142 
‘‘(i) IN GENERAL.—A professional 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 a patient encoun-
ter was documented using certified 
EHR technology); 
‘‘(III) a survey response; 
‘‘(IV) reporting under subpara-
graph (A)(iii); and 
‘‘(V) other means specified by the 
Secretary. 
‘‘(ii) USE OF PART D DATA.—Notwith-
standing sections 1860D–15(d)(2)(B) and 
1860D–15(f)(2), the Secretary may use data 
regarding drug claims submitted for pur-
poses of section 1860D–15 that are nec-
essary for purposes of subparagraph (A). 
‘‘(3) APPLICATION.— 
‘‘(A) 
PHYSICIAN
REPORTING
SYSTEM 
RULES.—Paragraphs (5), (6), and (8) of sub-
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section (k) shall apply for purposes of this sub-
section in the same manner as they apply for 
purposes of such subsection. 
‘‘(B) COORDINATION
WITH
OTHER
PAY-
MENTS.—The provisions of this subsection shall 
not be taken into account in applying the provi-
sions of subsection (m) of this section and of sec-
tion 1833(m) and any payment under such pro-
visions shall not be taken into account in com-
puting allowable charges under this subsection. 
‘‘(C) LIMITATIONS ON REVIEW.—There shall 
be no administrative or judicial review under 
section 1869, section 1878, or otherwise of the de-
termination of any incentive payment under this 
subsection and the payment adjustment under 
subsection (a)(7), including the determination of 
a meaningful EHR user under paragraph (2), a 
limitation under paragraph (1)(B), and the ex-
ception under subsection (a)(7)(B). 
‘‘(D) POSTING ON WEBSITE.—The Secretary 
shall post on the Internet website of the Centers 
for Medicare & Medicaid Services, in an easily 
understandable format, a list of the names, busi-
ness addresses, and business phone numbers of 
the eligible professionals who are meaningful 
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EHR users and, as determined appropriate by 
the Secretary, of group practices receiving incen-
tive payments under paragraph (1). 
‘‘(4) CERTIFIED EHR TECHNOLOGY DEFINED.— 
For purposes of this section, the term ‘certified EHR 
technology’ means a qualified electronic health record 
(as defined 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 section 
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 electronic 
health record for hospitals). 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) COVERED PROFESSIONAL SERVICES.— 
The term ‘covered professional services’ has the 
meaning given such term in subsection (k)(3). 
‘‘(B) ELIGIBLE PROFESSIONAL.—The term 
‘eligible professional’ means a physician, as de-
fined in section 1861(r). 
‘‘(C) REPORTING
PERIOD.—The term ‘re-
porting period’ means any period (or periods), 
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with respect to a payment year, as specified by 
the Secretary.’’. 
(b) 
INCENTIVE
PAYMENT
ADJUSTMENT.—Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w–4(a)) 
is amended by adding at the end the following new para-
graph: 
‘‘(7) INCENTIVES FOR MEANINGFUL USE OF CER-
TIFIED EHR TECHNOLOGY.— 
‘‘(A) ADJUSTMENT.— 
‘‘(i) IN GENERAL.—Subject to subpara-
graphs (B) and (D), with respect to covered 
professional services furnished by an eligible 
professional during 2016 or any subsequent 
payment year, if the eligible professional is 
not a meaningful EHR user (as determined 
under subsection (o)(2)) for a reporting pe-
riod for the year, the fee schedule amount 
for such services furnished by such profes-
sional during the year (including the fee 
schedule amount for purposes of deter-
mining a payment based on such amount) 
shall be equal to the applicable percent of 
the fee schedule amount that would other-
wise apply to such services under this sub-
section (determined after application of 
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146 
paragraph (3) but without regard to this 
paragraph). 
‘‘(ii) APPLICABLE
PERCENT.—Subject 
to clause (iii), for purposes of clause (i), the 
term ‘applicable percent’ means— 
‘‘(I) for 2016, 99 percent; 
‘‘(II) for 2017, 98 percent; and 
‘‘(III) for 2018 and each subse-
quent year, 97 percent. 
‘‘(iii) AUTHORITY
TO
DECREASE
AP-
PLICABLE PERCENTAGE FOR 2019 AND SUB-
SEQUENT YEARS.—For 2019 and each sub-
sequent year, if the Secretary finds that the 
proportion of eligible professionals who are 
meaningful EHR users (as determined 
under subsection (o)(2)) is less than 75 per-
cent, the applicable percent shall be de-
creased by 1 percentage point from the ap-
plicable percent in the preceding year, but 
in no case shall the applicable percent be 
less than 95 percent. 
‘‘(B) SIGNIFICANT HARDSHIP EXCEPTION.— 
The Secretary may, on a case-by-case basis, ex-
empt an eligible professional from the applica-
tion of the payment adjustment under subpara-
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graph (A) if the Secretary determines, subject to 
annual renewal, that compliance with the re-
quirement for being a meaningful EHR user 
would result in a significant hardship, such as 
in the case of an eligible professional who prac-
tices in a rural area without sufficient Internet 
access. In no case may an eligible professional be 
granted an exemption under this subparagraph 
for more than 5 years. 
‘‘(C) APPLICATION OF PHYSICIAN REPORT-
ING SYSTEM RULES.—Paragraphs (5), (6), and 
(8) of subsection (k) shall apply for purposes of 
this paragraph in the same manner as they 
apply for purposes of such subsection. 
‘‘(D) 
NON-APPLICATION
TO
HOSPITAL- 
BASED ELIGIBLE PROFESSIONALS.—No payment 
adjustment may be made under subparagraph 
(A) in the case of hospital-based eligible profes-
sionals (as defined in subsection (o)(1)(C)(ii)). 
‘‘(E) DEFINITIONS.—For purposes of this 
paragraph: 
‘‘(i) COVERED
PROFESSIONAL
SERV-
ICES.—The term ‘covered professional serv-
ices’ has the meaning given such term in 
subsection (k)(3). 
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‘‘(ii) ELIGIBLE
PROFESSIONAL.—The 
term ‘eligible professional’ means a physi-
cian, as defined in section 1861(r). 
‘‘(iii) REPORTING PERIOD.—The term 
‘reporting period’ means, with respect to a 
year, a period specified by the Secretary.’’. 
(c) APPLICATION TO CERTAIN HMO-AFFILIATED ELI-
GIBLE PROFESSIONALS.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23) is amended by adding at 
the end the following new subsection: 
‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL INCEN-
TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION 
AND
MEANINGFUL
USE
OF
CERTIFIED
EHR TECH-
NOLOGY.— 
‘‘(1) IN GENERAL.—Subject to paragraphs (3) 
and (4), in the case of a qualifying MA organization, 
the provisions of sections 1848(o) and 1848(a)(7) 
shall apply with respect to eligible professionals de-
scribed in paragraph (2) of the organization who the 
organization attests under paragraph (6) to be mean-
ingful EHR users in a similar manner as they apply 
to eligible professionals under such sections. Incentive 
payments under paragraph (3) shall be made to and 
payment adjustments under paragraph (4) shall 
apply to such qualifying organizations. 
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‘‘(2) ELIGIBLE
PROFESSIONAL
DESCRIBED.— 
With respect to a qualifying MA organization, an eli-
gible professional described in this paragraph is an 
eligible professional (as defined for purposes of section 
1848(o)) who— 
‘‘(A)(i) is employed by the organization; or 
‘‘(ii)(I) is employed by, or is a partner of, 
an entity that through contract with the organi-
zation furnishes at least 80 percent of the enti-
ty’s patient care services to enrollees of such or-
ganization; and 
‘‘(II) furnishes at least 75 percent of the 
professional services of the eligible professional to 
enrollees of the organization; and 
‘‘(B) furnishes, on average, at least 20 hours 
per week of patient care services. 
‘‘(3) ELIGIBLE PROFESSIONAL INCENTIVE PAY-
MENTS.— 
‘‘(A) IN
GENERAL.—In applying section 
1848(o) under paragraph (1), instead of the ad-
ditional 
payment 
amount 
under 
section 
1848(o)(1)(A) and subject to subparagraph (B), 
the Secretary may substitute an amount deter-
mined by the Secretary to the extent feasible and 
practical to be similar to the estimated amount 
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in the aggregate that would be payable if pay-
ment for services furnished by such professionals 
was payable under part B instead of this part. 
‘‘(B) AVOIDING
DUPLICATION
OF
PAY-
MENTS.— 
‘‘(i) IN GENERAL.—If an eligible pro-
fessional described in paragraph (2) is eligi-
ble for the maximum incentive payment 
under section 1848(o)(1)(A) for the same 
payment period, the payment incentive 
shall be made only under such section and 
not under this subsection. 
‘‘(ii) METHODS.—In the case of an eli-
gible professional described in paragraph 
(2) who is eligible for an incentive payment 
under section 1848(o)(1)(A) but is not de-
scribed in clause (i) for the same payment 
period, the Secretary shall develop a proc-
ess— 
‘‘(I) to ensure that duplicate pay-
ments are not made with respect to an 
eligible professional both under this 
subsection 
and 
under 
section 
1848(o)(1)(A); and 
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‘‘(II) to collect data from Medi-
care Advantage organizations to ensure 
against such duplicate payments. 
‘‘(C) FIXED
SCHEDULE
FOR
APPLICATION 
OF
LIMITATION
ON
INCENTIVE
PAYMENTS
FOR 
ALL
ELIGIBLE
PROFESSIONALS.—In applying 
section 1848(o)(1)(B)(ii) under subparagraph 
(A), in accordance with rules specified by the 
Secretary, a qualifying MA organization shall 
specify a year (not earlier than 2011) that shall 
be treated as the first payment year for all eligi-
ble professionals with respect to such organiza-
tion. 
‘‘(4) PAYMENT ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In applying section 
1848(a)(7) under paragraph (1), instead of the 
payment adjustment being an applicable percent 
of the fee schedule amount for a year under such 
section, subject to subparagraph (D), the pay-
ment adjustment under paragraph (1) shall be 
equal to the percent specified in subparagraph 
(B) for such year of the payment amount other-
wise provided under this section for such year. 
‘‘(B) SPECIFIED
PERCENT.—The percent 
specified under this subparagraph for a year is 
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100 percent minus a number of percentage 
points equal to the product of— 
‘‘(i) the number of percentage points by 
which the applicable percent (under section 
1848(a)(7)(A)(ii)) for the year is less than 
100 percent; and 
‘‘(ii) the Medicare physician expendi-
ture proportion specified in subparagraph 
(C) for the year. 
‘‘(C) MEDICARE
PHYSICIAN
EXPENDITURE 
PROPORTION.—The Medicare physician 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 physicians’ serv-
ices. 
‘‘(D) APPLICATION
OF
PAYMENT
ADJUST-
MENT.—In the case that a qualifying MA orga-
nization attests that not all eligible professionals 
are meaningful EHR users with respect to a 
year, the Secretary shall apply the payment ad-
justment under this paragraph based on the pro-
portion of such eligible professionals that are not 
meaningful EHR users for such year. 
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153 
‘‘(5) QUALIFYING MA ORGANIZATION DEFINED.— 
In this subsection and subsection (m), the term ‘quali-
fying MA organization’ means a Medicare Advantage 
organization that is organized as a health mainte-
nance organization (as defined in section 2791(b)(3) 
of the Public Health Service Act). 
‘‘(6) MEANINGFUL
EHR
USER
ATTESTATION.— 
For purposes of this subsection and subsection (m), a 
qualifying MA organization shall submit an attesta-
tion, in a form and manner specified by the Secretary 
which may include the submission of such attestation 
as part of submission of the initial bid under section 
1854(a)(1)(A)(iv), identifying— 
‘‘(A) whether each eligible professional de-
scribed in paragraph (2), with respect to such 
organization is a meaningful EHR user (as de-
fined in section 1848(o)(2)) for a year specified 
by the Secretary; and 
‘‘(B) whether each eligible hospital described 
in subsection (m)(1), with respect to such organi-
zation, is a meaningful EHR user (as defined in 
section 1886(n)(3)) for an applicable period 
specified by the Secretary.’’. 
(d) CONFORMING AMENDMENTS.—Section 1853 of the 
Social Security Act (42 U.S.C. 1395w–23) is amended— 
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(1) in subsection (a)(1)(A), by striking ‘‘and (i)’’ 
and inserting ‘‘(i), and (l)’’; 
(2) in subsection (c)— 
(A) in paragraph (1)(D)(i), by striking 
‘‘section 
1886(h)’’ 
and 
inserting 
‘‘sections 
1848(o) and 1886(h)’’; and 
(B) in paragraph (6)(A), by inserting after 
‘‘under part B,’’ the following: ‘‘excluding ex-
penditures attributable to subsections (a)(7) and 
(o) of section 1848,’’; and 
(3) in subsection (f), by inserting ‘‘and for pay-
ments under subsection (l)’’ after ‘‘with the organiza-
tion’’. 
(e) CONFORMING AMENDMENTS TO E-PRESCRIBING.— 
(1) Section 1848(a)(5)(A) of the Social Security 
Act (42 U.S.C. 1395w–4(a)(5)(A)) is amended— 
(A) in clause (i), by striking ‘‘or any subse-
quent year’’ and inserting ‘‘, 2013, 2014, or 
2015’’; and 
(B) in clause (ii), by striking ‘‘and each 
subsequent year’’ and inserting ‘‘and 2015’’. 
(2) Section 1848(m)(2) of such Act (42 U.S.C. 
1395w–4(m)(2)) is amended— 
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(A) in subparagraph (A), by striking ‘‘For 
2009’’ and inserting ‘‘Subject to subparagraph 
(D), for 2009’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) LIMITATION WITH RESPECT TO EHR 
INCENTIVE
PAYMENTS.—The provisions of this 
paragraph shall not apply to an eligible profes-
sional (or, in the case of a group practice under 
paragraph (3)(C), to the group practice) if, for 
the reporting period the eligible professional (or 
group practice) receives an incentive payment 
under subsection (o)(1)(A) with respect to a cer-
tified EHR technology (as defined in subsection 
(o)(4)) that has the capability of electronic pre-
scribing.’’. 
SEC. 4312. INCENTIVES FOR HOSPITALS. 
(a) INCENTIVE PAYMENT.—Section 1886 of the Social 
Security Act (42 U.S.C. 1395ww) is amended by adding 
at the end the following new subsection: 
‘‘(n) INCENTIVES FOR ADOPTION AND MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY.— 
‘‘(1) IN
GENERAL.—Subject to the succeeding 
provisions of this subsection, with respect to inpatient 
hospital services furnished by an eligible hospital dur-
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ing a payment year (as defined in paragraph 
(2)(G)), if the eligible hospital is a meaningful EHR 
user (as determined under paragraph (3)) for the re-
porting period with respect to such year, in addition 
to the amount otherwise paid under this section, there 
also shall be paid to the eligible hospital, from the 
Federal Hospital Insurance Trust Fund established 
under section 1817, an amount equal to the applica-
ble amount specified in paragraph (2)(A) for the hos-
pital for such payment year. 
‘‘(2) PAYMENT AMOUNT.— 
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding subparagraphs of this paragraph, the ap-
plicable amount specified in this subparagraph 
for an eligible hospital for a payment year is 
equal to the product of the following: 
‘‘(i) INITIAL AMOUNT.—The sum of— 
‘‘(I) the base amount specified in 
subparagraph (B); plus 
‘‘(II) the discharge related amount 
specified in subparagraph (C) for a 12- 
month period selected by the Secretary 
with respect to such payment year. 
‘‘(ii) MEDICARE
SHARE.—The Medi-
care share as specified in subparagraph (D) 
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for the hospital for a period selected by the 
Secretary with respect to such payment 
year. 
‘‘(iii) TRANSITION FACTOR.—The tran-
sition factor specified in subparagraph (E) 
for the hospital for the payment year. 
‘‘(B) BASE
AMOUNT.—The base amount 
specified in this subparagraph is $2,000,000. 
‘‘(C) DISCHARGE RELATED AMOUNT.—The 
discharge related amount specified in this sub-
paragraph for a 12-month period selected by the 
Secretary shall be determined as the sum of the 
amount, based upon total discharges (regardless 
of any source of payment) for the period, for 
each discharge up to the 23,000th discharge as 
follows: 
‘‘(i) For the 1,150th through the 
9,200th discharge, $200. 
‘‘(ii) For the 9,201st through the 
13,800th discharge, 50 percent of the 
amount specified in clause (i). 
‘‘(iii) For the 13,801st through the 
23,000th discharge, 30 percent of the 
amount specified in clause (i). 
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‘‘(D) MEDICARE
SHARE.—The Medicare 
share specified under this subparagraph for a 
hospital for a period selected by the Secretary for 
a payment year is equal to the fraction— 
‘‘(i) the numerator of which is the sum 
(for such period and with respect to the hos-
pital) of— 
‘‘(I) the number of inpatient-bed- 
days (as established by the Secretary) 
which are attributable to individuals 
with respect to whom payment may be 
made under part A; and 
‘‘(II) the number of inpatient-bed- 
days (as so established) which are at-
tributable to individuals who are en-
rolled with a Medicare Advantage or-
ganization under part C; and 
‘‘(ii) the denominator of which is the 
product of— 
‘‘(I) the total number of inpa-
tient-bed-days with respect to the hos-
pital during such period; and 
‘‘(II) the total amount of the hos-
pital’s charges during such period, not 
including any charges that are attrib-
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utable to charity care (as such term is 
used for purposes of hospital cost re-
porting under this title), divided by the 
total amount of the hospital’s charges 
during such period. 
Insofar as the Secretary determines that data are 
not available on charity care necessary to cal-
culate the portion of the formula specified in 
clause (ii)(II), the Secretary shall use data on 
uncompensated care and may adjust such data 
so as to be an appropriate proxy for charity care 
including a downward adjustment to eliminate 
bad debt data from uncompensated care data. In 
the absence of the data necessary, with respect to 
a hospital, for the Secretary to compute the 
amount described in clause (ii)(II), the amount 
under such clause shall be deemed to be 1. In the 
absence of data, with respect to a hospital, nec-
essary to compute the amount described in clause 
(i)(II), the amount under such clause shall be 
deemed to be 0. 
‘‘(E) TRANSITION FACTOR SPECIFIED.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), the transition factor specified in this 
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subparagraph for an eligible hospital for a 
payment year is as follows: 
‘‘(I) For the first payment year 
for such hospital, 1. 
‘‘(II) For the second payment 
year for such hospital, 3⁄4. 
‘‘(III) For the third payment year 
for such hospital, 1⁄2. 
‘‘(IV) For the fourth payment 
year for such hospital, 1⁄4. 
‘‘(V) For any succeeding payment 
year for such hospital, 0. 
‘‘(ii) PHASE DOWN FOR ELIGIBLE HOS-
PITALS FIRST ADOPTING EHR AFTER 2013.— 
If the first payment year for an eligible hos-
pital is after 2013, then the transition fac-
tor specified in this subparagraph for a 
payment year for such hospital is the same 
as the amount specified in clause (i) for 
such payment year for an eligible hospital 
for which the first payment year is 2013. If 
the first payment year for an eligible hos-
pital is after 2015 then the transition factor 
specified in this subparagraph for such hos-
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pital and for such year and any subsequent 
year shall be 0. 
‘‘(F) FORM
OF
PAYMENT.—The payment 
under this subsection for a payment year may be 
in the form of a single consolidated payment or 
in the form of such periodic installments as the 
Secretary may specify. 
‘‘(G) PAYMENT YEAR DEFINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘payment year’ 
means a fiscal year beginning with fiscal 
year 2011. 
‘‘(ii) FIRST, SECOND, ETC. PAYMENT 
YEAR.—The term ‘first payment year’ 
means, with respect to inpatient hospital 
services furnished by an eligible hospital, 
the first fiscal year for which an incentive 
payment is made for such services under 
this subsection. The terms ‘second payment 
year’, ‘third payment year’, and ‘fourth 
payment year’ mean, with respect to an eli-
gible hospital, each successive year imme-
diately following the first payment year for 
that hospital. 
‘‘(3) MEANINGFUL EHR USER.— 
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‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an eligible hospital shall be treated as 
a meaningful EHR user for a reporting period 
for a payment year (or, for purposes of sub-
section (b)(3)(B)(ix), for a reporting period 
under such subsection for a fiscal year) if each 
of the following requirements are met: 
‘‘(i) MEANINGFUL USE OF CERTIFIED 
EHR
TECHNOLOGY.—The eligible hospital 
demonstrates to the satisfaction of the Sec-
retary, in accordance with subparagraph 
(C)(i), that during such period the hospital 
is using certified EHR technology in a 
meaningful manner. 
‘‘(ii) INFORMATION
EXCHANGE.—The 
eligible hospital demonstrates to the satis-
faction of the Secretary, in accordance with 
subparagraph (C)(i), that during such pe-
riod such certified EHR technology is con-
nected in a manner that provides, in ac-
cordance with law and standards applicable 
to the exchange of information, for the elec-
tronic exchange of health information to im-
prove the quality of health care, such as 
promoting care coordination. 
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‘‘(iii) REPORTING ON MEASURES USING 
EHR.—Subject to subparagraph (B)(ii) and 
using such certified EHR technology, the el-
igible hospital submits information for such 
period, in a form and manner specified by 
the Secretary, on such clinical quality 
measures and such other measures as se-
lected 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 paragraph. 
‘‘(B) REPORTING ON MEASURES.— 
‘‘(i) SELECTION.—The Secretary shall 
select measures for purposes of subpara-
graph (A)(iii) but only consistent with the 
following: 
‘‘(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 entity 
with a contract with the Secretary 
under section 1890(a). 
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‘‘(II) Prior to any measure (other 
than a clinical quality measure that 
has been selected for purposes of apply-
ing subsection (b)(3)(B)(viii)) being se-
lected under this subparagraph, 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 Sec-
retary has the capacity to accept the infor-
mation electronically, which may be on a 
pilot basis. 
‘‘(iii) COORDINATION
OF
REPORTING 
OF INFORMATION.—In selecting such meas-
ures, and in establishing the form and man-
ner for reporting measures under subpara-
graph (A)(iii), the Secretary shall seek to 
avoid redundant or duplicative reporting 
with reporting otherwise required, including 
reporting under subsection (b)(3)(B)(viii). 
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‘‘(C) DEMONSTRATION OF MEANINGFUL USE 
OF CERTIFIED EHR TECHNOLOGY AND INFORMA-
TION 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 
‘‘(V) other means specified by the 
Secretary. 
‘‘(ii) USE OF PART D DATA.—Notwith-
standing sections 1860D–15(d)(2)(B) and 
1860D–15(f)(2), the Secretary may use data 
regarding drug claims submitted for pur-
poses of section 1860D–15 that are nec-
essary for purposes of subparagraph (A). 
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166 
‘‘(4) APPLICATION.— 
‘‘(A) LIMITATIONS ON REVIEW.—There shall 
be no administrative or judicial review under 
section 1869, section 1878, or otherwise of the de-
termination of any incentive payment under this 
subsection and the payment adjustment under 
subsection (b)(3)(B)(ix), including the deter-
mination of a meaningful EHR user under 
paragraph (3), determination of measures appli-
cable to services furnished by eligible hospitals 
under this subsection, and the exception under 
subsection (b)(3)(B)(ix)(II). 
‘‘(B) POSTING ON WEBSITE.—The Secretary 
shall post on the Internet website of the Centers 
for Medicare & Medicaid Services, in an easily 
understandable format, a list of the names of the 
eligible hospitals that are meaningful EHR users 
under this subsection or subsection (b)(3)(B)(ix) 
and other relevant data as determined appro-
priate by the Secretary. The Secretary shall en-
sure that a hospital has the opportunity to re-
view the other relevant data that are to be made 
public with respect to the hospital prior to such 
data being made public. 
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167 
‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 
The term ‘certified EHR technology’ has the meaning 
given such term in section 1848(o)(4). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eligi-
ble 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.—Sec-
tion 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 
(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 
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under clause (i) for such fiscal year shall be reduced by 
331⁄3 percent for fiscal year 2016, 662⁄3 percent 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 reduction in computing the ap-
plicable percentage increase under clause (i) for a subse-
quent 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 deter-
mines, subject to annual renewal, that requiring such hos-
pital 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 Internet ac-
cess. In no case may a hospital be granted an exemption 
under this subclause for more than 5 years. 
‘‘(III) For fiscal year 2016 and each subsequent fiscal 
year, a State in which hospitals are paid for services under 
section 1814(b)(3) shall adjust the payments to each sub-
section (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 pay-
ments to hospitals in the State that is equivalent to the ag-
gregate reduction that would have occurred if payments had 
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been reduced to each subsection (d) hospital in the State 
in a manner comparable to the reduction under the pre-
vious provisions of this clause. The State shall report to 
the Secretary the methodology it will use to make the pay-
ment 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 ELI-
GIBLE HOSPITALS.—Section 1853 of the Social Security 
Act (42 U.S.C. 1395w–23), as amended by section 4311(c), 
is further amended by adding at the end the following new 
subsection: 
‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN-
TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION 
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-
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ner as they apply to eligible hospitals under such sec-
tions. Incentive payments under paragraph (3) shall 
be made to and payment adjustments under para-
graph (4) shall apply to such qualifying organiza-
tions. 
‘‘(2) ELIGIBLE HOSPITAL DESCRIBED.—With re-
spect 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 
additional 
payment 
amount 
under 
section 
1886(n)(2), there shall be substituted an amount 
determined by the Secretary to be similar 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 sen-
tence, the Secretary— 
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171 
‘‘(i) shall, insofar as data to determine 
the discharge related amount under section 
1886(n)(2)(C) for an eligible hospital are 
not available to the Secretary, use such al-
ternative data and methodology to estimate 
such discharge related amount as the Sec-
retary 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 period 
which are attributable to both individuals 
for whom payment may be made under 
part A or individuals enrolled in an MA 
plan under a Medicare Advantage organiza-
tion under this part as a proportion of the 
total number of patient-bed-days (or dis-
charges) with respect to such hospital dur-
ing such period. 
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172 
‘‘(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 dis-
charges (or bed-days) of Medicare patients 
for the year are covered under part A, pay-
ment for the payment year shall be made 
only under section 1886(n) and not under 
this subsection. 
‘‘(ii) METHODS.—In the case of a hos-
pital that is an eligible hospital described 
in paragraph (2) and also is eligible for an 
incentive payment under section 1886(n) 
but is not described in clause (i) 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 sub-
section and under section 1886(n); and 
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173 
‘‘(II) to collect data from Medi-
care Advantage organizations to ensure 
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 corporate 
governance with such organization and that 
serve individuals enrolled under a plan offered 
by such organization are not meaningful EHR 
users (as defined in section 1886(n)(3)) with re-
spect to a period, the payment amount payable 
under this section for such organization for such 
period shall be the percent specified in subpara-
graph (B) for such period of the payment 
amount otherwise provided under this section 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— 
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‘‘(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 expenditure 
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 appli-
cable period, the Secretary shall apply the pay-
ment adjustment under this paragraph based on 
a methodology specified by the Secretary, taking 
into account the proportion of such eligible hos-
pitals, or discharges from such hospitals, that are 
not meaningful EHR users for such period.’’. 
(d) CONFORMING AMENDMENTS.— 
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175 
(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 ‘‘, subject 
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)’’. 
(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 
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(B) in subsection (f), by inserting ‘‘and sub-
section (m)’’ after ‘‘under subsection (l)’’. 
SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IMPLE-
MENTATION FUNDING. 
(a) PREMIUM HOLD HARMLESS.— 
(1) IN GENERAL.—Section 1839(a)(1) of the So-
cial Security Act (42 U.S.C. 1395r(a)(1)) is amended 
by adding at the end the following: ‘‘In applying this 
paragraph there shall not be taken into account addi-
tional payments under section 1848(o) and section 
1853(l)(3) and the Government contribution under 
section 1844(a)(3).’’. 
(2) PAYMENT.—Section 1844(a) of such Act (42 
U.S.C. 1395w(a)) is amended— 
(A) in paragraph (2), by striking the period 
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 sections 
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 section 
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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 Supplemental 
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 pro-
jected shortfall in the conversion factor for 2014 
relative to the conversion factor for 2008 and ad-
justments to payments for items and services fur-
nished by providers of services and suppliers 
under such original medicare fee-for-service pro-
gram’’; 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 
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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 SUBSEQUENT 
YEARS.—In the case that expenditures from the Fund 
are applied to, or otherwise affect, a payment rate for 
an item or service under this title for a year, the pay-
ment rate for such item or service 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 Treasury not 
otherwise appropriated, there are appropriated to the Sec-
retary of Health and Human Services for the Center for 
Medicare & Medicaid Services Program Management Ac-
count, $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 pur-
poses of carrying out the provisions of (and amendments 
made by) this part. Amounts appropriated under this sub-
section for a fiscal year shall be available until expended. 
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179 
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 Serv-
ice Act) should be made available to health care pro-
viders who are receiving minimal or no payment in-
centives 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; 
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(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 providers; 
and 
(F) any other issues the Secretary deems to 
be appropriate. 
(b) REPORT.—Not later than June 30, 2010, the Sec-
retary shall submit to Congress a report on the findings 
and conclusions of the study conducted under subsection (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 Security 
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 
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181 
(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 attributable 
to payments for certified EHR technology (and 
support services including maintenance and 
training that is for, or is necessary for the adop-
tion and operation of, such technology) by Med-
icaid providers described in subsection (t)(1); 
and 
‘‘(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 payments 
described in clause (i) if the State meets the con-
dition described in subsection (t)(9); plus’’; and 
(2) by inserting after subsection (s) the following 
new subsection: 
‘‘(t)(1) For purposes of subsection (a)(3)(F), the pay-
ments for certified EHR technology (and support services 
including maintenance that is for, or is necessary for the 
operation of, such technology) by Medicaid providers de-
scribed in this paragraph are payments made by the State 
in accordance with this subsection of 85 percent of the net 
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allowable costs of Medicaid providers (as defined in para-
graph (2)) for such technology (and support services). 
‘‘(2) In this subsection and subsection (a)(3)(F), the 
term ‘Medicaid provider’ means— 
‘‘(A) an eligible professional (as defined in para-
graph (3)(B)) who is not hospital-based and has at 
least 30 percent of the professional’s patient volume 
(as estimated in accordance with standards estab-
lished by the Secretary) attributable to individuals 
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 individuals 
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 cen-
ter’s or clinic’s patient volume (as estimated in ac-
cordance with standards established by the Secretary) 
attributable to individuals who are receiving medical 
assistance under this title. 
An eligible professional shall not qualify as a Medicaid pro-
vider under this subsection unless the eligible professional 
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has waived, in a manner specified by the Secretary, any 
right to payment under section 1848(o) with respect to the 
adoption or support of certified EHR technology by the pro-
fessional. In applying clauses (ii) and (iii) of subparagraph 
(B), the standards established by the Secretary 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 defined in 
3000(13) of the Public Health Service Act) that is cer-
tified pursuant to section 3001(c)(5) of such Act as 
meeting standards adopted under section 3004 of such 
Act that are applicable to the type of record involved 
(as determined by the Secretary, such as an ambula-
tory electronic health record for office-based physi-
cians or an inpatient hospital electronic 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 nurse mid-wife and a 
nurse practitioner. 
‘‘(C) The term ‘hospital-based’ means, with re-
spect to an eligible professional, a professional (such 
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as a pathologist, anesthesiologist, or emergency physi-
cian) who furnishes substantially all of the individ-
ual’s professional services in a hospital setting 
(whether inpatient or outpatient) and through the use 
of the facilities and equipment, including computer 
equipment, of the hospital. 
‘‘(4)(A) The term ‘allowable costs’ means, with respect 
to certified EHR technology of a Medicaid provider, costs 
of such technology (and support services including mainte-
nance and training that is for, or is necessary for the adop-
tion and operation of, such technology) as determined by 
the Secretary to be reasonable. 
‘‘(B) The term ‘net allowable costs’ means allowable 
costs reduced by any payment that is made to the Medicaid 
provider involved from any other source that is directly at-
tributable to payment for certified EHR technology or serv-
ices described in subparagraph (A). 
‘‘(C) In no case shall— 
‘‘(i) the aggregate allowable costs under this sub-
section (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 subpara-
graph (A)) exceed $25,000 or include costs over a pe-
riod of longer than 5 years; 
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‘‘(ii) for costs not described in clause (i) relating 
to the operation, maintenance, or use of certified 
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) exceed such aggregate or annual limitation as 
the Secretary shall establish, based on an amount de-
termined by the Secretary as being adequate to adopt 
and maintain certified EHR technology, consistent 
with paragraph (6). 
‘‘(5) Payments described in paragraph (1) are not in 
accordance with this subsection unless the following require-
ments are met: 
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‘‘(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 
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 Medicaid 
provider for costs other than costs related to the ini-
tial adoption of certified EHR technology, the Med-
icaid provider demonstrates meaningful use of cer-
tified EHR technology through a means that is ap-
proved by the State and acceptable to the Secretary, 
and that may be based upon the methodologies ap-
plied 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 systems. 
‘‘(6)(A) In no case shall the payments described in 
paragraph (1), with respect to a hospital, exceed in the ag-
gregate the product of— 
‘‘(i) the overall hospital EHR amount for the 
hospital computed under subparagraph (B); and 
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187 
‘‘(ii) the Medicaid share for such hospital com-
puted under subparagraph (C). 
‘‘(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 speci-
fied 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 clause (ii) 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 Medi-
care share under section 1886(n)(2)(D) for such a hospital 
and period, except that there shall be substituted for the nu-
merator 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 
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are not described in section 1886(n)(2)(D)(i). In computing 
inpatient-bed-days under the previous sentence, the Sec-
retary shall take into account inpatient-bed-days attrib-
utable 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 dif-
ferent programs for payment of such health care providers 
for adoption or use of health information technology (in-
cluding 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 sub-
section. The Secretary may also specify the reporting peri-
ods under this subsection in order to carry out this para-
graph. 
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189 
‘‘(9) In order to be provided Federal financial partici-
pation under subsection (a)(3)(F)(ii), a State must dem-
onstrate to the satisfaction of the Secretary, that the State— 
‘‘(A) is using the funds provided for the purposes 
of administering payments under this subsection, in-
cluding tracking of meaningful use by Medicaid pro-
viders; 
‘‘(B) is conducting adequate oversight of the pro-
gram under this subsection, including routine track-
ing of meaningful use attestations and reporting 
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 Treasury not 
otherwise appropriated, there are appropriated to the Sec-
retary of Health and Human Services for the Center for 
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Medicare & Medicaid Services Program Management Ac-
count, $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 pur-
poses of carrying out the provisions of (and the amendments 
made by) this part. Amounts appropriated under this sub-
section for a fiscal year shall be available until expended. 
Subtitle D—Privacy 
SEC. 4400. DEFINITIONS. 
In this subtitle, except as specified otherwise: 
(1) BREACH.—The term ‘‘breach’’ means the un-
authorized acquisition, access, use, or disclosure of 
protected health information which compromises the 
security, privacy, or integrity of protected health in-
formation maintained by or on behalf of a person. 
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 busi-
ness associate involved if such acquisition, access, 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 entity or business 
associate and if such information is not further ac-
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192 
(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 in-
dividual 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 meaning 
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. 
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193 
(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 entity 
(as defined in paragraph (3)), that offers or main-
tains a personal health record. 
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194 
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.—Sections 
164.308, 164.310, 164.312, and 164.316 of title 45, Code 
of Federal Regulations, shall apply to a business associate 
of a covered entity in the same manner that such sections 
apply to the covered entity. The additional requirements of 
this title that relate to security and that are made applica-
ble with respect to covered entities shall also be applicable 
to such a business associate and shall be incorporated into 
the business associate agreement between the business asso-
ciate 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 sec-
tions apply to a covered entity that violates such security 
provision. 
(c) ANNUAL GUIDANCE.—For the first year beginning 
after the date of the enactment of this Act and annually 
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thereafter, the Secretary of Health and Human Services 
shall, in consultation with industry stakeholders, annually 
issue guidance on the most effective and appropriate tech-
nical safeguards for use in carrying out the sections referred 
to in subsection (a) and the security standards in subpart 
C of part 164 of title 45, Code of Federal Regulations, as 
such provisions are in effect as of the date before the enact-
ment 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 discovered by 
the covered entity, notify each individual whose unsecured 
protected health information has been, or is reasonably be-
lieved by the covered entity to have been, accessed, acquired, 
or disclosed as a result of such breach. 
(b) NOTIFICATION OF COVERED ENTITY BY BUSINESS 
ASSOCIATE.—A business associate of a covered entity that 
accesses, maintains, retains, modifies, records, stores, de-
stroys, or otherwise holds, uses, or discloses unsecured pro-
tected health information shall, following the discovery of 
a breach of such information, notify the covered entity of 
such breach. Such notice shall include the identification of 
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each individual whose unsecured protected health informa-
tion has been, or is reasonably believed by the business asso-
ciate 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 discovered 
by a covered entity or by a business associate as of the first 
day on which such breach is known to such entity or asso-
ciate, respectively, (including any person, other than the in-
dividual committing the breach, that is an employee, officer, 
or other agent of such entity or associate, respectively) or 
should reasonably have been known to such entity or asso-
ciate (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 breach by 
the covered entity involved (or business associate in-
volved in the case of a notification required 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 notifications 
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were made as required under this part, including evi-
dence 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 re-
spect 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 (includ-
ing a phone number, email address, or any other 
form of appropriate communication) that pre-
cludes direct written (or, if specified by the indi-
vidual under subparagraph (A), electronic) noti-
fication 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 infor-
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198 
mation, a conspicuous posting for a period deter-
mined by the Secretary on the home page of the 
website of the covered entity involved or notice in 
major print or broadcast media, including major 
media in geographic areas where the individuals 
affected by the breach likely reside. Such a notice 
in media or web posting will include a toll-free 
phone number where an individual can learn 
whether or not the individual’s unsecured pro-
tected health information is possibly included in 
the breach. 
(C) In any case deemed by the covered enti-
ty involved to require urgency because of possible 
imminent misuse of unsecured protected health 
information, the covered entity, in addition to 
notice provided under subparagraph (A), may 
provide information to individuals by telephone 
or other means, as appropriate. 
(2) MEDIA NOTICE.—Notice shall be provided to 
prominent media outlets serving a State or jurisdic-
tion, following the discovery of a breach described in 
subsection (a), if the unsecured protected health infor-
mation 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. 
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199 
(3) NOTICE TO SECRETARY.—Notice shall be pro-
vided to the Secretary by covered entities of unsecured 
protected health information that has been acquired 
or disclosed in a breach. If the breach was with re-
spect 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 oc-
curring and annually submit such a log to the Sec-
retary documenting such breaches occurring 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 en-
tity involved in a breach described in subsection (a) 
in which the unsecured protected health information 
of more than 500 individuals is acquired or disclosed. 
(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, includ-
ing the date of the breach and the date of the dis-
covery of the breach, if known. 
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200 
(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 entity 
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 shall 
include a toll-free telephone number, an e-mail ad-
dress, website, 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, no-
tice, or posting shall be delayed in the same manner as pro-
vided under section 164.528(a)(2) of title 45, Code of Fed-
eral Regulations, in the case of a disclosure covered under 
such section. 
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201 
(h) UNSECURED
PROTECTED
HEALTH
INFORMA-
TION.— 
(1) DEFINITION.— 
(A) IN GENERAL.—Subject to subparagraph 
(B), for purposes of this section, the term ‘‘unse-
cured protected health information’’ means pro-
tected 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 GUIDANCE 
NOT ISSUED.—In the case that the Secretary does 
not issue guidance under paragraph (2) by the 
date specified in such paragraph, for purposes of 
this section, the term ‘‘unsecured protected health 
information’’ shall mean protected health infor-
mation that is not secured by a technology 
standard that renders protected health informa-
tion unusable, unreadable, or indecipherable to 
unauthorized individuals and is developed or en-
dorsed by a standards developing 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 
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60 days after the date of the enactment of this Act, 
the Secretary shall, after consultation with stake-
holders, issue (and annually update) guidance speci-
fying the technologies and methodologies that render 
protected health information unusable, unreadable, or 
indecipherable to unauthorized individuals. 
(i) REPORT TO CONGRESS ON BREACHES.— 
(1) IN
GENERAL.—Not later than 12 months 
after the date of the enactment of this Act and annu-
ally thereafter, the Secretary shall prepare and sub-
mit to the Committee on Finance and the Committee 
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 informa-
tion described in paragraph (2) regarding 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. 
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203 
(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 enactment 
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 regu-
lations. 
SEC. 4403. EDUCATION ON HEALTH INFORMATION PRIVACY. 
(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 covered entities, business 
associates, and individuals on their rights and responsibil-
ities 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 within 
the Department of Health and Human Services shall de-
velop and maintain a multi-faceted national education ini-
tiative to enhance public transparency regarding the uses 
of protected health information, including programs to edu-
cate individuals about the potential uses of their protected 
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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 manner. 
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 ob-
tains or creates protected health information pursuant to 
a written contract (or other written arrangement) described 
in section 164.502(e)(2) of title 45, Code of Federal Regula-
tions, with such covered entity, the business associate may 
use and disclose such protected health information 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 applicable with respect to 
covered entities shall also be applicable to such a business 
associate and shall be incorporated into the business asso-
ciate agreement between the business associate and the cov-
ered entity. 
(b) APPLICATION OF KNOWLEDGE ELEMENTS ASSOCI-
ATED WITH CONTRACTS.—Section 164.504(e)(1)(ii) of title 
45, Code of Federal Regulations, shall apply to a business 
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205 
associate described in subsection (a), with respect to compli-
ance with such subsection, in the same manner that such 
section applies to a covered entity, with respect to compli-
ance with the standards in sections 164.502(e) and 
164.504(e) of such title, except that in applying such section 
164.504(e)(1)(ii) each reference to the business associate, 
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 sec-
tions 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 as such 
provisions apply to a person who violates a provision 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 INFOR-
MATION DISCLOSURES; ACCESS TO CERTAIN 
INFORMATION IN ELECTRONIC FORMAT. 
(a) REQUESTED RESTRICTIONS ON CERTAIN DISCLO-
SURES OF HEALTH INFORMATION.—In the case that an in-
dividual requests under paragraph (a)(1)(i)(A) of section 
164.522 of title 45, Code of Federal Regulations, that a cov-
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ered entity restrict the disclosure of the protected health in-
formation of the individual, notwithstanding paragraph 
(a)(1)(ii) of such section, the covered entity must comply 
with the requested restriction if— 
(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 NECESSARY.— 
(1) IN GENERAL.— 
(A) IN GENERAL.—Subject to subparagraph 
(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 protected health in-
formation described in such section, only if the 
covered entity limits such protected health infor-
mation, to the extent practicable, to the limited 
data set (as defined in section 164.514(e)(2) of 
such title) or, if needed by such entity, to the 
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minimum necessary to accomplish the intended 
purpose of such use, disclosure, or request, re-
spectively. 
(B) GUIDANCE.—Not later than 18 months 
after the date of the enactment of this section, the 
Secretary shall issue guidance on what con-
stitutes ‘‘minimum necessary’’ for purposes of 
subpart E of part 164 of title 45, Code of Fed-
eral Regulation. In issuing such guidance the 
Secretary shall take into consideration the guid-
ance 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 subpara-
graph (B). 
(2) DETERMINATION OF MINIMUM NECESSARY.— 
For purposes of paragraph (1), in the case of the dis-
closure of protected health information, the covered 
entity or business associate disclosing such informa-
tion shall determine what constitutes 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-
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208 
quirement under paragraph (1) as of the effective date 
described in section 4423 in the same manner 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, dis-
closure, or request of protected health information 
that has been de-identified. 
(c) ACCOUNTING OF CERTAIN PROTECTED HEALTH IN-
FORMATION DISCLOSURES REQUIRED IF COVERED ENTITY 
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 informa-
tion— 
(A) the exception under paragraph (a)(1)(i) 
of such section shall not apply to disclosures 
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 
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209 
prior to the date on which the accounting is re-
quested. 
(2) REGULATIONS.—The Secretary shall promul-
gate regulations on what information shall be col-
lected about each disclosure referred to in paragraph 
(1)(A) not later than 18 months after the date on 
which the Secretary adopts standards on accounting 
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 re-
quire such information to be collected through an elec-
tronic health record in a manner that takes into ac-
count the interests of individuals in learning the cir-
cumstances under which their protected health infor-
mation is being disclosed and takes into account the 
administrative burden of accounting for such disclo-
sures. 
(3) CONSTRUCTION.—Nothing in this subsection 
shall be construed as requiring a covered entity to ac-
count for disclosures of protected health information 
that are not made by such covered entity or by a 
business associate acting on behalf of the covered enti-
ty. 
(4) EFFECTIVE DATE.— 
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210 
(A) 
CURRENT
USERS
OF
ELECTRONIC 
RECORDS.—In the case of a covered entity inso-
far as it acquired an electronic health record as 
of January 1, 2009, paragraph (1) shall apply 
to disclosures, with respect to protected health in-
formation, made by the covered entity from such 
a record on and after January 1, 2014. 
(B) OTHERS.—In the case of a covered enti-
ty 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 elimi-
nate from the definition of health care operations under sec-
tion 164.501 of title 45, Code of Federal Regulations, those 
activities that can reasonably and efficiently be conducted 
through the use of information that is de-identified (in ac-
cordance with the requirements of section 164.514(b) of such 
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211 
title) or that should require a valid authorization for use 
or disclosure. In promulgating such regulations, the Sec-
retary may choose to narrow or clarify activities that the 
Secretary chooses to retain in the definition of health care 
operations and the Secretary shall take into account the re-
port under section 424(d). In such regulations 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 ex-
change for any protected health information of an in-
dividual unless the covered entity obtained from the 
individual, in accordance with section 164.508 of title 
45, Code of Federal Regulations, a valid authoriza-
tion that includes, in accordance with such section, a 
specification of whether the protected health informa-
tion can be further exchanged for remuneration by the 
entity receiving protected health information of that 
individual. 
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212 
(2) EXCEPTIONS.—Paragraph (1) shall not 
apply in the following cases: 
(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 preparation 
and transmittal of the data for such purpose. 
(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 defini-
tion of health care operations in section 164.501 
of title 45, Code of Federal Regulations. 
(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 entity pursuant 
to a business associate agreement. 
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213 
(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 Regu-
lations. 
(F) The purpose of the exchange is otherwise 
determined by the Secretary in regulations to be 
similarly necessary and appropriate as the ex-
ceptions provided in subparagraphs (A) through 
(E). 
(3) REGULATIONS.—The Secretary shall promul-
gate regulations to carry out paragraph (this sub-
section, including exceptions described in paragraph 
(2), not later than 18 months after the date of the en-
actment 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 ELECTRONIC 
FORMAT.—In applying section 164.524 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 information of an individual— 
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214 
(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). 
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 prod-
uct or service and that encourages recipients of the 
communication to purchase or use the product or 
service shall not be considered a health care operation 
for purposes of subpart E of part 164 of title 45, Code 
of Federal Regulations, unless the communication is 
made as described in subparagraph (i), (ii), or (iii) 
of paragraph (1) of the definition of marketing in sec-
tion 164.501 of such title. 
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215 
(2) PAYMENT FOR CERTAIN COMMUNICATIONS.— 
A covered entity or business associate may not receive 
direct or indirect payment in exchange for making 
any communication described in subparagraph (i), 
(ii), or (iii) of paragraph (1) of the definition of mar-
keting 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) de-
scribed in section 164.502(e)(2) of such title be-
tween such business associate and covered entity; 
or 
(B) a covered entity may receive payment 
in exchange for making any such communication 
if the entity obtains from the recipient of the 
communication, in accordance with section 
164.508 of title 45, Code of Federal Regulations, 
a valid authorization (as described in paragraph 
(b) of such section) with respect to such commu-
nication. 
(b) FUNDRAISING.—Fundraising for the benefit of a 
covered entity shall not be considered a health care oper-
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216 
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 specified 
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 identifiable 
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 informa-
tion that is obtained through a product or service provided 
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 
unauthorized person as a result of such a breach of 
security; and 
(2) notify the Federal Trade Commission. 
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217 
(b) NOTIFICATION BY THIRD PARTY SERVICE PRO-
VIDERS.—A third party service provider that provides serv-
ices 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 maintenance of a personal 
health record or a related product or service and that ac-
cesses, maintains, retains, modifies, records, stores, destroys, 
or otherwise holds, uses, or discloses unsecured PHR identi-
fiable 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 individual whose unsecured PHR 
identifiable health information has been, or is reasonably 
believed to have been, accessed, acquired, or disclosed during 
such breach. 
(c) APPLICATION OF REQUIREMENTS FOR TIMELINESS, 
METHOD, AND CONTENT OF NOTIFICATIONS.—Subsections 
(c), (d), (e), and (f) of section 402 shall apply to a notifica-
tion required under subsection (a) and a vendor of personal 
health records, an entity described in subsection (a) and 
a third party service provider described in subsection (b), 
with respect to a breach of security under subsection (a) 
of unsecured PHR identifiable health information in such 
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218 
records maintained or offered by such vendor, in a manner 
specified by the Federal Trade Commission. 
(d) NOTIFICATION OF THE SECRETARY.—Upon receipt 
of a notification of a breach of security under subsection 
(a)(2), the Federal Trade Commission shall notify the Sec-
retary 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 Secu-
rity Act (42 U.S.C. 1320d(6)), and includes, with re-
spect to an individual, information— 
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219 
(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 be-
lieve that the information can be used to identify 
the individual. 
(3) UNSECURED PHR IDENTIFIABLE HEALTH IN-
FORMATION.— 
(A) IN GENERAL.—Subject to subparagraph 
(B), the term ‘‘unsecured PHR identifiable 
health information’’ means PHR identifiable 
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 GUIDANCE 
NOT ISSUED.—In the case that the Secretary does 
not issue guidance under section 4402(h)(2) by 
the date specified in such section, for purposes of 
this section, the term ‘‘unsecured PHR identifi-
able health information’’ shall mean PHR iden-
tifiable health information that is not secured by 
a technology standard that renders protected 
health information unusable, unreadable, or in-
decipherable to unauthorized individuals and 
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220 
that is developed or endorsed by a standards de-
veloping 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 regulations 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 interim final regula-
tions. 
(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. 
(B) The date on which a standard relating 
to requirements for entities that are not covered 
entities that includes requirements relating to 
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221 
breach notification has been promulgated by the 
Federal Trade Commission and has taken effect. 
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 Orga-
nization, 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 sec-
tion 164.308(b) of such title, with such entity and shall be 
treated as a business associate of the covered entity for pur-
poses of 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 enactment 
of this title. 
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222 
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 following 
new sentence: ‘‘For purposes of the previous sentence, a per-
son (including an employee or other individual) shall be 
considered to have obtained or disclosed individually identi-
fiable health information in violation of this part if the in-
formation is maintained by a covered entity (as defined in 
the HIPAA privacy regulation described in section 
1180(b)(3)) and the individual obtained or disclosed such 
information without authorization.’’. 
SEC. 4410. IMPROVED ENFORCEMENT. 
(a) IN GENERAL.—Section 1176 of the Social Security 
Act (42 U.S.C. 1320d–5) is amended— 
(1) in subsection (b)(1), by striking ‘‘the act con-
stitutes an offense punishable under section 1177’’ 
and inserting ‘‘a penalty has been imposed under sec-
tion 1177 with respect to such act’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(c) NONCOMPLIANCE DUE TO WILLFUL NEGLECT.— 
‘‘(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). 
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223 
‘‘(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 im-
plement such amendments. 
(c) DISTRIBUTION OF CERTAIN CIVIL MONETARY PEN-
ALTIES COLLECTED.— 
(1) IN GENERAL.—Subject to the regulation pro-
mulgated pursuant to paragraph (3), any civil mone-
tary penalty or monetary settlement collected with re-
spect to an offense punishable under this subtitle 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 
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224 
Services to be used for purposes of enforcing the pro-
visions 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 enactment of 
this Act. 
(2) GAO REPORT.—Not later than 18 months 
after the date of the enactment of this title, the Comp-
troller 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 pen-
alty or monetary settlement collected with respect to 
such offense. 
(3) ESTABLISHMENT OF METHODOLOGY TO DIS-
TRIBUTE
PERCENTAGE
OF
CMPS
COLLECTED
TO 
HARMED INDIVIDUALS.—Not later than 3 years after 
the date of the enactment of this title, the Secretary 
shall establish by regulation and based on the rec-
ommendations submitted under paragraph (2), 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 col-
lected with respect to such offense. 
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225 
(4) APPLICATION OF METHODOLOGY.—The meth-
odology under paragraph (3) shall be applied with re-
spect to civil monetary penalties or monetary settle-
ments imposed on or after the effective date of the reg-
ulation. 
(d) TIERED INCREASE IN AMOUNT OF CIVIL MONE-
TARY PENALTIES.— 
(1) IN GENERAL.—Section 1176(a)(1) of the So-
cial 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 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 will-
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ful neglect, a penalty for each such violation of 
an amount that is at least the amount described 
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 provi-
sion in which it is established that the violation 
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 de-
scribed in paragraph (3)(C) but not to ex-
ceed 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 de-
scribed 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-
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 further 
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amended by adding at the end the following new 
paragraph: 
‘‘(3) TIERS
OF
PENALTIES
DESCRIBED.—For 
purposes of paragraph (1), with respect to a violation 
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 requirement or 
prohibition during a calendar year may not ex-
ceed $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 requirement or 
prohibition during a calendar year may not ex-
ceed $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 requirement or 
prohibition during a calendar year may not ex-
ceed $250,000; and 
‘‘(D) the amount described in this subpara-
graph is $50,000 for each such violation, except 
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that the total amount imposed on the person for 
all such violations of an identical requirement or 
prohibition during a calendar year may not ex-
ceed $1,500,000.’’. 
(3) 
CONFORMING
AMENDMENTS.—Section 
1176(b) of such Act (42 U.S.C. 1320d–5(b)) is amend-
ed— 
(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 penalty 
may not be imposed under subsection (a) if 
the failure to comply is corrected’’; and 
(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. 
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229 
(e) ENFORCEMENT THROUGH STATE ATTORNEYS GEN-
ERAL.— 
(1) IN GENERAL.—Section 1176 of the Social Se-
curity Act (42 U.S.C. 1320d–5) is amended by add-
ing at the end the following new subsection: 
‘‘(c) ENFORCEMENT
BY STATE ATTORNEYS GEN-
ERAL.— 
‘‘(1) CIVIL ACTION.—Except as provided in sub-
section (b), in any case in which the attorney general 
of a State has reason to believe that an interest 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 ac-
tion on behalf of such residents of the State in a dis-
trict court of the United States of appropriate juris-
diction— 
‘‘(A) to enjoin further such violation by the 
defendant; or 
‘‘(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 
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paragraph is the amount calculated by multi-
plying the number of violations by up to $100. 
For purposes of the preceding sentence, in the 
case of a continuing violation, the number of vio-
lations shall be determined consistent with the 
HIPAA privacy regulations (as defined in sec-
tion 1180(b)(3)) for violations of subsection (a). 
‘‘(B) LIMITATION.—The total amount of 
damages imposed on the person for all violations 
of an identical requirement or prohibition dur-
ing a calendar year may not exceed $25,000. 
‘‘(C) REDUCTION OF DAMAGES.—In assess-
ing damages under subparagraph (A), the court 
may consider the factors the Secretary may con-
sider in determining the amount of a civil 
money penalty under subsection (a) under the 
HIPAA privacy regulations. 
‘‘(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 rea-
sonable 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 
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231 
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 bringing 
any civil action under paragraph (1), nothing in this 
section shall be construed to prevent an attorney gen-
eral 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 
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. 
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‘‘(7) LIMITATION ON STATE ACTION WHILE FED-
ERAL ACTION IS PENDING.—If the Secretary has insti-
tuted an action against a person under subsection (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 respect to such 
violation during the pendency of that action. 
‘‘(8) APPLICATION OF CMP STATUTE OF LIMITA-
TION.—A civil action may not be instituted with re-
spect 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).’’. 
(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 
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233 
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)’’. 
(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 AC-
TION.—Nothing in this section shall be construed as pre-
venting the Office of Civil Rights of the Department of 
Health and Human Services from continuing, in its discre-
tion, to use corrective action without a penalty in cases 
where the person did not know (and by exercising reason-
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234 
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 Regulations, 
as such provisions are in effect as of the date of enactment 
of this Act, comply with such requirements. 
SEC. 
4412. 
SECURING 
INDIVIDUALLY 
IDENTIFIABLE 
HEALTH INFORMATION. 
Notwithstanding the previous provisions of this title, 
a covered entity or business associate must use a technology 
standard that renders protected health information unus-
able, unreadable, or indecipherable to unauthorized individ-
uals and is developed or endorsed by a standards developing 
organization that is accredited by the American National 
Standards Institute to secure individually identifiable 
health information that is transmitted in the nationwide 
health information network supported in this title or phys-
ically transported outside of a covered entity’s or business 
associate’s secured, physical perimeter, including informa-
tion transported on removable media and on portable de-
vices. The Secretary may establish implementation criteria 
such that smaller covered entities with fewer resources are 
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granted a longer period of time to comply with these re-
quirements. 
SEC. 4413. SPECIAL RULE FOR INFORMATION TO REDUCE 
MEDICATION ERRORS AND IMPROVE PATIENT 
SAFETY. 
Nothing under this subtitle shall prevent a pharmacist 
from collecting and sharing information with patients in 
order to reduce medication errors and improve patient safe-
ty as long as any renumeration received for making such 
communication is reasonable and cost-based. Within 180 
days of the date of the enactment of this Act, the Secretary 
shall promulgate regulations implementing this section. 
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 sub-
title in the same manner that such section applies to a pro-
vision or requirement under part C of title XI of such Act 
or a standard or implementation specification adopted or 
established under sections 1172 through 1174 of such Act. 
(b) HEALTH INSURANCE PORTABILITY AND ACCOUNT-
ABILITY ACT.—The standards governing the privacy and 
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security of individually identifiable health information pro-
mulgated 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 Secretary shall by rule 
amend such Federal regulations as required to make such 
regulations consistent with this subtitle. 
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 annu-
ally thereafter, the Secretary shall prepare and sub-
mit 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 
Commerce of the House of Representatives a report 
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concerning complaints of alleged violations of law, in-
cluding 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 enactment 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 prepared. 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 resolved 
informally, a summary of the types of such com-
plaints so resolved, and the number of covered 
entities that received technical assistance from 
the Secretary during such year in order to 
achieve compliance with such provisions and the 
types of such technical assistance provided; 
(C) the number of such complaints that 
have resulted in the imposition of civil monetary 
penalties or have been resolved through monetary 
settlements, including the nature of the com-
plaints involved and the amount paid in each 
penalty or settlement; 
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(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 com-
pliance with and enforcement of such provisions 
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 PRIVACY 
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 
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— 
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(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 in-
dividually identifiable health information that 
has been rendered unusable, unreadable, or inde-
cipherable through technologies or methodologies 
recognized by appropriate professional organiza-
tion or standard setting bodies to provide effec-
tive security for the information) that should be 
applied to— 
(i) vendors of personal health records; 
(ii) entities that offer products or serv-
ices through the website of a vendor of per-
sonal health records; 
(iii) entities that are not covered enti-
ties and that offer products or services 
through the websites of covered entities 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 
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240 
(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 Representatives a report on 
the findings of the study under paragraph (1) and 
shall include in such report recommendations on the 
privacy and security requirements 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-
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241 
formation under section 164.514(b) of title 45, Code of Fed-
eral 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 Commerce of the 
House of Representatives a report on the best practices re-
lated to the disclosure among health care providers of pro-
tected health information of an individual for purposes of 
treatment of such individual. Such report shall include an 
examination of the best practices implemented by States 
and by other entities, such as health information exchanges 
and regional health information organizations, an exam-
ination of the extent to which such best practices are suc-
cessful with respect to the quality of the resulting health 
care provided to the individual and with respect to the abil-
ity of the health care provider to manage such best prac-
tices, and an examination of the use of electronic informed 
consent for disclosing protected health information for treat-
ment, payment, and health care operations. 
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. 
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Sec. 5001. Temporary increase of Medicaid FMAP. 
Sec. 5002. Moratoria on certain regulations. 
Sec. 5003. Transitional Medicaid assistance (TMA). 
Sec. 5004. State eligibility option for family planning services. 
Sec. 5005. Protections for Indians under Medicaid and CHIP. 
Sec. 5006. Consultation on Medicaid and CHIP. 
Sec. 5007. Temporary increase in DSH allotments during recession. 
SEC. 5001. TEMPORARY INCREASE OF MEDICAID FMAP. 
(a) PERMITTING MAINTENANCE OF FMAP.—Subject to 
subsections (e), (f), and (g), if the FMAP determined with-
out 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 applica-
tion 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 application 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 
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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.— 
(1) IN GENERAL.—Subject to subsections (e), (f), 
and (g) and paragraph (2), for each State for cal-
endar quarters during the recession adjustment period 
(as defined in subsection (h)(2)), the FMAP (after the 
application of subsection (a)) shall be increased 
(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 INCREASE 
IN UNEMPLOYMENT.— 
(1) IN GENERAL.—Subject to subsections (e), (f), 
and (g), in the case of a State that is a high unem-
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ployment State (as defined in paragraph (2)) for a 
calendar quarter during the recession adjustment pe-
riod, the FMAP (taking into account the application 
of subsections (a) and (b)) for such quarter shall be 
further increased by the high unemployment percent-
age 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 period, 
a State that is 1 of the 50 States or the District 
of Columbia and for which the State unemploy-
ment increase percentage (as computed 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 calendar 
quarter, it shall remain a high unemployment 
State for each subsequent calendar quarter end-
ing before July 1, 2010. 
(3) HIGH UNEMPLOYMENT PERCENTAGE POINT 
ADJUSTMENT.— 
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(A) IN GENERAL.—The high unemployment 
percentage point adjustment specified in this 
paragraph for a high unemployment State for a 
quarter is equal to the product of— 
(i) the SMAP for such State and quar-
ter (determined after the application of sub-
section (a) and before the application of 
subsection (b)); and 
(ii) subject to subparagraph (B), the 
State unemployment reduction factor speci-
fied 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 subparagraph). 
(4) STATE
UNEMPLOYMENT
REDUCTION
FAC-
TOR.—In the case of a high unemployment State for 
which the State unemployment increase percentage 
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(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-
duction factor for the State and quarter is 6 per-
cent; 
(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 IN-
CREASE PERCENTAGE.— 
(A) IN GENERAL.—In this subsection, the 
‘‘State unemployment increase percentage’’ for a 
State for a calendar quarter is equal to the num-
ber of percentage points (if any) by which— 
(i) the average monthly unemployment 
rate for the State for months in the most re-
cent previous 3-consecutive-month period for 
which data are available, subject to sub-
paragraph (C); exceeds 
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247 
(ii) the lowest average monthly unem-
ployment rate for the State for any 3-con-
secutive-month period preceding the period 
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 Department 
of Labor. 
(C) SPECIAL RULE.—With respect to— 
(i) the first 2 calendar quarters of the 
recession adjustment period, the most recent 
previous 3-consecutive-month period de-
scribed 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 recent 
previous 3-consecutive-month period de-
scribed in such subparagraph shall be the 3- 
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248 
consecutive-month period beginning with 
December 2009. 
(d) INCREASE IN CAP ON MEDICAID PAYMENTS TO 
TERRITORIES.—Subject to subsections (f) and (g) , with re-
spect to entire fiscal years occurring during the recession 
adjustment period and with respect to fiscal years only a 
portion of which occurs during such period (and in propor-
tion 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 Mariana Islands, 
and American Samoa under subsections (f) and (g) of sec-
tion 1108 of the Social Security Act (42 U.S.C. 1308) shall 
each be increased by 20 percent (or, in the case of an elec-
tion under subsection (b)(2), 10 percent). 
(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 described 
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in section 2105(b) of such Act (42 U.S.C. 
1397ee(b)); and 
(C) to payments for disproportionate share 
hospital (DSH) payment adjustments under sec-
tion 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 increase 
in a cap amount under subsection (d), if 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 sec-
tion 1115 of such Act (42 U.S.C. 1315)) are more re-
strictive than the eligibility standards, methodologies, 
or procedures, respectively, under such plan (or waiv-
er) as in effect on July 1, 2008. 
(2) STATE REINSTATEMENT OF ELIGIBILITY PER-
MITTED.—Subject to paragraph (3), a State that has 
restricted eligibility standards, methodologies, or pro-
cedures under its State plan under title XIX of the 
Social Security Act (including any waiver under such 
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title or under section 1115 of such Act (42 U.S.C. 
1315)) after July 1, 2008, is no longer ineligible 
under paragraph (1) beginning with the first cal-
endar quarter in which the State has reinstated eligi-
bility standards, methodologies, or procedures that are 
no more restrictive than the eligibility standards, 
methodologies, or procedures, respectively, under such 
plan (or waiver) as in effect on July 1, 2008. 
(3) SPECIAL RULES.—A State shall not be ineli-
gible under paragraph (1)— 
(A) 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; 
or 
(B) on the basis of a restriction that was ef-
fective 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 waiver 
under section 1115 of such Act with respect 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 
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251 
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 para-
graph (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.) (in-
cluding any waiver under such title or under section 
1115 of such Act (42 U.S.C. 1315)). 
(6) NO WAIVER AUTHORITY.—The Secretary may 
not waive the application of this subsection or sub-
section (g) under section 1115 of the Social Security 
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 expend-
itures under the State Medicaid plan required under section 
1902(a)(2) of the Social Security Act (42 U.S.C. 
1396a(a)(2)), the State is not eligible for an increase 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 percentage of the 
non-Federal share of such expenditures for quarters during 
the recession adjustment period, than the percentage that 
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would have been required by the State under such plan on 
September 30, 2008, prior to application of this section. 
(h) DEFINITIONS.—In this section, except as otherwise 
provided: 
(1) FMAP.—The term ‘‘FMAP’’ means the Fed-
eral medical assistance percentage, as defined in sec-
tion 1905(b) of the Social Security Act (42 U.S.C. 
1396d(b)), as determined without regard to this sec-
tion except as otherwise specified. 
(2) RECESSION ADJUSTMENT PERIOD.—The term 
‘‘recession adjustment period’’ means the period be-
ginning 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. 
(5) STATE.—The term ‘‘State’’ has the meaning 
given such term in section 1101(a)(1) of the Social 
Security Act (42 U.S.C. 1301(a)(1)) for purposes of 
title XIX of the Social Security Act (42 U.S.C. 1396 
et seq.). 
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253 
(i) SUNSET.—This section shall not apply to items and 
services furnished after the end of the recession adjustment 
period. 
SEC. 5002. MORATORIA ON CERTAIN REGULATIONS. 
(a) EXTENSION OF MORATORIA ON CERTAIN MEDICAID 
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 Readi-
ness, Veterans’ Care, Katrina Recovery, and Iraq Ac-
countability 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 Supple-
mental Appropriations Act, 2008 (Public Law 110– 
252). 
(3) Section 7001(a)(3)(A) of the Supplemental 
Appropriations Act, 2008 (Public Law 110–252). 
(b) ADDITIONAL MEDICAID MORATORIUM.—Notwith-
standing any other provision of law, with respect to expend-
itures for services furnished during the period beginning on 
December 8, 2008 and ending on June 30, 2009, the Sec-
retary of Health and Human Services shall not take any 
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254 
action (through promulgation of regulation, issuance of reg-
ulatory guidance, use of Federal payment audit procedures, 
or other administrative action, policy, or practice, includ-
ing a Medical Assistance Manual transmittal or letter to 
State Medicaid directors) to implement the final regulation 
relating to clarification of the definition of outpatient hos-
pital facility services under the Medicaid program pub-
lished 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 ‘‘Decem-
ber 31, 2010’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on July 1, 2009. 
(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 subject 
to paragraph (5)’’ after ‘‘Notwithstanding any other 
provision of this title’’; 
(2) by adding at the end of subsection (a) the fol-
lowing: 
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255 
‘‘(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 subject 
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 ‘‘REQUIRE-
MENT.—’’ as a subparagraph (A) with the heading 
‘‘IN GENERAL.—’’ and with the same indentation 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 3 MONTHS BEFORE RECEIPT OF MED-
ICAL ASSISTANCE.—A State may, at its option, 
elect also to apply subparagraph (A) in the case 
of a family that was receiving such aid for fewer 
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256 
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 de-
scribed 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 subsection: 
‘‘(g) COLLECTION AND REPORTING OF PARTICIPATION 
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-
tion rates for adults and children under this section 
and of the number and percentage of children who be-
come ineligible for medical assistance under this sec-
tion whose medical assistance is continued under an-
other 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. 
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257 
‘‘(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 sub-
sections (b) through (d) shall take effect on July 1, 2009. 
SEC. 5004. STATE ELIGIBILITY OPTION FOR FAMILY PLAN-
NING SERVICES. 
(a) COVERAGE AS OPTIONAL CATEGORICALLY NEEDY 
GROUP.— 
(1) IN GENERAL.—Section 1902(a)(10)(A)(ii) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396a(a)(10)(A)(ii)), as amended by section 3003(a) 
of the Health Insurance Assistance for the Unem-
ployed Act of 2009, is amended— 
(A) in subclause (XIX), by striking ‘‘or’’ at 
the end; 
(B) in subclause (XX), by adding ‘‘or’’ at 
the end; and 
(C) by adding at the end the following new 
subclause: 
‘‘(XXI) who are described in subsection (ee) (re-
lating to individuals who meet certain income stand-
ards);’’. 
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258 
(2) GROUP DESCRIBED.—Section 1902 of such 
Act (42 U.S.C. 1396a), as amended by section 
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)(1) Individuals described in this subsection are 
individuals— 
‘‘(A) whose income does not exceed an in-
come eligibility level established by the State that 
does not exceed the highest income eligibility 
level established under the State plan under this 
title (or under its State child health plan under 
title XXI) for pregnant women; and 
‘‘(B) who are not pregnant. 
‘‘(2) At the option of a State, individuals de-
scribed in this subsection may include individuals 
who, had individuals applied on or before January 1, 
2007, would have been made eligible pursuant to the 
standards and processes imposed by that State for 
benefits described in clause (XV) of the matter fol-
lowing subparagraph (G) of section subsection (a)(10) 
pursuant to a waiver granted under section 1115. 
‘‘(3) At the option of a State, for purposes of 
subsection (a)(17)(B), in determining eligibility for 
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259 
services under this subsection, the State may consider 
only the income of the applicant or recipient.’’. 
(3) 
LIMITATION
ON
BENEFITS.—Section 
1902(a)(10) of the Social Security Act (42 U.S.C. 
1396a(a)(10)) is amended in the matter following 
subparagraph (G)— 
(A) by striking ‘‘and (XIV)’’ and inserting 
‘‘(XIV)’’; and 
(B) by inserting ‘‘, and (XV) the medical 
assistance made available to an individual de-
scribed in subsection (ee) shall be limited to fam-
ily planning services and supplies described in 
section 1905(a)(4)(C) including medical diag-
nosis and treatment services that are provided 
pursuant to a family planning service in a fam-
ily planning setting’’ after ‘‘cervical cancer’’. 
(4) 
CONFORMING
AMENDMENTS.—Section 
1905(a) of the Social Security Act (42 U.S.C. 
1396d(a)), as amended by section 3003(c)(2) of the 
Health Insurance Assistance for the Unemployed Act 
of 2009, is amended in the matter preceding para-
graph (1)— 
(A) in clause (xiii), by striking ‘‘or’’ at the 
end; 
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260 
(B) in clause (xiv), by adding ‘‘or’’ at the 
end; and 
(C) by inserting after clause (xiii) the fol-
lowing: 
‘‘(xv) individuals described in section 
1902(ee),’’. 
(b) PRESUMPTIVE ELIGIBILITY.— 
(1) IN GENERAL.—Title XIX of the Social Secu-
rity Act (42 U.S.C. 1396 et seq.) is amended by in-
serting after section 1920B the following: 
‘‘PRESUMPTIVE ELIGIBILITY FOR FAMILY PLANNING 
SERVICES 
‘‘SEC. 1920C. (a) STATE OPTION.—State plan ap-
proved under section 1902 may provide for making medical 
assistance available to an individual described in section 
1902(ee) (relating to individuals who meet certain income 
eligibility standard) during a presumptive eligibility pe-
riod. In the case of an individual described in section 
1902(ee), such medical assistance shall be limited to family 
planning services and supplies described in 1905(a)(4)(C) 
and, at the State’s option, medical diagnosis and treatment 
services that are provided in conjunction with a family 
planning service in a family planning setting. 
‘‘(b) DEFINITIONS.—For purposes of this section: 
‘‘(1) PRESUMPTIVE
ELIGIBILITY
PERIOD.—The 
term ‘presumptive eligibility period’ means, with re-
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261 
spect to an individual described in subsection (a), the 
period that— 
‘‘(A) begins with the date on which a quali-
fied entity determines, on the basis of prelimi-
nary information, that the individual is de-
scribed in section 1902(ee); and 
‘‘(B) ends with (and includes) the earlier 
of— 
‘‘(i) the day on which a determination 
is made with respect to the eligibility of 
such individual for services under the State 
plan; or 
‘‘(ii) in the case of such an individual 
who does not file an application by the last 
day of the month following the month dur-
ing which the entity makes the determina-
tion referred to in subparagraph (A), such 
last day. 
‘‘(2) QUALIFIED ENTITY.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘qualified entity’ means any 
entity that— 
‘‘(i) is eligible for payments under a 
State plan approved under this title; and 
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262 
‘‘(ii) is determined by the State agency 
to be capable of making determinations of 
the type described in paragraph (1)(A). 
‘‘(B) RULE OF CONSTRUCTION.—Nothing in 
this paragraph shall be construed as preventing 
a State from limiting the classes of entities that 
may become qualified entities in order to prevent 
fraud and abuse. 
‘‘(c) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—The State agency shall pro-
vide qualified entities with— 
‘‘(A) such forms as are necessary for an ap-
plication to be made by an individual described 
in subsection (a) for medical assistance under 
the State plan; and 
‘‘(B) information on how to assist such in-
dividuals in completing and filing such forms. 
‘‘(2) NOTIFICATION
REQUIREMENTS.—A quali-
fied entity that determines under subsection (b)(1)(A) 
that an individual described in subsection (a) is pre-
sumptively eligible for medical assistance under a 
State plan shall— 
‘‘(A) notify the State agency of the deter-
mination within 5 working days after the date 
on which determination is made; and 
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263 
‘‘(B) inform such individual at the time the 
determination is made that an application for 
medical assistance is required to be made by not 
later than the last day of the month following the 
month during which the determination is made. 
‘‘(3) APPLICATION FOR MEDICAL ASSISTANCE.— 
In the case of an individual described in subsection 
(a) who is determined by a qualified entity to be pre-
sumptively eligible for medical assistance under a 
State plan, the individual shall apply for medical as-
sistance by not later than the last day of the month 
following the month during which the determination 
is made. 
‘‘(d) PAYMENT.—Notwithstanding any other provision 
of law, medical assistance that— 
‘‘(1) is furnished to an individual described in 
subsection (a)— 
‘‘(A) during a presumptive eligibility pe-
riod; and 
‘‘(B) by a entity that is eligible for pay-
ments under the State plan; and 
‘‘(2) is included in the care and services covered 
by the State plan, 
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264 
shall be treated as medical assistance provided by such plan 
for purposes of clause (4) of the first sentence of section 
1905(b).’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1902(a)(47) of the Social Secu-
rity Act (42 U.S.C. 1396a(a)(47)) is amended by 
inserting before the semicolon at the end the fol-
lowing: ‘‘and provide for making medical assist-
ance available to individuals described in sub-
section (a) of section 1920C during a presump-
tive eligibility period in accordance with such 
section’’. 
(B) Section 1903(u)(1)(D)(v) of such Act 
(42 U.S.C. 1396b(u)(1)(D)(v)) is amended— 
(i) by striking ‘‘or for’’ and inserting 
‘‘for’’; and 
(ii) by inserting before the period the 
following: ‘‘, or for medical assistance pro-
vided to an individual described in sub-
section (a) of section 1920C during a pre-
sumptive eligibility period under such sec-
tion’’. 
(c) CLARIFICATION OF COVERAGE OF FAMILY PLAN-
NING SERVICES AND SUPPLIES.—Section 1937(b) of the So-
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