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tion) as of December 31 of the most recent
calendar year for which such data is avail-
able.
‘‘(B) EXCEPTION
REGARDING
STATUS
AS
ELIGIBLE
AREA.—Subparagraph (A) does not
apply for a fiscal year if the metropolitan area
involved qualifies under subpart I as an eligible
area.
‘‘(d) APPLICATION OF CERTAIN PROVISIONS OF SUB-
PART I.—
‘‘(1) ADMINISTRATION; PLANNING COUNCIL.—
‘‘(A) IN GENERAL.—The provisions of sec-
tion 2602 apply with respect to a grant under
subsection (a) for a transitional area to the same
extent and in the same manner as such provi-
sions apply with respect to a grant under sub-
part I for an eligible area, except that, subject to
subparagraph (B), the chief elected official of the
transitional area may elect not to comply with
the provisions of section 2602(b) if the official
provides documentation to the Secretary that de-
tails the process used to obtain community input
(particularly from those with HIV) in the tran-
sitional area for formulating the overall plan for
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priority setting and allocating funds from the
grant under subsection (a).
‘‘(B) EXCEPTION.—For each of the fiscal
years 2007 through 2009, the exception described
in subparagraph (A) does not apply if the tran-
sitional area involved received funding under
subpart I for fiscal year 2006.
‘‘(2) TYPE AND DISTRIBUTION OF GRANTS; TIME-
FRAME
FOR
OBLIGATION
AND
EXPENDITURE
OF
GRANT FUNDS.—
‘‘(A) FORMULA
GRANTS; 
SUPPLEMENTAL
GRANTS.—The provisions of section 2603 apply
with respect to grants under subsection (a) to the
same extent and in the same manner as such
provisions apply with respect to grants under
subpart I, subject to subparagraphs (B) and (C).
‘‘(B) FORMULA
GRANTS; 
INCREASE
IN
GRANT.—For purposes of subparagraph (A), sec-
tion 2603(a)(4) does not apply.
‘‘(C) SUPPLEMENTAL GRANTS; SINGLE PRO-
GRAM WITH SUBPART I PROGRAM.—With respect
to section 2603(b) as applied for purposes of sub-
paragraph (A):
‘‘(i) The Secretary shall combine
amounts available pursuant to such sub-
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paragraph with amounts available for car-
rying out section 2603(b) and shall admin-
ister the two programs as a single program.
‘‘(ii) In the single program, the Sec-
retary has discretion in allocating amounts
between eligible areas under subpart I and
transitional areas under this section, subject
to the eligibility criteria that apply under
such 
section, 
and 
subject 
to 
section
2603(b)(2)(C) (relating to priority in mak-
ing grants).
‘‘(iii) Pursuant to section 2603(b)(1),
amounts for the single program are subject
to use under sections 2603(a)(4) and
2610(d)(1).
‘‘(3) 
APPLICATION; 
TECHNICAL
ASSISTANCE;
DEFINITIONS.—The provisions of sections 2605, 2606,
and 2607 apply with respect to grants under sub-
section (a) to the same extent and in the same man-
ner as such provisions apply with respect to grants
under subpart I.’’.
(b) CONFORMING AMENDMENTS.—Subpart I of part A
of title XXVI of the Public Health Service Act, as designated
by subsection (a)(1) of this section, is amended by striking
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‘‘this part’’ each place such term appears and inserting
‘‘this subpart’’.
SEC. 108. AUTHORIZATION OF APPROPRIATIONS FOR PART
A.
Part A of title XXVI of the Public Health Service Act,
as amended by section 106(a), is amended by adding at
the end the following:
‘‘Subpart III—General Provisions
‘‘SEC. 2610. AUTHORIZATION OF APPROPRIATIONS.
‘‘(a) IN GENERAL.—For the purpose of carrying out
this part, there are authorized to be appropriated
$604,000,000 for fiscal year 2007, $626,300,000 for fiscal
year 2008, and $649,500,000 for fiscal year 2009. Amounts
appropriated under the preceding sentence for a fiscal year
are available for obligation by the Secretary until the end
of the second succeeding fiscal year.
‘‘(b) RESERVATION OF AMOUNTS.—
‘‘(1) FISCAL YEAR 2007.—Of the amount appro-
priated under subsection (a) for fiscal year 2007, the
Secretary shall reserve—
‘‘(A) $458,310,000 for grants under subpart
I; and
‘‘(B) $145,690,000 for grants under section
2609.
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‘‘(2) 
SUBSEQUENT
FISCAL
YEARS.—Of 
the
amount appropriated under subsection (a) for fiscal
year 2008 and each subsequent fiscal year—
‘‘(A) the Secretary shall reserve an amount
for grants under subpart I; and
‘‘(B) the Secretary shall reserve an amount
for grants under section 2609.
‘‘(c) TRANSFER OF CERTAIN AMOUNTS; CHANGE IN
STATUS AS ELIGIBLE AREA OR TRANSITIONAL AREA.—
Notwithstanding subsection (b):
‘‘(1) If a metropolitan area is an eligible area
under subpart I for a fiscal year, but for a subsequent
fiscal year ceases to be an eligible area by reason of
section 2601(b)—
‘‘(A)(i) the amount reserved under para-
graph (1)(A) or (2)(A) of subsection (b) of this
section for the first such subsequent year of not
being an eligible area is deemed to be reduced by
an amount equal to the amount of the grant
made pursuant to section 2603(a) for the metro-
politan area for the preceding fiscal year; and
‘‘(ii)(I) if the metropolitan area qualifies
for such first subsequent fiscal year as a transi-
tional area under 2609, the amount reserved
under paragraph (1)(B) or (2)(B) of subsection
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(b) for such fiscal year is deemed to be increased
by an amount equal to the amount of the reduc-
tion under subparagraph (A) for such year; or
‘‘(II) if the metropolitan area does not qual-
ify for such first subsequent fiscal year as a
transitional area under 2609, an amount equal
to the amount of such reduction is, notwith-
standing subsection (a), transferred and made
available 
for 
grants 
pursuant 
to 
section
2618(a)(1), in addition to amounts available for
such grants under section 2623; and
‘‘(B) if a transfer under subparagraph
(A)(ii)(II) is made with respect to the metropoli-
tan area for such first subsequent fiscal year,
then—
‘‘(i) the amount reserved under para-
graph (1)(A) or (2)(A) of subsection (b) of
this section for such year is deemed to be re-
duced by an additional $500,000; and
‘‘(ii) an amount equal to the amount
of such additional reduction is, notwith-
standing subsection (a), transferred and
made available for grants pursuant to sec-
tion 2618(a)(1), in addition to amounts
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available for such grants under section
2623.
‘‘(2) If a metropolitan area is a transitional
area under section 2609 for a fiscal year, but for a
subsequent fiscal year ceases to be a transitional area
by reason of section 2609(c)(2) (and does not qualify
for such subsequent fiscal year as an eligible area
under subpart I)—
‘‘(A) the amount reserved under subsection
(b)(2)(B) of this section for the first such subse-
quent fiscal year of not being a transitional area
is deemed to be reduced by an amount equal to
the total of—
‘‘(i) the amount of the grant that, pur-
suant to section 2603(a), was made under
section 2609(d)(2)(A) for the metropolitan
area for the preceding fiscal year; and
‘‘(ii) $500,000; and
‘‘(B) an amount equal to the amount of the
reduction under subparagraph (A) for such year
is, notwithstanding subsection (a), transferred
and made available for grants pursuant to sec-
tion 2618(a)(1), in addition to amounts avail-
able for such grants under section 2623.
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‘‘(3) If a metropolitan area is a transitional
area under section 2609 for a fiscal year, but for a
subsequent fiscal year qualifies as an eligible area
under subpart I—
‘‘(A) the amount reserved under subsection
(b)(2)(B) of this section for the first such subse-
quent fiscal year of becoming an eligible area is
deemed to be reduced by an amount equal to the
amount of the grant that, pursuant to section
2603(a), was made under section 2609(d)(2)(A)
for the metropolitan area for the preceding fiscal
year; and
‘‘(B) the amount reserved under subsection
(b)(2)(A) for such fiscal year is deemed to be in-
creased by an amount equal to the amount of the
reduction under subparagraph (A) for such year.
‘‘(d) CERTAIN TRANSFERS; ALLOCATIONS BETWEEN
PROGRAMS UNDER SUBPART I.—With respect to para-
graphs (1)(B)(i) and (2)(A)(ii) of subsection (c), the Sec-
retary shall administer any reductions under such para-
graphs for a fiscal year in accordance with the following:
‘‘(1) The reductions shall be made from amounts
available for the single program referred to in section
2609(d)(2)(C) (relating to supplemental grants).
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‘‘(2) The reductions shall be made before the
amounts referred to in paragraph (1) are used for
purposes of section 2603(a)(4).
‘‘(3) If the amounts referred to in paragraph (1)
are not sufficient for making all the reductions, the
reductions shall be reduced until the total amount of
the reductions equals the total of the amounts referred
to in such paragraph.
‘‘(e) RULES
OF CONSTRUCTION REGARDING FIRST
SUBSEQUENT FISCAL YEAR.—Paragraphs (1) and (2) of
subsection (c) apply with respect to each series of fiscal
years during which a metropolitan area is an eligible area
under subpart I or a transitional area under section 2609
for a fiscal year and then for a subsequent fiscal year ceases
to be such an area by reason of section 2601(b) or
2609(c)(2), respectively, rather than applying to a single
such series. Paragraph (3) of subsection (c) applies with
respect to each series of fiscal years during which a metro-
politan area is a transitional area under section 2609 for
a fiscal year and then for a subsequent fiscal year becomes
an eligible area under subpart I, rather than applying to
a single such series.’’.
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TITLE II—CARE GRANTS
SEC. 201. GENERAL USE OF GRANTS.
(a) IN GENERAL.—Section 2612 of the Public Health
Service Act (42 U.S.C. 300ff–22) is amended to read as fol-
lows:
‘‘SEC. 2612. GENERAL USE OF GRANTS.
‘‘(a) IN GENERAL.—A State may use amounts pro-
vided under grants made under section 2611 for—
‘‘(1) core medical services described in subsection
(b);
‘‘(2) support services described in subsection (c);
and
‘‘(3) administrative expenses described in section
2618(b)(3).
‘‘(b) REQUIRED FUNDING FOR CORE MEDICAL SERV-
ICES.—
‘‘(1) IN
GENERAL.—With respect to a grant
under section 2611 for a State for a grant year, the
State shall, of the portion of the grant remaining
after reserving amounts for purposes of subpara-
graphs (A) and (E)(ii)(I) of section 2618(b)(3), use
not less than 75 percent to provide core medical serv-
ices that are needed in the State for individuals with
HIV/AIDS who are identified and eligible under this
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title (including services regarding the co-occurring
conditions of the individuals).
‘‘(2) WAIVER.—
‘‘(A) IN
GENERAL.—The Secretary shall
waive the application of paragraph (1) with re-
spect to a State for a grant year if the Secretary
determines that, within the State—
‘‘(i) there are no waiting lists for
AIDS Drug Assistance Program services
under section 2616; and
‘‘(ii) core medical services are available
to all individuals with HIV/AIDS identi-
fied and eligible under this title.
‘‘(B) NOTIFICATION OF WAIVER STATUS.—
When informing a State that a grant under sec-
tion 2611 is being made to the State for a fiscal
year, the Secretary shall inform the State wheth-
er a waiver under subparagraph (A) is in effect
for the fiscal year.
‘‘(3) CORE MEDICAL SERVICES.—For purposes of
this subsection, the term ‘core medical services’, with
respect to an individual infected with HIV/AIDS (in-
cluding the co-occurring conditions of the individual)
means the following services:
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‘‘(A) Outpatient and ambulatory health
services.
‘‘(B) AIDS Drug Assistance Program treat-
ments in accordance with section 2616.
‘‘(C) AIDS pharmaceutical assistance.
‘‘(D) Oral health care.
‘‘(E) Early intervention services described
in subsection (d).
‘‘(F) Health insurance premium and cost
sharing assistance for low-income individuals in
accordance with section 2615.
‘‘(G) Home health care.
‘‘(H) Medical nutrition therapy.
‘‘(I) Hospice services.
‘‘(J) Home and community-based health
services as defined under section 2614(c).
‘‘(K) Mental health services.
‘‘(L) Substance abuse outpatient care.
‘‘(M) Medical case management, including
treatment adherence services.
‘‘(c) SUPPORT SERVICES.—
‘‘(1) IN GENERAL.—For purposes of this sub-
section, the term ‘support services’ means services,
subject to the approval of the Secretary, that are need-
ed for individuals with HIV/AIDS to achieve their
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medical outcomes (such as respite care for persons
caring for individuals with HIV/AIDS, outreach serv-
ices, medical transportation, linguistic services, and
referrals for health care and support services).
‘‘(2) DEFINITION OF MEDICAL OUTCOMES.—In
this subsection, the term ‘medical outcomes’ means
those outcomes affecting the HIV-related clinical sta-
tus of an individual with HIV/AIDS.
‘‘(d) EARLY INTERVENTION SERVICES.—
‘‘(1) IN GENERAL.—For purposes of this section,
the term ‘early intervention services’ means HIV/
AIDS early intervention services described in section
2651(e), with follow-up referral provided for the pur-
pose of facilitating the access of individuals receiving
the services to HIV-related health services. The enti-
ties through which such services may be provided
under the grant include public health departments,
emergency rooms, substance abuse and mental health
treatment programs, detoxification centers, detention
facilities, clinics regarding sexually transmitted dis-
eases, homeless shelters, HIV/AIDS counseling and
testing sites, health care points of entry specified by
States, federally qualified health centers, and entities
described in section 2652(a) that constitute a point of
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access to services by maintaining referral relation-
ships.
‘‘(2) CONDITIONS.—With respect to an entity
that proposes to provide early intervention services
under paragraph (1), such paragraph shall apply
only if the entity demonstrates to the satisfaction of
the chief elected official for the State involved that—
‘‘(A) Federal, State, or local funds are oth-
erwise inadequate for the early intervention serv-
ices the entity proposes to provide; and
‘‘(B) the entity will expend funds pursuant
to such subparagraph to supplement and not
supplant other funds available to the entity for
the provision of early intervention services for
the fiscal year involved.
‘‘(e) PRIORITY FOR WOMEN, INFANTS, CHILDREN, AND
YOUTH.—
‘‘(1) IN GENERAL.—For the purpose of providing
health and support services to infants, children,
youth, and women with HIV/AIDS, including treat-
ment measures to prevent the perinatal transmission
of HIV, a State shall for each of such populations in
the eligible area use, from the grants made for the
area under section 2601(a) for a fiscal year, not less
than the percentage constituted by the ratio of the
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population involved (infants, children, youth, or
women in such area) with HIV/AIDS to the general
population in such area of individuals with HIV/
AIDS.
‘‘(2) WAIVER.—With respect to the population
involved, the Secretary may provide to a State a
waiver of the requirement of paragraph (1) if such
State demonstrates to the satisfaction of the Secretary
that the population is receiving HIV-related health
services through the State medicaid program under
title XIX of the Social Security Act, the State chil-
dren’s health insurance program under title XXI of
such Act, or other Federal or State programs.
‘‘(f) CONSTRUCTION.—A State may not use amounts
received under a grant awarded under section 2611 to pur-
chase or improve land, or to purchase, construct, or perma-
nently improve (other than minor remodeling) any building
or other facility, or to make cash payments to intended re-
cipients of services.’’.
(b) HIV CARE CONSORTIA.—Section 2613 of the Pub-
lic Health Service Act (42 U.S.C. 300ff–23) is amended—
(1) in subsection (a), in the matter preceding
paragraph (1)—
(A) by striking ‘‘may use’’ and inserting
‘‘may, subject to subsection (f), use’’; and
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(B) by striking ‘‘section 2612(a)(1)’’ and
inserting ‘‘section 2612(a)’’; and
(2) by adding at the end the following subsection:
‘‘(f) ALLOCATION OF FUNDS; TREATMENT AS SUPPORT
SERVICES.—For purposes of the requirement of section
2612(b)(1), expenditures of grants under section 2611 for
or through consortia under this section are deemed to be
support services, not core medical services. The preceding
sentence may not be construed as having any legal effect
on the provisions of subsection (a) that relate to authorized
expenditures of the grant.’’.
(c) TECHNICAL AMENDMENTS.—Part B of title XXVI
of the Public Health Service Act (42 U.S.C. 300ff–21 et seq.)
is amended—
(1) in section 2611—
(A) in subsection (a), by striking the sub-
section designation and heading; and
(B) by striking subsection (b);
(2) in section 2614—
(A) in subsection (a), in the matter pre-
ceding paragraph (1), by striking ‘‘section
2612(a)(2)’’ 
and 
inserting 
‘‘section
2612(b)(3)(J)’’; and
(B) in subsection (c)(2)(B), by striking
‘‘homemaker or’’;
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(3) in section 2615(a) by striking ‘‘section
2612(a)(3)’’ and inserting ‘‘section 2612(b)(3)(F)’’;
and
(4) in section 2616(a) by striking ‘‘section
2612(a)(5)’’ and inserting ‘‘section 2612(b)(3)(B)’’.
SEC. 202. AIDS DRUG ASSISTANCE PROGRAM.
(a) REQUIREMENT OF MINIMUM DRUG LIST.—Section
2616 of the Public Health Service Act (42 U.S.C. 300ff–
26) is amended—
(1) in subsection (c), by striking paragraph (1)
and inserting the following:
‘‘(1) ensure that the therapeutics included on the
list of classes of core antiretroviral therapeutics estab-
lished by the Secretary under subsection (e) are, at a
minimum, the treatments provided by the State pur-
suant to this section;’’;
(2) by redesignating subsection (e) as subsection
(f); and
(3) by inserting after subsection (d) the fol-
lowing:
‘‘(e) LIST OF CLASSES OF CORE ANTIRETROVIRAL
THERAPEUTICS.—For purposes of subsection (c)(1), the
Secretary shall develop and maintain a list of classes of
core antiretroviral therapeutics, which list shall be based
on the therapeutics included in the guidelines of the Sec-
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retary known as the Clinical Practice Guidelines for Use
of HIV/AIDS Drugs, relating to drugs needed to manage
symptoms associated with HIV. The preceding sentence does
not affect the authority of the Secretary to modify such
Guidelines.’’.
(b) DRUG REBATE PROGRAM.—Section 2616 of the
Public Health Service Act, as amended by subsection (a)(2)
of this section, is amended by adding at the end the fol-
lowing:
‘‘(g) DRUG REBATE PROGRAM.—A State shall ensure
that any drug rebates received on drugs purchased from
funds provided pursuant to this section are applied to ac-
tivities supported under this subpart, with priority given
to activities described under this section.’’.
SEC. 203. DISTRIBUTION OF FUNDS.
(a) DISTRIBUTION BASED ON LIVING CASES OF HIV/
AIDS.—
(1) 
STATE
DISTRIBUTION
FACTOR.—Section
2618(a)(2) of the Public Health Service Act (42
U.S.C. 300ff–28(a)(2)) is amended—
(A) in subparagraph (B), by striking ‘‘esti-
mated number of living cases of acquired im-
mune deficiency syndrome in the eligible area
involved’’ and inserting ‘‘number of living cases
of HIV/AIDS in the State involved’’; and
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(B) by amending subparagraph (D) to read
as follows:
‘‘(D) LIVING CASES OF HIV/AIDS.—
‘‘(i) REQUIREMENT
OF
NAMES-BASED
REPORTING.—Except as provided in clause
(ii), the number determined under this sub-
paragraph for a State for a fiscal year for
purposes of subparagraph (B) is the number
of living names-based cases of HIV/AIDS in
the State that, as of December 31 of the
most recent calendar year for which such
data is available, have been reported to and
confirmed by the Director of the Centers for
Disease Control and Prevention.
‘‘(ii) TRANSITION PERIOD; EXEMPTION
REGARDING NON-AIDS CASES.—For each of
the fiscal years 2007 through 2009, a State
is, subject to clauses (iii) through (v), ex-
empt from the requirement under clause (i)
that living non-AIDS names-based cases of
HIV be reported unless—
‘‘(I) a system was in operation as
of December 31, 2005, that provides
sufficiently 
accurate 
and 
reliable
names-based reporting of such cases
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throughout the State, subject to clause
(vii); or
‘‘(II) no later than the beginning
of fiscal year 2008 or 2009, the Sec-
retary, after consultation with the chief
executive of the State, determines that
a system has become operational in the
State that provides sufficiently accu-
rate and reliable names-based report-
ing of such cases throughout the State.
‘‘(iii) REQUIREMENTS FOR EXEMPTION
FOR FISCAL YEAR 2007.—For fiscal year
2007, an exemption under clause (ii) for a
State applies only if, by October 1, 2006—
‘‘(I)(aa) the State had submitted
to the Secretary a plan for making the
transition to sufficiently accurate and
reliable names-based reporting of living
non-AIDS cases of HIV; or
‘‘(bb) all statutory changes nec-
essary to provide for sufficiently accu-
rate and reliable reporting of such
cases had been made; and
‘‘(II) the State had agreed that,
by April 1, 2008, the State will begin
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accurate and reliable names-based re-
porting of such cases, except that such
agreement is not required to provide
that, as of such date, the system for
such reporting be fully sufficient with
respect to accuracy and reliability
throughout the area.
‘‘(iv) REQUIREMENT
FOR
EXEMPTION
AS OF FISCAL YEAR 2008.—For each of the
fiscal years 2008 through 2010, an exemp-
tion under clause (ii) for a State applies
only if, as of April 1, 2008, the State is sub-
stantially in compliance with the agreement
under clause (iii)(II).
‘‘(v) PROGRESS TOWARD NAMES-BASED
REPORTING.—For fiscal year 2009, the Sec-
retary may terminate an exemption under
clause (ii) for a State if the State submitted
a plan under clause (iii)(I)(aa) and the
Secretary determines that the State is not
substantially following the plan.
‘‘(vi) COUNTING OF CASES IN AREAS
WITH EXEMPTIONS.—
‘‘(I) IN
GENERAL.—With respect
to a State that is under a reporting
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system for living non-AIDS cases of
HIV that is not names-based (referred
to in this subparagraph as ‘code-based
reporting’), the Secretary shall, for
purposes of this subparagraph, modify
the number of such cases reported for
the State in order to adjust for dupli-
cative reporting in and among systems
that use code-based reporting.
‘‘(II) ADJUSTMENT
RATE.—The
adjustment rate under subclause (I) for
a State shall be a reduction of 5 per-
cent in the number of living non-AIDS
cases of HIV reported for the State.
‘‘(vii) 
LIST
OF
STATES
MEETING
STANDARD
REGARDING
DECEMBER
31,
2005.—
‘‘(I) IN GENERAL.—If a State is
specified in subclause (II), the State
shall be considered to meet the stand-
ard described in clause (ii)(I). No other
State may be considered to meet such
standard.
‘‘(II) 
RELEVANT
STATES.—For
purposes of subclause (I), the States
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specified in this subclause are the fol-
lowing: Alaska, Alabama, Arkansas,
Arizona, Colorado, Florida, Indiana,
Iowa, 
Idaho, 
Kansas, 
Louisiana,
Michigan, Minnesota, Missouri, Mis-
sissippi, North Carolina, North Da-
kota, Nebraska, New Jersey, New Mex-
ico, New York, Nevada, Ohio, Okla-
homa, South Carolina, South Dakota,
Tennessee, Texas, Utah, Virginia, Wis-
consin, 
West 
Virginia, 
Wyoming,
Guam, and the Virgin Islands.
‘‘(viii) RULES OF CONSTRUCTION RE-
GARDING ACCEPTANCE OF REPORTS.—
‘‘(I) CASES
OF
AIDS.—With re-
spect to a State that is subject to the
requirement under clause (i) and is
not in compliance with the require-
ment for names-based reporting of liv-
ing non-AIDS cases of HIV, the Sec-
retary shall, notwithstanding such
noncompliance, accept reports of living
cases of AIDS that are in accordance
with such clause.
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‘‘(II) APPLICABILITY
OF
EXEMP-
TION REQUIREMENTS.—The provisions
of clauses (ii) through (vii) may not be
construed as having any legal effect for
fiscal year 2010 or any subsequent fis-
cal year, and accordingly, the status of
a State for purposes of such clauses
may not be considered after fiscal year
2009.
‘‘(ix) PROGRAM FOR DETECTING INAC-
CURATE OR FRAUDULENT COUNTING.—The
Secretary shall carry out a program to
monitor the reporting of names-based cases
for purposes of this subparagraph and to
detect instances of inaccurate reporting, in-
cluding fraudulent reporting.’’.
(2) NON-EMA
DISTRIBUTION
FACTOR.—Section
2618(a)(2)(C) of the Public Health Service Act (42
U.S.C. 300ff–28(a)(2)(C)) is amended—
(A) in clause (i), by striking ‘‘estimated
number of living cases of acquired immune defi-
ciency syndrome’’ each place such term appears
and inserting ‘‘number of living cases of HIV/
AIDS’’; and
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(B) in clause (ii), by amending such clause
to read as follows:
‘‘(ii) a number equal to the sum of—
‘‘(I) the total number of living
cases of HIV/AIDS that are within
areas in such State that are eligible
areas under subpart I of part A for the
fiscal year involved, which individual
number for an area is the number that
applies under section 2601 for the area
for such fiscal year; and
‘‘(II) the total number of such
cases that are within areas in such
State that are transitional areas under
section 2609 for such fiscal year, which
individual number for an area is the
number that applies under such section
for the fiscal year.’’.
(b) FORMULA AMENDMENTS GENERALLY.—Section
2618(a)(2) of the Public Health Service Act (42 U.S.C.
300ff–28(a)(2)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘The amount referred to’’ in
the matter preceding clause (i) and all that fol-
lows through the end of clause (i) and inserting
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the following: ‘‘For purposes of paragraph (1),
the amount referred to in this paragraph for a
State (including a territory) for a fiscal year is,
subject to subparagraphs (E) and (F)—
‘‘(i) an amount equal to the amount
made available under section 2623 for the
fiscal year involved for grants pursuant to
paragraph (1), subject to subparagraph (G);
and’’; and
(B) in clause (ii)—
(i) in subclause (I)—
(I) by striking ‘‘.80’’ and insert-
ing ‘‘0.75’’; and
(II) by striking ‘‘and’’ at the end;
(ii) in subclause (II)—
(I) by inserting ‘‘non-EMA’’ after
‘‘respective’’; and
(II) by striking the period and in-
serting ‘‘; and’’; and
(iii) by adding at the end the fol-
lowing:
‘‘(III) if the State does not for
such fiscal year contain any area that
is an eligible area under subpart I of
part A or any area that is a transi-
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tional area under section 2609 (re-
ferred to in this subclause as a ‘no-
EMA State’), the product of 0.05 and
the ratio of the number of cases that
applies for the State under subpara-
graph (D) to the sum of the respective
numbers of cases that so apply for all
no-EMA States.’’;
(2) by striking subparagraphs (E) through (H);
(3) by inserting after subparagraph (D) the fol-
lowing subparagraphs:
‘‘(E) CODE-BASED STATES; LIMITATION ON
INCREASE IN GRANT.—
‘‘(i) IN GENERAL.—For each of the fis-
cal years 2007 through 2009, if code-based
reporting (within the meaning of subpara-
graph (D)(vi)) applies in a State as of the
beginning of the fiscal year involved, then
notwithstanding any other provision of this
paragraph, the amount of the grant pursu-
ant to paragraph (1) for the State may not
for the fiscal year involved exceed by more
than 5 percent the amount of the grant pur-
suant to this paragraph for the State for the
preceding fiscal year, except that the limita-
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tion under this clause may not result in a
grant pursuant to paragraph (1) for a fis-
cal year that is less than the minimum
amount that applies to the State under such
paragraph for such fiscal year.
‘‘(ii) USE OF AMOUNTS INVOLVED.—
For each of the fiscal years 2007 through
2009, amounts available as a result of the
limitation under clause (i) shall be made
available by the Secretary as additional
amounts for grants pursuant to section
2620, subject to subparagraph (H).’’; and
(4) by redesignating subparagraph (I) as sub-
paragraph (F).
(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 ‘‘section
2623’’;
(B) in subclause (II), by striking the period
at the end and inserting a semicolon; and
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(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 described
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 subject to re-
allocation under section 2618(d) in the
previous fiscal year and, in accordance
with criteria established by the Sec-
retary, demonstrates a severe need for
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a grant under this clause. For purposes
of determining severe need, the Sec-
retary shall consider eligibility stand-
ards, formulary composition, the num-
ber of eligible individuals to whom a
State is unable to provide therapeutics
described in section 2616(a), and an
unanticipated increase of eligible indi-
viduals with HIV/AIDS.
‘‘(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 ac-
tivities 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
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not required to comply with such sec-
tion 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:
‘‘(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 applies
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 limita-
tion under the preceding sentence shall be
made available by the Secretary as addi-
tional amounts for grants under clause (ii)
of this subparagraph.’’.
(d) HOLD HARMLESS.—Section 2618(a)(2) of the Pub-
lic Health Service Act (42 U.S.C. 300ff–28(a)(2)), as
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amended by subsection (b)(4) of this section, is amended
by adding at the end the following subparagraph:
‘‘(H) INCREASE IN FORMULA GRANTS.—
‘‘(i) ASSURANCE OF AMOUNT.—
‘‘(I) GENERAL RULE.—For fiscal
year 2007, the Secretary shall ensure,
subject to clauses (ii) through (iv), that
the total for a State of the grant pursu-
ant to paragraph (1) and the grant
pursuant to subparagraph (G) is not
less than 95 percent of such total for
the State for fiscal year 2006.
‘‘(II) RULE OF CONSTRUCTION.—
With respect to the application of sub-
clause (I), the 95 percent requirement
under such subclause shall apply with
respect to each grant awarded under
paragraph (1) and with respect to each
grant awarded under subparagraph
(G).
‘‘(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
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to subparagraph (I) as such subparagraph
was in effect for fiscal year 2006.
‘‘(iii) FISCAL YEARS 2008 AND 2009.—
For each of the fiscal years 2008 and 2009,
the Secretary shall ensure that the total for
a State of the grant pursuant to paragraph
(1) and the grant pursuant to subpara-
graph (G) is not less than 100 percent of
such total for the State for fiscal year 2007.
‘‘(iv) 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 pur-
suant to subsection (d) of this section,
the Secretary shall make available such
amounts as may be necessary to com-
ply 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 provide
the additional funds necessary for such
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compliance, shall reduce on a pro rata
basis the amount of each grant pursu-
ant to paragraph (1) for the fiscal
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 eli-
gible for such an increase.
‘‘(v) APPLICABILITY.—This paragraph
may not be construed as having any appli-
cability after fiscal year 2009.’’.
(e) ADMINISTRATIVE EXPENSES; CLINICAL QUALITY
MANAGEMENT.—Section 2618(b) of the Public Health Serv-
ice 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 insert-
ing ‘‘paragraph (4)’’; and
(B) by striking ‘‘paragraph (6)’’ and insert-
ing ‘‘paragraph (5)’’;
(3) in paragraph (3) (as so redesignated)—
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(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 entities
and subcontractors to which a State allocates
amounts received by the State under a grant
under section 2611, the State shall ensure that,
of the aggregate amount so allocated, the total of
the expenditures by such entities for administra-
tive expenses does not exceed 10 percent (without
regard to whether particular entities expend
more than 10 percent for such expenses).’’;
(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