386 
(C) SERIOUS.—The event is serious and 
could result in death or loss of a body part, dis-
ability, or more than transient loss of a body 
function. 
(D) DEFICIENCY IN SAFETY AND PROCESS 
CONTROLS.—The event is indicative of a prob-
lem in safety systems and process controls used 
by the physician, hospital, or ambulatory sur-
gical center involved and is indicative of the re-
liability of the quality of services provided by 
the physician, hospital, or ambulatory surgical 
center, respectively. 
(2) IDENTIFICATION AND PAYMENT ISSUES.— 
With respect to policies under the never events plan 
for identifying and reducing (or eliminating) pay-
ment for never events, the Secretary shall consider— 
(A) mechanisms used by hospitals and 
physicians in reporting and coding of services 
that would reliably identify never events; and 
(B) modifications in billing and payment 
mechanisms that would enable the Secretary to 
efficiently and accurately reduce or eliminate 
payments for never events. 
(3) PRIORITIES.—Under the never events plan 
the Secretary shall identify priorities regarding the 
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services to focus on and, among those, the never 
events for which payments should be reduced or 
eliminated. 
(4) CONSULTATION.—In developing the never 
events plan, the Secretary shall consult with affected 
parties that are relevant to payment reductions in 
response to never events. 
(d) CONGRESSIONAL REPORT.—By not later than 
June 1, 2008, the Secretary shall submit a report to Con-
gress on the never events plan developed under this sub-
section and shall include in the report recommendations 
on specific methods for implementation of the plan on a 
timely basis. 
SEC. 705. TREATMENT OF MEDICARE HOSPITAL RECLASSI-
FICATIONS. 
(a) EXTENDING
CERTAIN
MEDICARE
HOSPITAL 
WAGE INDEX RECLASSIFICATIONS THROUGH FISCAL 
YEAR 2009.— 
(1) IN GENERAL.—Section 106(a) of the Medi-
care Improvements and Extension Act of 2006 (divi-
sion B of public Law 109–432) is amended by strik-
ing ‘‘September 30, 2007’’ and inserting ‘‘September 
30, 2009’’. 
(2) SPECIAL EXCEPTION RECLASSIFICATIONS.— 
The Secretary of Health and Human Services shall 
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extend for discharges occurring through September 
30, 2009, the special exception reclassification made 
under the authority of section 1886(d)(5)(I)(i) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395ww(d)(5)(I)(i)) and contained in the final rule 
promulgated by the Secretary in the Federal Reg-
ister on August 11, 2004 (69 Fed. Reg. 49105, 
49107). 
(b) DISREGARDING SECTION 508 HOSPITAL RECLAS-
SIFICATIONS FOR PURPOSES OF GROUP RECLASSIFICA-
TIONS.—Section 508 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Public Law 
108–173, 42 U.S.C. 1395ww note) is amended by adding 
at the end the following new subsection: 
‘‘(g) DISREGARDING HOSPITAL RECLASSIFICATIONS 
FOR PURPOSES
OF GROUP RECLASSIFICATIONS.—For 
purposes of the reclassification of a group of hospitals in 
a geographic area under section 1886(d), a hospital reclas-
sified under this section (including any such reclassifica-
tion which is extended under section 106(a) of the Medi-
care Improvements and Extension Act of 2006) shall not 
be taken into account and shall not prevent the other hos-
pitals in such area from establishing such a group for such 
purpose.’’. 
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389 
TITLE VIII—MEDICAID 
Subtitle A—Protecting Existing 
Coverage 
SEC. 801. MODERNIZING TRANSITIONAL MEDICAID. 
(a) TWO-YEAR 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 ‘‘Sep-
tember 30, 2009’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on October 1, 
2007. 
(b) STATE OPTION OF INITIAL 12-MONTH ELIGI-
BILITY.—Section 1925 of the Social Security Act (42 
U.S.C. 1396r–6) is amended— 
(1) in subsection (a)(1), by inserting ‘‘but sub-
ject to paragraph (5)’’ after ‘‘Notwithstanding any 
other provision of this title’’; 
(2) by adding at the end of subsection (a) the 
following: 
‘‘(5) OPTION OF 12-MONTH INITIAL ELIGIBILITY 
PERIOD.—A State may elect to treat any reference 
in this subsection to a 6-month period (or 6 months) 
as a reference to a 12-month period (or 12 months). 
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In the case of such an election, subsection (b) shall 
not apply.’’; and 
(3) in subsection (b)(1), by inserting ‘‘but sub-
ject to subsection (a)(5)’’ after ‘‘Notwithstanding 
any other provision of this title’’. 
(c) REMOVAL OF REQUIREMENT FOR PREVIOUS RE-
CEIPT OF MEDICAL ASSISTANCE.—Section 1925(a)(1) of 
such Act (42 U.S.C. 1396r–6(a)(1)), as amended by sub-
section (b)(1), is further amended— 
(1) by inserting ‘‘subparagraph (B) and’’ before 
‘‘paragraph (5)’’; 
(2) by redesignating the matter after ‘‘RE-
QUIREMENT.—’’ as a subparagraph (A) with the 
heading ‘‘IN GENERAL.—’’ and with the same inden-
tation as subparagraph (B) (as added by paragraph 
(3)); and 
(3) by adding at the end the following: 
‘‘(B) STATE OPTION TO WAIVE REQUIRE-
MENT
FOR
MONTHS
BEFORE
RECEIPT
OF 
MEDICAL ASSISTANCE.—A State may, at its op-
tion, elect also to apply subparagraph (A) in 
the case of a family that was receiving such aid 
for fewer than three months or that had applied 
for and was eligible for such aid for fewer than 
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3 months during the 6 immediately preceding 
months described in such subparagraph.’’. 
(d) CMS REPORT ON ENROLLMENT AND PARTICIPA-
TION RATES UNDER TMA.—Section 1925 of such Act (42 
U.S.C. 1396r–6), as amended by this section, is further 
amended by adding at the end the following new sub-
section: 
‘‘(g) COLLECTION AND REPORTING OF PARTICIPA-
TION INFORMATION.— 
‘‘(1) COLLECTION
OF
INFORMATION
FROM 
STATES.—Each State shall collect and submit to the 
Secretary (and make publicly available), in a format 
specified by the Secretary, information on average 
monthly enrollment and average monthly participa-
tion rates for adults and children under this section 
and of the number and percentage of children who 
become ineligible for medical assistance under this 
section whose medical assistance is continued under 
another eligibility category or who are enrolled under 
the State’s child health plan under title XXI. Such 
information shall be submitted at the same time and 
frequency in which other enrollment information 
under this title is submitted to the Secretary. 
‘‘(2) ANNUAL REPORTS TO CONGRESS.—Using 
the information submitted under paragraph (1), the 
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392 
Secretary shall submit to Congress annual reports 
concerning enrollment and participation rates de-
scribed in such paragraph.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
subsections (b) through (d) shall take effect on the date 
of the enactment of this Act. 
SEC. 802. FAMILY PLANNING 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)) is amended— 
(A) in subclause (XVIII), by striking ‘‘or’’ 
at the end; 
(B) in subclause (XIX), by adding ‘‘or’’ at 
the end; and 
(C) by adding at the end the following new 
subclause: 
‘‘(XX) who are described in subsection (ee) (re-
lating to individuals who meet certain income stand-
ards);’’. 
(2) GROUP DESCRIBED.—Section 1902 of the 
Social Security Act (42 U.S.C. 1396a), as amended 
by section 112(c), is amended by adding at the end 
the following new subsection: 
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393 
‘‘(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 eligi-
bility 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 are determined to meet the eligibility require-
ments referred to in paragraph (1) under the terms, 
conditions, and procedures applicable to making eli-
gibility determinations for medical assistance under 
this title under a waiver to provide the benefits de-
scribed in clause (XV) of the matter following sub-
paragraph (G) of section 1902(a)(10) granted to the 
State under section 1115 as of January 1, 2007.’’. 
(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 
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394 
(B) by inserting ‘‘, and (XV) the medical 
assistance made available to an individual de-
scribed in subsection (ee) shall be limited to 
family planning services and supplies described 
in section 1905(a)(4)(C) including medical di-
agnosis or treatment services that are provided 
pursuant to a family planning service in a fam-
ily planning setting provided during the period 
in which such an individual is eligible;’’ after 
‘‘cervical cancer’’. 
(4) 
CONFORMING
AMENDMENTS.—Section 
1905(a) of the Social Security Act (42 U.S.C. 
1396d(a)) is amended in the matter preceding para-
graph (1)— 
(A) in clause (xii), by striking ‘‘or’’ at the 
end; 
(B) in clause (xii), by adding ‘‘or’’ at the 
end; and 
(C) by inserting after clause (xiii) the fol-
lowing: 
‘‘(xiv) individuals described in section 
1902(ee),’’. 
(b) PRESUMPTIVE ELIGIBILITY.— 
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395 
(1) IN GENERAL.—Title XIX of the Social Se-
curity Act (42 U.S.C. 1396 et seq.) is amended by 
inserting 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 med-
ical assistance available to an individual described in sec-
tion 1902(ee) (relating to individuals who meet certain in-
come eligibility standard) during a presumptive eligibility 
period. In the case of an individual described in section 
1902(ee), such medical assistance shall be limited to fam-
ily 
planning 
services 
and 
supplies 
described 
in 
1905(a)(4)(C) and, at the State’s option, medical diag-
nosis or treatment services that are provided in conjunc-
tion with a family planning service in a family planning 
setting provided during the period in which such an indi-
vidual is eligible. 
‘‘(b) DEFINITIONS.—For purposes of this section: 
‘‘(1) PRESUMPTIVE ELIGIBILITY PERIOD.—The 
term ‘presumptive eligibility period’ means, with re-
spect to an individual described in subsection (a), 
the period that— 
‘‘(A) begins with the date on which a 
qualified entity determines, on the basis of pre-
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396 
liminary 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 
‘‘(ii) is determined by the State agen-
cy 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 pre-
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397 
venting a State from limiting the classes of en-
tities 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 
application to be made by an individual de-
scribed 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 presumptively 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 
‘‘(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 fol-
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398 
lowing the month during which the determina-
tion is made. 
‘‘(3) 
APPLICATION
FOR
MEDICAL
ASSIST-
ANCE.—In the case of an individual described in 
subsection (a) who is determined by a qualified enti-
ty to be presumptively eligible for medical assistance 
under a State plan, the individual shall apply for 
medical assistance by not later than the last day of 
the month following the month during which the de-
termination is made. 
‘‘(d) PAYMENT.—Notwithstanding any other provi-
sion of this title, medical assistance that— 
‘‘(1) is furnished to an individual described in 
subsection (a)— 
‘‘(A) during a presumptive eligibility pe-
riod; 
‘‘(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, shall be treated as medical assist-
ance 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 Se-
curity Act (42 U.S.C. 1396a(a)(47)) is amend-
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399 
ed by inserting before the semicolon at the end 
the following: ‘‘and provide for making medical 
assistance available to individuals described in 
subsection (a) of section 1920C during a pre-
sumptive 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’’. 
(e) CLARIFICATION OF COVERAGE OF FAMILY PLAN-
NING SERVICES AND SUPPLIES.—Section 1937(b) of the 
Social Security Act (42 U.S.C. 1396u–7(b)) is amended 
by adding at the end the following: 
‘‘(5) COVERAGE OF FAMILY PLANNING SERV-
ICES AND SUPPLIES.—Notwithstanding the previous 
provisions of this section, a State may not provide 
for medical assistance through enrollment of an indi-
vidual with benchmark coverage or benchmark-equiv-
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400 
alent coverage under this section unless such cov-
erage includes for any individual described in section 
1905(a)(4)(C), medical assistance for family plan-
ning services and supplies in accordance with such 
section.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section take effect on October 1, 2007. 
SEC. 803. AUTHORITY TO CONTINUE PROVIDING ADULT 
DAY HEALTH SERVICES APPROVED UNDER A 
STATE MEDICAID PLAN. 
(a) IN GENERAL.—During the period described in 
subsection (b), the Secretary of Health and Human Serv-
ices shall not— 
(1) withhold, suspend, disallow, or otherwise 
deny Federal financial participation under section 
1903(a) of the Social Security Act (42 U.S.C. 
1396b(a)) for the provision of adult day health care 
services, day activity and health services, or adult 
medical day care services, as defined under a State 
Medicaid plan approved during or before 1994, dur-
ing such period if such services are provided con-
sistent with such definition and the requirements of 
such plan; or 
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401 
(2) withdraw Federal approval of any such 
State plan or part thereof regarding the provision of 
such services (by regulation or otherwise). 
(b) PERIOD DESCRIBED.—The period described in 
this subsection is the period that begins on November 3, 
2005, and ends on March 1, 2009. 
SEC. 
804. 
STATE 
OPTION 
TO 
PROTECT 
COMMUNITY 
SPOUSES OF INDIVIDUALS WITH DISABIL-
ITIES. 
Section 1924(h)(1)(A) of the Social Security Act (42 
U.S.C. 1396r–5(h)(1)(A)) is amended by striking ‘‘is de-
scribed in section 1902(a)(10)(A)(ii)(VI)’’ and inserting 
‘‘is being provided medical assistance for home and com-
munity-based services under subsection (c), (d), (e), (i), 
or (j) of section 1915 or pursuant to section 1115’’. 
SEC. 805. COUNTY MEDICAID HEALTH INSURING ORGANI-
ZATIONS . 
(a) IN GENERAL.—Section 9517(c)(3) of the Consoli-
dated Omnibus Budget Reconciliation Act of 1985 (42 
U.S.C. 1396b note), as added by section 4734 of the Om-
nibus Budget Reconciliation Act of 1990 and as amended 
by section 704 of the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000, is 
amended— 
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402 
(1) in subparagraph (A), by inserting ‘‘, in the 
case of any health insuring organization described in 
such subparagraph that is operated by a public enti-
ty established by Ventura County, and in the case 
of any health insuring organization described in such 
subparagraph that is operated by a public entity es-
tablished by Merced County’’ after ‘‘described in 
subparagraph (B)’’; and 
(2) in subparagraph (C), by striking ‘‘14 per-
cent’’ and inserting ‘‘16 percent’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act. 
Subtitle B—Payments 
SEC. 811. PAYMENTS FOR PUERTO RICO AND TERRITORIES. 
(a) PAYMENT CEILING.—Section 1108(g) of the So-
cial Security Act (42 U.S.C. 1308(g)) is amended— 
(1) in paragraph (2), by striking ‘‘paragraph 
(3)’’ and inserting ‘‘paragraphs (3) and (4)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(4) FISCAL YEARS 2009 THROUGH 2012 FOR 
CERTAIN INSULAR AREAS.—The amounts otherwise 
determined under this subsection for Puerto Rico, 
the Virgin Islands, Guam, the Northern Mariana Is-
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403 
lands, and American Samoa for fiscal years 2009 
through 2012 shall be increased by the following 
amounts: 
‘‘(A) PUERTO
RICO.—For Puerto Rico, 
$250,000,000 
for 
fiscal 
year 
2009, 
$350,000,000 
for 
fiscal 
year 
2010, 
$500,000,000 
for 
fiscal 
year 
2011, 
and 
$600,000,000 for fiscal year 2012. 
‘‘(B) VIRGIN ISLANDS.—For the Virgin Is-
lands, $5,000,000 for each of fiscal years 2009 
through 2012. 
‘‘(C) GUAM.—For Guam, $5,000,000 for 
each of fiscal years 2009 through 2012. 
‘‘(D) NORTHERN MARIANA ISLANDS.—For 
the Northern Mariana Islands, $4,000,000 for 
each of fiscal years 2009 through 2012. 
‘‘(E) AMERICAN
SAMOA.—For American 
Samoa, $4,000,000 for each of fiscal years 
2009 through 2012. 
Such amounts shall not be taken into account in ap-
plying paragraph (2) for fiscal years 2009 through 
2012 but shall be taken into account in applying 
such paragraph for fiscal year 2013 and subsequent 
fiscal years.’’. 
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404 
(b) REMOVAL OF FEDERAL MATCHING PAYMENTS 
FOR IMPROVING DATA REPORTING SYSTEMS FROM THE 
OVERALL LIMIT ON PAYMENTS TO TERRITORIES UNDER 
TITLE XIX.—Such section is further amended by adding 
at the end the following new paragraph: 
‘‘(5) EXCLUSION OF CERTAIN EXPENDITURES 
FROM
PAYMENT
LIMITS.— With respect to fiscal 
year 2008 and each fiscal year thereafter, if Puerto 
Rico, the Virgin Islands, Guam, the Northern Mar-
iana Islands, or American Samoa qualify for a pay-
ment under subparagraph (A)(i) or (B) of section 
1903(a)(3) for a calendar quarter of such fiscal year 
with respect to expenditures for improvements in 
data reporting systems described in such subpara-
graph, the limitation on expenditures under title 
XIX for such commonwealth or territory otherwise 
determined under subsection (f) and this subsection 
for such fiscal year shall be determined without re-
gard to payment for such expenditures.’’. 
SEC. 812. MEDICAID DRUG REBATE. 
(a) BRAND.—Paragraph (1)(B)(i) of section 1927(c) 
of the Social Security Act (42 U.S.C. 1396r–8(c)) is 
amended— 
(1) by striking ‘‘and’’ at the end of subclause 
(IV); 
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(2) in subclause (V)— 
(A) by inserting ‘‘and before January 1, 
2008,’’ after ‘‘December 31, 1995’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
clause: 
‘‘(VI) after December 31, 2007, 
is 20.1 percent.’’. 
(b) PBMS TO BEST PRICE DEFINITION.— 
(1) IN GENERAL.—Section 1927(c)(1)(C)(ii)(I) 
of the Social Security Act (42 U.S.C. 1396r- 
8(c)(1)(C)(ii)(I)) is amended— 
(A) by striking ‘‘and’’ before ‘‘rebates’’; 
and 
(B) by inserting before the semicolon at 
the end the following: ‘‘, and rebates, discounts, 
and other price concessions to pharmaceutical 
benefit managers (PBMs)’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to calendar quarters 
beginning on or after January 1, 2008. 
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SEC. 813. ADJUSTMENT IN COMPUTATION OF MEDICAID 
FMAP TO DISREGARD AN EXTRAORDINARY 
EMPLOYER PENSION CONTRIBUTION. 
(a) IN GENERAL.—Only for purposes of computing 
the Federal medical assistance percentage under section 
1905(b) of the Social Security Act (42 U.S.C. 1396d(b)) 
for a State for a fiscal year (beginning with fiscal year 
2006), any significantly disproportionate employer pension 
contribution described in subsection (b) shall be dis-
regarded in computing the per capita income of such 
State, but shall not be disregarded in computing the per 
capita income for the continental United States (and Alas-
ka) and Hawaii. 
(b) SIGNIFICANTLY DISPROPORTIONATE EMPLOYER 
PENSION CONTRIBUTION.—For purposes of subsection 
(a), a significantly disproportionate employer pension con-
tribution described in this subsection with respect to a 
State for a fiscal year is an employer contribution towards 
pensions that is allocated to such State for a period if the 
aggregate amount so allocated exceeds 25 percent of the 
total increase in personal income in that State for the pe-
riod involved. 
SEC. 814. MORATORIUM ON CERTAIN PAYMENT RESTRIC-
TIONS. 
Notwithstanding any other provision of law, the Sec-
retary of Health and Human Services shall not, prior to 
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the date that is 1 year after the date of enactment of this 
Act, take any action (through promulgation of regulation, 
issuance of regulatory guidance, use of federal payment 
audit procedures, or other administrative action, policy, or 
practice, including a Medical Assistance Manual trans-
mittal or letter to State Medicaid directors) to restrict cov-
erage or payment under title XIX of the Social Security 
Act for rehabilitation services, or school-based administra-
tion, transportation, or medical services if such restric-
tions are more restrictive in any aspect than those applied 
to such coverage or payment as of July 1, 2007. 
SEC. 815. TENNESSEE DSH. 
The DSH allotments for Tennessee for each fiscal 
year beginning with fiscal year 2008 under subsection 
(f)(3) of section 1923 of the Social Security Act (42 
U.S.C. 13961396r–4) are deemed to be $30,000,000. The 
Secretary of Health and Human Services may impose a 
limitation on the total amount of payments made to hos-
pitals under the TennCare Section 1115 waiver only to 
the extent that such limitation is necessary to ensure that 
a hospital does not receive payment in excess of the 
amounts described in subsection (f) of such section or as 
necessary to ensure that the waiver remains budget neu-
tral. 
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408 
SEC. 816. CLARIFICATION TREATMENT OF REGIONAL MED-
ICAL CENTER. 
(a) IN GENERAL.—Nothing in section 1903(w) of the 
Social Security Act (42 U.S.C. 1396b(w)) shall be con-
strued by the Secretary of Health and Human Services 
as prohibiting a State’s use of funds as the non-Federal 
share of expenditures under title XIX of such Act where 
such funds are transferred from or certified by a publicly- 
owned regional medical center located in another State 
and described in subsection (b), so long as the Secretary 
determines that such use of funds is proper and in the 
interest of the program under title XIX. 
(b) CENTER DESCRIBED.—A center described in this 
subsection is a publicly-owned regional medical center 
that— 
(1) provides level 1 trauma and burn care serv-
ices; 
(2) provides level 3 neonatal care services; 
(3) is obligated to serve all patients, regardless 
of ability to pay; 
(4) is located within a Standard Metropolitan 
Statistical Area (SMSA) that includes at least 3 
States; 
(5) provides services as a tertiary care provider 
for patients residing within a 125-mile radius; and 
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(6) meets the criteria for a disproportionate 
share hospital under section 1923 of such Act (42 
U.S.C. 1396r–4) in at least one State other than the 
State in which the center is located. 
Subtitle C—Miscellaneous 
SEC. 821. DEMONSTRATION PROJECT FOR EMPLOYER BUY- 
IN. 
Title XXI of the Social Security Act, as amended by 
section 115(a)(1), is further amended by adding at the 
end the following new section: 
‘‘SEC. 2112. DEMONSTRATION PROJECT FOR EMPLOYER 
BUY-IN. 
‘‘(a) AUTHORITY.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a demonstration project under which up to 10 
States (each referred to in this section as a ‘partici-
pating State’) that meets the conditions of para-
graph (2) may provide, under its State child health 
plan (notwithstanding section 2102(b)(3)(C)) for a 
period of 5 years, for child health assistance in rela-
tion to family coverage described in subsection (d) 
for children who would be targeted low-income chil-
dren but for coverage as beneficiaries under a group 
health plan as the children of participants by virtue 
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of a qualifying employer’s contribution under sub-
section (b)(2). : 
‘‘(2) CONDITIONS.—The conditions described in 
this paragraph for a State are as follows: 
‘‘(A) NO WAITING LISTS.—The State does 
not impose any waiting list, enrollment cap, or 
similar limitation on enrollment of targeted low- 
income children under the State child health 
plan. 
‘‘(B) ELIGIBILITY
OF
ALL
CHILDREN 
UNDER 200 PERCENT OF POVERTY LINE.—The 
State is applying an income eligibility level 
under section 2110(b)(1)(B)(ii)(I) that is at 
least 200 percent of the poverty line. 
‘‘(3) QUALIFYING
EMPLOYER
DEFINED.—In 
this section, the term ‘qualifying employer’ means an 
employer that has a majority of its workforce com-
posed of full-time workers with family incomes rea-
sonably estimated by the employer (based on wage 
information available to the employer) at or below 
200 percent of the poverty line. In applying the pre-
vious sentence, two part-time workers shall be treat-
ed as a single full-time worker. 
‘‘(b) FUNDING.—A demonstration project under this 
section in a participating State shall be funded, with re-
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spect to assistance provided to children described in sub-
section (a)(1), consistent with the following: 
‘‘(1) LIMITED
FAMILY
CONTRIBUTION.—The 
family involved shall be responsible for providing 
payment towards the premium for such assistance of 
such amount as the State may specify, except that 
the limitations on cost-sharing (including premiums) 
under paragraphs (2) and (3) of section 2103(e) 
shall apply to all cost-sharing of such family under 
this section. 
‘‘(2) MINIMUM
EMPLOYER
CONTRIBUTION.— 
The qualifying employer involved shall be responsible 
for providing payment to the State child health plan 
in the State of at least 50 percent of the portion of 
the cost (as determined by the State) of the family 
coverage in which the employer is enrolling the fam-
ily that exceeds the amount of the family contribu-
tion under paragraph (1) applied towards such cov-
erage. 
‘‘(3) LIMITATION ON FEDERAL FINANCIAL PAR-
TICIPATION.—In no case shall the Federal financial 
participation under section 2105 with respect to a 
demonstration project under this section be made for 
any portion of the costs of family coverage described 
in subsection (d) (including the costs of administra-
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tion of such coverage) that are not attributable to 
children described in subsection (a)(1). 
‘‘(c) UNIFORM ELIGIBILITY RULES.—In providing 
assistance under a demonstration project under this sec-
tion— 
‘‘(1) a State shall establish uniform rules of eli-
gibility for families to participate; and 
‘‘(2) a State shall not permit a qualifying em-
ployer to select, within those families that meet such 
eligibility rules, which families may participate. 
‘‘(d) TERMS AND CONDITIONS.—The family coverage 
offered to families of qualifying employers under a dem-
onstration project under this section in a State shall be 
the same as the coverage and benefits provided under the 
State child health plan in the State for targeted low-in-
come children with the highest family income level per-
mitted.’’. 
SEC. 822. DIABETES GRANTS. 
Section 2104 of the Social Security Act (42 U.C.C 
1397dd), as amended by section 101, is further amend-
ed— 
(1) in subsection (a)(11), by inserting before 
the period at the end the following: ‘‘plus for fiscal 
year 2009 the total of the amount specified in sub-
section (j)’’; and 
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(2) by adding at the end the following new sub-
section: 
‘‘(j) FUNDING FOR DIABETES GRANTS.—From the 
amounts appropriated under subsection (a)(11), for fiscal 
year 2009 from the amounts— 
‘‘(1) $150,000,000 is hereby transferred and 
made available in such fiscal year for grants under 
section 330B of the Public Health Service Act; and 
‘‘(2) $150,000,000 is hereby transferred and 
made available in such fiscal year for grants under 
section 330C of such Act.’’. 
SEC. 823. TECHNICAL CORRECTION. 
(a) CORRECTION OF REFERENCE TO CHILDREN IN 
FOSTER CARE RECEIVING CHILD WELFARE SERVICES.— 
Section 1937(a)(2)(B)(viii) of the Social Security Act (42 
U.S.C. 1396u–7(a)(2)(B) is amended by striking ‘‘aid or 
assistance is made available under part B of title IV to 
children in foster care’’ and inserting ‘‘child welfare serv-
ices are made available under part B of title IV on the 
basis of being a child in foster care’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect as if included in the 
amendment made by section 6044(a) of the Deficit Reduc-
tion Act of 2005. 
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TITLE IX—MISCELLANEOUS 
SEC. 901. MEDICARE PAYMENT ADVISORY COMMISSION 
STATUS. 
Section 1805(a) of the Social Security Act (42 U.S.C. 
1395b–6(a)) is amended by inserting ‘‘as an agency of 
Congress’’ after ‘‘established’’. 
SEC. 902. REPEAL OF TRIGGER PROVISION. 
Subtitle A of title VIII of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Pub-
lic Law 108–173) is repealed and the provisions of law 
amended by such subtitle are restored as if such subtitle 
had never been enacted. 
SEC. 903. REPEAL OF COMPARATIVE COST ADJUSTMENT 
(CCA) PROGRAM. 
Section 1860C–1 of the Social Security Act (42 
U.S.C. 1395w–29), as added by section 241(a) of the 
Medicare Prescription Drug, Improvement, and Mod-
ernization Act of 2003 (Public Law 108–173), is repealed. 
SEC. 904. COMPARATIVE EFFECTIVENESS RESEARCH. 
(a) IN GENERAL.—Part A of title XVIII of the Social 
Security Act is amended by adding at the end the fol-
lowing new section: 
‘‘COMPARATIVE EFFECTIVENESS RESEARCH 
‘‘SEC. 1822. (a) CENTER FOR COMPARATIVE EFFEC-
TIVENESS RESEARCH ESTABLISHED.— 
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