I 
110TH CONGRESS 
1ST SESSION H. R. 3162 
To amend titles XVIII, XIX, and XXI of the Social Security Act to extend 
and improve the children’s health insurance program, to improve bene-
ficiary protections under the Medicare, Medicaid, and the CHIP program, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 24, 2007 
Mr. DINGELL (for himself, Mr. RANGEL, Mr. STARK, and Mr. PALLONE) in-
troduced the following bill; which was referred to the Committee on En-
ergy and Commerce, and in addition to the Committee on Ways and 
Means, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To amend titles XVIII, XIX, and XXI of the Social Security 
Act to extend and improve the children’s health insur-
ance program, to improve beneficiary protections under 
the Medicare, Medicaid, and the CHIP program, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Children’s Health and Medicare Protection Act of 2007’’. 
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(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—CHILDREN’S HEALTH INSURANCE PROGRAM 
Sec. 100. Purpose. 
Subtitle A—Funding 
Sec. 101. Establishment of new base CHIP allotments. 
Sec. 102. 2-year initial availability of CHIP allotments. 
Sec. 103. Redistribution of unused allotments to address State funding short-
falls. 
Sec. 104. Extension of option for qualifying States. 
Subtitle B—Improving Enrollment and Retention of Eligible Children 
Sec. 111. CHIP performance bonus payment to offset additional enrollment 
costs resulting from enrollment and retention efforts. 
Sec. 112. State option to rely on findings from an express lane agency to con-
duct simplified eligibility determinations. 
Sec. 113. Application of medicaid outreach procedures to all children and preg-
nant women. 
Sec. 114. Encouraging culturally appropriate enrollment and retention prac-
tices. 
Subtitle C—Coverage 
Sec. 121. Ensuring child-centered coverage. 
Sec. 122. Improving benchmark coverage options. 
Sec. 123. Premium grace period. 
Subtitle D—Populations 
Sec. 131. Optional coverage of older children under Medicaid and CHIP. 
Sec. 132. Optional coverage of legal immigrants under the Medicaid program 
and CHIP. 
Sec. 133. State option to expand or add coverage of certain pregnant women 
under CHIP. 
Sec. 134. Limitation on waiver authority to cover adults. 
Subtitle E—Access 
Sec. 141. Children’s Access, Payment, and Equality Commission. 
Sec. 142. Model of Interstate coordinated enrollment and coverage process. 
Sec. 143. Medicaid citizenship documentation requirements. 
Sec. 144. Access to dental care for children. 
Sec. 145. Prohibiting initiation of new health opportunity account demonstra-
tion programs. 
Subtitle F—Quality and Program Integrity 
Sec. 151. Pediatric health quality measurement program. 
Sec. 152. Application of certain managed care quality safeguards to CHIP. 
Sec. 153. Updated Federal evaluation of CHIP. 
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Sec. 154. Access to records for IG and GAO audits and evaluations. 
Sec. 155. References to title XXI. 
Sec. 156. Reliance on law; exception for State legislation. 
TITLE II—MEDICARE BENEFICIARY IMPROVEMENTS 
Subtitle A—Improvements in Benefits 
Sec. 201. Coverage and waiver of cost-sharing for preventive services. 
Sec. 202. Waiver of deductible for colorectal cancer screening tests regardless 
of coding, subsequent diagnosis, or ancillary tissue removal. 
Sec. 203. Parity for mental health coinsurance. 
Subtitle B—Improving, Clarifying, and Simplifying Financial Assistance for 
Low Income Medicare Beneficiaries 
Sec. 211. Improving assets tests for Medicare Savings Program and low-income 
subsidy program. 
Sec. 212. Making QI program permanent and expanding eligibility. 
Sec. 213. Eliminating barriers to enrollment. 
Sec. 214. Eliminating application of estate recovery. 
Sec. 215. Elimination of part D cost-sharing for certain non-institutionalized 
full-benefit dual eligible individuals. 
Sec. 216. Exemptions from income and resources for determination of eligibility 
for low-income subsidy. 
Sec. 217. Cost-sharing protections for low-income subsidy-eligible individuals. 
Sec. 218. Intelligent assignment in enrollment. 
Subtitle C—Part D Beneficiary Improvements 
Sec. 221. Including costs incurred by AIDS drug assistance programs and In-
dian Health Service in providing prescription drugs toward the 
annual out of pocket threshold under Part D. 
Sec. 222. Permitting mid-year changes in enrollment for formulary changes ad-
versely impact an enrollee. 
Sec. 223. Removal of exclusion of benzodiazepines from required coverage 
under the Medicare prescription drug program. 
Sec. 224. Permitting updating drug compendia under part D using part B up-
date process. 
Sec. 225. Codification of special protections for six protected drug classifica-
tions. 
Sec. 226. Elimination of Medicare part D late enrollment penalties paid by low- 
income subsidy-eligible individuals. 
Sec. 227. Special enrollment period for subsidy eligible individuals. 
Subtitle D—Reducing Health Disparities 
Sec. 231. Medicare data on race, ethnicity, and primary language. 
Sec. 232. Ensuring effective communication in Medicare. 
Sec. 233. Demonstration to promote access for Medicare beneficiaries with lim-
ited English proficiency by providing reimbursement for cul-
turally and linguistically appropriate services. 
Sec. 234. Demonstration to improve care to previously uninsured. 
Sec. 235. Office of the Inspector General report on compliance with and en-
forcement of national standards on culturally and linguistically 
appropriate services (CLAS) in medicare. 
Sec. 236. IOM report on impact of language access services. 
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Sec. 237. Definitions. 
TITLE III—PHYSICIANS’ SERVICE PAYMENT REFORM 
Sec. 301. Establishment of separate target growth rates for service categories. 
Sec. 302. Improving accuracy of relative values under the Medicare physician 
fee schedule. 
Sec. 303. Physician feedback mechanism on practice patterns. 
Sec. 304. Payments for efficient physicians. 
Sec. 305. Recommendations on refining the physician fee schedule. 
Sec. 306. Improved and expanded medical home demonstration project. 
Sec. 307. Repeal of Physician Assistance and Quality Initiative Fund. 
Sec. 308. Adjustment to Medicare payment localities. 
Sec. 309. Payment for imaging services. 
Sec. 310. Repeal of Physicians Advisory Council. 
TITLE IV—MEDICARE ADVANTAGE REFORMS 
Subtitle A—Payment Reform 
Sec. 401. Equalizing payments between Medicare Advantage plans and fee-for- 
service Medicare. 
Subtitle B—Beneficiary Protections 
Sec. 411. NAIC development of marketing, advertising, and related protections. 
Sec. 412. Limitation on out-of-pocket costs for individual health services. 
Sec. 413. MA plan enrollment modifications. 
Sec. 414. Information for beneficiaries on MA plan administrative costs. 
Subtitle C—Quality and Other Provisions 
Sec. 421. Requiring all MA plans to meet equal standards. 
Sec. 422. Development of new quality reporting measures on racial disparities. 
Sec. 423. Strengthening audit authority. 
Sec. 424. Improving risk adjustment for MA payments. 
Sec. 425. Eliminating special treatment of private fee-for-service plans. 
Sec. 426. Renaming of Medicare Advantage program. 
Subtitle D—Extension of Authorities 
Sec. 431. Extension and revision of authority for special needs plans (SNPs). 
Sec. 432. Extension and revision of authority for Medicare reasonable cost con-
tracts. 
TITLE V—PROVISIONS RELATING TO MEDICARE PART A 
Sec. 501. Inpatient hospital payment updates. 
Sec. 502. Payment for inpatient rehabilitation facility (IRF) services. 
Sec. 503. Long-term care hospitals. 
Sec. 504. Increasing the DSH adjustment cap. 
Sec. 505. PPS-exempt cancer hospitals. 
Sec. 506. Skilled nursing facility payment update. 
Sec. 507. Revocation of unique deeming authority of the Joint Commission for 
the Accreditation of Healthcare Organizations. 
TITLE VI—OTHER PROVISIONS RELATING TO MEDICARE PART B 
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Subtitle A—Payment and Coverage Improvements 
Sec. 601. Payment for therapy services. 
Sec. 602. Medicare separate definition of outpatient speech-language pathology 
services. 
Sec. 603. Increased reimbursement rate for certified nurse-midwives. 
Sec. 604. Adjustment in outpatient hospital fee schedule increase factor. 
Sec. 605. Exception to 60-day limit on Medicare substitute billing arrange-
ments in case of physicians ordered to active duty in the 
Armed Forces. 
Sec. 606. Excluding clinical social worker services from coverage under the 
medicare skilled nursing facility prospective payment system 
and consolidated payment. 
Sec. 607. Coverage of marriage and family therapist services and mental health 
counselor services. 
Sec. 608. Rental and purchase of power-driven wheelchairs. 
Sec. 609. Rental and purchase of oxygen equipment. 
Sec. 610. Adjustment for Medicare mental health services. 
Sec. 611. Extension of brachytherapy special rule. 
Sec. 612. Payment for part B drugs. 
Subtitle B—Extension of Medicare Rural Access Protections 
Sec. 621. 2-year extension of floor on medicare work geographic adjustment. 
Sec. 622. 2-year extension of special treatment of certain physician pathology 
services under Medicare. 
Sec. 623. 2-year extension of medicare reasonable costs payments for certain 
clinical diagnostic laboratory tests furnished to hospital pa-
tients in certain rural areas. 
Sec. 624. 2-year extension of Medicare incentive payment program for physi-
cian scarcity areas . 
Sec. 625. 2-year extension of medicare increase payments for ground ambu-
lance services in rural areas. 
Sec. 626. Extending hold harmless for small rural hospitals under the HOPD 
prospective payment system. 
Subtitle C—End Stage Renal Disease Program 
Sec. 631. Chronic kidney disease demonstration projects. 
Sec. 632. Medicare coverage of kidney disease patient education services. 
Sec. 633. Required training for patient care dialysis technicians. 
Sec. 634. MedPAC report on treatment modalities for patients with kidney fail-
ure. 
Sec. 635. Adjustment for erythropoietin stimulating agents (ESAs). 
Sec. 636. Site neutral composite rate. 
Sec. 637. Development of ESRD bundling system and quality incentive pay-
ments. 
Sec. 638. MedPAC report on ESRD bundling system. 
Sec. 639. OIG study and report on erythropoietin. 
Subtitle D—Miscellaneous 
Sec. 651. Limitation on exception to the prohibition on certain physician refer-
rals for hospitals. 
TITLE VII—PROVISIONS RELATING TO MEDICARE PARTS A AND 
B 
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Sec. 701. Home health payment update for 2008. 
Sec. 702. 2-year extension of temporary Medicare payment increase for home 
health services furnished in a rural area. 
Sec. 703. Extension of Medicare secondary payer for beneficiaries with end 
stage renal disease for large group plans. 
Sec. 704. Plan for Medicare payment adjustments for never events. 
Sec. 705. Treatment of Medicare hospital reclassifications. 
TITLE VIII—MEDICAID 
Subtitle A—Protecting Existing Coverage 
Sec. 801. Modernizing transitional Medicaid. 
Sec. 802. Family planning services. 
Sec. 803. Authority to continue providing adult day health services approved 
under a State Medicaid plan. 
Sec. 804. State option to protect community spouses of individuals with disabil-
ities. 
Sec. 805. County medicaid health insuring organizations . 
Subtitle B—Payments 
Sec. 811. Payments for Puerto Rico and territories. 
Sec. 812. Medicaid drug rebate. 
Sec. 813. Adjustment in computation of Medicaid FMAP to disregard an ex-
traordinary employer pension contribution. 
Sec. 814. Moratorium on certain payment restrictions. 
Sec. 815. Tennessee DSH. 
Sec. 816. Clarification treatment of regional medical center. 
Subtitle C—Miscellaneous 
Sec. 821. Demonstration project for employer buy-in. 
Sec. 822. Diabetes grants. 
Sec. 823. Technical correction. 
TITLE IX—MISCELLANEOUS 
Sec. 901. Medicare Payment Advisory Commission status. 
Sec. 902. Repeal of trigger provision. 
Sec. 903. Repeal of comparative cost adjustment (CCA) program. 
Sec. 904. Comparative effectiveness research. 
Sec. 905. Implementation of Health information technology (IT) under Medi-
care. 
Sec. 906. Development, reporting, and use of health care measures. 
Sec. 907. Improvements to the Medigap program. 
TITLE X—REVENUES 
Sec. 1001. Increase in rate of excise taxes on tobacco products and cigarette 
papers and tubes. 
Sec. 1002. Exemption for emergency medical services transportation. 
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TITLE I—CHILDREN’S HEALTH 
INSURANCE PROGRAM 
SEC. 100. PURPOSE. 
It is the purpose of this title to provide dependable 
and stable funding for children’s health insurance under 
titles XXI and XIX of the Social Security Act in order 
to enroll all six million uninsured children who are eligible, 
but not enrolled, for coverage today through such titles. 
Subtitle A—Funding 
SEC. 101. ESTABLISHMENT OF NEW BASE CHIP ALLOT-
MENTS. 
Section 2104 of the Social Security Act (42 U.S.C. 
1397dd) is amended— 
(1) in subsection (a)— 
(A) in paragraph (9), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (10), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(11) for fiscal year 2008 and each succeeding 
fiscal year, the sum of the State allotments provided 
under subsection (i) for such fiscal year.’’; and 
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(2) in subsections (b)(1) and (c)(1), by striking 
‘‘subsection (d)’’ and inserting ‘‘subsections (d) and 
(i)’’; and 
(3) by adding at the end the following new sub-
section: 
‘‘(i) ALLOTMENTS FOR STATES AND TERRITORIES 
BEGINNING WITH FISCAL YEAR 2008.— 
‘‘(1) GENERAL
ALLOTMENT
COMPUTATION.— 
Subject to the succeeding provisions of this sub-
section, the Secretary shall compute a State allot-
ment for each State for each fiscal year as follows: 
‘‘(A) FOR FISCAL YEAR 2008.—For fiscal 
year 2008, the allotment of a State is equal to 
the greater of— 
‘‘(i) the State projection (in its sub-
mission on forms CMS–21B and CMS–37 
for May 2007) of Federal payments to the 
State under this title for such fiscal year, 
except that, in the case of a State that has 
enacted legislation to modify its State child 
health plan during 2007, the State may 
substitute its projection in its submission 
on forms CMS–21B and CMS–37 for Au-
gust 2007, instead of such forms for May 
2007; or 
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‘‘(ii) the allotment of the State under 
this section for fiscal year 2007 multiplied 
by the allotment increase factor under 
paragraph (2) for fiscal year 2008. 
‘‘(B) INFLATION
UPDATE
FOR
FISCAL 
YEAR 2009 AND EACH SECOND SUCCEEDING FIS-
CAL YEAR.—For fiscal year 2009 and each sec-
ond succeeding fiscal year, the allotment of a 
State is equal to the amount of the State allot-
ment under this paragraph for the previous fis-
cal year multiplied by the allotment increase 
factor under paragraph (2) for the fiscal year 
involved. 
‘‘(C) REBASING IN FISCAL YEAR 2010 AND 
EACH SECOND SUCCEEDING FISCAL YEAR.—For 
fiscal year 2010 and each second succeeding fis-
cal year, the allotment of a State is equal to the 
Federal payments to the State that are attrib-
utable to (and countable towards) the total 
amount of allotments available under this sec-
tion to the State (including allotments made 
available under paragraph (3) as well as 
amounts redistributed to the State) in the pre-
vious fiscal year multiplied by the allotment in-
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crease factor under paragraph (2) for the fiscal 
year involved. 
‘‘(D) SPECIAL RULES FOR TERRITORIES.— 
Notwithstanding the previous subparagraphs, 
the allotment for a State that is not one of the 
50 States or the District of Columbia for fiscal 
year 2008 and for a succeeding fiscal year is 
equal to the Federal payments provided to the 
State under this title for the previous fiscal 
year multiplied by the allotment increase factor 
under paragraph (2) for the fiscal year involved 
(but determined by applying under paragraph 
(2)(B) as if the reference to ‘in the State’ were 
a reference to ‘in the United States’). 
‘‘(2) ALLOTMENT INCREASE FACTOR.—The al-
lotment increase factor under this paragraph for a 
fiscal year is equal to the product of the following: 
‘‘(A) PER CAPITA HEALTH CARE GROWTH 
FACTOR.—1 plus the percentage increase in the 
projected per capita amount of National Health 
Expenditures from the calendar year in which 
the previous fiscal year ends to the calendar 
year in which the fiscal year involved ends, as 
most recently published by the Secretary before 
the beginning of the fiscal year. 
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‘‘(B) CHILD
POPULATION
GROWTH
FAC-
TOR.—1 plus the percentage increase (if any) in 
the population of children under 19 years of 
age in the State from July 1 in the previous fis-
cal year to July 1 in the fiscal year involved, as 
determined by the Secretary based on the most 
recent published estimates of the Bureau of the 
Census before the beginning of the fiscal year 
involved, plus 1 percentage point 
‘‘(3) PERFORMANCE-BASED
SHORTFALL
AD-
JUSTMENT.— 
‘‘(A) IN GENERAL.—If a State’s expendi-
tures under this title in a fiscal year (beginning 
with fiscal year 2008) exceed the total amount 
of allotments available under this section to the 
State in the fiscal year (determined without re-
gard to any redistribution it receives under sub-
section (f) that is available for expenditure dur-
ing such fiscal year, but including any carryover 
from a previous fiscal year) and if the average 
monthly unduplicated number of children en-
rolled under the State plan under this title (in-
cluding children receiving health care coverage 
through funds under this title pursuant to a 
waiver under section 1115) during such fiscal 
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year exceeds its target average number of such 
enrollees (as determined under subparagraph 
(B)) for that fiscal year, the allotment under 
this section for the State for the subsequent fis-
cal year (or, pursuant to subparagraph (F), for 
the fiscal year involved) shall be increased by 
the product of— 
‘‘(i) the amount by which such aver-
age monthly caseload exceeds such target 
number of enrollees; and 
‘‘(ii) the projected per capita expendi-
tures under the State child health plan (as 
determined under subparagraph (C) for 
the original fiscal year involved), multiplied 
by the enhanced FMAP (as defined in sec-
tion 2105(b)) for the State and fiscal year 
involved 
‘‘(B) TARGET AVERAGE NUMBER OF CHILD 
ENROLLEES.—In this subsection, the target av-
erage number of child enrollees for a State— 
‘‘(i) for fiscal year 2008 is equal to 
the monthly average unduplicated number 
of children enrolled in the State child 
health plan under this title (including such 
children receiving health care coverage 
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through funds under this title pursuant to 
a waiver under section 1115) during fiscal 
year 2007 increased by the population 
growth for children in that State for the 
year ending on June 30, 2006 (as esti-
mated by the Bureau of the Census) plus 
1 percentage point; or 
‘‘(ii) for a subsequent fiscal year is 
equal to the target average number of child 
enrollees for the State for the previous fis-
cal year increased by the population 
growth for children in that State for the 
year ending on June 30 before the begin-
ning of the fiscal year (as estimated by the 
Bureau of the Census) plus 1 percentage 
point. 
‘‘(C) PROJECTED
PER
CAPITA
EXPENDI-
TURES.—For purposes of subparagraph (A)(ii), 
the projected per capita expenditures under a 
State child health plan— 
‘‘(i) for fiscal year 2008 is equal to 
the average per capita expenditures (in-
cluding both State and Federal financial 
participation) under such plan for the tar-
geted low-income children counted in the 
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average monthly caseload for purposes of 
this paragraph during fiscal year 2007, in-
creased by the annual percentage increase 
in the per capita amount of National 
Health Expenditures (as estimated by the 
Secretary) for 2008; or 
‘‘(ii) for a subsequent fiscal year is 
equal to the projected per capita expendi-
tures under such plan for the previous fis-
cal year (as determined under clause (i) or 
this clause) increased by the annual per-
centage increase in the per capita amount 
of National Health Expenditures (as esti-
mated by the Secretary) for the year in 
which such subsequent fiscal year ends. 
‘‘(D) 
AVAILABILITY.—Notwithstanding 
subsection (e), an increase in allotment under 
this paragraph shall only be available for ex-
penditure during the fiscal year in which it is 
provided. 
‘‘(E) NO REDISTRIBUTION OF PERFORM-
ANCE-BASED SHORTFALL ADJUSTMENT.—In no 
case shall any increase in allotment under this 
paragraph for a State be subject to redistribu-
tion to other States. 
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‘‘(F) 
INTERIM
ALLOTMENT
ADJUST-
MENT.—The Secretary shall develop a process 
to administer the performance-based shortfall 
adjustment in a manner so it is applied to (and 
before the end of) the fiscal year (rather than 
the subsequent fiscal year) involved for a State 
that the Secretary estimates will be in shortfall 
and will exceed its enrollment target for that 
fiscal year. 
‘‘(G) PERIODIC
AUDITING.—The Comp-
troller General of the United States shall peri-
odically audit the accuracy of data used in the 
computation of allotment adjustments under 
this paragraph. Based on such audits, the 
Comptroller General shall make such rec-
ommendations to the Congress and the Sec-
retary as the Comptroller General deems appro-
priate. 
‘‘(4) CONTINUED REPORTING.—For purposes of 
paragraph (3) and subsection (f), the State shall 
submit to the Secretary the State’s projected Fed-
eral expenditures, even if the amount of such ex-
penditures exceeds the total amount of allotments 
available to the State in such fiscal year.’’. 
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SEC. 102. 2-YEAR INITIAL AVAILABILITY OF CHIP ALLOT-
MENTS. 
Section 2104(e) of the Social Security Act (42 U.S.C. 
1397dd(e)) is amended to read as follows: 
‘‘(e) AVAILABILITY OF AMOUNTS ALLOTTED.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2) and subsection (i)(3)(D), amounts allotted 
to a State pursuant to this section— 
‘‘(A) for each of fiscal years 1998 through 
2007, shall remain available for expenditure by 
the State through the end of the second suc-
ceeding fiscal year; and 
‘‘(B) for fiscal year 2008 and each fiscal 
year thereafter, shall remain available for ex-
penditure by the State through the end of the 
succeeding fiscal year. 
‘‘(2) AVAILABILITY
OF
AMOUNTS
REDISTRIB-
UTED.—Amounts redistributed to a State under sub-
section (f) shall be available for expenditure by the 
State through the end of the fiscal year in which 
they are redistributed, except that funds so redis-
tributed to a State that are not expended by the end 
of such fiscal year shall remain available after the 
end of such fiscal year and shall be available in the 
following fiscal year for subsequent redistribution 
under such subsection.’’. 
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SEC. 103. REDISTRIBUTION OF UNUSED ALLOTMENTS TO 
ADDRESS STATE FUNDING SHORTFALLS. 
Section 2104(f) of the Social Security Act (42 U.S.C. 
1397dd(f)) is amended— 
(1) by striking ‘‘The Secretary’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—The Secretary’’; 
(2) by striking ‘‘States that have fully expended 
the amount of their allotments under this section.’’ 
and inserting ‘‘States that the Secretary determines 
with respect to the fiscal year for which unused al-
lotments are available for redistribution under this 
subsection, are shortfall States described in para-
graph (2) for such fiscal year, but not to exceed the 
amount of the shortfall described in paragraph 
(2)(A) for each such State (as may be adjusted 
under paragraph (2)(C)). The amount of allotments 
not expended or redistributed under the previous 
sentence shall remain available for redistribution in 
the succeeding fiscal year.’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) SHORTFALL STATES DESCRIBED.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), with respect to a fiscal year, a short-
fall State described in this subparagraph is a 
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State with a State child health plan approved 
under this title for which the Secretary esti-
mates on the basis of the most recent data 
available to the Secretary, that the projected ex-
penditures under such plan for the State for the 
fiscal year will exceed the sum of— 
‘‘(i) the amount of the State’s allot-
ments for any preceding fiscal years that 
remains available for expenditure and that 
will not be expended by the end of the im-
mediately preceding fiscal year; 
‘‘(ii) the amount (if any) of the per-
formance based adjustment under sub-
section (i)(3)(A); and 
‘‘(iii) the amount of the State’s allot-
ment for the fiscal year. 
‘‘(B) PRORATION RULE.—If the amounts 
available for redistribution under paragraph (1) 
for a fiscal year are less than the total amounts 
of the estimated shortfalls determined for the 
year under subparagraph (A), the amount to be 
redistributed under such paragraph for each 
shortfall State shall be reduced proportionally. 
‘‘(C) RETROSPECTIVE ADJUSTMENT.—The 
Secretary may adjust the estimates and deter-
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minations made under paragraph (1) and this 
paragraph with respect to a fiscal year as nec-
essary on the basis of the amounts reported by 
States not later than November 30 of the suc-
ceeding fiscal year, as approved by the Sec-
retary.’’. 
SEC. 104. EXTENSION OF OPTION FOR QUALIFYING STATES. 
Section 2105(g)(1)(A) of the Social Security Act (42 
U.S.C. 1397ee(g)(1)(A)) is amended by inserting after ‘‘or 
2007’’ the following: ‘‘or 30 percent of any allotment 
under section 2104 for any subsequent fiscal year’’. 
Subtitle B—Improving Enrollment 
and Retention of Eligible Children 
SEC. 111. CHIP PERFORMANCE BONUS PAYMENT TO OFF-
SET ADDITIONAL ENROLLMENT COSTS RE-
SULTING FROM ENROLLMENT AND RETEN-
TION EFFORTS. 
Section 2105(a) of the Social Security Act (42 U.S.C. 
1397ee(a)) is amended by adding at the end the following 
new paragraphs: 
‘‘(3) PERFORMANCE BONUS PAYMENT TO OFF-
SET ADDITIONAL MEDICAID AND CHIP CHILD EN-
ROLLMENT COSTS RESULTING FROM ENROLLMENT 
AND RETENTION EFFORTS.— 
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‘‘(A) IN
GENERAL.—In addition to the 
payments made under paragraph (1), for each 
fiscal year (beginning with fiscal year 2008) the 
Secretary shall pay to each State that meets the 
condition under paragraph (4) for the fiscal 
year, an amount equal to the amount described 
in subparagraph (B) for the State and fiscal 
year. The payment under this paragraph shall 
be made, to a State for a fiscal year, as a single 
payment not later than the last day of the first 
calendar quarter of the following fiscal year. 
‘‘(B) AMOUNT.—The amount described in 
this subparagraph for a State for a fiscal year 
is equal to the sum of the following amounts: 
‘‘(i) FOR ABOVE BASELINE MEDICAID 
CHILD ENROLLMENT COSTS.— 
‘‘(I) FIRST
TIER
ABOVE
BASE-
LINE
MEDICAID
ENROLLEES.—An 
amount equal to the number of first 
tier above baseline child enrollees (as 
determined 
under 
subparagraph 
(C)(i)) under title XIX for the State 
and fiscal year multiplied by 35 per-
cent of the projected per capita State 
Medicaid expenditures (as determined 
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under subparagraph (D)(i)) for the 
State and fiscal year under title XIX. 
‘‘(II) SECOND TIER ABOVE BASE-
LINE
MEDICAID
ENROLLEES.—An 
amount equal to the number of second 
tier above baseline child enrollees (as 
determined 
under 
subparagraph 
(C)(ii)) under title XIX for the State 
and fiscal year multiplied by 90 per-
cent of the projected per capita State 
Medicaid expenditures (as determined 
under subparagraph (D)(i)) for the 
State and fiscal year under title XIX. 
‘‘(ii) FOR ABOVE BASELINE CHIP EN-
ROLLMENT COSTS.— 
‘‘(I) FIRST
TIER
ABOVE
BASE-
LINE CHIP ENROLLEES.—An amount 
equal to the number of first tier above 
baseline child enrollees under this title 
(as determined under subparagraph 
(C)(i)) for the State and fiscal year 
multiplied by 5 percent of the pro-
jected per capita State CHIP expendi-
tures (as determined under subpara-
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graph (D)(ii)) for the State and fiscal 
year under this title. 
‘‘(II) SECOND TIER ABOVE BASE-
LINE CHIP ENROLLEES.—An amount 
equal to the number of second tier 
above baseline child enrollees under 
this title (as determined under sub-
paragraph (C)(ii)) for the State and 
fiscal year multiplied by 75 percent of 
the projected per capita State CHIP 
expenditures (as determined under 
subparagraph (D)(ii)) for the State 
and fiscal year under this title. 
‘‘(C) NUMBER OF FIRST AND SECOND TIER 
ABOVE BASELINE CHILD ENROLLEES; BASELINE 
NUMBER OF CHILD ENROLLEES.—For purposes 
of this paragraph: 
‘‘(i) FIRST
TIER
ABOVE
BASELINE 
CHILD ENROLLEES.—The number of first 
tier above baseline child enrollees for a 
State for a fiscal year under this title or 
title XIX is equal to the number (if any, 
as determined by the Secretary) by 
which— 
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‘‘(I) 
the 
monthly 
average 
unduplicated number of qualifying 
children (as defined in subparagraph 
(E)) enrolled during the fiscal year 
under the State child health plan 
under this title or under the State 
plan under title XIX, respectively; ex-
ceeds 
‘‘(II) the baseline number of en-
rollees described in clause (iii) for the 
State and fiscal year under this title 
or title XIX, respectively; 
but not to exceed 3 percent (in the case of 
title XIX) or 7.5 percent (in the case of 
this title) of the baseline number of enroll-
ees described in subclause (II). 
‘‘(ii) SECOND TIER ABOVE BASELINE 
CHILD ENROLLEES.—The number of sec-
ond tier above baseline child enrollees for 
a State for a fiscal year under this title or 
title XIX is equal to the number (if any, 
as determined by the Secretary) by 
which— 
‘‘(I) 
the 
monthly 
average 
unduplicated number of qualifying 
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children (as defined in subparagraph 
(E)) enrolled during the fiscal year 
under this title or under title XIX, re-
spectively, as described in clause 
(i)(I); exceeds 
‘‘(II) the sum of the baseline 
number of child enrollees described in 
clause (iii) for the State and fiscal 
year under this title or title XIX, re-
spectively, as described in clause 
(i)(II), and the maximum number of 
first tier above baseline child enrollees 
for the State and fiscal year under 
this title or title XIX, respectively, as 
determined under clause (i). 
‘‘(iii) BASELINE
NUMBER
OF
CHILD 
ENROLLEES.—The baseline number of 
child enrollees for a State under this title 
or title XIX— 
‘‘(I) for fiscal year 2008 is equal 
to the monthly average unduplicated 
number of qualifying children enrolled 
in the State child health plan under 
this title or in the State plan under 
title XIX, respectively, during fiscal 
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year 2007 increased by the population 
growth for children in that State for 
the year ending on June 30, 2006 (as 
estimated by the Bureau of the Cen-
sus) plus 1 percentage point; or 
‘‘(II) for a subsequent fiscal year 
is equal to the baseline number of 
child enrollees for the State for the 
previous fiscal year under this title or 
title XIX, respectively, increased by 
the population growth for children in 
that State for the year ending on 
June 30 before the beginning of the 
fiscal year (as estimated by the Bu-
reau of the Census) plus 1 percentage 
point. 
‘‘(D) PROJECTED PER CAPITA STATE EX-
PENDITURES.—For purposes of subparagraph 
(B)— 
‘‘(i) PROJECTED PER CAPITA STATE 
MEDICAID EXPENDITURES.—The projected 
per capita State Medicaid expenditures for 
a State and fiscal year under title XIX is 
equal to the average per capita expendi-
tures (including both State and Federal fi-
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nancial participation) for children under 
the State plan under such title, including 
under waivers but not including such chil-
dren eligible for assistance by virtue of the 
receipt of benefits under title XVI, for the 
most recent fiscal year for which actual 
data are available (as determined by the 
Secretary), increased (for each subsequent 
fiscal year up to and including the fiscal 
year involved) by the annual percentage in-
crease in per capita amount of National 
Health Expenditures (as estimated by the 
Secretary) for the calendar year in which 
the respective subsequent fiscal year ends 
and multiplied by a State matching per-
centage equal to 100 percent minus the 
Federal medical assistance percentage (as 
defined in section 1905(b)) for the fiscal 
year involved. 
‘‘(ii) PROJECTED PER CAPITA STATE 
CHIP EXPENDITURES.—The projected per 
capita State CHIP expenditures for a 
State and fiscal year under this title is 
equal to the average per capita expendi-
tures (including both State and Federal fi-
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nancial participation) for children under 
the State child health plan under this title, 
including under waivers, for the most re-
cent fiscal year for which actual data are 
available (as determined by the Secretary), 
increased (for each subsequent fiscal year 
up to and including the fiscal year in-
volved) by the annual percentage increase 
in per capita amount of National Health 
Expenditures (as estimated by the Sec-
retary) for the calendar year in which the 
respective subsequent fiscal year ends and 
multiplied by a State matching percentage 
equal to 100 percent minus the enhanced 
FMAP (as defined in section 2105(b)) for 
the fiscal year involved. 
‘‘(E) QUALIFYING CHILDREN DEFINED.— 
For purposes of this subsection, the term 
‘qualifying children’ means, with respect to this 
title or title XIX, children who meet the eligi-
bility criteria (including income, categorical eli-
gibility, age, and immigration status criteria) in 
effect as of July 1, 2007, for enrollment under 
this title or title XIX, respectively, taking into 
account crtieria applied as of such date under 
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this title or title XIX, respectively, pursuant to 
a waiver under section 1115. 
‘‘(4) ENROLLMENT
AND
RETENTION
PROVI-
SIONS FOR CHILDREN.— For purposes of paragraph 
(3)(A), a State meets the condition of this para-
graph for a fiscal year if it is implementing at least 
4 of the following enrollment and retention provi-
sions (treating each subparagraph as a separate en-
rollment and retention provision) throughout the en-
tire fiscal year: 
‘‘(A) 
CONTINUOUS
ELIGIBILITY.—The 
State has elected the option of continuous eligi-
bility for a full 12 months for all children de-
scribed in section 1902(e)(12) under title XIX 
under 19 years of age, as well as applying such 
policy under its State child health plan under 
this title. 
‘‘(B) LIBERALIZATION OF ASSET REQUIRE-
MENTS.—The State meets the requirement 
specified in either of the following clauses: 
‘‘(i) ELIMINATION OF ASSET TEST.— 
The State does not apply any asset or re-
source test for eligibility for children under 
title XIX or this title. 
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