES.—In the case of a business associate that violates 
any provision of subsection (a) or (b), the provisions of 
sections 1176 and 1177 of the Social Security Act (42 
U.S.C. 1320d–5, 1320d–6) shall apply to the business as-
sociate with respect to such violation in the same manner 
as such provisions apply to a person who violates a provi-
sion of part C of title XI of such Act. 
SEC. 4405. RESTRICTIONS ON CERTAIN DISCLOSURES AND 
SALES OF HEALTH INFORMATION; ACCOUNT-
ING OF CERTAIN PROTECTED HEALTH IN-
FORMATION DISCLOSURES; ACCESS TO CER-
TAIN
INFORMATION
IN
ELECTRONIC
FOR-
MAT. 
(a) REQUESTED RESTRICTIONS ON CERTAIN DIS-
CLOSURES OF HEALTH INFORMATION.—In the case that 
an individual requests under paragraph (a)(1)(i)(A) of 
section 164.522 of title 45, Code of Federal Regulations, 
that a covered entity restrict the disclosure of the pro-
tected health information of the individual, notwith-
standing paragraph (a)(1)(ii) of such section, the covered 
entity must comply with the requested restriction if— 
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(1) except as otherwise required by law, the dis-
closure is to a health plan for purposes of carrying 
out payment or health care operations (and is not 
for purposes of carrying out treatment); and 
(2) the protected health information pertains 
solely to a health care item or service for which the 
health care provider involved has been paid out of 
pocket in full. 
(b) DISCLOSURES REQUIRED TO BE LIMITED TO 
THE
LIMITED
DATA
SET
OR
THE
MINIMUM
NEC-
ESSARY.— 
(1) IN GENERAL.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), a covered entity shall be treated as 
being in compliance with section 164.502(b)(1) 
of title 45, Code of Federal Regulations, with 
respect to the use, disclosure, or request of pro-
tected health information described in such sec-
tion, only if the covered entity limits such pro-
tected health information, to the extent prac-
ticable, to the limited data set (as defined in 
section 164.514(e)(2) of such title) or, if needed 
by such entity, to the minimum necessary to ac-
complish the intended purpose of such use, dis-
closure, or request, respectively. 
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(B)
GUIDANCE.—Not
later
than
months after the date of the enactment of this 
section, the Secretary shall issue guidance on 
what constitutes ‘‘minimum necessary’’ for pur-
poses of subpart E of part 164 of title 45, Code 
of Federal Regulation. In issuing such guidance 
the Secretary shall take into consideration the 
guidance under section 4424(c). 
(C) SUNSET.—Subparagraph (A) shall not 
apply on and after the effective date on which 
the Secretary issues the guidance under sub-
paragraph (B). 
(2)
DETERMINATION
OF
MINIMUM
NEC-
ESSARY.—For purposes of paragraph (1), in the 
case of the disclosure of protected health informa-
tion, the covered entity or business associate dis-
closing such information shall determine what con-
stitutes the minimum necessary to accomplish the 
intended purpose of such disclosure. 
(3) APPLICATION OF EXCEPTIONS.—The excep-
tions described in section 164.502(b)(2) of title 45, 
Code of Federal Regulations, shall apply to the re-
quirement under paragraph (1) as of the effective 
date described in section 4423 in the same manner 
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that such exceptions apply to section 164.502(b)(1) 
of such title before such date. 
(4) RULE OF CONSTRUCTION.—Nothing in this 
subsection shall be construed as affecting the use, 
disclosure, or request of protected health information 
that has been de-identified. 
(c) ACCOUNTING OF CERTAIN PROTECTED HEALTH 
INFORMATION DISCLOSURES REQUIRED IF COVERED EN-
TITY USES ELECTRONIC HEALTH RECORD.— 
(1) IN GENERAL.—In applying section 164.528 
of title 45, Code of Federal Regulations, in the case 
that a covered entity uses or maintains an electronic 
health record with respect to protected health infor-
mation— 
(A)
the
exception
under
paragraph 
(a)(1)(i) of such section shall not apply to dis-
closures through an electronic health record 
made by such entity of such information; and 
(B) an individual shall have a right to re-
ceive an accounting of disclosures described in 
such paragraph of such information made by 
such covered entity during only the three years 
prior to the date on which the accounting is re-
quested. 
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(2) REGULATIONS.—The Secretary shall pro-
mulgate regulations on what information shall be 
collected about each disclosure referred to in para-
graph (1)(A) not later than 18 months after the 
date on which the Secretary adopts standards on ac-
counting for disclosure described in the section 
3002(b)(2)(B)(iv) of the Public Health Service Act, 
as added by section 4101. Such regulations shall 
only require such information to be collected through 
an electronic health record in a manner that takes 
into account the interests of individuals in learning 
the circumstances under which their protected health 
information is being disclosed and takes into account 
the administrative burden of accounting for such 
disclosures. 
(3)
CONSTRUCTION.—Nothing
in
this
sub-
section shall be construed as requiring a covered en-
tity to account for disclosures of protected health in-
formation that are not made by such covered entity 
or by a business associate acting on behalf of the 
covered entity. 
(4) EFFECTIVE DATE.— 
(A)
CURRENT
USERS
OF
ELECTRONIC 
RECORDS.—In the case of a covered entity inso-
far as it acquired an electronic health record as 
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of January 1, 2009, paragraph (1) shall apply 
to disclosures, with respect to protected health 
information, made by the covered entity from 
such a record on and after January 1, 2014. 
(B) OTHERS.—In the case of a covered en-
tity insofar as it acquires an electronic health 
record after January 1, 2009, paragraph (1) 
shall apply to disclosures, with respect to pro-
tected health information, made by the covered 
entity from such record on and after the later 
of the following: 
(i) January 1, 2011; or 
(ii) the date that it acquires an elec-
tronic health record. 
(d) REVIEW OF HEALTH CARE OPERATIONS.—Not 
later than 18 months after the date of the enactment of 
this title, the Secretary shall promulgate regulations to 
eliminate from the definition of health care operations 
under section 164.501 of title 45, Code of Federal Regula-
tions, those activities that can reasonably and efficiently 
be conducted through the use of information that is de- 
identified (in accordance with the requirements of section 
164.514(b) of such title) or that should require a valid 
authorization for use or disclosure. In promulgating such 
regulations, the Secretary may choose to narrow or clarify 
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activities that the Secretary chooses to retain in the defini-
tion of health care operations and the Secretary shall take 
into account the report under section 424(d). In such reg-
ulations the Secretary shall specify the date on which such 
regulations shall apply to disclosures made by a covered 
entity, but in no case would such date be sooner than the 
date that is 24 months after the date of the enactment 
of this section. 
(e) PROHIBITION ON SALE OF ELECTRONIC HEALTH 
RECORDS OR PROTECTED HEALTH INFORMATION.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), a covered entity or business associate 
shall not directly or indirectly receive remuneration 
in exchange for any protected health information of 
an individual unless the covered entity obtained from 
the individual, in accordance with section 164.508 of 
title 45, Code of Federal Regulations, a valid au-
thorization that includes, in accordance with such 
section, a specification of whether the protected 
health information can be further exchanged for re-
muneration by the entity receiving protected health 
information of that individual. 
(2)
EXCEPTIONS.—Paragraph
(1)
shall
not 
apply in the following cases: 
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(A) The purpose of the exchange is for re-
search or public health activities (as described 
in sections 164.501, 164.512(i), and 164.512(b) 
of title 45, Code of Federal Regulations) and 
the price charged reflects the costs of prepara-
tion and transmittal of the data for such pur-
pose. 
(B) The purpose of the exchange is for the 
treatment
of
the
individual
and
the
price 
charges reflects not more than the costs of 
preparation and transmittal of the data for 
such purpose. 
(C) The purpose of the exchange is the 
health care operation specifically described in 
subparagraph (iv) of paragraph (6) of the defi-
nition of health care operations in section 
164.501 of title 45, Code of Federal Regula-
tions. 
(D) The purpose of the exchange is for re-
muneration that is provided by a covered entity 
to a business associate for activities involving 
the exchange of protected health information 
that the business associate undertakes on behalf 
of and at the specific request of the covered en-
tity pursuant to a business associate agreement. 
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(E) The purpose of the exchange is to pro-
vide an individual with a copy of the individ-
ual’s protected health information pursuant to 
section 164.524 of title 45, Code of Federal 
Regulations. 
(F) The purpose of the exchange is other-
wise determined by the Secretary in regulations 
to be similarly necessary and appropriate as the 
exceptions
provided
in
subparagraphs
(A) 
through (E). 
(3) REGULATIONS.—The Secretary shall pro-
mulgate regulations to carry out paragraph (this 
subsection, including exceptions described in para-
graph (2), not later than 18 months after the date 
of the enactment of this title. 
(4) EFFECTIVE
DATE.—Paragraph (1) shall 
apply to exchanges occurring on or after the date 
that is 6 months after the date of the promulgation 
of final regulations implementing this subsection. 
(f) ACCESS TO CERTAIN INFORMATION IN ELEC-
TRONIC FORMAT.—In applying section 164.524 of title 
45, Code of Federal Regulations, in the case that a cov-
ered entity uses or maintains an electronic health record 
with respect to protected health information of an indi-
vidual— 
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(1) the individual shall have a right to obtain 
from such covered entity a copy of such information 
in an electronic format; and 
(2) notwithstanding paragraph (c)(4) of such 
section, any fee that the covered entity may impose 
for providing such individual with a copy of such in-
formation (or a summary or explanation of such in-
formation) if such copy (or summary or explanation) 
is in an electronic form shall not be greater than the 
entity’s labor costs in responding to the request for 
the copy (or summary or explanation). 
(g) CLARIFICATION.—Nothing in this subtitle shall 
constitute a waiver of any privilege otherwise applicable 
to an individual with respect to the protected health infor-
mation of such individual. 
SEC. 4406. CONDITIONS ON CERTAIN CONTACTS AS PART 
OF HEALTH CARE OPERATIONS. 
(a) MARKETING.— 
(1) IN GENERAL.—A communication by a cov-
ered entity or business associate that is about a 
product or service and that encourages recipients of 
the communication to purchase or use the product 
or service shall not be considered a health care oper-
ation for purposes of subpart E of part 164 of title 
45, Code of Federal Regulations, unless the commu-
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nication is made as described in subparagraph (i), 
(ii), or (iii) of paragraph (1) of the definition of 
marketing in section 164.501 of such title. 
(2)
PAYMENT
FOR
CERTAIN
COMMUNICA-
TIONS.—A covered entity or business associate may 
not receive direct or indirect payment in exchange 
for making any communication described in sub-
paragraph (i), (ii), or (iii) of paragraph (1) of the 
definition of marketing in section 164.501 of title 
45, Code of Federal Regulations, except— 
(A) a business associate of a covered entity 
may receive payment from the covered entity 
for making any such communication on behalf 
of the covered entity that is consistent with the 
written contract (or other written arrangement) 
described in section 164.502(e)(2) of such title 
between such business associate and covered en-
tity; or 
(B) a covered entity may receive payment 
in exchange for making any such communica-
tion if the entity obtains from the recipient of 
the communication, in accordance with section 
164.508 of title 45, Code of Federal Regula-
tions, a valid authorization (as described in 
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paragraph (b) of such section) with respect to 
such communication. 
(b) FUNDRAISING.—Fundraising for the benefit of a 
covered entity shall not be considered a health care oper-
ation for purposes of section 164.501 of title 45, Code of 
Federal Regulations. 
(c) EFFECTIVE DATE.—This section shall apply to 
contracting occurring on or after the effective date speci-
fied under section 4423. 
SEC. 4407. TEMPORARY BREACH NOTIFICATION REQUIRE-
MENT FOR VENDORS OF PERSONAL HEALTH 
RECORDS AND OTHER NON-HIPAA COVERED 
ENTITIES. 
(a) IN GENERAL.—In accordance with subsection (c), 
each vendor of personal health records, following the dis-
covery of a breach of security of unsecured PHR identifi-
able health information that is in a personal health record 
maintained or offered by such vendor, and each entity de-
scribed in clause (ii) or (iii) of section 4424(b)(1)(A), fol-
lowing the discovery of a breach of security of such infor-
mation that is obtained through a product or service pro-
vided by such entity, shall— 
(1) notify each individual who is a citizen or 
resident of the United States whose unsecured PHR 
identifiable health information was acquired by an 
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unauthorized person as a result of such a breach of 
security; and 
(2) notify the Federal Trade Commission. 
(b) NOTIFICATION BY THIRD PARTY SERVICE PRO-
VIDERS.—A third party service provider that provides 
services to a vendor of personal health records or to an 
entity
described
in
clause
(ii)
or
(iii)
of
section 
4424(b)(1)(A) in connection with the offering or mainte-
nance of a personal health record or a related product or 
service and that accesses, maintains, retains, modifies, 
records, stores, destroys, or otherwise holds, uses, or dis-
closes unsecured PHR identifiable health information in 
such a record as a result of such services shall, following 
the discovery of a breach of security of such information, 
notify such vendor or entity, respectively, of such breach. 
Such notice shall include the identification of each indi-
vidual whose unsecured PHR identifiable health informa-
tion has been, or is reasonably believed to have been, 
accessed, acquired, or disclosed during such breach. 
(c) APPLICATION OF REQUIREMENTS FOR TIMELI-
NESS, METHOD,
AND CONTENT
OF NOTIFICATIONS.— 
Subsections (c), (d), (e), and (f) of section 402 shall apply 
to a notification required under subsection (a) and a ven-
dor of personal health records, an entity described in sub-
section (a) and a third party service provider described 
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in subsection (b), with respect to a breach of security 
under subsection (a) of unsecured PHR identifiable health 
information in such records maintained or offered by such 
vendor, in a manner specified by the Federal Trade Com-
mission. 
(d) NOTIFICATION OF THE SECRETARY.—Upon re-
ceipt of a notification of a breach of security under sub-
section (a)(2), the Federal Trade Commission shall notify 
the Secretary of such breach. 
(e) ENFORCEMENT.—A violation of subsection (a) or 
(b) shall be treated as an unfair and deceptive act or prac-
tice in violation of a regulation under section 18(a)(1)(B) 
of
the
Federal
Trade
Commission
Act
(15
U.S.C. 
57a(a)(1)(B)) regarding unfair or deceptive acts or prac-
tices. 
(f) DEFINITIONS.—For purposes of this section: 
(1) BREACH OF SECURITY.—The term ‘‘breach 
of security’’ means, with respect to unsecured PHR 
identifiable health information of an individual in a 
personal health record, acquisition of such informa-
tion without the authorization of the individual. 
(2)
PHR
IDENTIFIABLE
HEALTH
INFORMA-
TION.—The term ‘‘PHR identifiable health informa-
tion’’ means individually identifiable health informa-
tion, as defined in section 1171(6) of the Social Se-
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curity Act (42 U.S.C. 1320d(6)), and includes, with 
respect to an individual, information— 
(A) that is provided by or on behalf of the 
individual; and 
(B) that identifies the individual or with 
respect to which there is a reasonable basis to 
believe that the information can be used to 
identify the individual. 
(3) UNSECURED
PHR
IDENTIFIABLE
HEALTH 
INFORMATION.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘‘unsecured PHR identifi-
able health information’’ means PHR identifi-
able health information that is not protected 
through the use of a technology or methodology 
specified by the Secretary in the guidance 
issued under section 4402(h)(2). 
(B) EXCEPTION
IN
CASE
TIMELY
GUID-
ANCE NOT ISSUED.—In the case that the Sec-
retary does not issue guidance under section 
4402(h)(2) by the date specified in such sec-
tion, for purposes of this section, the term ‘‘un-
secured PHR identifiable health information’’ 
shall mean PHR identifiable health information 
that is not secured by a technology standard 
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that renders protected health information unus-
able, unreadable, or indecipherable to unauthor-
ized individuals and that is developed or en-
dorsed by a standards developing organization 
that is accredited by the American National 
Standards Institute. 
(g) REGULATIONS; EFFECTIVE DATE; SUNSET.— 
(1)
REGULATIONS;
EFFECTIVE
DATE.—To 
carry out this section, the Secretary of Health and 
Human Services shall promulgate interim final regu-
lations by not later than the date that is 180 days 
after the date of the enactment of this section. The 
provisions of this section shall apply to breaches of 
security that are discovered on or after the date that 
is 30 days after the date of publication of such in-
terim final regulations. 
(2) SUNSET.—The provisions of this section 
shall not apply to breaches of security occurring on 
or after the earlier of the following the dates: 
(A) The date on which a standard relating 
to requirements for entities that are not covered 
entities that includes requirements relating to 
breach notification has been promulgated by the 
Secretary. 
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(B) The date on which a standard relating 
to requirements for entities that are not covered 
entities that includes requirements relating to 
breach notification has been promulgated by the 
Federal Trade Commission and has taken ef-
fect. 
SEC. 4408. BUSINESS ASSOCIATE CONTRACTS REQUIRED 
FOR CERTAIN ENTITIES. 
Each organization, with respect to a covered entity, 
that provides data transmission of protected health infor-
mation to such entity (or its business associate) and that 
requires access on a routine basis to such protected health 
information, such as a Health Information Exchange Or-
ganization, Regional Health Information Organization, E- 
prescribing Gateway, or each vendor that contracts with 
a covered entity to allow that covered entity to offer a per-
sonal health record to patients as part of its electronic 
health record, is required to enter into a written contract 
(or other written arrangement) described in section 
164.502(e)(2) of title 45, Code of Federal Regulations and 
a written contract (or other arrangement) described in 
section 164.308(b) of such title, with such entity and shall 
be treated as a business associate of the covered entity 
for purposes of the provisions of this subtitle and subparts 
C and E of part 164 of title 45, Code of Federal Regula-
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tions, as such provisions are in effect as of the date of 
enactment of this title. 
SEC. 4409. CLARIFICATION OF APPLICATION OF WRONGFUL 
DISCLOSURES CRIMINAL PENALTIES. 
Section 1177(a) of the Social Security Act (42 U.S.C. 
1320d–6(a)) is amended by adding at the end the fol-
lowing new sentence: ‘‘For purposes of the previous sen-
tence, a person (including an employee or other individual) 
shall be considered to have obtained or disclosed individ-
ually identifiable health information in violation of this 
part if the information is maintained by a covered entity 
(as defined in the HIPAA privacy regulation described in 
section 1180(b)(3)) and the individual obtained or dis-
closed such information without authorization.’’. 
SEC. 4410. IMPROVED ENFORCEMENT. 
(a) IN GENERAL.—Section 1176 of the Social Secu-
rity Act (42 U.S.C. 1320d–5) is amended— 
(1) in subsection (b)(1), by striking ‘‘the act 
constitutes
an
offense
punishable
under
section 
1177’’ and inserting ‘‘a penalty has been imposed 
under section 1177 with respect to such act’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(c)
NONCOMPLIANCE
DUE
TO
WILLFUL
NE-
GLECT.— 
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‘‘(1) IN GENERAL.—A violation of a provision 
of this part due to willful neglect is a violation for 
which the Secretary is required to impose a penalty 
under subsection (a)(1). 
‘‘(2) REQUIRED INVESTIGATION.—For purposes 
of paragraph (1), the Secretary shall formally inves-
tigate any complaint of a violation of a provision of 
this part if a preliminary investigation of the facts 
of the complaint indicate such a possible violation 
due to willful neglect.’’. 
(b) EFFECTIVE DATE; REGULATIONS.— 
(1) The amendments made by subsection (a) 
shall apply to penalties imposed on or after the date 
that is 24 months after the date of the enactment 
of this title. 
(2) Not later than 18 months after the date of 
the enactment of this title, the Secretary of Health 
and Human Services shall promulgate regulations to 
implement such amendments. 
(c) DISTRIBUTION OF CERTAIN CIVIL MONETARY 
PENALTIES COLLECTED.— 
(1) IN
GENERAL.—Subject to the regulation 
promulgated pursuant to paragraph (3), any civil 
monetary penalty or monetary settlement collected 
with respect to an offense punishable under this sub-
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title or section 1176 of the Social Security Act (42 
U.S.C. 1320d–5) insofar as such section relates to 
privacy or security shall be transferred to the Office 
of Civil Rights of the Department of Health and 
Human Services to be used for purposes of enforcing 
the provisions of this subtitle and subparts C and E 
of part 164 of title 45, Code of Federal Regulations, 
as such provisions are in effect as of the date of en-
actment of this Act. 
(2) GAO REPORT.—Not later than 18 months 
after the date of the enactment of this title, the 
Comptroller General shall submit to the Secretary a 
report including recommendations for a methodology 
under which an individual who is harmed by an act 
that constitutes an offense referred to in paragraph 
(1) may receive a percentage of any civil monetary 
penalty or monetary settlement collected with re-
spect to such offense. 
(3)
ESTABLISHMENT
OF
METHODOLOGY
TO 
DISTRIBUTE PERCENTAGE OF CMPS COLLECTED TO 
HARMED
INDIVIDUALS.—Not later than 3 years 
after the date of the enactment of this title, the Sec-
retary shall establish by regulation and based on the 
recommendations submitted under paragraph (2), a 
methodology
under
which
an
individual
who
is 
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harmed by an act that constitutes an offense re-
ferred to in paragraph (1) may receive a percentage 
of any civil monetary penalty or monetary settlement 
collected with respect to such offense. 
(4)
APPLICATION
OF
METHODOLOGY.—The 
methodology under paragraph (3) shall be applied 
with respect to civil monetary penalties or monetary 
settlements imposed on or after the effective date of 
the regulation. 
(d) TIERED INCREASE IN AMOUNT OF CIVIL MONE-
TARY PENALTIES.— 
(1) IN GENERAL.—Section 1176(a)(1) of the 
Social Security Act (42 U.S.C. 1320d–5(a)(1)) is 
amended by striking ‘‘who violates a provision of 
this part a penalty of not more than’’ and all that 
follows and inserting the following: ‘‘who violates a 
provision of this part— 
‘‘(A) in the case of a violation of such pro-
vision in which it is established that the person 
did not know (and by exercising reasonable dili-
gence would not have known) that such person 
violated such provision, a penalty for each such 
violation of an amount that is at least the 
amount described in paragraph (3)(A) but not 
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to exceed the amount described in paragraph 
(3)(D); 
‘‘(B) in the case of a violation of such pro-
vision in which it is established that the viola-
tion was due to reasonable cause and not to 
willful neglect, a penalty for each such violation 
of an amount that is at least the amount de-
scribed in paragraph (3)(B) but not to exceed 
the amount described in paragraph (3)(D); and 
‘‘(C) in the case of a violation of such pro-
vision in which it is established that the viola-
tion was due to willful neglect— 
‘‘(i) if the violation is corrected as de-
scribed in subsection (b)(3)(A), a penalty 
in an amount that is at least the amount 
described in paragraph (3)(C) but not to 
exceed the amount described in paragraph 
(3)(D); and 
‘‘(ii) if the violation is not corrected 
as described in such subsection, a penalty 
in an amount that is at least the amount 
described in paragraph (3)(D). 
In determining the amount of a penalty under 
this section for a violation, the Secretary shall 
base such determination on the nature and ex-
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tent of the violation and the nature and extent 
of the harm resulting from such violation.’’. 
(2) TIERS OF PENALTIES DESCRIBED.—Section 
1176(a) of such Act (42 U.S.C. 1320d–5(a)) is fur-
ther amended by adding at the end the following 
new paragraph: 
‘‘(3) TIERS
OF
PENALTIES
DESCRIBED.—For 
purposes of paragraph (1), with respect to a viola-
tion by a person of a provision of this part— 
‘‘(A) the amount described in this subpara-
graph is $100 for each such violation, except 
that the total amount imposed on the person 
for all such violations of an identical require-
ment or prohibition during a calendar year may 
not exceed $25,000; 
‘‘(B) the amount described in this subpara-
graph is $1,000 for each such violation, except 
that the total amount imposed on the person 
for all such violations of an identical require-
ment or prohibition during a calendar year may 
not exceed $100,000; 
‘‘(C) the amount described in this subpara-
graph is $10,000 for each such violation, except 
that the total amount imposed on the person 
for all such violations of an identical require-
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ment or prohibition during a calendar year may 
not exceed $250,000; and 
‘‘(D) the amount described in this sub-
paragraph is $50,000 for each such violation, 
except that the total amount imposed on the 
person for all such violations of an identical re-
quirement or prohibition during a calendar year 
may not exceed $1,500,000.’’. 
(3)
CONFORMING
AMENDMENTS.—Section 
1176(b) of such Act (42 U.S.C. 1320d–5(b)) is 
amended— 
(A) by striking paragraph (2) and redesig-
nating paragraphs (3) and (4) as paragraphs 
(2) and (3), respectively; and 
(B) in paragraph (2), as so redesignated— 
(i) in subparagraph (A), by striking 
‘‘in subparagraph (B), a penalty may not 
be imposed under subsection (a) if’’ and all 
that follows through ‘‘the failure to comply 
is corrected’’ and inserting ‘‘in subpara-
graph (B) or subsection (a)(1)(C), a pen-
alty may not be imposed under subsection 
(a) if the failure to comply is corrected’’; 
and 
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(ii) in subparagraph (B), by striking 
‘‘(A)(ii)’’ and inserting ‘‘(A)’’ each place it 
appears. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to violations occurring 
after the date of the enactment of this title. 
(e) ENFORCEMENT THROUGH STATE ATTORNEYS 
GENERAL.— 
(1) IN GENERAL.—Section 1176 of the Social 
Security Act (42 U.S.C. 1320d–5) is amended by 
adding at the end the following new subsection: 
‘‘(c) ENFORCEMENT BY STATE ATTORNEYS GEN-
ERAL.— 
‘‘(1) CIVIL
ACTION.—Except as provided in 
subsection (b), in any case in which the attorney 
general of a State has reason to believe that an in-
terest of one or more of the residents of that State 
has been or is threatened or adversely affected by 
any person who violates a provision of this part, the 
attorney general of the State, as parens patriae, may 
bring a civil action on behalf of such residents of the 
State in a district court of the United States of ap-
propriate jurisdiction— 
‘‘(A) to enjoin further such violation by the 
defendant; or 
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‘‘(B) to obtain damages on behalf of such 
residents of the State, in an amount equal to 
the amount determined under paragraph (2). 
‘‘(2) STATUTORY DAMAGES.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(B), the amount determined under 
this paragraph is the amount calculated by mul-
tiplying the number of violations by up to $100. 
For purposes of the preceding sentence, in the 
case of a continuing violation, the number of 
violations shall be determined consistent with 
the HIPAA privacy regulations (as defined in 
section 1180(b)(3)) for violations of subsection 
(a). 
‘‘(B) LIMITATION.—The total amount of 
damages imposed on the person for all viola-
tions of an identical requirement or prohibition 
during a calendar year may not exceed $25,000. 
‘‘(C) REDUCTION
OF
DAMAGES.—In as-
sessing damages under subparagraph (A), the 
court may consider the factors the Secretary 
may consider in determining the amount of a 
civil money penalty under subsection (a) under 
the HIPAA privacy regulations. 
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‘‘(3) ATTORNEY FEES.—In the case of any suc-
cessful action under paragraph (1), the court, in its 
discretion, may award the costs of the action and 
reasonable attorney fees to the State. 
‘‘(4) NOTICE TO SECRETARY.—The State shall 
serve prior written notice of any action under para-
graph (1) upon the Secretary and provide the Sec-
retary with a copy of its complaint, except in any 
case in which such prior notice is not feasible, in 
which case the State shall serve such notice imme-
diately upon instituting such action. The Secretary 
shall have the right— 
‘‘(A) to intervene in the action; 
‘‘(B) upon so intervening, to be heard on 
all matters arising therein; and 
‘‘(C) to file petitions for appeal. 
‘‘(5) CONSTRUCTION.—For purposes of bring-
ing any civil action under paragraph (1), nothing in 
this section shall be construed to prevent an attor-
ney general of a State from exercising the powers 
conferred on the attorney general by the laws of that 
State. 
‘‘(6) VENUE; SERVICE OF PROCESS.— 
‘‘(A) VENUE.—Any action brought under 
paragraph (1) may be brought in the district 
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court of the United States that meets applicable 
requirements relating to venue under section 
1391 of title 28, United States Code. 
‘‘(B) SERVICE OF PROCESS.—In an action 
brought under paragraph (1), process may be 
served in any district in which the defendant— 
‘‘(i) is an inhabitant; or 
‘‘(ii) maintains a physical place of 
business. 
‘‘(7) LIMITATION
ON
STATE
ACTION
WHILE 
FEDERAL ACTION IS PENDING.—If the Secretary has 
instituted an action against a person under sub-
section (a) with respect to a specific violation of this 
part, no State attorney general may bring an action 
under this subsection against the person with re-
spect to such violation during the pendency of that 
action. 
‘‘(8) APPLICATION OF CMP STATUTE OF LIMI-
TATION.—A civil action may not be instituted with 
respect to a violation of this part unless an action 
to impose a civil money penalty may be instituted 
under subsection (a) with respect to such violation 
consistent
with
the
second
sentence
of
section 
1128A(c)(1).’’. 
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(2)
CONFORMING
AMENDMENTS.—Subsection 
(b) of such section, as amended by subsection (d)(3), 
is amended— 
(A) in paragraph (1), by striking ‘‘A pen-
alty may not be imposed under subsection (a)’’ 
and inserting ‘‘No penalty may be imposed 
under subsection (a) and no damages obtained 
under subsection (c)’’; 
(B) in paragraph (2)(A)— 
(i) in the matter before clause (i), by 
striking ‘‘a penalty may not be imposed 
under subsection (a)’’ and inserting ‘‘no 
penalty may be imposed under subsection 
(a) and no damages obtained under sub-
section (c)’’; and 
(ii) in clause (ii), by inserting ‘‘or 
damages’’ after ‘‘the penalty’’; 
(C) in paragraph (2)(B)(i), by striking 
‘‘The period’’ and inserting ‘‘With respect to 
the imposition of a penalty by the Secretary 
under subsection (a), the period’’; and 
(D) in paragraph (3), by inserting ‘‘and 
any damages under subsection (c)’’ after ‘‘any 
penalty under subsection (a)’’. 
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(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to violations occurring 
after the date of the enactment of this Act. 
(f) ALLOWING CONTINUED USE OF CORRECTIVE AC-
TION.—Such section is further amended by adding at the 
end the following new subsection: 
‘‘(d) ALLOWING CONTINUED USE OF CORRECTIVE 
ACTION.—Nothing in this section shall be construed as 
preventing the Office of Civil Rights of the Department 
of Health and Human Services from continuing, in its dis-
cretion, to use corrective action without a penalty in cases 
where the person did not know (and by exercising reason-
able diligence would not have known) of the violation in-
volved.’’. 
SEC. 4411. AUDITS. 
The Secretary shall provide for periodic audits to en-
sure that covered entities and business associates that are 
subject to the requirements of this subtitle and subparts 
C and E of part 164 of title 45, Code of Federal Regula-
tions, as such provisions are in effect as of the date of 
enactment of this Act, comply with such requirements. 
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SEC. 4412. SPECIAL RULE FOR INFORMATION TO REDUCE 
MEDICATION
ERRORS
AND
IMPROVE
PA-
TIENT SAFETY. 
Nothing under this subtitle shall prevent a phar-
macist from communicating with patients in order to re-
duce medication errors and improve patient safety pro-
vided there is no remuneration other than for the treat-
ment of the individual and payment for such treatment 
of the individual as defined in 45 CFR 164.501.
The 
Secretary may by regulation authorize a pharmacy to re-
ceive remuneration that does not exceed their reasonable 
out-of-pocket costs for such communications if the Sec-
retary determines that allowing this remuneration im-
proves patient care and protects protected health informa-
tion. 
PART II—RELATIONSHIP TO OTHER LAWS; REGU-
LATORY REFERENCES; EFFECTIVE DATE; RE-
PORTS 
SEC. 4421. RELATIONSHIP TO OTHER LAWS. 
(a) APPLICATION OF HIPAA STATE PREEMPTION.— 
Section 1178 of the Social Security Act (42 U.S.C. 
1320d–7) shall apply to a provision or requirement under 
this subtitle in the same manner that such section applies 
to a provision or requirement under part C of title XI of 
such Act or a standard or implementation specification 
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adopted or established under sections 1172 through 1174 
of such Act. 
(b) HEALTH INSURANCE PORTABILITY
AND AC-
COUNTABILITY ACT.—The standards governing the pri-
vacy and security of individually identifiable health infor-
mation promulgated by the Secretary under sections 
262(a) and 264 of the Health Insurance Portability and 
Accountability Act of 1996 shall remain in effect to the 
extent that they are consistent with this subtitle. The Sec-
retary shall by rule amend such Federal regulations as re-
quired to make such regulations consistent with this sub-
title. 
SEC. 4422. REGULATORY REFERENCES. 
Each reference in this subtitle to a provision of the 
Code of Federal Regulations refers to such provision as 
in effect on the date of the enactment of this title (or to 
the most recent update of such provision). 
SEC. 4423. EFFECTIVE DATE. 
Except as otherwise specifically provided, the provi-
sions of part I shall take effect on the date that is 12 
months after the date of the enactment of this title. 
SEC. 4424. STUDIES, REPORTS, GUIDANCE. 
(a) REPORT ON COMPLIANCE.— 
(1) IN GENERAL.—For the first year beginning 
after the date of the enactment of this Act and an-
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nually thereafter, the Secretary shall prepare and 
submit to the Committee on Health, Education, 
Labor, and Pensions of the Senate and the Com-
mittee on Ways and Means and the Committee on 
Energy and Commerce of the House of Representa-
tives a report concerning complaints of alleged viola-
tions of law, including the provisions of this subtitle 
as well as the provisions of subparts C and E of part 
164 of title 45, Code of Federal Regulations, (as 
such provisions are in effect as of the date of enact-
ment of this Act) relating to privacy and security of 
health information that are received by the Secretary 
during the year for which the report is being pre-
pared. Each such report shall include, with respect 
to such complaints received during the year— 
(A) the number of such complaints; 
(B) the number of such complaints re-
solved informally, a summary of the types of 
such complaints so resolved, and the number of 
covered entities that received technical assist-
ance from the Secretary during such year in 
order to achieve compliance with such provi-
sions and the types of such technical assistance 
provided; 
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(C) the number of such complaints that 
have resulted in the imposition of civil monetary 
penalties or have been resolved through mone-
tary settlements, including the nature of the 
complaints involved and the amount paid in 
each penalty or settlement; 
(D) the number of compliance reviews con-
ducted and the outcome of each such review; 
(E) the number of subpoenas or inquiries 
issued; 
(F) the Secretary’s plan for improving 
compliance with and enforcement of such provi-
sions for the following year; and 
(G) the number of audits performed and a 
summary of audit findings pursuant to section 
4411. 
(2) AVAILABILITY
TO
PUBLIC.—Each report 
under paragraph (1) shall be made available to the 
public on the Internet website of the Department of 
Health and Human Services. 
(b) STUDY AND REPORT ON APPLICATION OF PRI-
VACY AND SECURITY REQUIREMENTS TO NON-HIPAA 
COVERED ENTITIES.— 
(1) STUDY.—Not later than one year after the 
date of the enactment of this title, the Secretary, in 
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consultation with the Federal Trade Commission, 
shall conduct a study, and submit a report under 
paragraph (2), on privacy and security requirements 
for entities that are not covered entities or business 
associates as of the date of the enactment of this 
title, including— 
(A) requirements relating to security, pri-
vacy, and notification in the case of a breach of 
security or privacy (including the applicability 
of an exemption to notification in the case of 
individually identifiable health information that 
has been rendered unusable, unreadable, or in-
decipherable through technologies or methodolo-
gies recognized by appropriate professional or-
ganization or standard setting bodies to provide 
effective
security
for
the
information)
that 
should be applied to— 
(i) vendors of personal health records; 
(ii) entities that offer products or 
services through the website of a vendor of 
personal health records; 
(iii) entities that are not covered enti-
ties and that offer products or services 
through the websites of covered entities 
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that
offer
individuals
personal
health 
records; 
(iv) entities that are not covered enti-
ties and that access information in a per-
sonal health record or send information to 
a personal health record; and 
(v) third party service providers used 
by a vendor or entity described in clause 
(i), (ii), (iii), or (iv) to assist in providing 
personal health record products or services; 
(B) a determination of which Federal gov-
ernment agency is best equipped to enforce 
such requirements recommended to be applied 
to such vendors, entities, and service providers 
under subparagraph (A); and 
(C) a timeframe for implementing regula-
tions based on such findings. 
(2) REPORT.—The Secretary shall submit to 
the
Committee
on
Finance,
the
Committee
on 
Health, Education, Labor, and Pensions, and the 
Committee on Commerce of the Senate and the 
Committee on Ways and Means and the Committee 
on Energy and Commerce of the House of Rep-
resentatives a report on the findings of the study 
under paragraph (1) and shall include in such report 
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recommendations on the privacy and security re-
quirements described in such paragraph. 
(c) GUIDANCE ON IMPLEMENTATION SPECIFICATION 
TO DE-IDENTIFY PROTECTED HEALTH INFORMATION.— 
Not later than 12 months after the date of the enactment 
of this title, the Secretary shall, in consultation with stake-
holders, issue guidance on how best to implement the re-
quirements for the de-identification of protected health in-
formation under section 164.514(b) of title 45, Code of 
Federal Regulations. 
(d) GAO REPORT ON TREATMENT DISCLOSURES.— 
Not later than one year after the date of the enactment 
of this title, the Comptroller General of the United States 
shall submit to the Committee on Health, Education, 
Labor, and Pensions of the Senate and the Committee on 
Ways and Means and the Committee on Energy and Com-
merce of the House of Representatives a report on the 
best practices related to the disclosure among health care 
providers of protected health information of an individual 
for purposes of treatment of such individual. Such report 
shall include an examination of the best practices imple-
mented by States and by other entities, such as health 
information exchanges and regional health information or-
ganizations, an examination of the extent to which such 
best practices are successful with respect to the quality 
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of the resulting health care provided to the individual and 
with respect to the ability of the health care provider to 
manage such best practices, and an examination of the 
use of electronic informed consent for disclosing protected 
health information for treatment, payment, and health 
care operations. 
Subtitle E—Miscellaneous 
Medicare Provisions 
SEC. 4501. MORATORIA ON CERTAIN MEDICARE REGULA-
TIONS. 
(a) DELAY IN PHASE OUT OF MEDICARE HOSPICE 
BUDGET NEUTRALITY ADJUSTMENT FACTOR DURING 
FISCAL YEAR 2009.—Notwithstanding any other provi-
sion of law, including the final rule published on August 
8, 2008, 73 Federal Register 46464 et seq., relating to 
Medicare Program; Hospice Wage Index for Fiscal Year 
2009, the Secretary of Health and Human Services shall 
not phase out or eliminate the budget neutrality adjust-
ment factor in the Medicare hospice wage index before Oc-
tober 1, 2009, and the Secretary shall recompute and 
apply the final Medicare hospice wage index for fiscal year 
2009 as if there had been no reduction in the budget neu-
trality adjustment factor. 
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(b) NON-APPLICATION OF PHASED-OUT INDIRECT 
MEDICAL EDUCATION (IME) ADJUSTMENT FACTOR FOR 
FISCAL YEAR 2009.— 
(1) IN GENERAL.—Section 412.322 of title 42, 
Code of Federal Regulations, shall be applied with-
out regard to paragraph (c) of such section, and the 
Secretary of Health and Human Services shall re-
compute payments for discharges occurring on or 
after October 1, 2008, as if such paragraph had 
never been in effect. 
(2) NO
EFFECT
ON
SUBSEQUENT
YEARS.— 
Nothing in paragraph (1) shall be construed as hav-
ing any effect on the application of paragraph (d) of 
section 412.322 of title 42, Code of Federal Regula-
tions. 
(c) FUNDING FOR IMPLEMENTATION.—In addition to 
funds otherwise available, for purposes of implementing 
the provisions of subsections (a) and (b), including costs 
incurred in reprocessing claims in carrying out such provi-
sions, the Secretary of Health and Human Services shall 
provide for the transfer from the Federal Hospital Insur-
ance Trust Fund established under section 1817 of the 
Social Security Act (42 U.S.C. 1395i) to the Centers for 
Medicare & Medicaid Services Program Management Ac-
count of $2,000,000 for fiscal year 2009. 
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SEC. 4502. LONG-TERM CARE HOSPITAL TECHNICAL COR-
RECTIONS. 
(a) PAYMENT.—Subsection (c) of section 114 of the 
Medicare, Medicaid, and SCHIP Extension Act of 2007 
(Public Law 110–173) is amended— 
(1) in paragraph (1)— 
(A) by amending the heading to read as 
follows: ‘‘DELAY IN APPLICATION OF 25 PER-
CENT PATIENT THRESHOLD PAYMENT ADJUST-
MENT’’; 
(B) by striking ‘‘the date of the enactment 
of this Act’’ and inserting ‘‘July 1, 2007,’’; and 
(C) in subparagraph (A), by inserting ‘‘or 
to a long-term care hospital, or satellite facility, 
that as of December 29, 2007, was co-located 
with an entity that is a provider-based, off-cam-
pus location of a subsection (d) hospital which 
did not provide services payable under section 
1886(d) of the Social Security Act at the off- 
campus location’’ after ‘‘freestanding long-term 
care hospitals’’; and 
(2) in paragraph (2)— 
(A) in subparagraph (B)(ii), by inserting 
‘‘or that is described in section 412.22(h)(3)(i) 
of such title’’ before the period; and 
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(B) in subparagraph (C), by striking ‘‘the 
date of the enactment of this Act’’ and insert-
ing ‘‘October 1, 2007 (or July 1, 2007, in the 
case of a satellite facility described in section 
412.22(h)(3)(i) of title 42, Code of Federal 
Regulations)’’. 
(b) MORATORIUM.—Subsection (d)(3)(A) of such sec-
tion is amended by striking ‘‘if the hospital or facility’’ 
and inserting ‘‘if the hospital or facility obtained a certifi-
cate of need for an increase in beds that is in a State 
for which such certificate of need is required and that was 
issued on or after April 1, 2005, and before December 
29, 2007, or if the hospital or facility’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall be effective and apply as if included in 
the enactment of the Medicare, Medicaid, and SCHIP Ex-
tension Act of 2007 (Public Law 110–173). 
TITLE V—MEDICAID 
PROVISIONS 
SEC. 5000. TABLE OF CONTENTS OF TITLE. 
The table of contents of this title is as follows: 
Sec. 5000. Table of contents of title. 
Sec. 5001. Temporary increase of Medicaid FMAP. 
Sec. 5002. Moratoria on certain regulations. 
Sec. 5003. Transitional Medicaid assistance (TMA). 
Sec. 5004. Protections for Indians under Medicaid and CHIP. 
Sec. 5005. Consultation on Medicaid and CHIP. 
Sec. 5006. Temporary increase in DSH allotments during recession. 
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SEC. 5001. TEMPORARY INCREASE OF MEDICAID FMAP. 
(a) PERMITTING MAINTENANCE OF FMAP.—Subject 
to subsections (e), (f), and (g), if the FMAP determined 
without regard to this section for a State for— 
(1) fiscal year 2009 is less than the FMAP as 
so determined for fiscal year 2008, the FMAP for 
the State for fiscal year 2008 shall be substituted 
for the State’s FMAP for fiscal year 2009, before 
the application of this section; 
(2) fiscal year 2010 is less than the FMAP as 
so determined for fiscal year 2008 or fiscal year 
2009 (after the application of paragraph (1)), the 
greater of such FMAP for the State for fiscal year 
2008 or fiscal year 2009 shall be substituted for the 
State’s FMAP for fiscal year 2010, before the appli-
cation of this section; and 
(3) fiscal year 2011 is less than the FMAP as 
so determined for fiscal year 2008, fiscal year 2009 
(after the application of paragraph (1)), or fiscal 
year 2010 (after the application of paragraph (2)), 
the greatest of such FMAP for the State for fiscal 
year 2008, fiscal year 2009, or fiscal year 2010 shall 
be substituted for the State’s FMAP for fiscal year 
2011, before the application of this section, but only 
for the first calendar quarter in fiscal year 2011. 
(b) GENERAL 4.9 PERCENTAGE POINT INCREASE.— 
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(1) IN GENERAL.—Subject to subsections (e), 
(f), and (g) and paragraph (2), for each State for 
calendar quarters during the recession adjustment 
period (as defined in subsection (h)(2)), the FMAP 
(after the application of subsection (a)) shall be in-
creased (without regard to any limitation otherwise 
specified in section 1905(b) of the Social Security 
Act) by 4.9 percentage points. 
(2) SPECIAL ELECTION FOR TERRITORIES.—In 
the case of a State that is not one of the 50 States 
or the District of Columbia, paragraph (1) shall only 
apply if the State makes a one-time election, in a 
form and manner specified by the Secretary and for 
the entire recession adjustment period, to apply the 
increase in FMAP under paragraph (1) and a 10 
percent increase under subsection (d) instead of ap-
plying a 20 percent increase under subsection (d). 
(c) ADDITIONAL ADJUSTMENT TO REFLECT IN-
CREASE IN UNEMPLOYMENT.— 
(1) IN GENERAL.—Subject to subsections (e), 
(f), and (g), in the case of a State that is a high 
unemployment State (as defined in paragraph (2)) 
for a calendar quarter during the recession adjust-
ment period, the FMAP (taking into account the ap-
plication of subsections (a) and (b)) for such quarter 
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shall be further increased by the high unemployment 
percentage point adjustment specified in paragraph 
(3) for the State for the quarter. 
(2) HIGH UNEMPLOYMENT STATE.— 
(A) IN GENERAL.—In this subsection, sub-
ject to subparagraph (B), the term ‘‘high unem-
ployment State’’ means, with respect to a cal-
endar quarter in the recession adjustment pe-
riod, a State that is 1 of the 50 States or the 
District of Columbia and for which the State 
unemployment increase percentage (as com-
puted under paragraph (5)) for the quarter is 
not less than 1.5 percentage points. 
(B)
MAINTENANCE
OF
STATUS.—If
a 
State is a high unemployment State for a cal-
endar quarter, it shall remain a high unemploy-
ment State for each subsequent calendar quar-
ter ending before July 1, 2010. 
(3) HIGH UNEMPLOYMENT PERCENTAGE POINT 
ADJUSTMENT.— 
(A) IN
GENERAL.—The high unemploy-
ment percentage point adjustment specified in 
this paragraph for a high unemployment State 
for a quarter is equal to the product of— 
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(i) the SMAP for such State and 
quarter (determined after the application 
of subsection (a) and before the application 
of subsection (b)); and 
(ii) subject to subparagraph (B), the 
State unemployment reduction factor spec-
ified in paragraph (4) for the State and 
quarter. 
(B)
MAINTENANCE
OF
ADJUSTMENT 
LEVEL FOR CERTAIN QUARTERS.—In no case 
shall the State unemployment reduction factor 
applied under subparagraph (A)(ii) for a State 
for a quarter (beginning on or after January 1, 
2009, and ending before July 1, 2010) be less 
than the State unemployment reduction factor 
applied to the State for the previous quarter 
(taking into account the application of this sub-
paragraph). 
(4) STATE UNEMPLOYMENT REDUCTION FAC-
TOR.—In the case of a high unemployment State for 
which the State unemployment increase percentage 
(as computed under paragraph (5)) with respect to 
a calendar quarter is— 
(A) not less than 1.5, but is less than 2.5, 
percentage points, the State unemployment re-
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duction factor for the State and quarter is 6 
percent; 
(B) not less than 2.5, but is less than 3.5, 
percentage points, the State unemployment re-
duction factor for the State and quarter is 12 
percent; or 
(C) not less than 3.5 percentage points, 
the State unemployment reduction factor for 
the State and quarter is 14 percent. 
(5) COMPUTATION OF STATE UNEMPLOYMENT 
INCREASE PERCENTAGE.— 
(A) IN GENERAL.—In this subsection, the 
‘‘State unemployment increase percentage’’ for 
a State for a calendar quarter is equal to the 
number
of
percentage
points
(if
any)
by 
which— 
(i) the average monthly unemployment 
rate for the State for months in the most 
recent previous 3-consecutive-month period 
for which data are available, subject to 
subparagraph (C); exceeds 
(ii) the lowest average monthly unem-
ployment rate for the State for any 3-con-
secutive-month period preceding the period 
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described in clause (i) and beginning on or 
after January 1, 2006. 
(B) AVERAGE MONTHLY UNEMPLOYMENT 
RATE DEFINED.—In this paragraph, the term 
‘‘average monthly unemployment rate’’ means 
the average of the monthly number unemployed, 
divided by the average of the monthly civilian 
labor force, seasonally adjusted, as determined 
based on the most recent monthly publications 
of the Bureau of Labor Statistics of the De-
partment of Labor. 
(C) SPECIAL RULE.—With respect to— 
(i) the first 2 calendar quarters of the 
recession adjustment period, the most re-
cent previous 3-consecutive-month period 
described in subparagraph (A)(i) shall be 
the 3-consecutive-month period beginning 
with October 2008; and 
(ii) the last 2 calendar quarters of the 
recession adjustment period, the most re-
cent previous 3-consecutive-month period 
described in such subparagraph shall be 
the 3-consecutive-month period beginning 
with December 2009. 
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(d) INCREASE IN CAP ON MEDICAID PAYMENTS TO 
TERRITORIES.—Subject to subsections (f) and (g) , with 
respect to entire fiscal years occurring during the reces-
sion adjustment period and with respect to fiscal years 
only a portion of which occurs during such period (and 
in proportion to the portion of the fiscal year that occurs 
during such period), the amounts otherwise determined for 
Puerto Rico, the Virgin Islands, Guam, the Northern Mar-
iana Islands, and American Samoa under subsections (f) 
and (g) of section 1108 of the Social Security Act (42 
U.S.C. 1308) shall each be increased by 20 percent (or, 
in the case of an election under subsection (b)(2), 10 per-
cent). 
(e) SCOPE OF APPLICATION.—The increases in the 
FMAP for a State under this section shall apply for pur-
poses of title XIX of the Social Security Act and— 
(1) the increases applied under subsections (a), 
(b), and (c) shall not apply with respect— 
(A) to payments under parts A, B, and D 
of title IV or title XXI of such Act (42 U.S.C. 
601 et seq. and 1397aa et seq.); 
(B) to payments under title XIX of such 
Act that are based on the enhanced FMAP de-
scribed in section 2105(b) of such Act (42 
U.S.C. 1397ee(b)); and 
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(C) to payments for disproportionate share 
hospital (DSH) payment adjustments under 
section 1923 of such Act (42 U.S.C. 1396r–4); 
and 
(2) the increase provided under subsection (c) 
shall not apply with respect to payments under part 
E of title IV of such Act. 
(f) STATE INELIGIBILITY AND LIMITATION.— 
(1) IN GENERAL.—Subject to paragraphs (2) 
and (3), a State is not eligible for an increase in its 
FMAP under subsection (a), (b), or (c), or an in-
crease in a cap amount under subsection (d), if eligi-
bility standards, methodologies, or procedures under 
its State plan under title XIX of the Social Security 
Act (including any waiver under such title or under 
section 1115 of such Act (42 U.S.C. 1315)) are 
more restrictive than the eligibility standards, meth-
odologies, or procedures, respectively, under such 
plan (or waiver) as in effect on July 1, 2008. 
(2) STATE
REINSTATEMENT
OF
ELIGIBILITY 
PERMITTED.—Subject to paragraph (3), a State that 
has restricted eligibility standards, methodologies, or 
procedures under its State plan under title XIX of 
the Social Security Act (including any waiver under 
such title or under section 1115 of such Act (42 
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U.S.C. 1315)) after July 1, 2008, is no longer ineli-
gible under paragraph (1) beginning with the first 
calendar quarter in which the State has reinstated 
eligibility standards, methodologies, or procedures 
that are no more restrictive than the eligibility 
standards,
methodologies,
or
procedures,
respec-
tively, under such plan (or waiver) as in effect on 
July 1, 2008. 
(3) SPECIAL RULES.—A State shall not be in-
eligible under paragraph (1)— 
(A) for the calendar quarters before July 
1, 2009, on the basis of a restriction that was 
applied after July 1, 2008, and before the date 
of the enactment of this Act, if the State, prior 
to July 1, 2009, reinstated eligibility standards, 
methodologies, or procedures that are no more 
restrictive than the eligibility standards, meth-
odologies, or procedures, respectively, under 
such plan (or waiver) as in effect on July 1, 
2008; or 
(B) on the basis of a restriction that was 
effective under State law as of July 1, 2008, 
and would have been in effect as of such date, 
but for a delay (of not longer than 1 calendar 
quarter) in the approval of a request for a new 
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waiver under section 1115 of such Act with re-
spect to such restriction. 
(4) STATE’S APPLICATION TOWARD RAINY DAY 
FUND.—A State is not eligible for an increase in its 
FMAP under subsection (b) or (c), or an increase in 
a cap amount under subsection (d), if any amounts 
attributable (directly or indirectly) to such increase 
are deposited or credited into any reserve or rainy 
day fund of the State. 
(5)
RULE
OF
CONSTRUCTION.—Nothing
in 
paragraph (1) or (2) shall be construed as affecting 
a State’s flexibility with respect to benefits offered 
under the State Medicaid program under title XIX 
of the Social Security Act (42 U.S.C. 1396 et seq.) 
(including any waiver under such title or under sec-
tion 1115 of such Act (42 U.S.C. 1315)). 
(6) NO
WAIVER
AUTHORITY.—The Secretary 
may not waive the application of this subsection or 
subsection (g) under section 1115 of the Social Se-
curity Act or otherwise. 
(g) REQUIREMENT FOR CERTAIN STATES.—In the 
case of a State that requires political subdivisions within 
the State to contribute toward the non-Federal share of 
expenditures under the State Medicaid plan required 
under section 1902(a)(2) of the Social Security Act (42 
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U.S.C. 1396a(a)(2)), the State is not eligible for an in-
crease in its FMAP under subsection (a), (b), or (c), or 
an increase in a cap amount under subsection (d), if it 
requires that such political subdivisions pay a greater per-
centage of the non-Federal share of such expenditures for 
quarters during the recession adjustment period, than the 
percentage that would have been required by the State 
under such plan on September 30, 2008, prior to applica-
tion of this section. 
(h) DEFINITIONS.—In this section, except as other-
wise provided: 
(1) FMAP.—The term ‘‘FMAP’’ means the 
Federal medical assistance percentage, as defined in 
section 1905(b) of the Social Security Act (42 
U.S.C. 1396d(b)), as determined without regard to 
this section except as otherwise specified. 
(2)
RECESSION
ADJUSTMENT
PERIOD.—The 
term ‘‘recession adjustment period’’ means the pe-
riod beginning on October 1, 2008, and ending on 
December 31, 2010. 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(4) SMAP.—The term ‘‘SMAP’’ means, for a 
State, 100 percent minus the Federal medical assist-
ance percentage. 
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(5) STATE.—The term ‘‘State’’ has the mean-
ing given such term in section 1101(a)(1) of the So-
cial Security Act (42 U.S.C. 1301(a)(1)) for pur-
poses of title XIX of the Social Security Act (42 
U.S.C. 1396 et seq.). 
(i) SUNSET.—This section shall not apply to items 
and services furnished after the end of the recession ad-
justment period. 
SEC. 5002. MORATORIA ON CERTAIN REGULATIONS. 
(a) EXTENSION OF MORATORIA ON CERTAIN MED-
ICAID REGULATIONS.—The following sections are each 
amended by striking ‘‘April 1, 2009’’ and inserting ‘‘July 
1, 2009’’: 
(1) Section 7002(a)(1) of the U.S. Troop Read-
iness, Veterans’ Care, Katrina Recovery, and Iraq 
Accountability
Appropriations
Act,
2007
(Public 
Law 110–28), as amended by section 7001(a)(1) of 
the Supplemental Appropriations Act, 2008 (Public 
Law 110–252). 
(2) Section 206 of the Medicare, Medicaid, and 
SCHIP Extension Act of 2007 (Public Law 110– 
173), as amended by section 7001(a)(2) of the Sup-
plemental Appropriations Act, 2008 (Public Law 
110–252). 
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(3) Section 7001(a)(3)(A) of the Supplemental 
Appropriations Act, 2008 (Public Law 110–252). 
(b)
ADDITIONAL
MEDICAID
MORATORIUM.—Not-
withstanding any other provision of law, with respect to 
expenditures for services furnished during the period be-
ginning on December 8, 2008 and ending on June 30, 
2009, the Secretary of Health and Human Services shall 
not 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 implement 
the final regulation relating to clarification of the defini-
tion of outpatient hospital facility services under the Med-
icaid program published on November 7, 2008 (73 Federal 
Register 66187). 
SEC. 5003. TRANSITIONAL MEDICAID ASSISTANCE (TMA). 
(a) 18-MONTH EXTENSION.— 
(1) IN GENERAL.—Sections 1902(e)(1)(B) and 
1925(f) of the Social Security Act (42 U.S.C. 
1396a(e)(1)(B), 1396r–6(f)) are each amended by 
striking ‘‘September 30, 2003’’ and inserting ‘‘De-
cember 31, 2010’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on July 1, 2009. 
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(b) STATE OPTION OF INITIAL 12-MONTH ELIGI-
BILITY.—Section 1925 of the Social Security Act (42 
U.S.C. 1396r–6) is amended— 
(1) in subsection (a)(1), by inserting ‘‘but sub-
ject to paragraph (5)’’ after ‘‘Notwithstanding any 
other provision of this title’’; 
(2) by adding at the end of subsection (a) the 
following: 
‘‘(5) OPTION OF 12-MONTH INITIAL ELIGIBILITY 
PERIOD.—A State may elect to treat any reference 
in this subsection to a 6-month period (or 6 months) 
as a reference to a 12-month period (or 12 months). 
In the case of such an election, subsection (b) shall 
not apply.’’; and 
(3) in subsection (b)(1), by inserting ‘‘but sub-
ject to subsection (a)(5)’’ after ‘‘Notwithstanding 
any other provision of this title’’. 
(c) REMOVAL OF REQUIREMENT FOR PREVIOUS RE-
CEIPT OF MEDICAL ASSISTANCE.—Section 1925(a)(1) of 
such Act (42 U.S.C. 1396r–6(a)(1)), as amended by sub-
section (b)(1), is further amended— 
(1) by inserting ‘‘subparagraph (B) and’’ before 
‘‘paragraph (5)’’; 
(2) by redesignating the matter after ‘‘RE-
QUIREMENT.—’’ as a subparagraph (A) with the 
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heading ‘‘IN GENERAL.—’’ and with the same inden-
tation as subparagraph (B) (as added by paragraph 
(3)); and 
(3) by adding at the end the following: 
‘‘(B) STATE OPTION TO WAIVE REQUIRE-
MENT
FOR
MONTHS
BEFORE
RECEIPT
OF 
MEDICAL ASSISTANCE.—A State may, at its op-
tion, elect also to apply subparagraph (A) in 
the case of a family that was receiving such aid 
for fewer than three months or that had applied 
for and was eligible for such aid for fewer than 
3 months during the 6 immediately preceding 
months described in such subparagraph.’’. 
(d) CMS REPORT ON ENROLLMENT AND PARTICIPA-
TION RATES UNDER TMA.—Section 1925 of such Act (42 
U.S.C. 1396r–6), as amended by this section, is further 
amended by adding at the end the following new sub-
section: 
‘‘(g) COLLECTION AND REPORTING OF PARTICIPA-
TION INFORMATION.— 
‘‘(1)
COLLECTION
OF
INFORMATION
FROM 
STATES.—Each State shall collect and submit to the 
Secretary (and make publicly available), in a format 
specified by the Secretary, information on average 
monthly enrollment and average monthly participa-
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tion rates for adults and children under this section 
and of the number and percentage of children who 
become ineligible for medical assistance under this 
section whose medical assistance is continued under 
another eligibility category or who are enrolled under 
the State’s child health plan under title XXI. Such 
information shall be submitted at the same time and 
frequency in which other enrollment information 
under this title is submitted to the Secretary. 
‘‘(2) ANNUAL REPORTS TO CONGRESS.—Using 
the information submitted under paragraph (1), the 
Secretary shall submit to Congress annual reports 
concerning enrollment and participation rates de-
scribed in such paragraph.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
subsections (b) through (d) shall take effect on July 1, 
2009. 
SEC. 5004. PROTECTIONS FOR INDIANS UNDER MEDICAID 
AND CHIP. 
(a) PREMIUMS
AND COST SHARING PROTECTION 
UNDER MEDICAID.— 
(1) IN GENERAL.—Section 1916 of the Social 
Security Act (42 U.S.C. 1396o) is amended— 
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(A) in subsection (a), in the matter pre-
ceding paragraph (1), by striking ‘‘and (i)’’ and 
inserting ‘‘, (i), and (j)’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(j) NO PREMIUMS OR COST SHARING FOR INDIANS 
FURNISHED ITEMS OR SERVICES DIRECTLY BY INDIAN 
HEALTH PROGRAMS OR THROUGH REFERRAL UNDER 
CONTRACT HEALTH SERVICES.— 
‘‘(1) NO COST SHARING FOR ITEMS OR SERV-
ICES
FURNISHED
TO
INDIANS
THROUGH
INDIAN 
HEALTH PROGRAMS.— 
‘‘(A) IN
GENERAL.—No enrollment fee, 
premium, or similar charge, and no deduction, 
copayment, cost sharing, or similar charge shall 
be imposed against an Indian who is furnished 
an item or service directly by the Indian Health 
Service, an Indian Tribe, Tribal Organization, 
or Urban Indian Organization or through refer-
ral under contract health services for which 
payment may be made under this title. 
‘‘(B) NO REDUCTION IN AMOUNT OF PAY-
MENT TO INDIAN HEALTH PROVIDERS.—Pay-
ment due under this title to the Indian Health 
Service, an Indian Tribe, Tribal Organization, 
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or Urban Indian Organization, or a health care 
provider through referral under contract health 
services for the furnishing of an item or service 
to an Indian who is eligible for assistance under 
such title, may not be reduced by the amount 
of any enrollment fee, premium, or similar 
charge, or any deduction, copayment, cost shar-
ing, or similar charge that would be due from 
the Indian but for the operation of subpara-
graph (A). 
‘‘(2) RULE
OF
CONSTRUCTION.—Nothing in 
this subsection shall be construed as restricting the 
application of any other limitations on the imposi-
tion of premiums or cost sharing that may apply to 
an individual receiving medical assistance under this 
title who is an Indian.’’. 
(2)
CONFORMING
AMENDMENT.—Section 
1916A(b)(3) of such Act (42 U.S.C. 1396o–1(b)(3)) 
is amended— 
(A) in subparagraph (A), by adding at the 
end the following new clause: 
‘‘(vi) An Indian who is furnished an 
item or service directly by the Indian 
Health Service, an Indian Tribe, Tribal 
Organization or Urban Indian Organiza-
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tion or through referral under contract 
health services.’’; and 
(B) in subparagraph (B), by adding at the 
end the following new clause: 
‘‘(ix) Items and services furnished to 
an Indian directly by the Indian Health 
Service, an Indian Tribe, Tribal Organiza-
tion
or
Urban
Indian
Organization
or 
through
referral
under
contract
health 
services.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on October 1, 
2009. 
(b) TREATMENT OF CERTAIN PROPERTY FROM RE-
SOURCES FOR MEDICAID AND CHIP ELIGIBILITY.— 
(1) MEDICAID.—Section 1902 of the Social Se-
curity Act (42 U.S.C. 1396a), as amended by sec-
tion 3003(a) of the Health Insurance Assistance for 
the Unemployed Act of 2009, is amended by adding 
at the end the following new subsection: 
‘‘(ee) Notwithstanding any other requirement of this 
title or any other provision of Federal or State law, a State 
shall disregard the following property from resources for 
purposes of determining the eligibility of an individual who 
is an Indian for medical assistance under this title: 
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‘‘(1) Property, including real property and im-
provements, that is held in trust, subject to Federal 
restrictions, or otherwise under the supervision of 
the Secretary of the Interior, located on a reserva-
tion,
including
any
federally
recognized
Indian 
Tribe’s
reservation,
pueblo,
or
colony,
including 
former reservations in Oklahoma, Alaska Native re-
gions established by the Alaska Native Claims Set-
tlement Act, and Indian allotments on or near a res-
ervation as designated and approved by the Bureau 
of Indian Affairs of the Department of the Interior. 
‘‘(2) For any federally recognized Tribe not de-
scribed in paragraph (1), property located within the 
most recent boundaries of a prior Federal reserva-
tion. 
‘‘(3) Ownership interests in rents, leases, royal-
ties, or usage rights related to natural resources (in-
cluding extraction of natural resources or harvesting 
of timber, other plants and plant products, animals, 
fish, and shellfish) resulting from the exercise of fed-
erally protected rights. 
‘‘(4) Ownership interests in or usage rights to 
items not covered by paragraphs (1) through (3) 
that have unique religious, spiritual, traditional, or 
cultural significance or rights that support subsist-
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ence or a traditional lifestyle according to applicable 
tribal law or custom.’’. 
(2) APPLICATION TO CHIP.—Section 2107(e)(1) 
of such Act (42 U.S.C. 1397gg(e)(1)) is amended by 
adding at the end the following new subparagraph: 
‘‘(E) Section 1902(ff) (relating to dis-
regard of certain property for purposes of mak-
ing eligibility determinations).’’. 
(c) CONTINUATION OF CURRENT LAW PROTECTIONS 
OF CERTAIN INDIAN PROPERTY FROM MEDICAID ESTATE 
RECOVERY.—Section 1917(b)(3) of the Social Security 
Act (42 U.S.C. 1396p(b)(3)) is amended— 
(1) by inserting ‘‘(A)’’ after ‘‘(3)’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) The standards specified by the Sec-
retary under subparagraph (A) shall require 
that the procedures established by the State 
agency under subparagraph (A) exempt income, 
resources, and property that are exempt from 
the application of this subsection as of April 1, 
2003, under manual instructions issued to carry 
out this subsection (as in effect on such date) 
because of the Federal responsibility for Indian 
Tribes and Alaska Native Villages. Nothing in 
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this subparagraph shall be construed as pre-
venting the Secretary from providing additional 
estate recovery exemptions under this title for 
Indians.’’. 
SEC. 5005. CONSULTATION ON MEDICAID AND CHIP. 
(a) IN GENERAL.—Section 1139 of the Social Secu-
rity Act (42 U.S.C. 1320b–9) is amended to read as fol-
lows: 
‘‘CONSULTATION WITH TRIBAL TECHNICAL ADVISORY 
GROUP (TTAG) 
‘‘SEC. 1139. The Secretary shall maintain within the 
Centers for Medicaid & Medicare Services (CMS) a Tribal 
Technical Advisory Group, which was first established in 
accordance with requirements of the charter dated Sep-
tember 30, 2003, and the Secretary shall include in such 
Group a representative of the Urban Indian Organizations 
and the Service. The representative of the Urban Indian 
Organization shall be deemed to be an elected officer of 
a tribal government for purposes of applying section 
204(b) of the Unfunded Mandates Reform Act of 1995 
(2 U.S.C. 1534(b)).’’. 
(b) SOLICITATION OF ADVICE UNDER MEDICAID AND 
CHIP.— 
(1) MEDICAID STATE PLAN AMENDMENT.—Sec-
tion 1902(a) of the Social Security Act (42 U.S.C. 
1396a(a)) is amended— 
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(A) in paragraph (70), by striking ‘‘and’’ 
at the end; 
(B) in paragraph (71), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by inserting after paragraph (71), the 
following new paragraph: 
‘‘(72) in the case of any State in which 1 or 
more Indian Health Programs or Urban Indian Or-
ganizations furnishes health care services, provide 
for a process under which the State seeks advice on 
a regular, ongoing basis from designees of such In-
dian Health Programs and Urban Indian Organiza-
tions on matters relating to the application of this 
title that are likely to have a direct effect on such 
Indian Health Programs and Urban Indian Organi-
zations and that— 
‘‘(A) shall include solicitation of advice 
prior to submission of any plan amendments, 
waiver requests, and proposals for demonstra-
tion projects likely to have a direct effect on In-
dians, Indian Health Programs, or Urban In-
dian Organizations; and 
‘‘(B) may include appointment of an advi-
sory committee and of a designee of such In-
dian Health Programs and Urban Indian Orga-
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nizations to the medical care advisory com-
mittee advising the State on its State plan 
under this title.’’. 
(2) APPLICATION TO CHIP.—Section 2107(e)(1) 
of such Act (42 U.S.C. 1397gg(e)(1)), as amended 
by section 5004(b), is amended by adding at the end 
the following new subparagraph: 
‘‘(F) Section 1902(a)(72) (relating to re-
quiring certain States to seek advice from des-
ignees of Indian Health Programs and Urban 
Indian Organizations).’’. 
(c)
RULE
OF
CONSTRUCTION.—Nothing
in
the 
amendments made by this section shall be construed as 
superseding existing advisory committees, working groups, 
guidance, or other advisory procedures established by the 
Secretary of Health and Human Services or by any State 
with respect to the provision of health care to Indians. 
SEC. 5006. TEMPORARY INCREASE IN DSH ALLOTMENTS 
DURING RECESSION. 
Section 1923(f)(3) of the Social Security Act (42 
U.S.C. 1396r–4(f)(3)) is amended— 
(1) in subparagraph (A), by striking ‘‘para-
graph (6)’’ and inserting ‘‘paragraph (6) and sub-
paragraph (E)’’; and 
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(2) by adding at the end the following new sub-
paragraph: 
‘‘(E) TEMPORARY
INCREASE
IN
ALLOT-
MENTS DURING RECESSION.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the DSH allotment for any State— 
‘‘(I) for fiscal year 2009 is equal 
to 102.5 percent of the DSH allot-
ment that would be determined under 
this paragraph for the State for fiscal 
year 2009 without application of this 
subparagraph,
notwithstanding
sub-
paragraph (B); 
‘‘(II) for fiscal year 2010 is equal 
to 102.5 percent of the DSH allot-
ment for the State for fiscal year 
2009, as determined under subclause 
(I); and 
‘‘(III) for each succeeding fiscal 
year is equal to the DSH allotment 
for the State under this paragraph de-
termined without applying subclauses 
(I) and (II). 
‘‘(ii) APPLICATION.—Clause (i) shall 
not apply to a State for a year in the case 
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that the DSH allotment for such State for 
such year under this paragraph determined 
without applying clause (i) would grow 
higher than the DSH allotment specified 
under clause (i) for the State for such 
year.’’. 
TITLE VI—BROADBAND 
COMMUNICATIONS 
SEC. 6001. INVENTORY OF BROADBAND SERVICE CAPA-
BILITY AND AVAILABILITY. 
(a) ESTABLISHMENT.—To provide a comprehensive 
nationwide inventory of existing broadband service capa-
bility and availability, the National Telecommunications 
and Information Administration (‘‘NTIA’’) shall develop 
and maintain a broadband inventory map of the United 
States that identifies and depicts the geographic extent 
to which broadband service capability is deployed and 
available from a commercial provider or public provider 
throughout each State. 
(b) PUBLIC AVAILABILITY AND INTERACTIVITY.— 
Not later than 2 years after the date of enactment of this 
Act, the NTIA shall make the broadband inventory map 
developed and maintained pursuant to this section acces-
sible by the public on a World Wide Web site of the NTIA 
in a form that is interactive and searchable. 
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SEC.
6002.
WIRELESS
AND
BROADBAND
DEPLOYMENT 
GRANT PROGRAMS. 
(a) GRANTS AUTHORIZED.— 
(1) IN GENERAL.—The National Telecommuni-
cations and Information Administration (‘‘NTIA’’) 
is authorized to carry out a program to award 
grants to eligible entities for the non-recurring costs 
associated with the deployment of broadband infra-
structure in rural, suburban, and urban areas, in ac-
cordance with the requirements of this section. 
(2) PROGRAM WEBSITE.—The NTIA shall de-
velop and maintain a website to make publicly avail-
able information about the program described in 
paragraph (1), including— 
(A) each prioritization report submitted by 
a State under subsection (b); 
(B) a list of eligible entities that have ap-
plied for a grant under this section, and the 
area or areas the entity proposes to serve; and 
(C) the status of each such application, 
whether approved, denied, or pending. 
(b) STATE PRIORITIES.— 
(1)
PRIORITIES
REPORT
SUBMISSION.—Not 
later than 75 days after the date of enactment of 
this section, each State intending to participate in 
the program under this section shall submit to the 
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NTIA a report indicating the geographic areas of 
the State which— 
(A) for the purposes of determining the 
need for Wireless Deployment Grants under 
subsection (c), the State considers to have the 
greatest priority for— 
(i) wireless voice service in unserved 
areas; and 
(ii) advanced wireless broadband serv-
ice in underserved areas; and 
(B) for the purposes of determining the 
need for Broadband Deployment Grants under 
subsection (d), the State considers to have the 
greatest priority for— 
(i)
basic
broadband
service
in 
unserved areas; and 
(ii) advanced broadband service in un-
derserved areas. 
(2) LIMITATION.—The unserved and under-
served areas identified by a State in the report re-
quired by this subsection shall not represent, in the 
aggregate, more than 20 percent of the population 
of such State. 
(c) WIRELESS DEPLOYMENT GRANTS.— 
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(1) AUTHORIZED ACTIVITY.—The NTIA shall 
award Wireless Deployment Grants in accordance 
with this subsection from amounts authorized for 
Wireless Deployment Grants by this subtitle to eligi-
ble entities to deploy necessary infrastructure for the 
provision of wireless voice service or advanced wire-
less broadband service to end users in designated 
areas. 
(2) GRANT
DISTRIBUTION.—The NTIA shall 
seek to distribute grants, to the extent possible, so 
that 25 percent of the grants awarded under this 
subsection shall be awarded to eligible entities for 
providing wireless voice service to unserved areas 
and 75 percent of grants awarded under this sub-
section shall be awarded to eligible entities for pro-
viding advanced wireless broadband service to under-
served areas. 
(d) BROADBAND DEPLOYMENT GRANTS.— 
(1) AUTHORIZED ACTIVITY.—The NTIA shall 
award Broadband Deployment Grants in accordance 
with this subsection from amounts authorized for 
Broadband Deployment Grants by this subtitle to el-
igible entities to deploy necessary infrastructure for 
the provision of basic broadband service or advanced 
broadband service to end users in designated areas. 
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(2) GRANT
DISTRIBUTION.—The NTIA shall 
seek to distribute grants, to the extent possible, so 
that 25 percent of the grants awarded under this 
subsection shall be awarded to eligible entities for 
providing basic broadband service to unserved areas 
and 75 percent of grants awarded under this sub-
section shall be awarded to eligible entities for pro-
viding advanced broadband service to underserved 
areas. 
(e) GRANT REQUIREMENTS.—The NTIA shall— 
(1) adopt rules to protect against unjust enrich-
ment; and 
(2) ensure that grant recipients— 
(A) meet buildout requirements; 
(B) maximize use of the supported infra-
structure by the public; 
(C) operate basic and advanced broadband 
service networks on an open access basis; 
(D) operate advanced wireless broadband 
service on a wireless open access basis; and 
(E) adhere to the principles contained in 
the
Federal
Communications
Commission’s 
broadband
policy
statement
(FCC
05–151, 
adopted August 5, 2005). 
(f) APPLICATIONS.— 
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(1) SUBMISSION.—To be considered for a grant 
awarded under subsection (c) or (d), an eligible enti-
ty shall submit to the NTIA an application at such 
time, in such manner, and containing such informa-
tion and assurances as the NTIA may require. Such 
an application shall include— 
(A) a cost-study estimate for serving the 
particular geographic area to be served by the 
entity; 
(B) a proposed build-out schedule to resi-
dential households and small businesses in the 
area; 
(C) for applicants for Wireless Deployment 
Grants under subsection (c), a build-out sched-
ule for geographic coverage of such areas; and 
(D) any other requirements the NTIA 
deems necessary. 
(2) SELECTION.— 
(A) NOTIFICATION.—The NTIA shall no-
tify each eligible entity that has submitted a 
complete application whether the entity has 
been approved or denied for a grant under this 
section in a timely fashion. 
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(B)
GRANT
DISTRIBUTION
CONSIDER-
ATIONS.—In awarding grants under this sec-
tion, the NTIA shall, to the extent practical— 
(i) award not less than one grant in 
each State; 
(ii) give substantial weight to whether 
an application is from an eligible entity to 
deploy infrastructure in an area that is an 
area— 
(I) identified by a State in a re-
port submitted under subsection (b); 
or 
(II) in which the NTIA deter-
mines
there
will
be
a
significant 
amount of public safety or emergency 
response use of the infrastructure; 
(iii) consider whether an application 
from an eligible entity to deploy infrastruc-
ture in an area— 
(I) will, if approved, increase the 
affordability of, or subscribership to, 
service to the greatest population of 
underserved users in the area; 
(II) will, if approved, enhance 
service for health care delivery, edu-
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cation, or children to the greatest pop-
ulation of underserved users in the 
area; 
(III) contains concrete plans for 
enhancing
computer
ownership
or 
computer literacy in the area; 
(IV) is from a recipient of more 
than 20 percent matching grants from 
State, local, or private entities for 
service in the area and the extent of 
such commitment; 
(V) will, if approved, result in 
unjust enrichment because the eligible 
entity has applied for, or intends to 
apply for, support for the non-recur-
ring costs through another Federal 
program for service in the area; and 
(VI)
will,
if
approved,
signifi-
cantly
improve
interoperable 
broadband
communications
systems 
available for use by public safety and 
emergency response; and 
(iv) consider whether the eligible enti-
ty is a socially and economically disadvan-
taged small business concern, as defined 
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under section 8(a) of the Small Business 
Act (15 U.S.C. 637). 
(g)
COORDINATION
AND
CONSULTATION.—The 
NTIA shall coordinate with the Federal Communications 
Commission and shall consult with other appropriate Fed-
eral agencies in implementing this section. 
(h) REPORT REQUIRED.—The NTIA shall submit an 
annual report to the Committee on Energy and Commerce 
of the House of Representatives and the Committee on 
Commerce, Science, and Transportation of the Senate for 
5 years assessing the impact of the grants funded under 
this section on the basis of the objectives and criteria de-
scribed in subsection (f)(2)(B)(iii). 
(i) RULEMAKING AUTHORITY.—The NTIA shall have 
the authority to prescribe such rules as necessary to carry 
out the purposes of this section. 
(j) DEFINITIONS.—For the purpose of this section— 
(1) the term ‘‘advanced broadband service’’ 
means a service delivering data to the end user 
transmitted at a speed of at least 45 megabits per 
second downstream and at least 15 megabits per 
second upstream; 
(2) the term ‘‘advanced wireless broadband 
service’’ means a wireless service delivering to the 
end user data transmitted at a speed of at least 3 
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megabits per second downstream and at least 1 
megabit per second upstream over an end-to-end 
internet protocol wireless network; 
(3) the term ‘‘basic broadband service’’ means 
a service delivering data to the end user transmitted 
at a speed of at least 5 megabits per second down-
stream and at least 1 megabit per second upstream; 
(4) the term ‘‘eligible entity’’ means— 
(A) a provider of wireless voice service, ad-
vanced
wireless
broadband
service,
basic 
broadband service, or advanced broadband serv-
ice, including a satellite carrier that provides 
any such service; 
(B) a State or unit of local government, or 
agency or instrumentality thereof, that is or in-
tends to be a provider of any such service; and 
(C) any other entity, including construc-
tion
companies,
tower
companies,
backhaul 
companies, or other service providers, that the 
NTIA authorizes by rule to participate in the 
programs under this section, if such other enti-
ty is required to provide access to the supported 
infrastructure on a neutral, reasonable basis to 
maximize use; 
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(5) the term ‘‘interoperable broadband commu-
nications systems’’ means communications systems 
which enable public safety agencies to share infor-
mation among local, State, Federal, and tribal public 
safety agencies in the same area using voice or data 
signals via advanced wireless broadband service; 
(6) the term ‘‘open access’’ shall be defined by 
the Federal Communications Commission not later 
than 45 days after the date of enactment of this sec-
tion; 
(7) the term ‘‘State’’ includes the District of 
Columbia and the territories and possessions; 
(8) the term ‘‘underserved area’’ shall be de-
fined by the Federal Communications Commission 
not later than 45 days after the date of enactment 
of this section; 
(9) the term ‘‘unserved area’’ shall be defined 
by the Federal Communications Commission not 
later than 45 days after the date of enactment of 
this section; 
(10) the term ‘‘wireless open access’’ shall be 
defined by the Federal Communications Commission 
not later than 45 days after the date of enactment 
of this section; and 
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(11) the term ‘‘wireless voice service’’ means 
the provision of two-way, real-time, voice commu-
nications using a mobile service. 
(k) REVIEW
OF DEFINITIONS.—Not later than 3 
months after the date the NTIA makes a broadband in-
ventory map of the United States accessible to the public 
pursuant to section 6001(b), the Federal Communications 
Commission shall review the definitions of ‘‘underserved 
area’’ and ‘‘unserved area’’, as defined by the Commission 
within 45 days after the date of enactment of this Act 
(as required by paragraphs (8) and (9) of subsection (j)), 
and shall revise such definitions based on the data used 
by the NTIA to develop and maintain such map. 
SEC. 6003. NATIONAL BROADBAND PLAN. 
(a) REPORT REQUIRED.—Not later than 1 year after 
the date of enactment of this section, the Federal Commu-
nications Commission shall submit to the Committee on 
Energy and Commerce of the House of Representatives 
and the Committee on Commerce, Science, and Transpor-
tation of the Senate, a report containing a national 
broadband plan. 
(b) CONTENTS OF PLAN.—The national broadband 
plan required by this section shall seek to ensure that all 
people of the United States have access to broadband ca-
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pability and shall establish benchmarks for meeting that 
goal. The plan shall also include— 
(1) an analysis of the most effective and effi-
cient mechanisms for ensuring broadband access by 
all people of the United States; 
(2) a detailed strategy for achieving afford-
ability of such service and maximum utilization of 
broadband infrastructure and service by the public; 
and 
(3) a plan for use of broadband infrastructure 
and services in advancing consumer welfare, civic 
participation, public safety and homeland security, 
community development, health care delivery, energy 
independence and efficiency, education, worker train-
ing, private sector investment, entrepreneurial activ-
ity, job creation and economic growth, and other na-
tional purposes. 
TITLE VII—ENERGY 
SEC.
7001.
TECHNICAL
CORRECTIONS
TO
THE
ENERGY 
INDEPENDENCE AND SECURITY ACT OF 2007. 
(a) Section 543(a) of the Energy Independence and 
Security Act of 2007 (42 U.S.C. 17153(a)) is amended— 
(1) by redesignating paragraphs (2) through 
(4) as paragraphs (3) through (5), respectively; and 
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support to smart grid demonstration projects in 
urban, suburban, and rural areas, including 
areas where electric system assets are controlled 
by tax-exempt entities and areas where electric 
system assets are controlled by investor-owned 
utilities.’’. 
(2) By amending subparagraph (C) of section 
1304(b)(3) to read as follows: 
‘‘(C) FEDERAL SHARE OF COST OF TECH-
NOLOGY
INVESTMENTS.—The Secretary shall 
provide to an electric utility described in sub-
paragraph (B) or to other parties financial as-
sistance for use in paying an amount equal to 
not more than 50 percent of the cost of quali-
fying
advanced
grid
technology
investments 
made by the electric utility or other party to 
carry out a demonstration project.’’. 
(3) By inserting after section 1304(b)(3)(D) 
the following new subparagraphs: 
‘‘(E) AVAILABILITY OF DATA.—The Sec-
retary shall establish and maintain a smart grid 
information clearinghouse in a timely manner 
which will make data from smart grid dem-
onstration projects and other sources available 
to the public. As a condition of receiving finan-
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cial assistance under this subsection, a utility or 
other participant in a smart grid demonstration 
project shall provide such information as the 
Secretary
may
require
to
become
available 
through the smart grid information clearing-
house in the form and within the timeframes as 
directed by the Secretary. The Secretary shall 
assure that business proprietary information 
and individual customer information is not in-
cluded
in
the
information
made
available 
through the clearinghouse. 
‘‘(F)
OPEN
PROTOCOLS
AND
STAND-
ARDS.—The Secretary shall require as a condi-
tion of receiving funding under this subsection 
that demonstration projects utilize Internet- 
based or other open protocols and standards if 
available and appropriate.’’. 
(4) By amending paragraph (2) of section 
1304(c) to read as follows: 
‘‘(2) to carry out subsection (b), such sums as 
may be necessary.’’. 
(5) By amending subsection (a) of section 1306 
by striking ‘‘reimbursement of one-fifth (20 per-
cent)’’ and inserting ‘‘grants of up to one-half (50 
percent)’’. 
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(6) By striking the last sentence of subsection 
(b)(9) of section 1306. 
(7) By striking ‘‘are eligible for’’ in subsection 
(c)(1) of section 1306 and inserting ‘‘utilize’’. 
(8) By amending subsection (e) of section 1306 
to read as follows: 
‘‘(e)
PROCEDURES
AND
RULES.—The
Secretary 
shall— 
‘‘(1) establish within 60 days after the enact-
ment of the American Recovery and Reinvestment 
Act of 2009 procedures by which applicants can ob-
tain grants of not more than one-half of their docu-
mented costs; 
‘‘(2) require as a condition of receiving a grant 
under this section that grant recipients utilize Inter-
net-based or other open protocols and standards if 
available and appropriate; 
‘‘(3) establish procedures to ensure that there is 
no duplication or multiple payment or recovery for 
the same investment or costs, that the grant goes to 
the party making the actual expenditures for quali-
fying smart grid investments, and that the grants 
made have significant effect in encouraging and fa-
cilitating the development of a smart grid; 
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‘‘(4) maintain public records of grants made, 
recipients, and qualifying smart grid investments 
which have received grants; 
‘‘(5) establish procedures to provide advance 
payment of moneys up to the full amount of the 
grant award; and 
‘‘(6) have and exercise the discretion to deny 
grants for investments that do not qualify in the 
reasonable judgment of the Secretary.’’. 
SEC. 7003. RENEWABLE ENERGY AND ELECTRIC POWER 
TRANSMISSION LOAN GUARANTEE PROGRAM. 
(a) AMENDMENT.—Title XVII of the Energy Policy 
Act of 2005 (42 U.S.C. 16511 et seq.) is amended by add-
ing the following at the end: 
‘‘SEC. 1705. TEMPORARY PROGRAM FOR RAPID DEPLOY-
MENT OF RENEWABLE ENERGY AND ELEC-
TRIC POWER TRANSMISSION PROJECTS. 
‘‘(a) IN GENERAL.—Notwithstanding section 1703, 
the Secretary may make guarantees under this section 
only for commercial technology projects under subsection 
(b) that will commence construction not later than Sep-
tember 30, 2011. 
‘‘(b) CATEGORIES.—Projects from only the following 
categories shall be eligible for support under this section: 
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‘‘(1) Renewable energy systems, including incre-
mental hydropower, that generate electricity. 
‘‘(2) Electric power transmission systems, in-
cluding upgrading and reconductoring projects. 
‘‘(3) Leading edge biofuel projects that will use 
technologies performing at the pilot or demonstra-
tion scale that the Secretary determines are likely to 
become commercial technologies and will produce 
transportation fuels that substantially reduce life- 
cycle greenhouse gas emissions compared to other 
transportation fuels. 
‘‘(c) FACTORS RELATING
TO ELECTRIC POWER 
TRANSMISSION SYSTEMS.—In determining to make guar-
antees to projects described in subsection (b)(2), the Sec-
retary shall consider the following factors: 
‘‘(1) The viability of the project without guar-
antees. 
‘‘(2) The availability of other Federal and State 
incentives. 
‘‘(3) The importance of the project in meeting 
reliability needs. 
‘‘(4) The effect of the project in meeting a 
State or region’s environment (including climate 
change) and energy goals. 
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‘‘(d) WAGE RATE REQUIREMENTS.—The Secretary 
shall require that each recipient of support under this sec-
tion provide reasonable assurance that all laborers and 
mechanics employed in the performance of the project for 
which the assistance is provided, including those employed 
by contractors or subcontractors, will be paid wages at 
rates not less than those prevailing on similar work in the 
locality as determined by the Secretary of Labor in accord-
ance with subchapter IV of chapter 31 of part A of subtitle 
II of title 40, United States Code (commonly referred to 
as the ‘Davis-Bacon Act’). 
‘‘(e) LIMITATION.—Funding under this section for 
projects described in subsection (b)(3) shall not exceed 
$500,000,000. 
‘‘(f) SUNSET.—The authority to enter into guaran-
tees under this section shall expire on September 30, 
2011.’’. 
(b) TABLE OF CONTENTS AMENDMENT.—The table 
of contents for the Energy Policy Act of 2005 is amended 
by inserting after the item relating to section 1704 the 
following new item: 
‘‘Sec. 1705. Temporary program for rapid deployment of renewable energy and 
electric power transmission projects.’’. 
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SEC.
7004.
WEATHERIZATION
ASSISTANCE
PROGRAM 
AMENDMENTS. 
(a) INCOME LEVEL.—Section 412(7) of the Energy 
Conservation and Production Act (42 U.S.C. 6862(7)) is 
amended by striking ‘‘150 percent’’ both places it appears 
and inserting ‘‘200 percent’’. 
(b) ASSISTANCE LEVEL PER DWELLING UNIT.— 
Section 415(c)(1) of the Energy Conservation and Produc-
tion Act (42 U.S.C. 6865(c)(1)) is amended by striking 
‘‘$2,500’’ and inserting ‘‘$5,000’’. 
(c) EFFECTIVE USE OF FUNDS.—In providing funds 
made available by this Act for the Weatherization Assist-
ance Program, the Secretary may encourage States to give 
priority to using such funds for the most cost-effective ef-
ficiency activities, which may include insulation of attics, 
if, in the Secretary’s view, such use of funds would in-
crease the effectiveness of the program. 
SEC.
7005.
RENEWABLE
ELECTRICITY
TRANSMISSION 
STUDY. 
In completing the 2009 National Electric Trans-
mission Congestion Study, the Secretary of Energy shall 
include— 
(1) an analysis of the significant potential 
sources of renewable energy that are constrained in 
accessing appropriate market areas by lack of ade-
quate transmission capacity; 
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(2) an analysis of the reasons for failure to de-
velop the adequate transmission capacity; 
(3) recommendations for achieving adequate 
transmission capacity; 
(4) an analysis of the extent to which legal 
challenges filed at the State and Federal level are 
delaying the construction of transmission necessary 
to access renewable energy; and 
(5) an explanation of assumptions and projec-
tions made in the Study, including— 
(A) assumptions and projections relating 
to energy efficiency improvements in each load 
center; 
(B) assumptions and projections regarding 
the location and type of projected new genera-
tion capacity; and 
(C) assumptions and projections regarding 
projected deployment of distributed generation 
infrastructure. 
SEC. 7006. ADDITIONAL STATE ENERGY GRANTS. 
(a) IN GENERAL.—Amounts appropriated in para-
graph (6) under the heading ‘‘Department of Energy— 
Energy Programs—Energy Efficiency and Renewable En-
ergy’’ in title V of division A of this Act shall be available 
to the Secretary of Energy for making additional grants 
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under part D of title III of the Energy Policy and Con-
servation Act (42 U.S.C. 6321 et seq.). The Secretary 
shall make grants under this section in excess of the base 
allocation established for a State under regulations issued 
pursuant to the authorization provided in section 365(f) 
of such Act only if the governor of the recipient State noti-
fies the Secretary of Energy that the governor will seek, 
to the extent of his or her authority, to ensure that each 
of the following will occur: 
(1) The applicable State regulatory authority 
will implement the following regulatory policies for 
each electric and gas utility with respect to which 
the State regulatory authority has ratemaking au-
thority: 
(A) Policies that ensure that a utility’s re-
covery of prudent fixed costs of service is timely 
and independent of its retail sales, without in 
the process shifting prudent costs from variable 
to fixed charges. This cost shifting constraint 
shall not apply to rate designs adopted prior to 
the date of enactment of this Act. 
(B) Cost recovery for prudent investments 
by utilities in energy efficiency. 
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(C) An earnings opportunity for utilities 
associated with cost-effective energy efficiency 
savings. 
(2) The State, or the applicable units of local 
government that have authority to adopt building 
codes, will implement the following: 
(A) A building energy code (or codes) for 
residential buildings that meets or exceeds the 
most recently published International Energy 
Conservation Code, or achieves equivalent or 
greater energy savings. 
(B) A building energy code (or codes) for 
commercial buildings throughout the State that 
meets or exceeds the ANSI/ASHRAE/IESNA 
Standard 90.1–2007, or achieves equivalent or 
greater energy savings. 
(C) A plan for the jurisdiction achieving 
compliance with the building energy code or 
codes described in subparagraphs (A) and (B) 
within 8 years of the date of enactment of this 
Act in at least 90 percent of new and renovated 
residential and commercial building space. Such 
plan shall include active training and enforce-
ment programs and measurement of the rate of 
compliance each year. 
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(3) The State will to the extent practicable 
prioritize the grants toward funding energy effi-
ciency and renewable energy programs, including— 
(A) the expansion of existing energy effi-
ciency programs approved by the State or the 
appropriate regulatory authority, including en-
ergy efficiency retrofits of buildings and indus-
trial facilities, that are funded— 
(i) by the State; or 
(ii) through rates under the oversight 
of the applicable regulatory authority, to 
the extent applicable; 
(B) the expansion of existing programs, 
approved by the State or the appropriate regu-
latory authority, to support renewable energy 
projects and deployment activities, including 
programs operated by entities which have the 
authority and capability to manage and dis-
tribute grants, loans, performance incentives, 
and other forms of financial assistance; and 
(C) cooperation and joint activities between 
States to advance more efficient and effective 
use of this funding to support the priorities de-
scribed in this paragraph. 
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RURAL COMMUNITY FACILITIES PROGRAM ACCOUNT 
For an additional amount for the cost of direct loans, 
loan guarantees, and grants for rural community facilities 
programs as authorized by section 306 and described in sec-
tion 381E(d)(1) of the Consolidated Farm and Rural Devel-
opment Act, $127,000,000, to remain available until Sep-
tember 30, 2010. 
RURAL BUSINESS—COOPERATIVE SERVICE 
RURAL BUSINESS PROGRAM ACCOUNT 
For an additional amount for the cost of guaranteed 
loans and grants as authorized by sections 310B(a)(2)(A) 
and 310B(c) of the Consolidated Farm and Rural Develop-
ment Act (7 U.S.C. 1932), $150,000,000, to remain avail-
able until September 30, 2010. 
BIOREFINERY ASSISTANCE 
For the cost of loan guarantees and grants, as author-
ized by section 9003 of the Farm Security and Rural In-
vestment Act of 2002 (7 U.S.C. 8103), $200,000,000, to re-
main available until September 30, 2010. 
RURAL ENERGY FOR AMERICA PROGRAM 
For an additional amount for the cost of loan guaran-
tees and grants, as authorized by section 9007 of the Farm 
Security and Rural Investment Act of 2002 (7 U.S.C. 
8107), $50,000,000, to remain available until September 
30, 2010: Provided, That these funds may be used by tribes, 
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8(a) of the Food and Nutrition Act of 2008 (7 U.S.C. 
2017(a)) by 12 percent. 
(3) SUBSEQUENT INCREASE FOR FISCAL YEAR 
2010.—Beginning on October 1, 2009, and for each 
subsequent month through the month ending Sep-
tember 30, 2010, the Secretary shall increase the cost 
of the thrifty food plan for purposes of section 8(a) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 
2017(a)) by an amount equal to 12 percent, less the 
percentage by which the Secretary determines the 
thrifty food plan would otherwise be adjusted on Octo-
ber 1, 2009, as required under section 3(u) of that Act 
(7 U.S.C. 2012(u)), if the percentage is less than 12 
percent. 
(4) SUBSEQUENT INCREASE FOR FISCAL YEAR 
2011.—Beginning on October 1, 2010, and for each 
subsequent month through the month ending Sep-
tember 30, 2011, the Secretary shall increase the cost 
of the thrifty food plan for purposes of section 8(a) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 
2017(a)) by an amount equal to 12 percent, less the 
sum of the percentages by which the Secretary deter-
mines the thrifty food plan would otherwise be ad-
justed on October 1, 2009 and October 1, 2010, as re-
quired under section 3(u) of that Act (7 U.S.C. 
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of Congress an expenditure plan for funds provided under 
this heading prior to obligation. 
MILITARY CONSTRUCTION, AIR NATIONAL GUARD 
For an additional amount for ‘‘Military Construction, 
Air National Guard’’, $110,000,000, to remain available 
until September 30, 2013: Provided, That notwithstanding 
any other provision of law, such funds may be obligated 
and expended to carry out planning and design and mili-
tary construction projects in the United States not other-
wise authorized by law: Provided further, That within 30 
days of enactment of this Act the Director of the Air Na-
tional Guard shall submit to the Committees on Appropria-
tions of both Houses of Congress an expenditure plan for 
funds provided under this heading prior to obligation. 
FAMILY HOUSING CONSTRUCTION, ARMY 
For an additional amount for ‘‘Family Housing Con-
struction, Army’’, $34,570,000, to remain available until 
September 30, 2013: Provided, That notwithstanding any 
other provision of law, such funds may be obligated and 
expended to carry out planning and design and military 
construction projects in the United States not otherwise au-
thorized by law: Provided further, That within 30 days of 
enactment of this Act the Secretary of the Army shall sub-
mit to the Committees on Appropriations of both Houses 
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