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Sec. 702. 2-year extension of temporary Medicare payment increase for home 
health services furnished in a rural area. 
Sec. 703. Extension of Medicare secondary payer for beneficiaries with end 
stage renal disease for large group plans. 
Sec. 704. Plan for Medicare payment adjustments for never events. 
Sec. 705. Reinstatement of residency slots. 
Sec. 706. Studies relating to home health. 
Sec. 707. Rural home health quality demonstration projects. 
TITLE VIII—MEDICAID 
Subtitle A—Protecting Existing Coverage 
Sec. 801. Modernizing transitional Medicaid. 
Sec. 802. Family planning services. 
Sec. 803. Authority to continue providing adult day health services approved 
under a State Medicaid plan. 
Sec. 804. State option to protect community spouses of individuals with disabil-
ities. 
Sec. 805. County medicaid health insuring organizatios. 
Subtitle B—Payments 
Sec. 811. Payments for Puerto Rico and territories. 
Sec. 812. Medicaid drug rebate. 
Sec. 813. Adjustment in computation of Medicaid FMAP to disregard an ex-
traordinary employer pension contribution. 
Sec. 814. Moratorium on certain payment restrictions. 
Sec. 815. Tennessee DSH. 
Sec. 816. Clarification treatment of regional medical center. 
Sec. 817. Extension of SSI web-based asset demonstration project to the Med-
icaid program. 
Subtitle C—Miscellaneous 
Sec. 821. Demonstration project for employer buy-in. 
Sec. 822. Diabetes grants. 
Sec. 823. Technical correction. 
TITLE IX—MISCELLANEOUS 
Sec. 901. Medicare Payment Advisory Commission status. 
Sec. 902. Repeal of trigger provision. 
Sec. 903. Repeal of comparative cost adjustment (CCA) program. 
Sec. 904. Comparative effectiveness research. 
Sec. 905. Implementation of Health information technology (IT) under Medi-
care. 
Sec. 906. Development, reporting, and use of health care measures. 
Sec. 907. Improvements to the Medigap program. 
Sec. 908. Implementation funding. 
Sec. 909. Access to data on prescription drug plans and medicare advantage 
plans. 
Sec. 910. Abstinence education. 
TITLE X—REVENUES 
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Sec. 1001. Increase in rate of excise taxes on tobacco products and cigarette 
papers and tubes. 
Sec. 1002. Exemption for emergency medical services transportation. 
TITLE I—CHILDREN’S HEALTH 
INSURANCE PROGRAM 
SEC. 100. PURPOSE. 
It is the purpose of this title to provide dependable 
and stable funding for children’s health insurance under 
titles XXI and XIX of the Social Security Act in order 
to enroll all six million uninsured children who are eligible, 
but not enrolled, for coverage today through such titles. 
Subtitle A—Funding 
SEC. 101. ESTABLISHMENT OF NEW BASE CHIP ALLOT-
MENTS. 
Section 2104 of the Social Security Act (42 U.S.C. 
1397dd) is amended— 
(1) in subsection (a)— 
(A) in paragraph (9), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (10), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(11) for fiscal year 2008 and each succeeding 
fiscal year, the sum of the State allotments provided 
under subsection (i) for such fiscal year.’’; and 
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(2) in subsections (b)(1) and (c)(1), by striking 
‘‘subsection (d)’’ and inserting ‘‘subsections (d) and 
(i)’’; and 
(3) by adding at the end the following new sub-
section: 
‘‘(i) ALLOTMENTS FOR STATES AND TERRITORIES 
BEGINNING WITH FISCAL YEAR 2008.— 
‘‘(1) GENERAL
ALLOTMENT
COMPUTATION.— 
Subject to the succeeding provisions of this sub-
section, the Secretary shall compute a State allot-
ment for each State for each fiscal year as follows: 
‘‘(A) FOR FISCAL YEAR 2008.—For fiscal 
year 2008, the allotment of a State is equal to 
the greater of— 
‘‘(i) the State projection (in its sub-
mission on forms CMS—21B and CMS— 
37 for May 2007) of Federal payments to 
the State under this title for such fiscal 
year, except that, in the case of a State 
that has enacted legislation to modify its 
State child health plan during 2007, the 
State may substitute its projection in its 
submission on forms CMS—21B and 
CMS—37 for August 2007, instead of 
such forms for May 2007; or 
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‘‘(ii) the allotment of the State under 
this section for fiscal year 2007 multiplied 
by the allotment increase factor under 
paragraph (2) for fiscal year 2008. 
‘‘(B) INFLATION
UPDATE
FOR
FISCAL 
YEAR 2009 AND EACH SECOND SUCCEEDING FIS-
CAL YEAR.—For fiscal year 2009 and each sec-
ond succeeding fiscal year, the allotment of a 
State is equal to the amount of the State allot-
ment under this paragraph for the previous fis-
cal year multiplied by the allotment increase 
factor under paragraph (2) for the fiscal year 
involved. 
‘‘(C) REBASING IN FISCAL YEAR 2010 AND 
EACH SECOND SUCCEEDING FISCAL YEAR.—For 
fiscal year 2010 and each second succeeding fis-
cal year, the allotment of a State is equal to the 
Federal payments to the State that are attrib-
utable to (and countable towards) the total 
amount of allotments available under this sec-
tion to the State (including allotments made 
available under paragraph (3) as well as 
amounts redistributed to the State) in the pre-
vious fiscal year multiplied by the allotment in-
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crease factor under paragraph (2) for the fiscal 
year involved. 
‘‘(D) SPECIAL RULES FOR TERRITORIES.— 
Notwithstanding the previous subparagraphs, 
the allotment for a State that is not one of the 
50 States or the District of Columbia for fiscal 
year 2008 and for a succeeding fiscal year is 
equal to the Federal payments provided to the 
State under this title for the previous fiscal 
year multiplied by the allotment increase factor 
under paragraph (2) for the fiscal year involved 
(but determined by applying under paragraph 
(2)(B) as if the reference to ‘in the State’ were 
a reference to ‘in the United States’). 
‘‘(2) ALLOTMENT INCREASE FACTOR.—The al-
lotment increase factor under this paragraph for a 
fiscal year is equal to the product of the following: 
‘‘(A) PER CAPITA HEALTH CARE GROWTH 
FACTOR.—1 plus the percentage increase in the 
projected per capita amount of National Health 
Expenditures from the calendar year in which 
the previous fiscal year ends to the calendar 
year in which the fiscal year involved ends, as 
most recently published by the Secretary before 
the beginning of the fiscal year. 
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‘‘(B) CHILD
POPULATION
GROWTH
FAC-
TOR.—1 plus the percentage increase (if any) in 
the population of children under 19 years of 
age in the State from July 1 in the previous fis-
cal year to July 1 in the fiscal year involved, as 
determined by the Secretary based on the most 
recent published estimates of the Bureau of the 
Census before the beginning of the fiscal year 
involved, plus 1 percentage point. 
‘‘(3) PERFORMANCE-BASED
SHORTFALL
AD-
JUSTMENT.— 
‘‘(A) IN GENERAL.—If a State’s expendi-
tures under this title in a fiscal year (beginning 
with fiscal year 2008) exceed the total amount 
of allotments available under this section to the 
State in the fiscal year (determined without re-
gard to any redistribution it receives under sub-
section (f) that is available for expenditure dur-
ing such fiscal year, but including any carryover 
from a previous fiscal year) and if the average 
monthly unduplicated number of children en-
rolled under the State plan under this title (in-
cluding children receiving health care coverage 
through funds under this title pursuant to a 
waiver under section 1115) during such fiscal 
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year exceeds its target average number of such 
enrollees (as determined under subparagraph 
(B)) for that fiscal year, the allotment under 
this section for the State for the subsequent fis-
cal year (or, pursuant to subparagraph (F), for 
the fiscal year involved) shall be increased by 
the product of— 
‘‘(i) the amount by which such aver-
age monthly caseload exceeds such target 
number of enrollees; and 
‘‘(ii) the projected per capita expendi-
tures under the State child health plan (as 
determined under subparagraph (C) for 
the original fiscal year involved), multiplied 
by the enhanced FMAP (as defined in sec-
tion 2105(b)) for the State and fiscal year 
involved. 
‘‘(B) TARGET AVERAGE NUMBER OF CHILD 
ENROLLEES.—In this subsection, the target av-
erage number of child enrollees for a State— 
‘‘(i) for fiscal year 2008 is equal to 
the monthly average unduplicated number 
of children enrolled in the State child 
health plan under this title (including such 
children receiving health care coverage 
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through funds under this title pursuant to 
a waiver under section 1115) during fiscal 
year 2007 increased by the population 
growth for children in that State for the 
year ending on June 30, 2006 (as esti-
mated by the Bureau of the Census) plus 
1 percentage point; or 
‘‘(ii) for a subsequent fiscal year is 
equal to the target average number of child 
enrollees for the State for the previous fis-
cal year increased by the population 
growth for children in that State for the 
year ending on June 30 before the begin-
ning of the fiscal year (as estimated by the 
Bureau of the Census) plus 1 percentage 
point. 
‘‘(C) PROJECTED
PER
CAPITA
EXPENDI-
TURES.—For purposes of subparagraph (A)(ii), 
the projected per capita expenditures under a 
State child health plan— 
‘‘(i) for fiscal year 2008 is equal to 
the average per capita expenditures (in-
cluding both State and Federal financial 
participation) under such plan for the tar-
geted low-income children counted in the 
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average monthly caseload for purposes of 
this paragraph during fiscal year 2007, in-
creased by the annual percentage increase 
in the per capita amount of National 
Health Expenditures (as estimated by the 
Secretary) for 2008; or 
‘‘(ii) for a subsequent fiscal year is 
equal to the projected per capita expendi-
tures under such plan for the previous fis-
cal year (as determined under clause (i) or 
this clause) increased by the annual per-
centage increase in the per capita amount 
of National Health Expenditures (as esti-
mated by the Secretary) for the year in 
which such subsequent fiscal year ends. 
‘‘(D) 
AVAILABILITY.—Notwithstanding 
subsection (e), an increase in allotment under 
this paragraph shall only be available for ex-
penditure during the fiscal year in which it is 
provided. 
‘‘(E) NO REDISTRIBUTION OF PERFORM-
ANCE-BASED SHORTFALL ADJUSTMENT.—In no 
case shall any increase in allotment under this 
paragraph for a State be subject to redistribu-
tion to other States. 
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‘‘(F) 
INTERIM
ALLOTMENT
ADJUST-
MENT.—The Secretary shall develop a process 
to administer the performance-based shortfall 
adjustment in a manner so it is applied to (and 
before the end of) the fiscal year (rather than 
the subsequent fiscal year) involved for a State 
that the Secretary estimates will be in shortfall 
and will exceed its enrollment target for that 
fiscal year. 
‘‘(G) PERIODIC
AUDITING.—The Comp-
troller General of the United States shall peri-
odically audit the accuracy of data used in the 
computation of allotment adjustments under 
this paragraph. Based on such audits, the 
Comptroller General shall make such rec-
ommendations to the Congress and the Sec-
retary as the Comptroller General deems appro-
priate. 
‘‘(4) CONTINUED REPORTING.—For purposes of 
paragraph (3) and subsection (f), the State shall 
submit to the Secretary the State’s projected Fed-
eral expenditures, even if the amount of such ex-
penditures exceeds the total amount of allotments 
available to the State in such fiscal year.’’. 
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SEC. 102. 2-YEAR INITIAL AVAILABILITY OF CHIP ALLOT-
MENTS. 
Section 2104(e) of the Social Security Act (42 U.S.C. 
1397dd(e)) is amended to read as follows: 
‘‘(e) AVAILABILITY OF AMOUNTS ALLOTTED.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2) and subsection (i)(3)(D), amounts allotted 
to a State pursuant to this section— 
‘‘(A) for each of fiscal years 1998 through 
2007, shall remain available for expenditure by 
the State through the end of the second suc-
ceeding fiscal year; and 
‘‘(B) for fiscal year 2008 and each fiscal 
year thereafter, shall remain available for ex-
penditure by the State through the end of the 
succeeding fiscal year. 
‘‘(2) AVAILABILITY
OF
AMOUNTS
REDISTRIB-
UTED.—Amounts redistributed to a State under sub-
section (f) shall be available for expenditure by the 
State through the end of the fiscal year in which 
they are redistributed, except that funds so redis-
tributed to a State that are not expended by the end 
of such fiscal year shall remain available after the 
end of such fiscal year and shall be available in the 
following fiscal year for subsequent redistribution 
under such subsection.’’. 
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SEC. 103. REDISTRIBUTION OF UNUSED ALLOTMENTS TO 
ADDRESS STATE FUNDING SHORTFALLS. 
Section 2104(f) of the Social Security Act (42 U.S.C. 
1397dd(f)) is amended— 
(1) by striking ‘‘The Secretary’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—The Secretary’’; 
(2) by striking ‘‘States that have fully expended 
the amount of their allotments under this section.’’ 
and inserting ‘‘States that the Secretary determines 
with respect to the fiscal year for which unused al-
lotments are available for redistribution under this 
subsection, are shortfall States described in para-
graph (2) for such fiscal year, but not to exceed the 
amount of the shortfall described in paragraph 
(2)(A) for each such State (as may be adjusted 
under paragraph (2)(C)). The amount of allotments 
not expended or redistributed under the previous 
sentence shall remain available for redistribution in 
the succeeding fiscal year.’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) SHORTFALL STATES DESCRIBED.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), with respect to a fiscal year, a short-
fall State described in this subparagraph is a 
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State with a State child health plan approved 
under this title for which the Secretary esti-
mates on the basis of the most recent data 
available to the Secretary, that the projected ex-
penditures under such plan for the State for the 
fiscal year will exceed the sum of— 
‘‘(i) the amount of the State’s allot-
ments for any preceding fiscal years that 
remains available for expenditure and that 
will not be expended by the end of the im-
mediately preceding fiscal year; 
‘‘(ii) the amount (if any) of the per-
formance based adjustment under sub-
section (i)(3)(A); and 
‘‘(iii) the amount of the State’s allot-
ment for the fiscal year. 
‘‘(B) PRORATION RULE.—If the amounts 
available for redistribution under paragraph (1) 
for a fiscal year are less than the total amounts 
of the estimated shortfalls determined for the 
year under subparagraph (A), the amount to be 
redistributed under such paragraph for each 
shortfall State shall be reduced proportionally. 
‘‘(C) RETROSPECTIVE ADJUSTMENT.—The 
Secretary may adjust the estimates and deter-
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minations made under paragraph (1) and this 
paragraph with respect to a fiscal year as nec-
essary on the basis of the amounts reported by 
States not later than November 30 of the suc-
ceeding fiscal year, as approved by the Sec-
retary.’’. 
SEC. 104. EXTENSION OF OPTION FOR QUALIFYING STATES. 
Section 2105(g)(1)(A) of the Social Security Act (42 
U.S.C. 1397ee(g)(1)(A)) is amended by inserting after ‘‘or 
2007’’ the following: ‘‘or 100 percent of any allotment 
under section 2104 for any subsequent fiscal year’’. 
Subtitle B—Improving Enrollment 
and Retention of Eligible Children 
SEC. 111. CHIP PERFORMANCE BONUS PAYMENT TO OFF-
SET ADDITIONAL ENROLLMENT COSTS RE-
SULTING FROM ENROLLMENT AND RETEN-
TION EFFORTS. 
(a) IN GENERAL.—Section 2105(a) of the Social Se-
curity Act (42 U.S.C. 1397ee(a)) is amended by adding 
at the end the following new paragraphs: 
‘‘(3) PERFORMANCE BONUS PAYMENT TO OFF-
SET ADDITIONAL MEDICAID AND CHIP CHILD EN-
ROLLMENT COSTS RESULTING FROM ENROLLMENT 
AND RETENTION EFFORTS.— 
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‘‘(A) IN
GENERAL.—In addition to the 
payments made under paragraph (1), for each 
fiscal year (beginning with fiscal year 2008 and 
ending with fiscal year 2013) the Secretary 
shall pay to each State that meets the condition 
under paragraph (4) for the fiscal year, an 
amount equal to the amount described in sub-
paragraph (B) for the State and fiscal year. 
The payment under this paragraph shall be 
made, to a State for a fiscal year, as a single 
payment not later than the last day of the first 
calendar quarter of the following fiscal year. 
‘‘(B) AMOUNT.—The amount described in 
this subparagraph for a State for a fiscal year 
is equal to the sum of the following amounts: 
‘‘(i) FOR ABOVE BASELINE MEDICAID 
CHILD ENROLLMENT COSTS.— 
‘‘(I) FIRST
TIER
ABOVE
BASE-
LINE
MEDICAID
ENROLLEES.—An 
amount equal to the number of first 
tier above baseline child enrollees (as 
determined 
under 
subparagraph 
(C)(i)) under title XIX for the State 
and fiscal year multiplied by 35 per-
cent of the projected per capita State 
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Medicaid expenditures (as determined 
under subparagraph (D)(i)) for the 
State and fiscal year under title XIX. 
‘‘(II) SECOND TIER ABOVE BASE-
LINE
MEDICAID
ENROLLEES.—An 
amount equal to the number of second 
tier above baseline child enrollees (as 
determined 
under 
subparagraph 
(C)(ii)) under title XIX for the State 
and fiscal year multiplied by 90 per-
cent of the projected per capita State 
Medicaid expenditures (as determined 
under subparagraph (D)(i)) for the 
State and fiscal year under title XIX. 
‘‘(ii) FOR ABOVE BASELINE CHIP EN-
ROLLMENT COSTS.— 
‘‘(I) FIRST
TIER
ABOVE
BASE-
LINE CHIP ENROLLEES.—An amount 
equal to the number of first tier above 
baseline child enrollees under this title 
(as determined under subparagraph 
(C)(i)) for the State and fiscal year 
multiplied by 5 percent of the pro-
jected per capita State CHIP expendi-
tures (as determined under subpara-
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