ferent weights to those cases based on 
their needs. 
‘‘(v) REQUIREMENTS
FOR
SECRE-
TARIAL
NOTIFICATION.—When the Sec-
retary notifies the appropriate committees 
of Congress that the Secretary has devel-
oped a severity of need index, the Sec-
retary shall provide the following: 
‘‘(I) Methodology for and ration-
ale behind developing the severity of 
need index, including information re-
lated to the field testing of the sever-
ity of need index. 
‘‘(II) An independent contractor 
analysis of activities carried out under 
subclause (I). 
‘‘(III) Expected changes in fund-
ing allocations, given the application 
of the severity of need index and the 
elimination of the provisions of sub-
paragraphs (A) through (D). 
‘‘(IV) Information regarding the 
process by which the Secretary re-
ceived community input regarding the 
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application and development of the se-
verity of need index. 
‘‘(V) Timeline and process for 
the implementation of the severity of 
need index to ensure that it is applied 
in the following fiscal year. 
‘‘(vi) ANNUAL
REPORTS.—Not later 
than 1 year after the date of enactment of 
the Ryan White HIV/AIDS Treatment 
Modernization Act of 2006, and annually 
thereafter until the Secretary notifies Con-
gress that the Secretary has developed a 
severity of need index in accordance with 
this subparagraph, the Secretary shall pre-
pare and submit to the appropriate com-
mittees of Congress a report— 
‘‘(I) that updates progress to-
ward having client level data; 
‘‘(II) that updates the progress 
toward having a severity of need 
index, including information related to 
the methodology and process for ob-
taining community input; and 
‘‘(III) that, as applicable, states 
whether the Secretary could develop a 
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severity of need index before fiscal 
year 2010.’’; and 
(4) by redesignating subparagraph (I) as sub-
paragraph (G). 
(c) 
SEPARATE
ADAP 
GRANTS.—Section 
2618(a)(2)(G) of the Public Health Service Act (42 
U.S.C. 300ff–28(a)(2)(G)), as redesignated by subsection 
(b)(4) of this section, is amended— 
(1) in clause (i)— 
(A) in the matter preceding subclause (I), 
by striking ‘‘section 2677’’ and inserting ‘‘sec-
tion 2623’’; 
(B) in subclause (II), by striking the pe-
riod at the end and inserting a semicolon; and 
(C) by adding after and below subclause 
(II) the following: 
‘‘which product shall then, as applicable, 
be increased under subparagraph (H).’’; 
(2) in clause (ii)— 
(A) by striking subclauses (I) through (III) 
and inserting the following: 
‘‘(I) 
IN
GENERAL.—From 
amounts made available under sub-
clause (V), the Secretary shall award 
supplemental grants to States de-
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scribed in subclause (II) to enable 
such States to purchase and distribute 
to eligible individuals under section 
2616(b) pharmaceutical therapeutics 
described under subsections (c)(2) and 
(e) of such section. 
‘‘(II) ELIGIBLE
STATES.—For 
purposes of subclause (I), a State 
shall be an eligible State if the State 
did not have unobligated funds sub-
ject to reallocation under section 
2618(d) in the previous fiscal year 
and, in accordance with criteria estab-
lished by the Secretary, demonstrates 
a severe need for a grant under this 
clause. For purposes of determining 
severe need, the Secretary shall con-
sider eligibility standards, formulary 
composition, the number of eligible in-
dividuals to whom a State is unable to 
provide therapeutics described in sec-
tion 2616(a), and an unanticipated in-
crease of eligible individuals with 
HIV/AIDS. 
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‘‘(III) STATE REQUIREMENTS.— 
The Secretary may not make a grant 
to a State under this clause unless the 
State agrees that the State will make 
available (directly or through dona-
tions of public or private entities) 
non-Federal contributions toward the 
activities to be carried out under the 
grant in an amount equal to $1 for 
each $4 of Federal funds provided in 
the grant, except that the Secretary 
may waive this subclause if the State 
has otherwise fully complied with sec-
tion 2617(d) with respect to the grant 
year involved. The provisions of this 
subclause shall apply to States that 
are not required to comply with such 
section 2617(d).’’. 
(B) in subclause (IV), by moving the sub-
clause two ems to the left; 
(C) in subclause (V), by striking ‘‘3 per-
cent’’ and inserting ‘‘5 percent’’; and 
(D) by striking subclause (VI); and 
(3) by adding at the end the following clause: 
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‘‘(iii) CODE-BASED
STATES; LIMITA-
TION ON INCREASE IN FORMULA GRANT.— 
The limitation under subparagraph (E)(i) 
applies to grants pursuant to clause (i) of 
this subparagraph to the same extent and 
in the same manner as such limitation ap-
plies to grants pursuant to paragraph (1), 
except that the reference to minimum 
grants does not apply for purposes of this 
clause. Amounts available as a result of 
the limitation under the preceding sentence 
shall be made available by the Secretary as 
additional amounts for grants under clause 
(ii) of this subparagraph.’’. 
(d) HOLD HARMLESS.—Section 2618(a)(2) of the 
Public Health Service Act (42 U.S.C. 300ff–28(a)(2)), as 
amended by subsection (b)(4) of this section, is amended 
by adding at the end the following subparagraph: 
‘‘(H) INCREASE IN FORMULA GRANTS.— 
‘‘(i) IN GENERAL.—For each of the 
fiscal years 2007 through 2009, the Sec-
retary shall ensure, subject to clauses (ii) 
through (iv), that the total for a State of 
the grant pursuant to paragraph (1) and 
the grant pursuant to subparagraph (G) is 
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not less than 95 percent of such total for 
the State for the preceding fiscal year, ex-
cept that any increase under this clause— 
‘‘(I) may not result in a grant 
pursuant to paragraph (1) that is 
more than 95 percent of the amount 
of such grant for the preceding fiscal 
year; and 
‘‘(II) may not result in a grant 
pursuant to subparagraph (G) that is 
more than 95 percent of the amount 
of such grant for such preceding fiscal 
year. 
‘‘(ii) FISCAL
YEAR
2007.—For pur-
poses of clause (i) as applied for fiscal year 
2007, the references in such clause to sub-
paragraph (G) are deemed to be references 
to subparagraph (I) as such subparagraph 
was in effect for fiscal year 2006. 
‘‘(iii) SOURCE
OF
FUNDS
FOR
IN-
CREASE.— 
‘‘(I) IN
GENERAL.—From the 
amount 
reserved 
under 
section 
2623(b)(2) for a fiscal year, and from 
amounts available for such section 
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pursuant to subsection (d) of this sec-
tion, the Secretary shall make avail-
able such amounts as may be nec-
essary to comply with clause (i). 
‘‘(II) PRO RATA REDUCTION.—If 
the amounts referred to in subclause 
(I) for a fiscal year are insufficient to 
fully comply with clause (i) for the 
year, the Secretary, in order to pro-
vide the additional funds necessary for 
such compliance, shall reduce on a pro 
rata basis the amount of each grant 
pursuant to paragraph (1) for the fis-
cal year, other than grants for States 
for which increases under clause (i) 
apply and other than States described 
in paragraph (1)(A)(i)(I). A reduction 
under the preceding sentence may not 
be made in an amount that would re-
sult in the State involved becoming el-
igible for such an increase. 
‘‘(iv) 
APPLICABILITY.—This 
para-
graph may not be construed as having any 
applicability after fiscal year 2009.’’. 
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(e) ADMINISTRATIVE EXPENSES; CLINICAL QUALITY 
MANAGEMENT.—Section 2618(b) of the Public Health 
Service Act (42 U.S.C. 300ff–28(b)) is amended— 
(1) by redesignating paragraphs (2) through 
(7) as paragraphs (1) through (6); 
(2) in paragraph (2) (as so redesignated)— 
(A) by striking ‘‘paragraph (5)’’ and in-
serting ‘‘paragraph (4)’’; and 
(B) by striking ‘‘paragraph (6)’’ and in-
serting ‘‘paragraph (5)’’; 
(3) in paragraph (3) (as so redesignated)— 
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) IN GENERAL.—Subject to paragraph 
(4,) and except as provided in paragraph (5), a 
State may not use more than 10 percent of 
amounts received under a grant awarded under 
section 2611 for administration.’’; 
(B) by redesignating subparagraphs (B) 
and (C) as subparagraphs (C) and (D), respec-
tively; 
(C) by inserting after subparagraph (A) 
the following: 
‘‘(B) ALLOCATIONS.—In the case of enti-
ties and subcontractors to which a State allo-
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cates amounts received by the State under a 
grant under section 2611, the State shall en-
sure that, of the aggregate amount so allocated, 
the total of the expenditures by such entities for 
administrative expenses does not exceed 10 per-
cent (without regard to whether particular enti-
ties expend more than 10 percent for such ex-
penses).’’; 
(D) in subparagraph (C) (as so redesig-
nated), by inserting before the period the fol-
lowing: ‘‘, including a clinical quality manage-
ment program under subparagraph (E)’’; and 
(E) by adding at the end the following: 
‘‘(E) CLINICAL QUALITY MANAGEMENT.— 
‘‘(i) REQUIREMENT.—Each State that 
receives a grant under section 2611 shall 
provide for the establishment of a clinical 
quality management program to assess the 
extent to which HIV health services pro-
vided to patients under the grant are con-
sistent with the most recent Public Health 
Service guidelines for the treatment of 
HIV/AIDS and related opportunistic infec-
tion, and as applicable, to develop strate-
gies for ensuring that such services are 
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consistent with the guidelines for improve-
ment in the access to and quality of HIV 
health services. 
‘‘(ii) USE OF FUNDS.— 
‘‘(I) 
IN
GENERAL.—From 
amounts received under a grant 
awarded under section 2611 for a fis-
cal year, a State may use for activities 
associated with the clinical quality 
management program required in 
clause (i) not to exceed the lesser of— 
‘‘(aa) 5 percent of amounts 
received under the grant; or 
‘‘(bb) $3,000,000. 
‘‘(II) RELATION TO LIMITATION 
ON ADMINISTRATIVE EXPENSES.—The 
costs of a clinical quality management 
program under clause (i) may not be 
considered administrative expenses for 
purposes of the limitation established 
in subparagraph (A).’’; 
(4) in paragraph (4) (as so redesignated)— 
(A) by striking ‘‘paragraph (6)’’ and in-
serting ‘‘paragraph (5)’’; and 
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(B) by striking ‘‘paragraphs (3) and (4)’’ 
and inserting ‘‘paragraphs (2) and (3)’’; and 
(5) in paragraph (5) (as so redesignated), by 
striking ‘‘paragraph (3)’’ and all that follows 
through ‘‘(5),’’ and inserting the following: ‘‘para-
graphs (2) and (3), may, notwithstanding para-
graphs (2) through (4),’’. 
(f) REALLOCATION FOR SUPPLEMENTAL GRANTS.— 
Section 2618(d) of the Public Health Service Act (42 
U.S.C. 300ff–28(d)) is amended to read as follows: 
‘‘(d) REALLOCATION.—Any portion of a grant made 
to a State under section 2611 for a fiscal year that has 
not been obligated as described in subsection (c) ceases 
to be available to the State and shall be made available 
by the Secretary for grants under section 2620, in addi-
tion to amounts made available for such grants under sec-
tion 2623(b)(2).’’. 
(g) DEFINITIONS; OTHER
TECHNICAL
AMEND-
MENTS.—Section 2618(a) of the Public Health Service 
Act (42 U.S.C. 300ff–28(a)) is amended— 
(1) in paragraph (1), in the matter preceding 
subparagraph (A), by striking ‘‘section 2677’’ and 
inserting ‘‘section 2623’’; 
(2) in paragraph (1)(A)— 
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