F:\M11\RANGEL\RANGEL_046.XML ..................................................................... (Original Signature of Member) 111TH CONGRESS 1ST SESSION H. R. ll To provide for a portion of the economic recovery package relating to revenue measures, unemployment, and health. IN THE HOUSE OF REPRESENTATIVES Mr. RANGEL (for himself, Mr. STARK, and Mr. MCDERMOTT) introduced the following bill; which was referred to the Committee on lllllllllllllll A BILL To provide for a portion of the economic recovery package relating to revenue measures, unemployment, and health. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 TITLE I—TAX PROVISIONS 4 SECTION 1000. SHORT TITLE, ETC. 5 (a) SHORT TITLE.—This title may be cited as the 6 ‘‘American Recovery and Reinvestment Tax Act of 2009’’. 7 (b) REFERENCE.—Except as otherwise expressly pro8 vided, whenever in this title an amendment or repeal is f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 2 1 expressed in terms of an amendment to, or repeal of, a 2 section or other provision, the reference shall be consid3 ered to be made to a section or other provision of the In4 ternal Revenue Code of 1986. 5 (c) TABLE OF CONTENTS.—The table of contents for 6 this title is as follows: Sec. 1000. Short title, etc. Subtitle A—Making Work Pay Sec. 1001. Making work pay credit. Subtitle B—Additional Tax Relief for Families With Children Sec. 1101. Temporary increase in earned income tax credit. Sec. 1102. Temporary increase of refundable portion of child credit. Subtitle C—American Opportunity Tax Credit Sec. 1201. American opportunity tax credit. Subtitle D—Housing Incentives Sec. 1301. Waiver of requirement to repay first-time homebuyer credit. Sec. 1302. Coordination of low-income housing credit and low-income housing grants. Subtitle E—Tax Incentives for Business PART 1—TEMPORARY INVESTMENT INCENTIVES Sec. 1401. Special allowance for certain property acquired during 2009. Sec. 1402. Temporary increase in limitations on expensing of certain depreciable business assets. PART 2—5-YEAR CARRYBACK OF OPERATING LOSSES Sec. 1411. 5-year carryback of operating losses. Sec. 1412. Exception for TARP recipients. PART 3—INCENTIVES FOR NEW JOBS Sec. 1421. Incentives to hire unemployed veterans and disconnected youth. PART 4—CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE Sec. 1431. Clarification of regulations related to limitations on certain built-in losses following an ownership change. Subtitle F—Fiscal Relief for State and Local Governments f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 3 PART 1—IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS Sec. 1501. De minimis safe harbor exception for tax-exempt interest expense of financial institutions. Sec. 1502. Modification of small issuer exception to tax-exempt interest expense allocation rules for financial institutions. Sec. 1503. Temporary modification of alternative minimum tax limitations on tax-exempt bonds. PART 2—TAX CREDIT BONDS FOR SCHOOLS Sec. 1511. Qualified school construction bonds. Sec. 1512. Extension and expansion of qualified zone academy bonds. PART 3—TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS Sec. 1521. Taxable bond option for governmental bonds. PART 4—RECOVERY ZONE BONDS Sec. 1531. Recovery zone bonds. Sec. 1532. Tribal economic development bonds. PART 5—REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS Sec. 1541. Repeal of withholding tax on government contractors. Subtitle G—Energy Incentives PART 1—RENEWABLE ENERGY INCENTIVES Sec. 1601. Extension of credit for electricity produced from certain renewable resources. Sec. 1602. Election of investment credit in lieu of production credit. Sec. 1603. Repeal of certain limitations on credit for renewable energy property. Sec. 1604. Coordination with renewable energy grants. PART 2—INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY BONDS AND QUALIFIED ENERGY CONSERVATION BONDS Sec. 1611. Increased limitation on issuance of new clean renewable energy bonds. Sec. 1612. Increased limitation on issuance of qualified energy conservation bonds. PART 3—ENERGY CONSERVATION INCENTIVES Sec. 1621. Extension and modification of credit for nonbusiness energy property. Sec. 1622. Modification of credit for residential energy efficient property. Sec. 1623. Temporary increase in credit for alternative fuel vehicle refueling property. PART 4—ENERGY RESEARCH INCENTIVES Sec. 1631. Increased research credit for energy research. Subtitle H—Other Provisions f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 4 PART 1—APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS FINANCED WITH CERTAIN TAX-FAVORED BONDS Sec. 1701. Application of certain labor standards to projects financed with certain tax-favored bonds. PART 2—GRANTS TO PROVIDE FINANCING FOR LOW-INCOME HOUSING Sec. 1711. Grants to States for low-income housing projects in lieu of low-income housing credit allocations for 2009. PART 3—GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS Sec. 1721. Grants for specified energy property in lieu of tax credits. 1 Subtitle A—Making Work Pay 2 SEC. 1001. MAKING WORK PAY CREDIT. 3 (a) IN GENERAL.—Subpart C of part IV of sub4 chapter A of chapter 1 is amended by inserting after sec5 tion 36 the following new section: 6 ‘‘SEC. 36A. MAKING WORK PAY CREDIT. 7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli8 gible individual, there shall be allowed as a credit against 9 the tax imposed by this subtitle for the taxable year an 10 amount equal to the lesser of— 11 ‘‘(1) 6.2 percent of earned income of the tax12 payer, or 13 ‘‘(2) $500 ($1,000 in the case of a joint re14 turn). 15 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED 16 GROSS INCOME.— 17 ‘‘(1) IN GENERAL.—The amount allowable as a 18 credit under subsection (a) (determined without re 19 gard to this paragraph) for the taxable year shall be f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 5 1 reduced (but not below zero) by 2 percent of so 2 much of the taxpayer’s modified adjusted gross in 3 come as exceeds $75,000 ($150,000 in the case of 4 a joint return). 5 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.— 6 For purposes of subparagraph (A), the term ‘modi7 fied adjusted gross income’ means the adjusted 8 gross income of the taxpayer for the taxable year in9 creased by any amount excluded from gross income 10 under section 911, 931, or 933. 11 ‘‘(c) DEFINITIONS.—For purposes of this section— 12 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 13 individual’ means any individual other than— 14 ‘‘(A) any nonresident alien individual, 15 ‘‘(B) any individual with respect to whom 16 a deduction under section 151 is allowable to 17 another taxpayer for a taxable year beginning 18 in the calendar year in which the individual’s 19 taxable year begins, and 20 ‘‘(C) an estate or trust. 21 ‘‘(2) EARNED INCOME.—The term ‘earned in 22 come’ has the meaning given such term by section 23 32(c)(2), except that such term shall not include net 24 earnings from self-employment which are not taken 25 into account in computing taxable income. For pur f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 6 1 poses of the preceding sentence, any amount ex 2 cluded from gross income by reason of section 112 3 shall be treated as earned income which is taken 4 into account in computing taxable income for the 5 taxable year. 6 ‘‘(d) TERMINATION.—This section shall not apply to 7 taxable years beginning after December 31, 2010.’’. 8 (b) TREATMENT OF POSSESSIONS.— 9 (1) PAYMENTS TO POSSESSIONS.— 10 (A) MIRROR CODE POSSESSION.—The Sec11 retary of the Treasury shall pay to each posses12 sion of the United States with a mirror code 13 tax system amounts equal to the loss to that 14 possession by reason of the amendments made 15 by this section with respect to taxable years be16 ginning in 2009 and 2010. Such amounts shall 17 be determined by the Secretary of the Treasury 18 based on information provided by the govern19 ment of the respective possession. 20 (B) OTHER POSSESSIONS.—The Secretary 21 of the Treasury shall pay to each possession of 22 the United States which does not have a mirror 23 code tax system amounts estimated by the Sec 24 retary of the Treasury as being equal to the ag 25 gregate benefits that would have been provided f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 7 1 to residents of such possession by reason of the 2 amendments made by this section for taxable 3 years beginning in 2009 and 2010 if a mirror 4 code tax system had been in effect in such pos 5 session. The preceding sentence shall not apply 6 with respect to any possession of the United 7 States unless such possession has a plan, which 8 has been approved by the Secretary of the 9 Treasury, under which such possession will 10 promptly distribute such payments to the resi11 dents of such possession. 12 (2) COORDINATION WITH CREDIT ALLOWED 13 AGAINST UNITED STATES INCOME TAXES.—No cred14 it shall be allowed against United States income 15 taxes for any taxable year under section 36A of the 16 Internal Revenue Code of 1986 (as added by this 17 section) to any person— 18 (A) to whom a credit is allowed against 19 taxes imposed by the possession by reason of 20 the amendments made by this section for such 21 taxable year, or 22 (B) who is eligible for a payment under a 23 plan described in paragraph (1)(B) with respect 24 to such taxable year. 25 (3) DEFINITIONS AND SPECIAL RULES.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 8 1 (A) POSSESSION OF THE UNITED 2 STATES.—For purposes of this subsection, the 3 term ‘‘possession of the United States’’ includes 4 the Commonwealth of Puerto Rico and the 5 Commonwealth of the Northern Mariana Is6 lands. 7 (B) MIRROR CODE TAX SYSTEM.—For pur8 poses of this subsection, the term ‘‘mirror code 9 tax system’’ means, with respect to any posses10 sion of the United States, the income tax sys11 tem of such possession if the income tax liabil12 ity of the residents of such possession under 13 such system is determined by reference to the 14 income tax laws of the United States as if such 15 possession were the United States. 16 (C) TREATMENT OF PAYMENTS.—For pur17 poses of section 1324(b)(2) of title 31, United 18 States Code, the payments under this sub19 section shall be treated in the same manner as 20 a refund due from the credit allowed under sec21 tion 36A of the Internal Revenue Code of 1986 22 (as added by this section). 23 (c) REFUNDS DISREGARDED IN THE ADMINISTRA24 TION OF FEDERAL PROGRAMS AND FEDERALLY AS25 SISTED PROGRAMS.—Any credit or refund allowed or f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 9 1 made to any individual by reason of section 36A of the 2 Internal Revenue Code of 1986 (as added by this section) 3 or by reason of subsection (b) of this section shall not be 4 taken into account as income and shall not be taken into 5 account as resources for the month of receipt and the fol6 lowing 2 months, for purposes of determining the eligi7 bility of such individual or any other individual for benefits 8 or assistance, or the amount or extent of benefits or assist9 ance, under any Federal program or under any State or 10 local program financed in whole or in part with Federal 11 funds. 12 (d) CONFORMING AMENDMENTS.— 13 (1) Section 6211(b)(4)(A) is amended by insert14 ing ‘‘36A,’’ after ‘‘36,’’. 15 (2) Section 1324(b)(2) of title 31, United 16 States Code, is amended by inserting ‘‘36A,’’ after 17 ‘‘36,’’. 18 (3) The table of sections for subpart C of part 19 IV of subchapter A of chapter 1 is amended by in20 serting after the item relating to section 36 the fol21 lowing new item: ‘‘Sec. 36A. Making work pay credit.’’. 22 (e) EFFECTIVE DATE.—This section shall apply to 23 taxable years beginning after December 31, 2008. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 10 1 Subtitle B—Additional Tax Relief 2 for Families With Children 3 SEC. 1101. TEMPORARY INCREASE IN EARNED INCOME TAX 4 CREDIT. 5 (a) IN GENERAL.—Subsection (b) of section 32 is 6 amended by adding at the end the following new para7 graph: 8 ‘‘(3) TEMPORARY INCREASE.—In the case of 9 any taxable year beginning in 2009 or 2010— 10 ‘‘(A) INCREASED CREDIT PERCENTAGE 11 FOR 3 OR MORE QUALIFYING CHILDREN.—In 12 the case of a taxpayer with 3 or more qualifying 13 children, the credit percentage is 45 percent. 14 ‘‘(B) REDUCTION OF MARRIAGE PEN15 ALTY.— 16 ‘‘(i) IN GENERAL.—The dollar amount 17 in effect under paragraph (2)(B) shall be 18 $5,000. 19 ‘‘(ii) INFLATION ADJUSTMENT.—In 20 the case of any taxable year beginning in 21 2010, the $5,000 amount in clause (i) 22 shall be increased by an amount equal to— 23 ‘‘(I) such dollar amount, multi24 plied by f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 11 1 ‘‘(II) the cost of living adjust 2 ment determined under section 1(f)(3) 3 for the calendar year in which the tax 4 able year begins determined by sub 5 stituting ‘calendar year 2008’ for ‘cal6 endar year 1992’ in subparagraph (B) 7 thereof. 8 ‘‘(iii) ROUNDING.—Subparagraph (A) 9 of subsection (j)(2) shall apply after taking 10 into account any increase under clause 11 (ii).’’. 12 (b) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 December 31, 2008. 15 SEC. 1102. TEMPORARY INCREASE OF REFUNDABLE POR16 TION OF CHILD CREDIT. 17 (a) IN GENERAL.—Paragraph (4) of section 24(d) is 18 amended to read as follows: 19 ‘‘(4) SPECIAL RULE FOR 2009 AND 2010.—Not20 withstanding paragraph (3), in the case of any tax21 able year beginning in 2009 or 2010, the dollar 22 amount in effect for such taxable year under para 23 graph (1)(B)(i) shall be zero.’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 12 1 (b) EFFECTIVE DATE.—The amendments made by 2 this section shall apply to taxable years beginning after 3 December 31, 2008. 4 Subtitle C—American Opportunity 5 Tax Credit 6 SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT. 7 (a) IN GENERAL.—Section 25A (relating to Hope 8 scholarship credit) is amended by redesignating subsection 9 (i) as subsection (j) and by inserting after subsection (h) 10 the following new subsection: 11 ‘‘(i) AMERICAN OPPORTUNITY TAX CREDIT.—In the 12 case of any taxable year beginning in 2009 or 2010— 13 ‘‘(1) INCREASE IN CREDIT.—The Hope Scholar14 ship Credit shall be an amount equal to the sum 15 of— 16 ‘‘(A) 100 percent of so much of the quali17 fied tuition and related expenses paid by the 18 taxpayer during the taxable year (for education 19 furnished to the eligible student during any 20 academic period beginning in such taxable year) 21 as does not exceed $2,000, plus 22 ‘‘(B) 25 percent of such expenses so paid 23 as exceeds $2,000 but does not exceed $4,000. 24 ‘‘(2) CREDIT ALLOWED FOR FIRST 4 YEARS OF 25 POST-SECONDARY EDUCATION.—Subparagraphs (A) f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 13 1 and (C) of subsection (b)(2) shall be applied by sub 2 stituting ‘4’ for ‘2’. 3 ‘‘(3) QUALIFIED TUITION AND RELATED EX4 PENSES TO INCLUDE REQUIRED COURSE MATE 5 RIALS.—Subsection (f)(1)(A) shall be applied by 6 substituting ‘tuition, fees, and course materials’ for 7 ‘tuition and fees’. 8 ‘‘(4) INCREASE IN AGI LIMITS FOR HOPE 9 SCHOLARSHIP CREDIT.—In lieu of applying sub10 section (d) with respect to the Hope Scholarship 11 Credit, such credit (determined without regard to 12 this paragraph) shall be reduced (but not below 13 zero) by the amount which bears the same ratio to 14 such credit (as so determined) as— 15 ‘‘(A) the excess of— 16 ‘‘(i) the taxpayer’s modified adjusted 17 gross income (as defined in subsection 18 (d)(3)) for such taxable year, over 19 ‘‘(ii) $80,000 ($160,000 in the case of 20 a joint return), bears to 21 ‘‘(B) $10,000 ($20,000 in the case of a 22 joint return). 23 ‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE 24 MINIMUM TAX.—In the case of a taxable year to 25 which section 26(a)(2) does not apply, so much of f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 14 1 the credit allowed under subsection (a) as is attrib 2 utable to the Hope Scholarship Credit shall not ex 3 ceed the excess of— 4 ‘‘(A) the sum of the regular tax liability 5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 7 ‘‘(B) the sum of the credits allowable 8 under this subpart (other than this section and 9 sections 23, 25D, and 30D) and section 27 for 10 the taxable year. 11 Any reference in section 24, 25, 26, 25B, 904, or 12 1400C to a credit allowed under this subsection shall 13 be treated as a reference to so much of the credit 14 allowed under subsection (a) as is attributable to the 15 Hope Scholarship Credit. 16 ‘‘(6) PORTION OF CREDIT MADE REFUND17 ABLE.—40 percent of so much of the credit allowed 18 under subsection (a) as is attributable to the Hope 19 Scholarship Credit (determined after application of 20 paragraph (4) and without regard to this paragraph 21 and section 26(a)(2) or paragraph (5), as the case 22 may be) shall be treated as a credit allowable under 23 subpart C (and not allowed under subsection (a)). 24 The preceding sentence shall not apply to any tax 25 payer for any taxable year if such taxpayer is a child f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 15 1 to whom subsection (g) of section 1 applies for such 2 taxable year.’’. 3 (b) CONFORMING AMENDMENTS.— 4 (1) Section 24(b)(3)(B) is amended by inserting 5 ‘‘25A(i),’’ after ‘‘23,’’. 6 (2) Section 25(e)(1)(C)(ii) is amended by in7 serting ‘‘25A(i),’’ after ‘‘24,’’. 8 (3) Section 26(a)(1) is amended by inserting 9 ‘‘25A(i),’’ after ‘‘24,’’. 10 (4) Section 25B(g)(2) is amended by inserting 11 ‘‘25A(i),’’ after ‘‘23,’’. 12 (5) Section 904(i) is amended by inserting 13 ‘‘25A(i),’’ after ‘‘24,’’. 14 (6) Section 1400C(d)(2) is amended by insert15 ing ‘‘25A(i),’’ after ‘‘24,’’. 16 (7) Section 1324(b)(2) of title 31, United 17 States Code, is amended by inserting ‘‘25A,’’ before 18 ‘‘35’’. 19 (c) EFFECTIVE DATE.—The amendments made by 20 this section shall apply to taxable years beginning after 21 December 31, 2008. 22 (d) APPLICATION OF EGTRRA SUNSET.—The 23 amendment made by subsection (b)(1) shall be subject to 24 title IX of the Economic Growth and Tax Relief Reconcili f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 16 1 ation Act of 2001 in the same manner as the provision 2 of such Act to which such amendment relates. 3 (e) TREASURY STUDIES REGARDING EDUCATION IN4 CENTIVES.— 5 (1) STUDY REGARDING COORDINATION WITH 6 NON-TAX EDUCATIONAL INCENTIVES.—The Sec7 retary of the Treasury, or the Secretary’s delegate, 8 shall study how to coordinate the credit allowed 9 under section 25A of the Internal Revenue Code of 10 1986 with the Federal Pell Grant program under 11 section 401 of the Higher Education Act of 1965. 12 (2) STUDY REGARDING IMPOSITION OF COMMU13 NITY SERVICE REQUIREMENTS.—The Secretary of 14 the Treasury, or the Secretary’s delegate, shall study 15 the feasibility of requiring students to perform com16 munity service as a condition of taking their tuition 17 and related expenses into account under section 25A 18 of the Internal Revenue Code of 1986. 19 (3) REPORT.—Not later than 1 year after the 20 date of the enactment of this Act, the Secretary of 21 the Treasury, or the Secretary’s delegate, shall re 22 port to Congress on the results of the studies con 23 ducted under this paragraph. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 17 1 Subtitle D—Housing Incentives 2 SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST3 TIME HOMEBUYER CREDIT. 4 (a) IN GENERAL.—Paragraph (4) of section 36(f) is 5 amended by adding at the end the following new subpara6 graph: 7 ‘‘(D) WAIVER OF RECAPTURE FOR PUR8 CHASES IN 2009.—In the case of any credit al9 lowed with respect to the purchase of a prin10 cipal residence after December 31, 2008, and 11 before July 1, 2009— 12 ‘‘(i) paragraph (1) shall not apply, 13 and 14 ‘‘(ii) paragraph (2) shall apply only if 15 the disposition or cessation described in 16 paragraph (2) with respect to such resi17 dence occurs during the 36-month period 18 beginning on the date of the purchase of 19 such residence by the taxpayer.’’. 20 (b) CONFORMING AMENDMENT.—Subsection (g) of 21 section 36 is amended by striking ‘‘subsection (c)’’ and 22 inserting ‘‘subsections (c) and (f)(4)(D)’’. 23 (c) EFFECTIVE DATE.—The amendments made by 24 this section shall apply to residences purchased after De25 cember 31, 2008. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 18 1 SEC. 1302. COORDINATION OF LOW-INCOME HOUSING 2 CREDIT AND LOW-INCOME HOUSING GRANTS. 3 Subsection (i) of section 42 of the Internal Revenue 4 Code of 1986 is amended by adding at the end the fol5 lowing new paragraph: 6 ‘‘(9) COORDINATION WITH LOW-INCOME HOUS7 ING GRANTS.— 8 ‘‘(A) REDUCTION IN STATE HOUSING 9 CREDIT CEILING FOR LOW-INCOME HOUSING 10 GRANTS RECEIVED IN 2009.—For purposes of 11 this section, the amounts described in clauses 12 (i) through (iv) of subsection (h)(3)(C) with re13 spect to any State for 2009 shall each be re14 duced by so much of such amount as is taken 15 into account in determining the amount of any 16 grant to such State under section 1711 of the 17 American Recovery and Reinvestment Tax Act 18 of 2009. 19 ‘‘(B) SPECIAL RULE FOR BASIS.—Basis of 20 a qualified low-income building shall not be re21 duced by the amount of any grant described in 22 subparagraph (A).’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 19 1 Subtitle E—Tax Incentives for 2 Business 3 PART 1—TEMPORARY INVESTMENT INCENTIVES 4 SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 5 ACQUIRED DURING 2009. 6 (a) IN GENERAL.—Paragraph (2) of section 168(k) 7 is amended— 8 (1) by striking ‘‘January 1, 2010’’ and insert9 ing ‘‘January 1, 2011’’, and 10 (2) by striking ‘‘January 1, 2009’’ each place 11 it appears and inserting ‘‘January 1, 2010’’. 12 (b) CONFORMING AMENDMENTS.— 13 (1) The heading for subsection (k) of section 14 168 is amended by striking ‘‘JANUARY 1, 2009’’ and 15 inserting ‘‘JANUARY 1, 2010’’. 16 (2) The heading for clause (ii) of section 17 168(k)(2)(B) is amended by striking ‘‘PRE-JANUARY 18 1, 2009’’ and inserting ‘‘PRE-JANUARY 1, 2010’’. 19 (3) Subparagraph (D) of section 168(k)(4) is 20 amended— 21 (A) by striking ‘‘and’’ at the end of clause 22 (i), 23 (B) by redesignating clause (ii) as clause 24 (v), and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 20 1 (C) by inserting after clause (i) the fol 2 lowing new clauses: 3 ‘‘(ii) ‘April 1, 2008’ shall be sub 4 stituted for ‘January 1, 2008’ in subpara 5 graph (A)(iii)(I) thereof, 6 ‘‘(iii) ‘January 1, 2009’ shall be sub7 stituted for ‘January 1, 2010’ each place it 8 appears, 9 ‘‘(iv) ‘January 1, 2010’ shall be sub10 stituted for ‘January 1, 2011’ in subpara11 graph (A)(iv) thereof, and’’. 12 (4) Subparagraph (B) of section 168(l)(5) is 13 amended by striking ‘‘January 1, 2009’’ and insert14 ing ‘‘January 1, 2010’’. 15 (5) Subparagraph (B) of section 1400N(d)(3) 16 is amended by striking ‘‘January 1, 2009’’ and in17 serting ‘‘January 1, 2010’’. 18 (c) EFFECTIVE DATES.— 19 (1) IN GENERAL.—Except as provided in para20 graph (2), the amendments made by this section 21 shall apply to property placed in service after De 22 cember 31, 2008, in taxable years ending after such 23 date. 24 (2) TECHNICAL AMENDMENT.—Section 25 168(k)(4)(D)(ii) of the Internal Revenue Code of f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 21 1 1986, as added by subsection (b)(3)(C), shall apply 2 to taxable years ending after March 31, 2008. 3 SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EX4 PENSING OF CERTAIN DEPRECIABLE BUSI 5 NESS ASSETS. 6 (a) IN GENERAL.—Paragraph (7) of section 179(b) 7 is amended— 8 (1) by striking ‘‘2008’’ and inserting ‘‘2008, or 9 2009’’, and 10 (2) by striking ‘‘2008’’ in the heading thereof 11 and inserting ‘‘2008, AND 2009’’. 12 (b) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 December 31, 2008. 15 PART 2—5-YEAR CARRYBACK OF OPERATING 16 LOSSES 17 SEC. 1411. 5-YEAR CARRYBACK OF OPERATING LOSSES. 18 (a) IN GENERAL.—Subparagraph (H) of section 19 172(b)(1) is amended to read as follows: 20 ‘‘(H) CARRYBACK FOR 2008 AND 2009 NET 21 OPERATING LOSSES.—In the case of a net oper 22 ating loss for any taxable year ending during 23 2008 or 2009— 24 ‘‘(i) subparagraph (A)(i) shall be ap 25 plied by substituting ‘5’ for ‘2’, f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 22 1 ‘‘(ii) subparagraph (E)(ii) shall be ap 2 plied by substituting ‘4’ for ‘2’, and 3 ‘‘(iii) subparagraph (F) shall not 4 apply.’’. 5 (b) ALTERNATIVE TAX NET OPERATING LOSS DE6 DUCTION.—Subclause (I) of section 56(d)(1)(A)(ii) is 7 amended to read as follows: 8 ‘‘(I) the amount of such deduc9 tion attributable to the sum of 10 carrybacks of net operating losses 11 from taxable years ending during 12 2001, 2002, 2008, or 2009 and 13 carryovers of net operating losses to 14 taxable years ending during such cal15 endar years, or’’. 16 (c) ELECTION TO CARRYBACK A FEWER NUMBER OF 17 YEARS.—Subsection (k) of section 172 is amended by in18 serting ‘‘or may elect to apply such subsection by sub19 stituting a whole number less than 5 for ‘5’ in such sub20 section’’ before the period at the end of the first sentence. 21 (d) LOSS FROM OPERATIONS OF LIFE INSURANCE 22 COMPANIES.—Subsection (b) of section 810 is amended 23 by adding at the end the following new paragraph: 24 ‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSS 25 YEARS.—In the case of a loss from operations for f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 23 1 any taxable year ending during 2008 or 2009, the 2 taxpayer may elect to apply paragraph (1)(A) by 3 substituting any whole number less than 6 for ‘3’. 4 Such election shall be made in such manner as may 5 be prescribed by the Secretary and shall be made by 6 the due date (including extensions of time) for filing 7 the taxpayer’s return for the taxable year of the loss 8 from operations. Such election, once made for any 9 taxable year, shall be irrevocable for such taxable 10 year.’’. 11 (e) EFFECTIVE DATE.— 12 (1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the amendments made by 14 this section shall apply to net operating losses aris15 ing in taxable years ending after December 31, 16 2007. 17 (2) ALTERNATIVE TAX NET OPERATING LOSS 18 DEDUCTION.—The amendment made by subsection 19 (b) shall apply to taxable years ending after 1997. 20 (3) LOSS FROM OPERATIONS OF LIFE INSUR21 ANCE COMPANIES.—The amendment made by sub 22 section (d) shall apply to losses from operations aris 23 ing in taxable years ending after December 31, 24 2007. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 24 1 (4) TRANSITIONAL RULE.—In the case of a net 2 operating loss (or, in the case of a life insurance 3 company, a loss from operations) for a taxable year 4 ending during 2008— 5 (A) any election made under section 6 172(b)(3) or 810(b)(3) of the Internal Revenue 7 Code of 1986 with respect to such loss may 8 (notwithstanding such section) be revoked be9 fore the applicable date, 10 (B) any election made under section 11 172(k) or 810(b)(4) of such Code with respect 12 to such loss shall (notwithstanding such sec13 tion) be treated as timely made if made before 14 the applicable date, and 15 (C) any application under section 6411(a) 16 of such Code with respect to such loss shall be 17 treated as timely filed if filed before the appli18 cable date. 19 For purposes of this paragraph, the term ‘‘applica20 ble date’’ means the date which is 60 days after the 21 date of the enactment of this Act. 22 SEC. 1412. EXCEPTION FOR TARP RECIPIENTS. 23 The amendments made by this part shall not apply 24 to— 25 (1) any taxpayer if— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 25 1 (A) the Federal Government acquires, at 2 any time, an equity interest in the taxpayer 3 pursuant to the Emergency Economic Stabiliza 4 tion Act of 2008, or 5 (B) the Federal Government acquires, at 6 any time, any warrant (or other right) to ac7 quire any equity interest with respect to the 8 taxpayer pursuant to such Act, 9 (2) the Federal National Mortgage Association 10 and the Federal Home Loan Mortgage Corporation, 11 and 12 (3) any taxpayer which at any time in 2008 or 13 2009 is a member of the same affiliated group (as 14 defined in section 1504 of the Internal Revenue 15 Code of 1986, determined without regard to sub16 section (b) thereof) as a taxpayer described in para17 graph (1) or (2). 18 PART 3—INCENTIVES FOR NEW JOBS 19 SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS 20 AND DISCONNECTED YOUTH. 21 (a) IN GENERAL.—Subsection (d) of section 51 is 22 amended by adding at the end the following new para23 graph: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 26 1 ‘‘(14) CREDIT ALLOWED FOR UNEMPLOYED 2 VETERANS AND DISCONNECTED YOUTH HIRED IN 3 2009 OR 2010.— 4 ‘‘(A) IN GENERAL.—Any unemployed vet 5 eran or disconnected youth who begins work for 6 the employer during 2009 or 2010 shall be 7 treated as a member of a targeted group for 8 purposes of this subpart. 9 ‘‘(B) DEFINITIONS.—For purposes of this 10 paragraph— 11 ‘‘(i) UNEMPLOYED VETERAN.—The 12 term ‘unemployed veteran’ means any vet13 eran (as defined in paragraph (3)(B), de14 termined without regard to clause (ii) 15 thereof) who is certified by the designated 16 local agency as— 17 ‘‘(I) having been discharged or 18 released from active duty in the 19 Armed Forces during 2008, 2009, or 20 2010, and 21 ‘‘(II) being in receipt of unem 22 ployment compensation under State or 23 Federal law for not less than 4 weeks 24 during the 1-year period ending on 25 the hiring date. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 27 1 ‘‘(ii) DISCONNECTED YOUTH.—The 2 term ‘disconnected youth’ means any indi 3 vidual who is certified by the designated 4 local agency— 5 ‘‘(I) as having attained age 16 6 but not age 25 on the hiring date, 7 ‘‘(II) as not regularly attending 8 any secondary, technical, or post-sec9 ondary school during the 6-month pe10 riod preceding the hiring date, 11 ‘‘(III) as not regularly employed 12 during such 6-month period, and 13 ‘‘(IV) as not readily employable 14 by reason of lacking a sufficient num15 ber of basic skills.’’. 16 (b) EFFECTIVE DATE.—The amendments made by 17 this section shall apply to individuals who begin work for 18 the employer after December 31, 2008. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 28 1 PART 4—CLARIFICATION OF REGULATIONS RE2 LATED TO LIMITATIONS ON CERTAIN BUILT3 IN LOSSES FOLLOWING AN OWNERSHIP 4 CHANGE 5 SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO 6 LIMITATIONS ON CERTAIN BUILT-IN LOSSES 7 FOLLOWING AN OWNERSHIP CHANGE. 8 (a) FINDINGS.—Congress finds as follows: 9 (1) The delegation of authority to the Secretary 10 of the Treasury under section 382(m) of the Inter11 nal Revenue Code of 1986 does not authorize the 12 Secretary to provide exemptions or special rules that 13 are restricted to particular industries or classes of 14 taxpayers. 15 (2) Internal Revenue Service Notice 2008–83 is 16 inconsistent with the congressional intent in enact17 ing such section 382(m). 18 (3) The legal authority to prescribe Internal 19 Revenue Service Notice 2008–83 is doubtful. 20 (4) However, as taxpayers should generally be 21 able to rely on guidance issued by the Secretary of 22 the Treasury legislation is necessary to clarify the 23 force and effect of Internal Revenue Service Notice 24 2008–83 and restore the proper application under 25 the Internal Revenue Code of 1986 of the limitation f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 29 1 on built-in losses following an ownership change of 2 a bank. 3 (b) DETERMINATION OF FORCE AND EFFECT OF IN4 TERNAL REVENUE SERVICE NOTICE 2008–83 EXEMPT5 ING BANKS FROM LIMITATION ON CERTAIN BUILT–IN 6 LOSSES FOLLOWING OWNERSHIP CHANGE.— 7 (1) IN GENERAL.—Internal Revenue Service 8 Notice 2008–83— 9 (A) shall be deemed to have the force and 10 effect of law with respect to any ownership 11 change (as defined in section 382(g) of the In12 ternal Revenue Code of 1986) occurring on or 13 before January 16, 2009, and 14 (B) shall have no force or effect with re15 spect to any ownership change after such date. 16 (2) BINDING CONTRACTS.—Notwithstanding 17 paragraph (1), Internal Revenue Service Notice 18 2008–83 shall have the force and effect of law with 19 respect to any ownership change (as so defined) 20 which occurs after January 16, 2009 if such 21 change— 22 (A) is pursuant to a written binding con 23 tract entered into on or before such date, or 24 (B) was described on or before such date 25 in a public announcement or in a filing with the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 30 1 Securities and Exchange Commision required 2 by reason of such ownership change. 3 Subtitle F—Fiscal Relief for State 4 and Local Governments 5 PART 1—IMPROVED MARKETABILITY FOR TAX6 EXEMPT BONDS 7 SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX8 EXEMPT INTEREST EXPENSE OF FINANCIAL 9 INSTITUTIONS. 10 (a) IN GENERAL.—Subsection (b) of section 265 is 11 amended by adding at the end the following new para12 graph: 13 ‘‘(7) DE MINIMIS EXCEPTION FOR BONDS 14 ISSUED DURING 2009 OR 2010.— 15 ‘‘(A) IN GENERAL.—In applying paragraph 16 (2)(A), there shall not be taken into account 17 tax-exempt obligations issued during 2009 or 18 2010. 19 ‘‘(B) LIMITATION.—The amount of tax-ex20 empt obligations not taken into account by rea21 son of subparagraph (A) shall not exceed 2 per 22 cent of the amount determined under para 23 graph (2)(B). 24 ‘‘(C) REFUNDINGS.—For purposes of this 25 paragraph, a refunding bond (whether a current f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 31 1 or advance refunding) shall be treated as issued 2 on the date of the issuance of the refunded 3 bond (or in the case of a series of refundings, 4 the original bond).’’. 5 (b) TREATMENT AS FINANCIAL INSTITUTION PREF6 ERENCE ITEM.—Clause (iv) of section 291(e)(1)(B) is 7 amended by adding at the end the following: ‘‘That por8 tion of any obligation not taken into account under para9 graph (2)(A) of section 265(b) by reason of paragraph (7) 10 of such section shall be treated for purposes of this section 11 as having been acquired on August 7, 1986.’’. 12 (c) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to obligations issued after Decem14 ber 31, 2008. 15 SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION 16 TO TAX-EXEMPT INTEREST EXPENSE ALLOCA17 TION RULES FOR FINANCIAL INSTITUTIONS. 18 (a) IN GENERAL.—Paragraph (3) of section 265(b) 19 (relating to exception for certain tax-exempt obligations) 20 is amended by adding at the end the following new sub21 paragraph: 22 ‘‘(G) SPECIAL RULES FOR OBLIGATIONS 23 ISSUED DURING 2009 AND 2010.— 24 ‘‘(i) INCREASE IN LIMITATION.—In 25 the case of obligations issued during 2009 f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 32 1 or 2010, subparagraphs (C)(i), (D)(i), and 2 (D)(iii)(II) shall each be applied by sub 3 stituting ‘$30,000,000’ for ‘$10,000,000’. 4 ‘‘(ii) SPECIAL RULE FOR POOLED 5 FINANCINGS.—In the case of a pooled fi6 nancing issue issued during 2009 or 7 2010— 8 ‘‘(I) subparagraph (F) shall not 9 apply, and 10 ‘‘(II) any obligation issued as a 11 part of such issue shall be treated as 12 a qualified tax-exempt obligation if 13 the requirements of this paragraph 14 are met with respect to each qualified 15 portion of the issue (determined by 16 treating each qualified portion as a 17 separate issue). 18 ‘‘(iii) POOLED FINANCING ISSUE.— 19 For purposes of this subparagraph, the 20 term ‘pooled financing issue’ means any 21 issue the proceeds of which are used di 22 rectly or indirectly to make or finance 23 loans to 2 or more ultimate borrowers all 24 of whom are qualified borrowers. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 33 1 ‘‘(iv) QUALIFIED PORTION.—For pur 2 poses of this subparagraph, the term 3 ‘qualified portion’ means that portion of 4 the proceeds which are used with respect 5 to each qualified borrower under the issue. 6 ‘‘(v) QUALIFIED BORROWER.—For 7 purposes of this subparagraph, the term 8 ‘qualified borrower’ means a borrower 9 which is a State or political subdivision 10 thereof or an organization described in sec11 tion 501(c)(3) and exempt from taxation 12 under section 501(a).’’. 13 (b) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to obligations issued after Decem15 ber 31, 2008. 16 SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE 17 MINIMUM TAX LIMITATIONS ON TAX-EXEMPT 18 BONDS. 19 (a) INTEREST ON PRIVATE ACTIVITY BONDS ISSUED 20 DURING 2009 AND 2010 NOT TREATED AS TAX PREF21 ERENCE ITEM.—Subparagraph (C) of section 57(a)(5) is 22 amended by adding at the end a new clause: 23 ‘‘(vi) EXCEPTION FOR BONDS ISSUED 24 IN 2009 AND 2010.—For purposes of clause 25 (i), the term ‘private activity bond’ shall f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 34 1 not include any bond issued after Decem 2 ber 31, 2008, and before January 1, 2011. 3 For purposes of the preceding sentence, a 4 refunding bond (whether a current or ad 5 vance refunding) shall be treated as issued 6 on the date of the issuance of the refunded 7 bond (or in the case of a series of 8 refundings, the original bond).’’. 9 (b) NO ADJUSTMENT TO ADJUSTED CURRENT 10 EARNINGS FOR INTEREST ON TAX-EXEMPT BONDS 11 ISSUED AFTER 2008.—Subparagraph (B) of section 12 56(g)(4) is amended by adding at the end the following 13 new clause: 14 ‘‘(iv) TAX EXEMPT INTEREST ON 15 BONDS ISSUED IN 2009 AND 2010.—Clause 16 (i) shall not apply in the case of any inter17 est on a bond issued after December 31, 18 2008, and before January 1, 2011. For 19 purposes of the preceding sentence, a re20 funding bond (whether a current or ad21 vance refunding) shall be treated as issued 22 on the date of the issuance of the refunded 23 bond (or in the case of a series of 24 refundings, the original bond).’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 35 1 (c) EFFECTIVE DATE.—The amendments made by 2 this section shall apply to obligations issued after Decem3 ber 31, 2008. 4 PART 2—TAX CREDIT BONDS FOR SCHOOLS 5 SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS. 6 (a) IN GENERAL.—Subpart I of part IV of sub7 chapter A of chapter 1 is amended by adding at the end 8 the following new section: 9 ‘‘SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS. 10 ‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.— 11 For purposes of this subchapter, the term ‘qualified school 12 construction bond’ means any bond issued as part of an 13 issue if— 14 ‘‘(1) 100 percent of the available project pro15 ceeds of such issue are to be used for the construc16 tion, rehabilitation, or repair of a public school facil17 ity or for the acquisition of land on which such a fa18 cility is to be constructed with part of the proceeds 19 of such issue, 20 ‘‘(2) the bond is issued by a State or local gov21 ernment within the jurisdiction of which such school 22 is located, and 23 ‘‘(3) the issuer designates such bond for pur 24 poses of this section. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 36 1 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES2 IGNATED.—The maximum aggregate face amount of 3 bonds issued during any calendar year which may be des4 ignated under subsection (a) by any issuer shall not exceed 5 the sum of— 6 ‘‘(1) the limitation amount allocated under sub7 section (d) for such calendar year to such issuer, 8 and 9 ‘‘(2) if such issuer is a large local educational 10 agency (as defined in subsection (e)(4)) or is issuing 11 on behalf of such an agency, the limitation amount 12 allocated under subsection (e) for such calendar year 13 to such agency. 14 ‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS 15 DESIGNATED.—There is a national qualified school con16 struction bond limitation for each calendar year. Such lim17 itation is— 18 ‘‘(1) $10,000,000,000 for 2009, 19 ‘‘(2) $10,000,000,000 for 2010, and 20 ‘‘(3) except as provided in subsection (f), zero 21 after 2010. 22 ‘‘(d) 60 PERCENT OF LIMITATION ALLOCATED 23 AMONG STATES.— 24 ‘‘(1) IN GENERAL.—60 percent of the limitation 25 applicable under subsection (c) for any calendar year f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 37 1 shall be allocated by the Secretary among the States 2 in proportion to the respective numbers of children 3 in each State who have attained age 5 but not age 4 18 for the most recent fiscal year ending before such 5 calendar year. The limitation amount allocated to a 6 State under the preceding sentence shall be allocated 7 by the State to issuers within such State. 8 ‘‘(2) MINIMUM ALLOCATIONS TO STATES.— 9 ‘‘(A) IN GENERAL.—The Secretary shall 10 adjust the allocations under this subsection for 11 any calendar year for each State to the extent 12 necessary to ensure that the sum of— 13 ‘‘(i) the amount allocated to such 14 State under this subsection for such year, 15 and 16 ‘‘(ii) the aggregate amounts allocated 17 under subsection (e) to large local edu18 cational agencies in such State for such 19 year, 20 is not less than an amount equal to such 21 State’s adjusted minimum percentage of the 22 amount to be allocated under paragraph (1) for 23 the calendar year. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 38 1 ‘‘(B) ADJUSTED MINIMUM PERCENTAGE.— 2 A State’s adjusted minimum percentage for any 3 calendar year is the product of— 4 ‘‘(i) the minimum percentage de5 scribed in section 1124(d) of the Elemen6 tary and Secondary Education Act of 1965 7 (20 U.S.C. 6334(d)) for such State for the 8 most recent fiscal year ending before such 9 calendar year, multiplied by 10 ‘‘(ii) 1.68. 11 ‘‘(3) ALLOCATIONS TO CERTAIN POSSES12 SIONS.—The amount to be allocated under para13 graph (1) to any possession of the United States 14 other than Puerto Rico shall be the amount which 15 would have been allocated if all allocations under 16 paragraph (1) were made on the basis of respective 17 populations of individuals below the poverty line (as 18 defined by the Office of Management and Budget). 19 In making other allocations, the amount to be allo20 cated under paragraph (1) shall be reduced by the 21 aggregate amount allocated under this paragraph to 22 possessions of the United States. 23 ‘‘(4) ALLOCATIONS FOR INDIAN SCHOOLS.—In 24 addition to the amounts otherwise allocated under 25 this subsection, $200,000,000 for calendar year f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 39 1 2009, and $200,000,000 for calendar year 2010, 2 shall be allocated by the Secretary of the Interior for 3 purposes of the construction, rehabilitation, and re 4 pair of schools funded by the Bureau of Indian Af 5 fairs. In the case of amounts allocated under the 6 preceding sentence, Indian tribal governments (as 7 defined in section 7701(a)(40)) shall be treated as 8 qualified issuers for purposes of this subchapter. 9 ‘‘(e) 40 PERCENT OF LIMITATION ALLOCATED 10 AMONG LARGEST SCHOOL DISTRICTS.— 11 ‘‘(1) IN GENERAL.—40 percent of the limitation 12 applicable under subsection (c) for any calendar year 13 shall be allocated under paragraph (2) by the Sec14 retary among local educational agencies which are 15 large local educational agencies for such year. 16 ‘‘(2) ALLOCATION FORMULA.—The amount to 17 be allocated under paragraph (1) for any calendar 18 year shall be allocated among large local educational 19 agencies in proportion to the respective amounts 20 each such agency received for Basic Grants under 21 subpart 2 of part A of title I of the Elementary and 22 Secondary Education Act of 1965 (20 U.S.C. 6331 23 et seq.) for the most recent fiscal year ending before 24 such calendar year. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 40 1 ‘‘(3) ALLOCATION OF UNUSED LIMITATION TO 2 STATE.—The amount allocated under this subsection 3 to a large local educational agency for any calendar 4 year may be reallocated by such agency to the State 5 in which such agency is located for such calendar 6 year. Any amount reallocated to a State under the 7 preceding sentence may be allocated as provided in 8 subsection (d)(1). 9 ‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.— 10 For purposes of this section, the term ‘large local 11 educational agency’ means, with respect to a cal12 endar year, any local educational agency if such 13 agency is— 14 ‘‘(A) among the 100 local educational 15 agencies with the largest numbers of children 16 aged 5 through 17 from families living below 17 the poverty level, as determined by the Sec18 retary using the most recent data available 19 from the Department of Commerce that are 20 satisfactory to the Secretary, or 21 ‘‘(B) 1 of not more than 25 local edu 22 cational agencies (other than those described in 23 subparagraph (A)) that the Secretary of Edu 24 cation determines (based on the most recent 25 data available satisfactory to the Secretary) are f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 41 1 in particular need of assistance, based on a low 2 level of resources for school construction, a high 3 level of enrollment growth, or such other factors 4 as the Secretary deems appropriate. 5 ‘‘(f) CARRYOVER OF UNUSED LIMITATION.—If for 6 any calendar year— 7 ‘‘(1) the amount allocated under subsection (d) 8 to any State, exceeds 9 ‘‘(2) the amount of bonds issued during such 10 year which are designated under subsection (a) pur11 suant to such allocation, 12 the limitation amount under such subsection for such 13 State for the following calendar year shall be increased 14 by the amount of such excess. A similar rule shall apply 15 to the amounts allocated under subsection (d)(4) or (e).’’. 16 (b) CONFORMING AMENDMENTS.— 17 (1) Paragraph (1) of section 54A(d) is amended 18 by striking ‘‘or’’ at the end of subparagraph (C), by 19 inserting ‘‘or’’ at the end of subparagraph (D), and 20 by inserting after subparagraph (D) the following 21 new subparagraph: 22 ‘‘(E) a qualified school construction 23 bond,’’. 24 (2) Subparagraph (C) of section 54A(d)(2) is 25 amended by striking ‘‘and’’ at the end of clause (iii), f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 42 1 by striking the period at the end of clause (iv) and 2 inserting ‘‘, and’’, and by adding at the end the fol 3 lowing new clause: 4 ‘‘(v) in the case of a qualified school 5 construction bond, a purpose specified in 6 section 54F(a)(1).’’. 7 (3) The table of sections for subpart I of part 8 IV of subchapter A of chapter 1 is amended by add9 ing at the end the following new item: ‘‘Sec. 54F. Qualified school construction bonds.’’. 10 (c) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to obligations issued after Decem12 ber 31, 2008. 13 SEC. 1512. EXTENSION AND EXPANSION OF QUALIFIED 14 ZONE ACADEMY BONDS. 15 (a) IN GENERAL.—Section 54E(c)(1) is amended by 16 striking ‘‘and 2009’’ and inserting ‘‘and $1,400,000,000 17 for 2009 and 2010’’. 18 (b) EFFECTIVE DATE.—The amendment made by 19 this section shall apply to obligations issued after Decem20 ber 31, 2008. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 43 1 PART 3—TAXABLE BOND OPTION FOR 2 GOVERNMENTAL BONDS 3 SEC. 1521. TAXABLE BOND OPTION FOR GOVERNMENTAL 4 BONDS. 5 (a) IN GENERAL.—Part IV of subchapter A of chap6 ter 1 is amended by adding at the end the following new 7 subpart: 8 ‘‘Subpart J—Taxable Bond Option for Governmental 9 Bonds ‘‘Sec. 54AA. Taxable bond option for governmental bonds. 10 ‘‘SEC. 54AA. TAXABLE BOND OPTION FOR GOVERNMENTAL 11 BONDS. 12 ‘‘(a) IN GENERAL.—If a taxpayer holds a taxable 13 governmental bond on one or more interest payment dates 14 of the bond during any taxable year, there shall be allowed 15 as a credit against the tax imposed by this chapter for 16 the taxable year an amount equal to the sum of the credits 17 determined under subsection (b) with respect to such 18 dates. 19 ‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 20 determined under this subsection with respect to any in21 terest payment date for a taxable governmental bond is 22 35 percent of the amount of interest payable by the issuer 23 with respect to such date. 24 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 44 1 ‘‘(1) IN GENERAL.—The credit allowed under 2 subsection (a) for any taxable year shall not exceed 3 the excess of— 4 ‘‘(A) the sum of the regular tax liability 5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 7 ‘‘(B) the sum of the credits allowable 8 under this part (other than subpart C and this 9 subpart). 10 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 11 credit allowable under subsection (a) exceeds the 12 limitation imposed by paragraph (1) for such taxable 13 year, such excess shall be carried to the succeeding 14 taxable year and added to the credit allowable under 15 subsection (a) for such taxable year (determined be16 fore the application of paragraph (1) for such suc17 ceeding taxable year). 18 ‘‘(d) TAXABLE GOVERNMENTAL BOND.— 19 ‘‘(1) IN GENERAL.—For purposes of this sec20 tion, the term ‘taxable governmental bond’ means 21 any obligation (other than a private activity bond) 22 if— 23 ‘‘(A) the interest on such obligation would 24 (but for this section) be excludable from gross 25 income under section 103, and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 45 1 ‘‘(B) the issuer makes an irrevocable elec 2 tion to have this section apply. 3 ‘‘(2) APPLICABLE RULES.—For purposes of ap 4 plying paragraph (1)— 5 ‘‘(A) a taxable governmental bond shall not 6 be treated as federally guaranteed by reason of 7 the credit allowed under subsection (a) or sec8 tion 6431, 9 ‘‘(B) the yield on a taxable governmental 10 bond shall be determined without regard to the 11 credit allowed under subsection (a), and 12 ‘‘(C) a bond shall not be treated as a tax13 able governmental bond if the issue price has 14 more than a de minimis amount (determined 15 under rules similar to the rules of section 16 1273(a)(3)) of premium over the stated prin17 cipal amount of the bond. 18 ‘‘(e) INTEREST PAYMENT DATE.—For purposes of 19 this section, the term ‘interest payment date’ means any 20 date on which the holder of record of the taxable govern21 mental bond is entitled to a payment of interest under 22 such bond. 23 ‘‘(f) SPECIAL RULES.— 24 ‘‘(1) INTEREST ON TAXABLE GOVERNMENTAL 25 BONDS INCLUDIBLE IN GROSS INCOME FOR FED- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 46 1 ERAL INCOME TAX PURPOSES.—For purposes of this 2 title, interest on any taxable governmental bond 3 shall be includible in gross income. 4 ‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 5 similar to the rules of subsections (f), (g), (h), and 6 (i) of section 54A shall apply for purposes of the 7 credit allowed under subsection (a). 8 ‘‘(g) SPECIAL RULE FOR QUALIFIED BONDS ISSUED 9 BEFORE 2011.—In the case of a qualified bond issued be10 fore January 1, 2011— 11 ‘‘(1) ISSUER ALLOWED REFUNDABLE CRED12 IT.—In lieu of any credit allowed under this section 13 with respect to such bond, the issuer of such bond 14 shall be allowed a credit as provided in section 6431. 15 ‘‘(2) QUALIFIED BOND.—For purposes of this 16 subsection, the term ‘qualified bond’ means any tax17 able governmental bond issued as part of an issue 18 if— 19 ‘‘(A) 100 percent of the available project 20 proceeds (as defined in section 54A) of such 21 issue are to be used for capital expenditures, 22 and 23 ‘‘(B) the issuer makes an irrevocable elec 24 tion to have this subsection apply.’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 47 1 (b) CREDIT FOR QUALIFIED BONDS ISSUED BEFORE 2 2011.—Subchapter B of chapter 65 is amended by adding 3 at the end the following new section: 4 ‘‘SEC. 6431. CREDIT FOR QUALIFIED BONDS ALLOWED TO 5 ISSUER. 6 ‘‘(a) IN GENERAL.—In the case of a qualified bond 7 issued before January 1, 2011, the issuer of such bond 8 shall be allowed a credit with respect to each interest pay9 ment under such bond which shall be payable by the Sec10 retary as provided in subsection (b). 11 ‘‘(b) PAYMENT OF CREDIT.—The Secretary shall pay 12 (contemporaneously with each interest payment date 13 under such bond) to the issuer of such bond (or to any 14 person who makes such interest payments on behalf of the 15 issuer) 35 percent of the interest payable under such bond 16 on such date. 17 ‘‘(c) APPLICATION OF ARBITRAGE RULES.—For pur18 poses of section 148, the yield on a qualified bond shall 19 be reduced by the credit allowed under this section. 20 ‘‘(d) INTEREST PAYMENT DATE.—For purposes of 21 this subsection, the term ‘interest payment date’ means 22 each date on which interest is payable by the issuer under 23 the terms of the bond. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 48 1 ‘‘(e) QUALIFIED BOND.—For purposes of this sub2 section, the term ‘qualified bond’ has the meaning given 3 such term in section 54AA(h).’’. 4 (c) CONFORMING AMENDMENTS.— 5 (1) Section 1324(b)(2) of title 31, United 6 States Code, is amended by striking ‘‘or 6428’’ and 7 inserting ‘‘6428, or 6431,’’. 8 (2) Section 54A(c)(1)(B) is amended by strik9 ing ‘‘subpart C’’ and inserting ‘‘subparts C and J’’. 10 (3) Sections 54(c)(2), 1397E(c)(2), and 11 1400N(l)(3)(B) are each amended by striking ‘‘and 12 I’’ and inserting ‘‘, I, and J’’. 13 (4) Section 6401(b)(1) is amended by striking 14 ‘‘and I’’ and inserting ‘‘I, and J’’. 15 (5) The table of subparts for part IV of sub16 chapter A of chapter 1 is amended by adding at the 17 end the following new item: ‘‘Subpart J. Taxable bond option for governmental bonds.’’. 18 (6) The table of section for subchapter B of 19 chapter 65 is amended by adding at the end the fol20 lowing new item: ‘‘Sec. 6431. Credit for qualified bonds allowed to issuer on advance basis.’’. 21 (d) TRANSITIONAL COORDINATION WITH STATE 22 LAW.—Except as otherwise provided by a State after the 23 date of the enactment of this Act, the interest on any tax24 able governmental bond (as defined in section 54AA of f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 49 1 the Internal Revenue Code of 1986, as added by this sec2 tion) and the amount of any credit determined under such 3 section with respect to such bond shall be treated for pur4 poses of the income tax laws of such State as being exempt 5 from Federal income tax. 6 (e) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to obligations issued after the date 8 of the enactment of this Act. 9 PART 4—RECOVERY ZONE BONDS 10 SEC. 1531. RECOVERY ZONE BONDS. 11 (a) IN GENERAL.—Subchapter Y of chapter 1 is 12 amended by adding at the end the following new part: 13 ‘‘PART III—RECOVERY ZONE BONDS ‘‘Sec. 1400U–1. Allocation of recovery zone bonds. ‘‘Sec. 1400U–2. Recovery zone economic development bonds. ‘‘Sec. 1400U–3. Recovery zone facility bonds. 14 ‘‘SEC. 1400U–1. ALLOCATION OF RECOVERY ZONE BONDS. 15 ‘‘(a) ALLOCATIONS.— 16 ‘‘(1) IN GENERAL.—The Secretary shall allo17 cate the national recovery zone economic develop18 ment bond limitation and the national recovery zone 19 facility bond limitation among the States in the pro 20 portion that each such State’s 2008 State employ 21 ment decline bears to the aggregate of the 2008 22 State employment declines for all of the States. 23 ‘‘(2) 2008 STATE EMPLOYMENT DECLINE.—For 24 purposes of this subsection, the term ‘2008 State f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 50 1 employment decline’ means, with respect to any 2 State, the excess (if any) of— 3 ‘‘(A) the number of individuals employed 4 in such State determined for December 2007, 5 over 6 ‘‘(B) the number of individuals employed 7 in such State determined for December 2008. 8 ‘‘(3) ALLOCATIONS BY STATES.— 9 ‘‘(A) IN GENERAL.—Each State with re10 spect to which an allocation is made under 11 paragraph (1) shall reallocate such allocation 12 among the counties and large municipalities in 13 such State in the proportion the each such 14 county’s or municipality’s 2008 employment de15 cline bears to the aggregate of the 2008 em16 ployment declines for all the counties and mu17 nicipalities in such State. 18 ‘‘(B) LARGE MUNICIPALITIES.—For pur19 poses of subparagraph (A), the term ‘large mu20 nicipality’ means a municipality with a popu21 lation of more than 100,000. 22 ‘‘(C) DETERMINATION OF LOCAL EMPLOY 23 MENT DECLINES.—For purposes of this para 24 graph, the employment decline of any munici 25 pality or county shall be determined in the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 51 1 same manner as determining the State employ 2 ment decline under paragraph (2), except that 3 in the case of a municipality any portion of 4 which is in a county, such portion shall be 5 treated as part of such municipality and not 6 part of such county. 7 ‘‘(4) NATIONAL LIMITATIONS.— 8 ‘‘(A) RECOVERY ZONE ECONOMIC DEVEL9 OPMENT BONDS.—There is a national recovery 10 zone economic development bond limitation of 11 $10,000,000,000. 12 ‘‘(B) RECOVERY ZONE FACILITY BONDS.— 13 There is a national recovery zone facility bond 14 limitation of $15,000,000,000. 15 ‘‘(b) RECOVERY ZONE.—For purposes of this part, 16 the term ‘recovery zone’ means— 17 ‘‘(1) any area designated by the issuer as hav18 ing significant poverty, unemployment, or rate of 19 home foreclosures, and 20 ‘‘(2) any area for which a designation as an em21 powerment zone or renewal community is in effect. 22 ‘‘SEC. 1400U–2. RECOVERY ZONE ECONOMIC DEVELOPMENT 23 BONDS. 24 ‘‘(a) IN GENERAL.—In the case of a recovery zone 25 economic development bond— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 52 1 ‘‘(1) such bond shall be treated as a qualified 2 bond for purposes of section 6431, and 3 ‘‘(2) subsection (b) of such section shall be ap 4 plied by substituting ‘40 percent’ for ‘35 percent’. 5 ‘‘(b) RECOVERY ZONE ECONOMIC DEVELOPMENT 6 BOND.— 7 ‘‘(1) IN GENERAL.—For purposes of this sec8 tion, the term ‘recovery zone economic development 9 bond’ means any taxable governmental bond (as de10 fined in section 54AA(d)) issued before January 1, 11 2011, as part of issue if— 12 ‘‘(A) 100 percent of the available project 13 proceeds (as defined in section 54A) of such 14 issue are to be used for one or more qualified 15 economic development purposes, and 16 ‘‘(B) the issuer designates such bond for 17 purposes of this section. 18 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES19 IGNATED.—The maximum aggregate face amount of 20 bonds which may be designated by any issuer under 21 paragraph (1) shall not exceed the amount of the re 22 covery zone economic development bond limitation 23 allocated to such issuer under section 1400U–1. 24 ‘‘(c) QUALIFIED ECONOMIC DEVELOPMENT PUR25 POSE.—For purposes of this section, the term ‘qualified f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 53 1 economic development purpose’ means expenditures for 2 purposes of promoting development or other economic ac3 tivity in a recovery zone, including— 4 ‘‘(1) capital expenditures paid or incurred with 5 respect to property located in such zone, 6 ‘‘(2) expenditures for public infrastructure and 7 construction of public facilities, and 8 ‘‘(3) expenditures for job training and edu9 cational programs. 10 ‘‘SEC. 1400U–3. RECOVERY ZONE FACILITY BONDS. 11 ‘‘(a) IN GENERAL.—For purposes of part IV of sub12 chapter B (relating to tax exemption requirements for 13 State and local bonds), the term ‘exempt facility bond’ in14 cludes any recovery zone facility bond. 15 ‘‘(b) RECOVERY ZONE FACILITY BOND.— 16 ‘‘(1) IN GENERAL.—For purposes of this sec17 tion, the term ‘recovery zone facility bond’ means 18 any bond issued as part of an issue if— 19 ‘‘(A) 95 percent or more of the net pro20 ceeds (as defined in section 150(a)(3)) of such 21 issue are to be used for recovery zone property, 22 ‘‘(B) such bond is issued before January 1, 23 2011, and 24 ‘‘(C) the issuer designates such bond for 25 purposes of this section. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 54 1 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES 2 IGNATED.—The maximum aggregate face amount of 3 bonds which may be designated by any issuer under 4 paragraph (1) shall not exceed the amount of recov 5 ery zone facility bond limitation allocated to such 6 issuer under section 1400U–1. 7 ‘‘(c) RECOVERY ZONE PROPERTY.—For purposes of 8 this section— 9 ‘‘(1) IN GENERAL.—The term ‘recovery zone 10 property’ means any property to which section 168 11 applies (or would apply but for section 179) if— 12 ‘‘(A) such property was acquired by the 13 taxpayer by purchase (as defined in section 14 179(d)(2)) after the date on which the designa15 tion of the recovery zone took effect, 16 ‘‘(B) the original use of which in the recov17 ery zone commences with the taxpayer, and 18 ‘‘(C) substantially all of the use of which 19 is in the recovery zone and is in the active con20 duct of a qualified business by the taxpayer in 21 such zone. 22 ‘‘(2) QUALIFIED BUSINESS.—The term ‘quali 23 fied business’ means any trade or business except 24 that— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 55 1 ‘‘(A) the rental to others of real property 2 located in a recovery zone shall be treated as a 3 qualified business only if the property is not 4 residential rental property (as defined in section 5 168(e)(2)), and 6 ‘‘(B) such term shall not include any trade 7 or business consisting of the operation of any 8 facility described in section 144(c)(6)(B). 9 ‘‘(3) SPECIAL RULES FOR SUBSTANTIAL REN10 OVATIONS AND SALE-LEASEBACK.—Rules similar to 11 the rules of subsections (a)(2) and (b) of section 12 1397D shall apply for purposes of this subsection. 13 ‘‘(d) NONAPPLICATION OF CERTAIN RULES.—Sec14 tions 146 (relating to volume cap) and 147(d) (relating 15 to acquisition of existing property not permitted) shall not 16 apply to any recovery zone facility bond.’’. 17 (b) CLERICAL AMENDMENT.—The table of parts for 18 subchapter Y of chapter 1 of such Code is amended by 19 adding at the end the following new item: ‘‘PART III. RECOVERY ZONE BONDS.’’. 20 (c) EFFECTIVE DATE.—The amendments made by 21 this section shall apply to obligations issued after the date 22 of the enactment of this Act. 23 SEC. 1532. TRIBAL ECONOMIC DEVELOPMENT BONDS. 24 (a) IN GENERAL.—Section 7871 is amended by add25 ing at the end the following new subsection: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 56 1 ‘‘(f) TRIBAL ECONOMIC DEVELOPMENT BONDS.— 2 ‘‘(1) ALLOCATION OF LIMITATION.— 3 ‘‘(A) IN GENERAL.—The Secretary shall 4 allocate the national tribal economic develop 5 ment bond limitation among the Indian tribal 6 governments in such manner as the Secretary, 7 in consultation with the Secretary of the Inte8 rior, determines appropriate. 9 ‘‘(B) NATIONAL LIMITATION.—There is a 10 national tribal economic development bond limi11 tation of $2,000,000,000. 12 ‘‘(2) BONDS TREATED AS EXEMPT FROM 13 TAX.—In the case of a tribal economic development 14 bond— 15 ‘‘(A) notwithstanding subsection (c), such 16 bond shall be treated for purposes of this title 17 in the same manner as if such bond were issued 18 by a State, and 19 ‘‘(B) section 146 shall not apply. 20 ‘‘(3) TRIBAL ECONOMIC DEVELOPMENT 21 BOND.— 22 ‘‘(A) IN GENERAL.—For purposes of this 23 section, the term ‘tribal economic development 24 bond’ means any bond issued by an Indian trib 25 al government— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 57 1 ‘‘(i) the interest on which is not ex 2 empt from tax under section 103 by reason 3 of subsection (c) (determined without re 4 gard to this subsection) but would be so 5 exempt if issued by a State or local govern6 ment, and 7 ‘‘(ii) which is designated by the In8 dian tribal government as a tribal eco9 nomic development bond for purposes of 10 this subsection. 11 ‘‘(B) EXCEPTIONS.—The term tribal eco12 nomic development bond shall not include any 13 bond issued as part of an issue if any portion 14 of the proceeds of such issue are used to fi15 nance— 16 ‘‘(i) any portion of a building in which 17 class II or class III gaming (as defined in 18 section 4 of the Indian Gaming Regulatory 19 Act) is conducted or housed or any other 20 property actually used in the conduct of 21 such gaming, or 22 ‘‘(ii) any facility located outside the 23 Indian reservation (as defined in section 24 168(j)(6)). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 58 1 ‘‘(C) LIMITATION ON AMOUNT OF BONDS 2 DESIGNATED.—The maximum aggregate face 3 amount of bonds which may be designated by 4 any Indian tribal government under subpara 5 graph (A) shall not exceed the amount of na6 tional tribal economic development bond limita7 tion allocated to such government under para8 graph (1).’’. 9 (b) STUDY.—The Secretary of the Treasury, or the 10 Secretary’s delegate, shall conduct a study of the effects 11 of the amendment made by subsection (a). Not later than 12 1 year after the date of the enactment of this Act, the 13 Secretary of the Treasury, or the Secretary’s delegate, 14 shall report to Congress on the results of the studies con15 ducted under this paragraph, including the Secretary’s 16 recommendations regarding such amendment. 17 (c) EFFECTIVE DATE.—The amendment made by 18 subsection (a) shall apply to obligations issued after the 19 date of the enactment of this Act. 20 PART 5—REPEAL OF WITHHOLDING TAX ON 21 GOVERNMENT CONTRACTORS 22 SEC. 1541. REPEAL OF WITHHOLDING TAX ON GOVERN23 MENT CONTRACTORS. 24 Section 3402 is amended by striking subsection (t). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 59 1 Subtitle G—Energy Incentives 2 PART 1—RENEWABLE ENERGY INCENTIVES 3 SEC. 1601. EXTENSION OF CREDIT FOR ELECTRICITY PRO4 DUCED FROM CERTAIN RENEWABLE RE5 SOURCES. 6 (a) IN GENERAL.—Subsection (d) of section 45 is 7 amended— 8 (1) by striking ‘‘2010’’ in paragraph (1) and in9 serting ‘‘2013’’, 10 (2) by striking ‘‘2011’’ each place it appears in 11 paragraphs (2), (3), (4), (6), (7) and (9) and insert12 ing ‘‘2014’’, and 13 (3) by striking ‘‘2012’’ in paragraph (11)(B) 14 and inserting ‘‘2014’’. 15 (b) TECHNICAL AMENDMENT.—Paragraph (5) of 16 section 45(d) is amended by striking ‘‘and before’’ and 17 all that follows and inserting ‘‘ and before October 3, 18 2008.’’. 19 (c) EFFECTIVE DATE.— 20 (1) IN GENERAL.—The amendments made by 21 subsection (a) shall apply to property placed in serv 22 ice after the date of the enactment of this Act. 23 (2) TECHNICAL AMENDMENT.—The amendment 24 made by subsection (b) shall take effect as if in- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 60 1 cluded in section 102 of the Energy Improvement 2 and Extension Act of 2008. 3 SEC. 1602. ELECTION OF INVESTMENT CREDIT IN LIEU OF 4 PRODUCTION CREDIT. 5 (a) IN GENERAL.—Subsection (a) of section 48 is 6 amended by adding at the end the following new para7 graph: 8 ‘‘(5) ELECTION TO TREAT QUALIFIED FACILI9 TIES AS ENERGY PROPERTY.— 10 ‘‘(A) IN GENERAL.—In the case of any 11 qualified investment credit facility placed in 12 service in 2009 or 2010— 13 ‘‘(i) such facility shall be treated as 14 energy property for purposes of this sec15 tion, and 16 ‘‘(ii) the energy percentage with re17 spect to such property shall be 30 percent. 18 ‘‘(B) DENIAL OF PRODUCTION CREDIT.— 19 No credit shall be allowed under section 45 for 20 any taxable year with respect to any qualified 21 investment credit facility. 22 ‘‘(C) QUALIFIED INVESTMENT CREDIT FA 23 CILITY.—For purposes of this paragraph, the 24 term ‘qualified investment credit facility’ means 25 any facility described in paragraph (1), (2), (3), f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 61 1 (4), (6), (7), (9), or (11) of section 45(d) if no 2 credit has been allowed under section 45 with 3 respect to such facility and the taxpayer makes 4 an irrevocable election to have this paragraph 5 apply to such facility.’’. 6 (b) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to facilities placed in service after 8 December 31, 2008. 9 SEC. 1603. REPEAL OF CERTAIN LIMITATIONS ON CREDIT 10 FOR RENEWABLE ENERGY PROPERTY. 11 (a) REPEAL OF LIMITATION ON CREDIT FOR QUALI12 FIED SMALL WIND ENERGY PROPERTY.—Paragraph (4) 13 of section 48(c) is amended by striking subparagraph (B) 14 and by redesignating subparagraphs (C) and (D) as sub15 paragraphs (B) and (C). 16 (b) REPEAL OF LIMITATION ON PROPERTY FI17 NANCED BY SUBSIDIZED ENERGY FINANCING.— 18 (1) IN GENERAL.—Subsection (a) of section 48 19 is amended by striking paragraph (4). 20 (2) CONFORMING AMENDMENTS.— 21 (A) Section 25C(e)(1) is amended by strik 22 ing ‘‘(8), and (9)’’ and inserting ‘‘and (8)’’. 23 (B) Section 25D(e) is amended by striking 24 paragraph (9). 25 (c) EFFECTIVE DATE.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 62 1 (1) IN GENERAL.—Except as provided in para 2 graph (2),the amendment made by this section shall 3 apply to periods after December 31, 2008, under 4 rules similar to the rules of section 48(m) of the In 5 ternal Revenue Code of 1986 (as in effect on the day 6 before the date of the enactment of the Revenue 7 Reconciliation Act of 1990). 8 (2) CONFORMING AMENDMENTS.—The amend9 ments made by subsection (b)(2) shall apply to tax10 able years beginning after December 31, 2008. 11 SEC. 1604. COORDINATION WITH RENEWABLE ENERGY 12 GRANTS. 13 Section 48 is amended by adding at the end the fol14 lowing new subsection: 15 ‘‘(d) COORDINATION WITH DEPARTMENT OF EN16 ERGY GRANTS.—In the case of any property with respect 17 to which the Secretary of Energy makes a grant under 18 section 1721 of the American Recovery and Reinvestment 19 Tax Act of 2009— 20 ‘‘(1) DENIAL OF PRODUCTION AND INVEST21 MENT CREDITS.—No credit shall be determined 22 under this section or section 45 with respect to such 23 property for the taxable year in which such grant is 24 made or any subsequent taxable year. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 63 1 ‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS 2 EXPENDITURES MADE BEFORE GRANT.—If a credit 3 was determined under this section with respect to 4 such property for any taxable year ending before 5 such grant is made— 6 ‘‘(A) the tax imposed under subtitle A on 7 the taxpayer for the taxable year in which such 8 grant is made shall be increased by so much of 9 such credit as was allowed under section 38, 10 ‘‘(B) the general business carryforwards 11 under section 39 shall be adjusted so as to re12 capture the portion of such credit which was 13 not so allowed, and 14 ‘‘(C) the amount of such grant shall be de15 termined without regard to any reduction in the 16 basis of such property by reason of such credit. 17 ‘‘(3) TREATMENT OF GRANTS.—Any such grant 18 shall— 19 ‘‘(A) not be includible in the gross income 20 of the taxpayer, but 21 ‘‘(B) shall be taken into account in deter 22 mining the basis of the property to which such 23 grant relates, except that the basis of such 24 property shall be reduced under section 50(c) in f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 64 1 the same manner as a credit allowed under sub 2 section (a).’’. 3 PART 2—INCREASED ALLOCATIONS OF NEW 4 CLEAN RENEWABLE ENERGY BONDS AND 5 QUALIFIED ENERGY CONSERVATION BONDS 6 SEC. 1611. INCREASED LIMITATION ON ISSUANCE OF NEW 7 CLEAN RENEWABLE ENERGY BONDS. 8 Subsection (c) of section 54C is amended by adding 9 at the end the following new paragraph: 10 ‘‘(4) ADDITIONAL LIMITATION.—The national 11 new clean renewable energy bond limitation shall be 12 increased by $1,600,000,000. Such increase shall be 13 allocated by the Secretary consistent with the rules 14 of paragraphs (2) and (3).’’. 15 SEC. 1612. INCREASED LIMITATION ON ISSUANCE OF 16 QUALIFIED ENERGY CONSERVATION BONDS. 17 Subsection (e) of section 54D is amended by adding 18 at the end the following new paragraph: 19 ‘‘(4) ADDITIONAL LIMITATION.—The national 20 qualified energy conservation bond limitation shall 21 be increased by $2,400,000,000. Such increase shall 22 be allocated by the Secretary consistent with the 23 rules of paragraphs (1), (2), and (3).’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 65 1 PART 3—ENERGY CONSERVATION INCENTIVES 2 SEC. 1621. EXTENSION AND MODIFICATION OF CREDIT FOR 3 NONBUSINESS ENERGY PROPERTY. 4 (a) IN GENERAL.—Section 25C is amended by strik5 ing subsections (a) and (b) and inserting the following new 6 subsections: 7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in8 dividual, there shall be allowed as a credit against the tax 9 imposed by this chapter for the taxable year an amount 10 equal to 30 percent of the sum of— 11 ‘‘(1) the amount paid or incurred by the tax12 payer during such taxable year for qualified energy 13 efficiency improvements, and 14 ‘‘(2) the amount of the residential energy prop15 erty expenditures paid or incurred by the taxpayer 16 during such taxable year. 17 ‘‘(b) LIMITATION.—The aggregate amount of the 18 credits allowed under this section for taxable years begin19 ning in 2009 and 2010 with respect to any taxpayer shall 20 not exceed $1,500.’’. 21 (b) EXTENSION.—Section 25C(g)(2) is amended by 22 striking ‘‘December 31, 2009’’ and inserting ‘‘December 23 31, 2010’’. 24 (c) EFFECTIVE DATE.—The amendments made by 25 this section shall apply to taxable years beginning after 26 December 31, 2008. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 66 1 SEC. 1622. MODIFICATION OF CREDIT FOR RESIDENTIAL 2 ENERGY EFFICIENT PROPERTY. 3 (a) REMOVAL OF CREDIT LIMITATION FOR PROP4 ERTY PLACED IN SERVICE.— 5 (1) IN GENERAL.—Paragraph (1) of section 6 25D(b) is amended to read as follows: 7 ‘‘(1) MAXIMUM CREDIT FOR FUEL CELLS.—In 8 the case of any qualified fuel cell property expendi9 ture, the credit allowed under subsection (a) (deter10 mined without regard to subsection (c)) for any tax11 able year shall not exceed $500 with respect to each 12 half kilowatt of capacity of the qualified fuel cell 13 property (as defined in section 48(c)(1)) to which 14 such expenditure relates.’’. 15 (2) CONFORMING AMENDMENT.—Paragraph (4) 16 of section 25D(e) is amended— 17 (A) by striking all that precedes subpara18 graph (B) and inserting the following: 19 ‘‘(4) FUEL CELL EXPENDITURE LIMITATIONS 20 IN CASE OF JOINT OCCUPANCY.—In the case of any 21 dwelling unit with respect to which qualified fuel cell 22 property expenditures are made and which is jointly 23 occupied and used during any calendar year as a 24 residence by two or more individuals the following 25 rules shall apply: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 67 1 ‘‘(A) MAXIMUM EXPENDITURES FOR FUEL 2 CELLS.—The maximum amount of such ex 3 penditures which may be taken into account 4 under subsection (a) by all such individuals 5 with respect to such dwelling unit during such 6 calendar year shall be $1,667 in the case of 7 each half kilowatt of capacity of qualified fuel 8 cell property (as defined in section 48(c)(1)) 9 with respect to which such expenditures re10 late.’’, and 11 (B) by striking subparagraph (C). 12 (b) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 December 31, 2008. 15 SEC. 1623. TEMPORARY INCREASE IN CREDIT FOR ALTER16 NATIVE FUEL VEHICLE REFUELING PROP17 ERTY. 18 (a) IN GENERAL.—Section 30C(e) is amended by 19 adding at the end the following new paragraph: 20 ‘‘(6) SPECIAL RULE FOR PROPERTY PLACED IN 21 SERVICE DURING 2009 AND 2010.—In the case of 22 property placed in service in taxable years beginning 23 after December 31, 2008, and before January 1, 24 2011— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 68 1 ‘‘(A) in the case of any such property 2 which does not relate to hydrogen— 3 ‘‘(i) subsection (a) shall be applied by 4 substituting ‘50 percent’ for ‘30 percent’, 5 ‘‘(ii) subsection (b)(1) shall be applied 6 by substituting ‘$50,000’ for ‘$30,000’, 7 and 8 ‘‘(iii) subsection (b)(2) shall be ap9 plied by substituting ‘$2,000’ for ‘$1,000’, 10 and 11 ‘‘(B) in the case of any such property 12 which relates to hydrogen, subsection (b) shall 13 be applied by substituting ‘$200,000’ for 14 ‘$30,000’.’’. 15 (b) EFFECTIVE DATE.—The amendment made by 16 this section shall apply to taxable years beginning after 17 December 31, 2008. 18 PART 4—ENERGY RESEARCH INCENTIVES 19 SEC. 1631. INCREASED RESEARCH CREDIT FOR ENERGY RE20 SEARCH. 21 (a) IN GENERAL.—Section 41 is amended by redesig22 nating subsection (h) as subsection (i) and by inserting 23 after subsection (g) the following new subsection: 24 ‘‘(h) ENERGY RESEARCH CREDIT.—In the case of 25 any taxable year beginning in 2009 or 2010— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 69 1 ‘‘(1) IN GENERAL.—The credit determined 2 under subsection (a)(1) shall be increased by 20 per 3 cent of the qualified energy research expenses for 4 the taxable year. 5 ‘‘(2) QUALIFIED ENERGY RESEARCH EX6 PENSES.—For purposes of this subsection, the term 7 ‘qualified energy research expenses’ means so much 8 of the taxpayer’s qualified research expenses as are 9 related to the fields of fuel cells and battery tech10 nology, renewable energy, energy conservation tech11 nology, efficient transmission and distribution of 12 electricity, and carbon capture and sequestration. 13 ‘‘(3) COORDINATION WITH OTHER RESEARCH 14 CREDITS.— 15 ‘‘(A) INCREMENTAL CREDIT.—The amount 16 of qualified energy research expenses taken into 17 account under subsection (a)(1)(A) shall not ex18 ceed the base amount. 19 ‘‘(B) ALTERNATIVE SIMPLIFIED CREDIT.— 20 For purposes of subsection (c)(5), the amount 21 of qualified energy research expenses taken into 22 account for the taxable year for which the cred 23 it is being determined shall not exceed— 24 ‘‘(i) in the case of subsection 25 (c)(5)(A), 50 percent of the average quali f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 70 1 fied research expenses for the 3 taxable 2 years preceding the taxable year for which 3 the credit is being determined, and 4 ‘‘(ii) in the case of subsection 5 (c)(5)(B)(ii), zero. 6 ‘‘(C) BASIC RESEARCH AND ENERGY RE7 SEARCH CONSORTIUM PAYMENTS.—Any amount 8 taken into account under paragraph (1) shall 9 not be taken into account under paragraph (2) 10 or (3) of subsection (a).’’. 11 (b) CONFORMING AMENDMENT.—Subparagraph (B) 12 of section 41(i)(1)(B), as redesignated by subsection (a), 13 is amended by inserting ‘‘(in the case of the increase in 14 the credit determined under subsection (h), December 31, 15 2010)’’ after ‘‘December 31, 2009’’. 16 (c) EFFECTIVE DATE.—The amendments made by 17 this section shall apply to taxable years beginning after 18 December 31, 2008. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 71 1 Subtitle H—Other Provisions 2 PART 1—APPLICATION OF CERTAIN LABOR 3 STANDARDS TO PROJECTS FINANCED WITH 4 CERTAIN TAX-FAVORED BONDS 5 SEC. 1701. APPLICATION OF CERTAIN LABOR STANDARDS 6 TO PROJECTS FINANCED WITH CERTAIN TAX7 FAVORED BONDS. 8 Subchapter IV of chapter 31 of the title 40, United 9 States Code, shall apply to projects financed with the pro10 ceeds of— 11 (1) any qualified clean renewable energy bond 12 (as defined in section 54C of the Internal Revenue 13 Code of 1986) issued after the date of the enact14 ment of this Act, 15 (2) any qualified energy conservation bond (as 16 defined in section 54D of the Internal Revenue Code 17 of 1986) issued after the date of the enactment of 18 this Act, 19 (3) any qualified zone academy bond (as de20 fined in section 54E of the Internal Revenue Code 21 of 1986) issued after the date of the enactment of 22 this Act, 23 (4) any qualified school construction bond (as 24 defined in section 54F of the Internal Revenue Code 25 of 1986), and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 72 1 (5) any recovery zone economic development 2 bond (as defined in section 1400U–2 of the Internal 3 Revenue Code of 1986). 4 PART 2—GRANTS TO PROVIDE FINANCING FOR 5 LOW-INCOME HOUSING 6 SEC. 1711. GRANTS TO STATES FOR LOW-INCOME HOUSING 7 PROJECTS IN LIEU OF LOW-INCOME HOUS8 ING CREDIT ALLOCATIONS FOR 2009. 9 (a) IN GENERAL.—The Secretary of the Treasury 10 shall make a grant to the housing credit agency of each 11 State in an amount equal to such State’s low-income hous12 ing grant election amount. 13 (b) LOW-INCOME HOUSING GRANT ELECTION 14 AMOUNT.—For purposes of this section, the term ‘‘low15 income housing grant election amount’’ means, with re16 spect to any State, such amount as the State may elect 17 which does not exceed 85 percent of the product of— 18 (1) the sum of— 19 (A) 100 percent of the State housing credit 20 ceiling for 2009 which is attributable to 21 amounts described in clauses (i) and (iii) of sec 22 tion 42(h)(3)(C) of the Internal Revenue Code 23 of 1986, and 24 (B) 40 percent of the State housing credit 25 ceiling for 2009 which is attributable to f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 73 1 amounts described in clauses (ii) and (iv) of 2 such section, multiplied by 3 (2) 10. 4 (c) SUBAWARDS FOR LOW-INCOME BUILDINGS.— 5 (1) IN GENERAL.—A State housing credit agen6 cy receiving a grant under this section shall use such 7 grant to make subawards to finance the construction 8 or acquisition and rehabilitation of qualified low-in9 come buildings. A subaward under this section may 10 be made to finance a qualified low-income building 11 with or without an allocation under section 42 of the 12 Internal Revenue Code of 1986, except that a State 13 housing credit agency may make subawards to fi14 nance qualified low-income buildings without an allo15 cation only if it makes a determination that such use 16 will increase the total funds available to the State to 17 build and rehabilitate affordable housing. In com18 plying with such determination requirement, a State 19 housing credit agency shall establish a process in 20 which applicants that are allocated credits are re21 quired to demonstrate good faith efforts to obtain 22 investment commitments for such credits before the 23 agency makes such subawards. 24 (2) SUBAWARDS SUBJECT TO SAME REQUIRE25 MENTS AS LOW-INCOME HOUSING CREDIT ALLOCA- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 74 1 TIONS.—Any such subaward with respect to any 2 qualified low-income building shall be made in the 3 same manner and shall be subject to the same limi 4 tations (including rent, income, and use restrictions 5 on such building) as an allocation of housing credit 6 dollar amount allocated by such State housing credit 7 agency under section 42 of the Internal Revenue 8 Code of 1986, except that such subawards shall not 9 be limited by, or otherwise affect (except as provided 10 in subsection (h)(3)(J) of such section), the State 11 housing credit ceiling applicable to such agency. 12 (3) COMPLIANCE AND ASSET MANAGEMENT.— 13 The State housing credit agency shall perform asset 14 management functions to ensure compliance with 15 section 42 of the Internal Revenue Code of 1986 16 and the long-term viability of buildings funded by 17 any subaward under this section. The State housing 18 credit agency may collect reasonable fees from a 19 subaward recipient to cover expenses associated with 20 the performance of its duties under this paragraph. 21 The State housing credit agency may retain an 22 agent or other private contractor to satisfy the re 23 quirements of this paragraph. 24 (4) RECAPTURE.—The State housing credit 25 agency shall impose conditions or restrictions, in- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 75 1 cluding a requirement providing for recapture, on 2 any subaward under this section so as to assure that 3 the building with respect to which such subaward is 4 made remains a qualified low-income building during 5 the compliance period. Any such recapture shall be 6 payable to the Secretary of the Treasury for deposit 7 in the general fund of the Treasury and may be en8 forced by means of liens or such other methods as 9 the Secretary of the Treasury determines appro10 priate. 11 (d) RETURN OF UNUSED GRANT FUNDS.—Any grant 12 funds not used to make subawards under this section be13 fore January 1, 2011, shall be returned to the Secretary 14 of the Treasury on such date. Any subawards returned 15 to the State housing credit agency on or after such date 16 shall be promptly returned to the Secretary of the Treas17 ury. Any amounts returned to the Secretary of the Treas18 ury under this subsection shall be deposited in the general 19 fund of the Treasury. 20 (e) DEFINITIONS.—Any term used in this section 21 which is also used in section 42 of the Internal Revenue 22 Code of 1986 shall have the same meaning for purposes 23 of this section as when used in such section 42. Any ref24 erence in this section to the Secretary of the Treasury 25 shall be treated as including the Secretary’s delegate. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 76 1 (f) APPROPRIATIONS.—There is hereby appropriated 2 to the Secretary of the Treasury such sums as may be 3 necessary to carry out this section. 4 PART 3—GRANTS FOR SPECIFIED ENERGY 5 PROPERTY IN LIEU OF TAX CREDITS 6 SEC. 1721. GRANTS FOR SPECIFIED ENERGY PROPERTY IN 7 LIEU OF TAX CREDITS. 8 (a) IN GENERAL.—Upon application, the Secretary 9 of Energy shall, within 60 days of the application and sub10 ject to the requirements of this section, provide a grant 11 to each person who places in service specified energy prop12 erty during 2009 or 2010 to reimburse such person for 13 a portion of the expense of such facility as provided in 14 subsection (b). 15 (b) GRANT AMOUNT.— 16 (1) IN GENERAL.—The amount of the grant 17 under subsection (a) with respect to any specified 18 energy property shall be the applicable percentage of 19 the basis of such facility. 20 (2) APPLICABLE PERCENTAGE.—For purposes 21 of paragraph (1), the term ‘‘applicable percentage’’ 22 means— 23 (A) 30 percent in the case of any property 24 described in paragraphs (1) through (4) of sub 25 section (c), and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 77 1 (B) 10 percent in the case of any other 2 property. 3 (3) DOLLAR LIMITATIONS.—In the case of 4 property described in paragraph (2), (6), or (7) of 5 subsection (c), the amount of any grant under this 6 section with respect to such property shall not ex7 ceed the limitation described in section 48(c)(1)(B), 8 48(c)(2)(B), or 48(c)(3)(B) of the Internal Revenue 9 Code of 1986, respectively, with respect to such 10 property. 11 (c) SPECIFIED ENERGY PROPERTY.—For purposes 12 of this section, the term ‘‘specified energy property’’ 13 means any of the following: 14 (1) QUALIFIED FACILITIES.—Any facility de15 scribed in paragraph (1), (2), (3), (4), (6), (7), (9), 16 or (11) of section 45(d) of the Internal Revenue 17 Code of 1986. 18 (2) QUALIFIED FUEL CELL PROPERTY.—Any 19 qualified fuel cell property (as defined in section 20 48(c)(1) of such Code). 21 (3) SOLAR PROPERTY.—Any property described 22 in clause (i) or (ii) of section 48(a)(3)(A) of such 23 Code. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 78 1 (4) QUALIFIED SMALL WIND ENERGY PROP 2 ERTY.—Any qualified small wind energy property 3 (as defined in section 48(c)(4) of such Code). 4 (5) GEOTHERMAL PROPERTY.—Any property 5 described in clause (iii) of section 48(a)(3)(A) of 6 such Code. 7 (6) QUALIFIED MICROTURBINE PROPERTY.— 8 Any qualified microturbine property (as defined in 9 section 48(c)(2) of such Code). 10 (7) COMBINED HEAT AND POWER SYSTEM 11 PROPERTY.—Any combined heat and power system 12 property (as defined in section 48(c)(3) of such 13 Code). 14 (8) GEOTHERMAL HEATPUMP PROPERTY.—Any 15 property described in clause (vii) of section 16 48(a)(3)(A) of such Code. 17 (d) APPLICATION OF CERTAIN RULES.—In making 18 grants under this section, the Secretary of Energy shall 19 apply rules similar to the rules of section 50 of the Inter20 nal Revenue Code of 1986. In applying such rules, if the 21 facility is disposed of, or otherwise ceases to be a qualified 22 renewable energy facility, the Secretary of Energy shall 23 provide for the recapture of the appropriate percentage of 24 the grant amount in such manner as the Secretary of En25 ergy determines appropriate. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 79 1 (e) EXCEPTION FOR CERTAIN NON-TAXPAYERS.— 2 The Secretary of Energy shall not make any grant under 3 this section to any Federal, State, or local government (or 4 any political subdivision, agency, or instrumentality there5 of) or any organization described in section 501(c) of the 6 Internal Revenue Code of 1986 and exempt from tax 7 under section 501(a) of such Code. 8 (f) DEFINITIONS.—Terms used in this section which 9 are also used in section 45 or 48 of the Internal Revenue 10 Code of 1986 shall have the same meaning for purposes 11 of this section as when used in such section 45 or 48. 12 Any reference in this section to the Secretary of the Treas13 ury shall be treated as including the Secretary’s delegate. 14 (g) COORDINATION BETWEEN DEPARTMENTS OF 15 TREASURY AND ENERGY.—The Secretary of the Treasury 16 shall provide the Secretary of Energy with such technical 17 assistance as the Secretary of Energy may require in car18 rying out this section. The Secretary of Energy shall pro19 vide the Secretary of the Treasury with such information 20 as the Secretary of the Treasury may require in carrying 21 out the amendment made by section 1604. 22 (h) APPROPRIATIONS.—There is hereby appropriated 23 to the Secretary of Energy such sums as may be necessary 24 to carry out this section. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 80 1 (i) TERMINATION.—The Secretary of Energy shall 2 not make any grant to any person under this section un3 less the application of such person for such grant is re4 ceived before October 1, 2011. 5 TITLE II—ASSISTANCE FOR UN6 EMPLOYED WORKERS AND 7 STRUGGLING FAMILIES 8 SEC. 2000. SHORT TITLE. 9 This title may be cited as the ‘‘Assistance for Unem10 ployed Workers and Struggling Families Act’’. 11 Subtitle A—Unemployment 12 Insurance 13 SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT 14 COMPENSATION PROGRAM. 15 (a) IN GENERAL.—Section 4007 of the Supplemental 16 Appropriations Act, 2008 (Public Law 110-252; 26 U.S.C. 17 3304 note), as amended by section 4 of the Unemployment 18 Compensation Extension Act of 2008 (Public Law 11019 449; 122 Stat. 5015), is amended— 20 (1) by striking ‘‘March 31, 2009’’ each place it 21 appears and inserting ‘‘December 31, 2009’’; 22 (2) in the heading for subsection (b)(2), by 23 striking ‘‘MARCH 31, 2009’’ and inserting ‘‘DECEM24 BER 31, 2009’’; and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 81 1 (3) in subsection (b)(3), by striking ‘‘August 2 27, 2009’’ and inserting ‘‘May 31, 2010’’. 3 (b) FINANCING PROVISIONS.—Section 4004 of such 4 Act is amended by adding at the end the following: 5 ‘‘(e) TRANSFER OF FUNDS.—Notwithstanding any 6 other provision of law, the Secretary of the Treasury shall 7 transfer from the general fund of the Treasury (from 8 funds not otherwise appropriated)— 9 ‘‘(1) to the extended unemployment compensa10 tion account (as established by section 905 of the 11 Social Security Act) such sums as the Secretary of 12 Labor estimates to be necessary to make payments 13 to States under this title by reason of the amend14 ments made by section 2001(a) of the Assistance for 15 Unemployed Workers and Struggling Families Act; 16 and 17 ‘‘(2) to the employment security administration 18 account (as established by section 901 of the Social 19 Security Act) such sums as the Secretary of Labor 20 estimates to be necessary for purposes of assisting 21 States in meeting administrative costs by reason of 22 the amendments referred to in paragraph (1). 23 There are appropriated from the general fund of the 24 Treasury, without fiscal year limitation, the sums referred f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 82 1 to in the preceding sentence and such sums shall not be 2 required to be repaid.’’. 3 SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION 4 BENEFITS. 5 (a) FEDERAL-STATE AGREEMENTS.—Any State 6 which desires to do so may enter into and participate in 7 an agreement under this section with the Secretary of 8 Labor (hereinafter in this section referred to as the ‘‘Sec9 retary’’). Any State which is a party to an agreement 10 under this section may, upon providing 30 days’ written 11 notice to the Secretary, terminate such agreement. 12 (b) PROVISIONS OF AGREEMENT.— 13 (1) ADDITIONAL COMPENSATION.—Any agree14 ment under this section shall provide that the State 15 agency of the State will make payments of regular 16 compensation to individuals in amounts and to the 17 extent that they would be determined if the State 18 law of the State were applied, with respect to any 19 week for which the individual is (disregarding this 20 section) otherwise entitled under the State law to re21 ceive regular compensation, as if such State law had 22 been modified in a manner such that the amount of 23 regular compensation (including dependents’ allow 24 ances) payable for any week shall be equal to the 25 amount determined under the State law (before the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 83 1 application of this paragraph) plus an additional 2 $25. 3 (2) ALLOWABLE METHODS OF PAYMENT.—Any 4 additional compensation provided for in accordance 5 with paragraph (1) shall be payable either— 6 (A) as an amount which is paid at the 7 same time and in the same manner as any reg8 ular compensation otherwise payable for the 9 week involved; or 10 (B) at the option of the State, by pay11 ments which are made separately from, but on 12 the same weekly basis as, any regular com13 pensation otherwise payable. 14 (c) NONREDUCTION RULE.—An agreement under 15 this section shall not apply (or shall cease to apply) with 16 respect to a State upon a determination by the Secretary 17 that the method governing the computation of regular 18 compensation under the State law of that State has been 19 modified in a manner such that— 20 (1) the average weekly benefit amount of reg21 ular compensation which will be payable during the 22 period of the agreement (determined disregarding 23 any additional amounts attributable to the modifica 24 tion described in subsection (b)(1)) will be less than f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 84 1 (2) the average weekly benefit amount of reg 2 ular compensation which would otherwise have been 3 payable during such period under the State law, as 4 in effect on December 31, 2008. 5 (d) PAYMENTS TO STATES.— 6 (1) IN GENERAL.— 7 (A) FULL REIMBURSEMENT.—There shall 8 be paid to each State which has entered into an 9 agreement under this section an amount equal 10 to 100 percent of— 11 (i) the total amount of additional 12 compensation (as described in subsection 13 (b)(1)) paid to individuals by the State 14 pursuant to such agreement; and 15 (ii) any additional administrative ex16 penses incurred by the State by reason of 17 such agreement (as determined by the Sec18 retary). 19 (B) TERMS OF PAYMENTS.—Sums payable 20 to any State by reason of such State’s having 21 an agreement under this section shall be pay 22 able, either in advance or by way of reimburse 23 ment (as determined by the Secretary), in such 24 amounts as the Secretary estimates the State 25 will be entitled to receive under this section for f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 85 1 each calendar month, reduced or increased, as 2 the case may be, by any amount by which the 3 Secretary finds that his estimates for any prior 4 calendar month were greater or less than the 5 amounts which should have been paid to the 6 State. Such estimates may be made on the 7 basis of such statistical, sampling, or other 8 method as may be agreed upon by the Secretary 9 and the State agency of the State involved. 10 (2) CERTIFICATIONS.—The Secretary shall 11 from time to time certify to the Secretary of the 12 Treasury for payment to each State the sums pay13 able to such State under this section. 14 (3) APPROPRIATION.—There are appropriated 15 from the general fund of the Treasury, without fiscal 16 year limitation, such sums as may be necessary for 17 purposes of this subsection. 18 (e) APPLICABILITY.— 19 (1) IN GENERAL.—An agreement entered into 20 under this section shall apply to weeks of unemploy21 ment— 22 (A) beginning after the date on which such 23 agreement is entered into; and 24 (B) ending before January 1, 2010. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 86 1 (2) TRANSITION RULE FOR INDIVIDUALS RE 2 MAINING ENTITLED TO REGULAR COMPENSATION AS 3 OF JANUARY 1, 2010.—In the case of any individual 4 who, as of the date specified in paragraph (1)(B), 5 has not yet exhausted all rights to regular com6 pensation under the State law of a State with re7 spect to a benefit year that began before such date, 8 additional compensation (as described in subsection 9 (b)(1)) shall continue to be payable to such indi10 vidual for any week beginning on or after such date 11 for which the individual is otherwise eligible for reg12 ular compensation with respect to such benefit year. 13 (3) TERMINATION.—Notwithstanding any other 14 provision of this subsection, no additional compensa15 tion (as described in subsection (b)(1)) shall be pay16 able for any week beginning after June 30, 2010. 17 (f) FRAUD AND OVERPAYMENTS.—The provisions of 18 section 4005 of the Supplemental Appropriations Act, 19 2008 (Public Law 110–252; 122 Stat. 2356) shall apply 20 with respect to additional compensation (as described in 21 subsection (b)(1)) to the same extent and in the same 22 manner as in the case of emergency unemployment com23 pensation. 24 (g) APPLICATION TO OTHER UNEMPLOYMENT BENE25 FITS.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 87 1 (1) IN GENERAL.—Each agreement under this 2 section shall include provisions to provide that the 3 purposes of the preceding provisions of this section 4 shall be applied with respect to unemployment bene 5 fits described in subsection (h)(3) to the same extent 6 and in the same manner as if those benefits were 7 regular compensation. 8 (2) ELIGIBILITY AND TERMINATION RULES.— 9 Additional compensation (as described in subsection 10 (b)(1))— 11 (A) shall not be payable, pursuant to this 12 subsection, with respect to any unemployment 13 benefits described in subsection (h)(3) for any 14 week beginning on or after the date specified in 15 subsection (e)(1)(B), except in the case of an 16 individual who was eligible to receive additional 17 compensation (as so described) in connection 18 with any regular compensation or any unem19 ployment benefits described in subsection (h)(3) 20 for any period of unemployment ending before 21 such date; and 22 (B) shall in no event be payable for any 23 week beginning after the date specified in sub 24 section (e)(3). 25 (h) DEFINITIONS.—For purposes of this section— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 88 1 (1) the terms ‘‘compensation’’, ‘‘regular com 2 pensation’’, ‘‘benefit year’’, ‘‘State’’, ‘‘State agency’’, 3 ‘‘State law’’, and ‘‘week’’ have the respective mean 4 ings given such terms under section 205 of the Fed 5 eral-State Extended Unemployment Compensation 6 Act of 1970 (26 U.S.C. 3304 note); 7 (2) the term ‘‘emergency unemployment com8 pensation’’ means emergency unemployment com9 pensation under title IV of the Supplemental Appro10 priations Act, 2008 (Public Law 110–252; 122 Stat. 11 2353); and 12 (3) any reference to unemployment benefits de13 scribed in this paragraph shall be considered to refer 14 to— 15 (A) extended compensation (as defined by 16 section 205 of the Federal-State Extended Un17 employment Compensation Act of 1970); and 18 (B) unemployment compensation (as de19 fined by section 85(b) of the Internal Revenue 20 Code of 1986) provided under any program ad21 ministered by a State under an agreement with 22 the Secretary. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 89 1 SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT 2 COMPENSATION MODERNIZATION. 3 (a) IN GENERAL.—Section 903 of the Social Security 4 Act (42 U.S.C. 1103) is amended by adding at the end 5 the following: 6 ‘‘Special Transfers in Fiscal Years 2009, 2010, and 2011 7 for Modernization 8 ‘‘(f)(1)(A) In addition to any other amounts, the Sec9 retary of Labor shall provide for the making of unemploy10 ment compensation modernization incentive payments 11 (hereinafter ‘incentive payments’) to the accounts of the 12 States in the Unemployment Trust Fund, by transfer from 13 amounts reserved for that purpose in the Federal unem14 ployment account, in accordance with succeeding provi15 sions of this subsection. 16 ‘‘(B) The maximum incentive payment allowable 17 under this subsection with respect to any State shall, as 18 determined by the Secretary of Labor, be equal to the 19 amount obtained by multiplying $7,000,000,000 by the 20 same ratio as would apply under subsection (a)(2)(B) for 21 purposes of determining such State’s share of any excess 22 amount (as described in subsection (a)(1)) that would 23 have been subject to transfer to State accounts, as of Oc24 tober 1, 2008, under the provisions of subsection (a). 25 ‘‘(C) Of the maximum incentive payment determined 26 under subparagraph (B) with respect to a State— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 90 1 ‘‘(i) one-third shall be transferred to the ac 2 count of such State upon a certification under para 3 graph (4)(B) that the State law of such State meets 4 the requirements of paragraph (2); and 5 ‘‘(ii) the remainder shall be transferred to the 6 account of such State upon a certification under 7 paragraph (4)(B) that the State law of such State 8 meets the requirements of paragraph (3). 9 ‘‘(2) The State law of a State meets the requirements 10 of this paragraph if such State law— 11 ‘‘(A) uses a base period that includes the most 12 recently completed calendar quarter before the start 13 of the benefit year for purposes of determining eligi14 bility for unemployment compensation; or 15 ‘‘(B) provides that, in the case of an individual 16 who would not otherwise be eligible for unemploy17 ment compensation under the State law because of 18 the use of a base period that does not include the 19 most recently completed calendar quarter before the 20 start of the benefit year, eligibility shall be deter21 mined using a base period that includes such cal 22 endar quarter. 23 ‘‘(3) The State law of a State meets the requirements 24 of this paragraph if such State law includes provisions to 25 carry out at least 2 of the following subparagraphs: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 91 1 ‘‘(A) An individual shall not be denied regular 2 unemployment compensation under any State law 3 provisions relating to availability for work, active 4 search for work, or refusal to accept work, solely be 5 cause such individual is seeking only part-time (and 6 not full-time) work, except that the State law provi7 sions carrying out this subparagraph may exclude an 8 individual if a majority of the weeks of work in such 9 individual’s base period do not include part-time 10 work. 11 ‘‘(B) An individual shall not be disqualified 12 from regular unemployment compensation for sepa13 rating from employment if that separation is for any 14 compelling family reason. For purposes of this sub15 paragraph, the term ‘compelling family reason’ 16 means the following: 17 ‘‘(i) Domestic violence, verified by such 18 reasonable and confidential documentation as 19 the State law may require, which causes the in20 dividual reasonably to believe that such individ21 ual’s continued employment would jeopardize 22 the safety of the individual or of any member 23 of the individual’s immediate family (as defined 24 by the Secretary of Labor). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 92 1 ‘‘(ii) The illness or disability of a member 2 of the individual’s immediate family (as defined 3 by the Secretary of Labor). 4 ‘‘(iii) The need for the individual to accom 5 pany such individual’s spouse— 6 ‘‘(I) to a place from which it is im7 practical for such individual to commute; 8 and 9 ‘‘(II) due to a change in location of 10 the spouse’s employment. 11 ‘‘(C) Weekly unemployment compensation is 12 payable under this subparagraph to any individual 13 who is unemployed (as determined under the State 14 unemployment compensation law), has exhausted all 15 rights to regular unemployment compensation under 16 the State law, and is enrolled and making satisfac17 tory progress in a State-approved training program 18 or in a job training program authorized under the 19 Workforce Investment Act of 1998. Such programs 20 shall prepare individuals who have been separated 21 from a declining occupation, or who have been invol 22 untarily and indefinitely separated from employment 23 as a result of a permanent reduction of operations 24 at the individual’s place of employment, for entry 25 into a high-demand occupation. The amount of un f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 93 1 employment compensation payable under this sub 2 paragraph to an individual for a week of unemploy 3 ment shall be equal to the individual’s average week 4 ly benefit amount (including dependents’ allowances) 5 for the most recent benefit year, and the total 6 amount of unemployment compensation payable 7 under this subparagraph to any individual shall be 8 equal to at least 26 times the individual’s average 9 weekly benefit amount (including dependents’ allow10 ances) for the most recent benefit year. 11 ‘‘(D) Dependents’ allowances are provided, in 12 the case of any individual who is entitled to receive 13 regular unemployment compensation and who has 14 any dependents (as defined by State law), in an 15 amount equal to at least $15 per dependent per 16 week, subject to any aggregate limitation on such al17 lowances which the State law may establish (but 18 which aggregate limitation on the total allowance for 19 dependents paid to an individual may not be less 20 than $50 for each week of unemployment or 50 per21 cent of the individual’s weekly benefit amount for 22 the benefit year, whichever is less). 23 ‘‘(4)(A) Any State seeking an incentive payment 24 under this subsection shall submit an application therefor 25 at such time, in such manner, and complete with such in- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 94 1 formation as the Secretary of Labor may within 60 days 2 after the date of the enactment of this subsection prescribe 3 (whether by regulation or otherwise), including informa4 tion relating to compliance with the requirements of para5 graph (2) or (3), as well as how the State intends to use 6 the incentive payment to improve or strengthen the State’s 7 unemployment compensation program. The Secretary of 8 Labor shall, within 30 days after receiving a complete ap9 plication, notify the State agency of the State of the Sec10 retary’s findings with respect to the requirements of para11 graph (2) or (3) (or both). 12 ‘‘(B)(i) If the Secretary of Labor finds that the State 13 law provisions (disregarding any State law provisions 14 which are not then currently in effect as permanent law 15 or which are subject to discontinuation) meet the require16 ments of paragraph (2) or (3), as the case may be, the 17 Secretary of Labor shall thereupon make a certification 18 to that effect to the Secretary of the Treasury, together 19 with a certification as to the amount of the incentive pay20 ment to be transferred to the State account pursuant to 21 that finding. The Secretary of the Treasury shall make 22 the appropriate transfer within 7 days after receiving such 23 certification. 24 ‘‘(ii) For purposes of clause (i), State law provisions 25 which are to take effect within 12 months after the date f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 95 1 of their certification under this subparagraph shall be con2 sidered to be in effect as of the date of such certification. 3 ‘‘(C)(i) No certification of compliance with the re4 quirements of paragraph (2) or (3) may be made with re5 spect to any State whose State law is not otherwise eligible 6 for certification under section 303 or approvable under 7 section 3304 of the Federal Unemployment Tax Act. 8 ‘‘(ii) No certification of compliance with the require9 ments of paragraph (3) may be made with respect to any 10 State whose State law is not in compliance with the re11 quirements of paragraph (2). 12 ‘‘(iii) No application under subparagraph (A) may be 13 considered if submitted before the date of the enactment 14 of this subsection or after the latest date necessary (as 15 specified by the Secretary of Labor) to ensure that all in16 centive payments under this subsection are made before 17 October 1, 2011. 18 ‘‘(5)(A) Except as provided in subparagraph (B), any 19 amount transferred to the account of a State under this 20 subsection may be used by such State only in the payment 21 of cash benefits to individuals with respect to their unem22 ployment (including for dependents’ allowances and for 23 unemployment compensation under paragraph (3)(C)), ex24 clusive of expenses of administration. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 96 1 ‘‘(B) A State may, subject to the same conditions as 2 set forth in subsection (c)(2) (excluding subparagraph (B) 3 thereof, and deeming the reference to ‘subsections (a) and 4 (b)’ in subparagraph (D) thereof to include this sub5 section), use any amount transferred to the account of 6 such State under this subsection for the administration 7 of its unemployment compensation law and public employ8 ment offices. 9 ‘‘(6) Out of any money in the Federal unemployment 10 account not otherwise appropriated, the Secretary of the 11 Treasury shall reserve $7,000,000,000 for incentive pay12 ments under this subsection. Any amount so reserved shall 13 not be taken into account for purposes of any determina14 tion under section 902, 910, or 1203 of the amount in 15 the Federal unemployment account as of any given time. 16 Any amount so reserved for which the Secretary of the 17 Treasury has not received a certification under paragraph 18 (4)(B) by the deadline described in paragraph (4)(C)(iii) 19 shall, upon the close of fiscal year 2011, become unre20 stricted as to use as part of the Federal unemployment 21 account. 22 ‘‘(7) For purposes of this subsection, the terms ‘ben23 efit year’, ‘base period’, and ‘week’ have the respective 24 meanings given such terms under section 205 of the Fed- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 97 1 eral-State Extended Unemployment Compensation Act of 2 1970 (26 U.S.C. 3304 note). 3 ‘‘Special Transfer in Fiscal Year 2009 for Administration 4 ‘‘(g)(1) In addition to any other amounts, the Sec5 retary of the Treasury shall transfer from the employment 6 security administration account to the account of each 7 State in the Unemployment Trust Fund, within 30 days 8 after the date of the enactment of this subsection, the 9 amount determined with respect to such State under para10 graph (2). 11 ‘‘(2) The amount to be transferred under this sub12 section to a State account shall (as determined by the Sec13 retary of Labor and certified by such Secretary to the Sec14 retary of the Treasury) be equal to the amount obtained 15 by multiplying $500,000,000 by the same ratio as deter16 mined under subsection (f)(1)(B) with respect to such 17 State. 18 ‘‘(3) Any amount transferred to the account of a 19 State as a result of the enactment of this subsection may 20 be used by the State agency of such State only in the pay21 ment of expenses incurred by it for— 22 ‘‘(A) the administration of the provisions of its 23 State law carrying out the purposes of subsection 24 (f)(2) or any subparagraph of subsection (f)(3); f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 98 1 ‘‘(B) improved outreach to individuals who 2 might be eligible for regular unemployment com 3 pensation by virtue of any provisions of the State 4 law which are described in subparagraph (A); 5 ‘‘(C) the improvement of unemployment benefit 6 and unemployment tax operations, including re7 sponding to increased demand for unemployment 8 compensation; and 9 ‘‘(D) staff-assisted reemployment services for 10 unemployment compensation claimants.’’. 11 (b) REGULATIONS.—The Secretary of Labor may 12 prescribe any regulations, operating instructions, or other 13 guidance necessary to carry out the amendment made by 14 subsection (a). 15 Subtitle B—Assistance for 16 Vulnerable Individuals 17 SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM. 18 (a) IN GENERAL.—Section 403 of the Social Security 19 Act (42 U.S.C. 603) is amended by adding at the end the 20 following: 21 ‘‘(c) EMERGENCY FUND.— 22 ‘‘(1) ESTABLISHMENT.—There is established in 23 the Treasury of the United States a fund which 24 shall be known as the ‘Emergency Contingency 25 Fund for State Temporary Assistance for Needy f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 99 1 Families Programs’ (in this subsection referred to as 2 the ‘Emergency Fund’). 3 ‘‘(2) DEPOSITS INTO FUND.—Out of any money 4 in the Treasury of the United States not otherwise 5 appropriated, there are appropriated such sums as 6 are necessary for payment to the Emergency Fund. 7 ‘‘(3) GRANTS.— 8 ‘‘(A) GRANT RELATED TO CASELOAD IN9 CREASES.— 10 ‘‘(i) IN GENERAL.—For each calendar 11 quarter in fiscal year 2009 or 2010, the 12 Secretary shall make a grant from the 13 Emergency Fund to each State that— 14 ‘‘(I) requests a grant under this 15 subparagraph for the quarter; and 16 ‘‘(II) meets the requirement of 17 clause (ii) for the quarter. 18 ‘‘(ii) CASELOAD INCREASE REQUIRE19 MENT.—A State meets the requirement of 20 this clause for a quarter if the average 21 monthly assistance caseload of the State 22 for the quarter exceeds the average month 23 ly assistance caseload of the State for the 24 corresponding quarter in the emergency 25 fund base year of the State. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 100 1 ‘‘(iii) AMOUNT OF GRANT.—Subject to 2 paragraph (5), the amount of the grant to 3 be made to a State under this subpara 4 graph for a quarter shall be 80 percent of 5 the amount (if any) by which the total ex6 penditures of the State for basic assistance 7 (as defined by the Secretary) in the quar8 ter, whether under the State program 9 funded under this part or as qualified 10 State expenditures, exceeds the total ex11 penditures of the State for such assistance 12 for the corresponding quarter in the emer13 gency fund base year of the State. 14 ‘‘(B) GRANT RELATED TO INCREASED EX15 PENDITURES FOR NON-RECURRENT SHORT 16 TERM BENEFITS.— 17 ‘‘(i) IN GENERAL.—For each calendar 18 quarter in fiscal year 2009 or 2010, the 19 Secretary shall make a grant from the 20 Emergency Fund to each State that— 21 ‘‘(I) requests a grant under this 22 subparagraph for the quarter; and 23 ‘‘(II) meets the requirement of 24 clause (ii) for the quarter. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 101 1 ‘‘(ii) NON-RECURRENT SHORT TERM 2 EXPENDITURE REQUIREMENT.—A State 3 meets the requirement of this clause for a 4 quarter if the total expenditures of the 5 State for non-recurrent short term benefits 6 in the quarter, whether under the State 7 program funded under this part or as 8 qualified State expenditures, exceeds the 9 total such expenditures of the State for 10 non-recurrent short term benefits in the 11 corresponding quarter in the emergency 12 fund base year of the State. 13 ‘‘(iii) AMOUNT OF GRANT.—Subject to 14 paragraph (5), the amount of the grant to 15 be made to a State under this subpara16 graph for a quarter shall be an amount 17 equal to 80 percent of the excess described 18 in clause (ii). 19 ‘‘(C) GRANT RELATED TO INCREASED EX20 PENDITURES FOR SUBSIDIZED EMPLOYMENT.— 21 ‘‘(i) IN GENERAL.—For each calendar 22 quarter in fiscal year 2009 or 2010, the 23 Secretary shall make a grant from the 24 Emergency Fund to each State that— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 102 1 ‘‘(I) requests a grant under this 2 subparagraph for the quarter; and 3 ‘‘(II) meets the requirement of 4 clause (ii) for the quarter. 5 ‘‘(ii) SUBSIDIZED EMPLOYMENT EX6 PENDITURE REQUIREMENT.—A State 7 meets the requirement of this clause for a 8 quarter if the total expenditures of the 9 State for subsidized employment in the 10 quarter, whether under the State program 11 funded under this part or as qualified 12 State expenditures, exceeds the total of 13 such expenditures of the State in the cor14 responding quarter in the emergency fund 15 base year of the State. 16 ‘‘(iii) AMOUNT OF GRANT.—Subject to 17 paragraph (5), the amount of the grant to 18 be made to a State under this subpara19 graph for a quarter shall be an amount 20 equal to 80 percent of the excess described 21 in clause (ii). 22 ‘‘(4) AUTHORITY TO MAKE NECESSARY ADJUST 23 MENTS TO DATA AND COLLECT NEEDED DATA.—In 24 determining the size of the caseload of a State and 25 the expenditures of a State for basic assistance, non- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 103 1 recurrent short-term benefits, and subsidized em 2 ployment, during any period for which the State re 3 quests funds under this subsection, and during the 4 emergency fund base year of the State, the Sec 5 retary may make appropriate adjustments to the 6 data to ensure that the data reflect expenditures 7 under the State program funded under this part and 8 qualified State expenditures. The Secretary may de9 velop a mechanism for collecting expenditure data, 10 including procedures which allow States to make 11 reasonable estimates, and may set deadlines for 12 making revisions to the data. 13 ‘‘(5) LIMITATION.—The total amount payable 14 to a single State under subsection (b) and this sub15 section for a fiscal year shall not exceed 25 percent 16 of the State family assistance grant. 17 ‘‘(6) LIMITATIONS ON USE OF FUNDS.—A State 18 to which an amount is paid under this subsection 19 may use the amount only as authorized by section 20 404. 21 ‘‘(7) TIMING OF IMPLEMENTATION.—The Sec22 retary shall implement this subsection as quickly as 23 reasonably possible, pursuant to appropriate guid 24 ance to States. 25 ‘‘(8) DEFINITIONS.—In this subsection: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 104 1 ‘‘(A) AVERAGE MONTHLY ASSISTANCE 2 CASELOAD.—The term ‘average monthly assist 3 ance caseload’ means, with respect to a State 4 and a quarter, the number of families receiving 5 assistance during the quarter under the State 6 program funded under this part or as qualified 7 State expenditures, subject to adjustment under 8 paragraph (4). 9 ‘‘(B) EMERGENCY FUND BASE YEAR.— 10 ‘‘(i) IN GENERAL.—The term ‘emer11 gency fund base year’ means, with respect 12 to a State and a category described in 13 clause (ii), whichever of fiscal year 2007 or 14 2008 is the fiscal year in which the 15 amount described by the category with re16 spect to the State is the lesser. 17 ‘‘(ii) CATEGORIES DESCRIBED.—The 18 categories described in this clause are the 19 following: 20 ‘‘(I) The average monthly assist21 ance caseload of the State. 22 ‘‘(II) The total expenditures of 23 the State for non-recurrent short term 24 benefits, whether under the State pro- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 105 1 gram funded under this part or as 2 qualified State expenditures. 3 ‘‘(III) The total expenditures of 4 the State for subsidized employment, 5 whether under the State program 6 funded under this part or as qualified 7 State expenditures. 8 ‘‘(C) QUALIFIED STATE EXPENDITURES.— 9 The term ‘qualified State expenditures’ has the 10 meaning given the term in section 409(a)(7).’’. 11 (b) TEMPORARY MODIFICATION OF CASELOAD RE12 DUCTION CREDIT.—Section 407(b)(3)(A)(i) of such Act 13 (42 U.S.C. 607(b)(3)(A)(i)) is amended by inserting ‘‘(or 14 if the immediately preceding fiscal year is fiscal year 2009 15 or 2010, then, at State option, during the emergency fund 16 base year of the State with respect to the average monthly 17 assistance caseload of the State (within the meaning of 18 section 403(c)(8)(B)))’’ before ‘‘under the State’’. 19 (c) EFFECTIVE DATE.—The amendments made by 20 this section shall take effect on the date of the enactment 21 of this Act. 22 SEC. 2102. ONE-TIME EMERGENCY SSI PAYMENT. 23 (a) PAYMENT AUTHORITY.— 24 (1) IN GENERAL.—At the earliest practicable 25 date in calendar year 2009 but not later than 90 f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 106 1 days after the date of the enactment of this section, 2 the Commissioner of Social Security shall make a 3 one-time payment, subject to subsection (b)(2) of 4 this section, to each individual who is determined by 5 the Commissioner in calendar year 2009 to be an in6 dividual who— 7 (A) is entitled to a cash benefit under the 8 supplemental security income program under 9 title XVI of the Social Security Act (other than 10 pursuant to section 1611(e)(1)(B) of such Act) 11 for at least 1 day in the calendar month in 12 which the first payment under this section is to 13 be made; or 14 (B)(i) was entitled to such a cash benefit 15 (other than pursuant to section 1611(e)(1)(B) 16 of such Act) for at least 1 day in the 2-month 17 period preceding that calendar month; and 18 (ii) whose entitlement to that benefit 19 ceased in that 2-month period solely because 20 the income of the individual (and the income of 21 the spouse, if any, of the individual) exceeded 22 the applicable income limit described in para 23 graph (1)(A) or (2)(A) of section 1611(a) of 24 such Act. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 107 1 (2) AMOUNT OF PAYMENT.—Subject to sub2 section (b)(1) of this section, the amount of the pay 3 ment shall be— 4 (A) in the case of an individual eligible for 5 a payment under this section who does not have 6 a spouse eligible for such a payment, an 7 amount equal to the average of the cash bene8 fits payable in the aggregate under section 9 1611 or 1619(a) of the Social Security Act to 10 eligible individuals who do not have an eligible 11 spouse, for the most recent month for which 12 data on payment of the benefits are available, 13 as determined by the Commissioner of Social 14 Security; or 15 (B) in the case of an individual eligible for 16 a payment under this section who has a spouse 17 eligible for such a payment, an amount equal to 18 the average of the cash benefits payable in the 19 aggregate under section 1611 or 1619(a) of the 20 Social Security Act to eligible individuals who 21 have an eligible spouse, for the most recent 22 month for which data on payment of the bene 23 fits are available, as so determined. 24 (b) ADMINISTRATIVE PROVISIONS.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 108 1 (1) AUTHORITY TO WITHHOLD PAYMENT TO 2 RECOVER PRIOR OVERPAYMENT OF SSI BENEFITS.— 3 The Commissioner of Social Security may withhold 4 part or all of a payment otherwise required to be 5 made under subsection (a) of this section to an indi6 vidual, in order to recover a prior overpayment of 7 benefits to the individual under the supplemental se8 curity income program under title XVI of the Social 9 Security Act, subject to the limitations of section 10 1631(b) of such Act. 11 (2) AUTHORITY TO MAKE PAYMENTS OVER THE 12 COURSE OF 2 MONTHS.—The Commissioner of So13 cial Security may provide for payments under this 14 section to be made over the course of 2 calendar 15 months as may be necessary for the effective and ef16 ficient administration of this section. 17 (3) PAYMENT TO BE DISREGARDED IN DETER18 MINING UNDERPAYMENTS UNDER THE SSI PRO19 GRAM.—A payment under subsection (a) shall be 20 disregarded in determining whether there has been 21 an underpayment of benefits under the supplemental 22 security income program under title XVI of the So 23 cial Security Act. 24 (4) NONASSIGNMENT.—The provisions of sec 25 tion 207 of the Social Security Act shall apply with f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 109 1 respect to payments under this section to the same 2 extent as they apply in the case of title II of such 3 Act. 4 (c) PAYMENTS TO BE DISREGARDED FOR PURPOSES 5 OF ALL FEDERAL AND FEDERALLY ASSISTED PRO6 GRAMS.—A payment under subsection (a) shall not be re7 garded as income to the recipient, and shall not be re8 garded as a resource of the recipient for the month of re9 ceipt and the following 6 months, for purposes of deter10 mining the eligibility of any individual for benefits or as11 sistance, or the amount or extent of benefits or assistance, 12 under any Federal program or under any State or local 13 program financed in whole or in part with Federal funds. 14 (d) APPROPRIATION.—Out of any sums in the Treas15 ury of the United States not otherwise appropriated, there 16 are appropriated such sums as may be necessary to carry 17 out this section. 18 SEC. 2103. TEMPORARY RESUMPTION OF PRIOR CHILD 19 SUPPORT LAW. 20 During the period that begins with October 1, 2008, 21 and ends with September 30, 2010, section 455(a)(1) of 22 the Social Security Act shall be applied and administered 23 as if the phrase ‘‘from amounts paid to the State under 24 section 458 or’’ did not appear in such section. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 110 1 TITLE III—HEALTH INSURANCE 2 ASSISTANCE FOR THE UNEM 3 PLOYED 4 SEC. 3001. SHORT TITLE AND TABLE OF CONTENTS OF 5 TITLE. 6 (a) SHORT TITLE OF TITLE.—This title may be cited 7 as the ‘‘Health Insurance Assistance for the Unemployed 8 Act of 2009’’. 9 (b) TABLE OF CONTENTS OF TITLE.—The table of 10 contents of this title is as follows: Sec. 3001. Short title and table of contents of title. Sec. 3002. Premium assistance for COBRA benefits and extension of COBRA benefits for older or long-term employees. Sec. 3003. Temporary optional Medicaid coverage for the unemployed. 11 SEC. 3002. PREMIUM ASSISTANCE FOR COBRA BENEFITS 12 AND EXTENSION OF COBRA BENEFITS FOR 13 OLDER OR LONG-TERM EMPLOYEES. 14 (a) PREMIUM ASSISTANCE FOR COBRA CONTINU15 ATION COVERAGE FOR INDIVIDUALS AND THEIR FAMI16 LIES.— 17 (1) PROVISION OF PREMIUM ASSISTANCE.— 18 (A) REDUCTION OF PREMIUMS PAY19 ABLE.—In the case of any premium for a pe 20 riod of coverage beginning on or after the date 21 of the enactment of this Act for COBRA con 22 tinuation coverage with respect to any assist 23 ance eligible individual, such individual shall be f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 111 1 treated for purposes of any COBRA continu 2 ation provision as having paid the amount of 3 such premium if such individual pays 35 per 4 cent of the amount of such premium (as deter 5 mined without regard to this subsection). 6 (B) PREMIUM REIMBURSEMENT.—For pro7 visions providing the balance of such premium, 8 see section 6431 of the Internal Revenue Code 9 of 1986, as added by paragraph (12). 10 (2) LIMITATION OF PERIOD OF PREMIUM AS11 SISTANCE.— 12 (A) IN GENERAL.—Paragraph (1)(A) shall 13 not apply with respect to any assistance eligible 14 individual for months of coverage beginning on 15 or after the earlier of— 16 (i) the first date that such individual 17 is eligible for coverage under any other 18 group health plan (other than coverage 19 consisting of only dental, vision, coun20 seling, or referral services (or a combina21 tion thereof), coverage under a health re22 imbursement arrangement or a health 23 flexible spending arrangement, or coverage 24 of treatment that is furnished in an on-site 25 medical facility maintained by the em- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 112 1 ployer and that consists primarily of first 2 aid services, prevention and wellness care, 3 or similar care (or a combination thereof)) 4 or is eligible for benefits under title XVIII 5 of the Social Security Act. 6 (ii) the earliest of— 7 (I) the date which is 12 months 8 after the first day of first month that 9 paragraph (1)(A) applies with respect 10 to such individual, 11 (II) the date following the expira12 tion of the maximum period of con13 tinuation coverage required under the 14 applicable COBRA continuation cov15 erage provision, or 16 (III) the date following the expi17 ration of the period of continuation 18 coverage allowed under paragraph 19 (4)(B)(ii). 20 (B) TIMING OF ELIGIBILITY FOR ADDI21 TIONAL COVERAGE.—For purposes of subpara 22 graph (A)(i), an individual shall not be treated 23 as eligible for coverage under a group health 24 plan before the first date on which such indi 25 vidual could be covered under such plan. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 113 1 (C) NOTIFICATION REQUIREMENT.—An 2 assistance eligible individual shall notify in writ 3 ing the group health plan with respect to which 4 paragraph (1)(A) applies if such paragraph 5 ceases to apply by reason of subparagraph 6 (A)(i). Such notice shall be provided to the 7 group health plan in such time and manner as 8 may be specified by the Secretary of Labor. 9 (3) ASSISTANCE ELIGIBLE INDIVIDUAL.—For 10 purposes of this section, the term ‘‘assistance eligible 11 individual’’ means any qualified beneficiary if— 12 (A) at any time during the period that be13 gins with September 1, 2008, and ends with 14 December 31, 2009, such qualified beneficiary 15 is eligible for COBRA continuation coverage, 16 (B) such qualified beneficiary elects such 17 coverage, and 18 (C) the qualifying event with respect to the 19 COBRA continuation coverage consists of the 20 involuntary termination of the covered employ21 ee’s employment and occurred during such pe22 riod. 23 (4) EXTENSION OF ELECTION PERIOD AND EF 24 FECT ON COVERAGE.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 114 1 (A) IN GENERAL.—Notwithstanding sec 2 tion 605(a) of the Employee Retirement Income 3 Security Act of 1974, section 4980B(f)(5)(A) of 4 the Internal Revenue Code of 1986, section 5 2205(a) of the Public Health Service Act, and 6 section 8905a(c)(2) of title 5, United States 7 Code, in the case of an individual who is a 8 qualified beneficiary described in paragraph 9 (3)(A) as of the date of the enactment of this 10 Act and has not made the election referred to 11 in paragraph (3)(B) as of such date, such indi12 vidual may elect the COBRA continuation cov13 erage under the COBRA continuation coverage 14 provisions containing such sections during the 15 60-day period commencing with the date on 16 which the notification required under paragraph 17 (7)(C) is provided to such individual. 18 (B) COMMENCEMENT OF COVERAGE; NO 19 REACH-BACK.—Any COBRA continuation cov20 erage elected by a qualified beneficiary during 21 an extended election period under subparagraph 22 (A)— 23 (i) shall commence on the date of the 24 enactment of this Act, and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 115 1 (ii) shall not extend beyond the period 2 of COBRA continuation coverage that 3 would have been required under the appli 4 cable COBRA continuation coverage provi 5 sion if the coverage had been elected as re6 quired under such provision. 7 (C) PREEXISTING CONDITIONS.—With re8 spect to a qualified beneficiary who elects 9 COBRA continuation coverage pursuant to sub10 paragraph (A), the period— 11 (i) beginning on the date of the quali12 fying event, and 13 (ii) ending with the day before the 14 date of the enactment of this Act, 15 shall be disregarded for purposes of deter16 mining the 63-day periods referred to in section 17 701)(2) of the Employee Retirement Income 18 Security Act of 1974, section 9801(c)(2) of the 19 Internal Revenue Code of 1986, and section 20 2701(c)(2) of the Public Health Service Act. 21 (5) EXPEDITED REVIEW OF DENIALS OF PRE 22 MIUM ASSISTANCE.—In any case in which an indi 23 vidual requests treatment as an assistance eligible 24 individual and is denied such treatment by the group 25 health plan by reason of such individual’s ineligi f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 116 1 bility for COBRA continuation coverage, the Sec 2 retary of Labor (or the Secretary of Health and 3 Human services in connection with COBRA continu 4 ation coverage which is provided other than pursu 5 ant to part 6 of subtitle B of title I of the Employee 6 Retirement Income Security Act of 1974), in con7 sultation with the Secretary of the Treasury, shall 8 provide for expedited review of such denial. An indi9 vidual shall be entitled to such review upon applica10 tion to such Secretary in such form and manner as 11 shall be provided by such Secretary. Such Secretary 12 shall make a determination regarding such individ13 ual’s eligibility within 10 business days after receipt 14 of such individual’s application for review under this 15 paragraph. 16 (6) DISREGARD OF SUBSIDIES FOR PURPOSES 17 OF FEDERAL AND STATE PROGRAMS.—Notwith18 standing any other provision of law, any premium 19 reduction with respect to an assistance eligible indi20 vidual under this subsection shall not be considered 21 income or resources in determining eligibility for, or 22 the amount of assistance or benefits provided under, 23 any other public benefit provided under Federal law 24 or the law of any State or political subdivision there25 of. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 117 1 (7) NOTICES TO INDIVIDUALS.— 2 (A) GENERAL NOTICE.— 3 (i) IN GENERAL.—In the case of no 4 tices provided under section 606(4) of the 5 Employee Retirement Income Security Act 6 of 1974 (29 U.S.C. 1166(4)), section 7 4980B(f)(6)(D) of the Internal Revenue 8 Code of 1986, section 2206(4) of the Pub9 lic Health Service Act (42 U.S.C. 300bb10 6(4)), or section 8905a(f)(2)(A) of title 5, 11 United States Code, with respect to indi12 viduals who, during the period described in 13 paragraph (3)(A), become entitled to elect 14 COBRA continuation coverage, such no15 tices shall include an additional notifica16 tion to the recipient of the availability of 17 premium reduction with respect to such 18 coverage under this subsection. 19 (ii) ALTERNATIVE NOTICE.—In the 20 case of COBRA continuation coverage to 21 which the notice provision under such sec 22 tions does not apply, the Secretary of 23 Labor, in consultation with the Secretary 24 of the Treasury and the Secretary of 25 Health and Human Services, shall, in co f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 118 1 ordination with administrators of the 2 group health plans (or other entities) that 3 provide or administer the COBRA continu 4 ation coverage involved, provide rules re 5 quiring the provision of such notice. 6 (iii) FORM.—The requirement of the 7 additional notification under this subpara8 graph may be met by amendment of exist9 ing notice forms or by inclusion of a sepa10 rate document with the notice otherwise 11 required. 12 (B) SPECIFIC REQUIREMENTS.—Each ad13 ditional notification under subparagraph (A) 14 shall include— 15 (i) the forms necessary for estab16 lishing eligibility for premium reduction 17 under this subsection, 18 (ii) the name, address, and telephone 19 number necessary to contact the plan ad20 ministrator and any other person main21 taining relevant information in connection 22 with such premium reduction, 23 (iii) a description of the extended elec 24 tion period provided for in paragraph 25 (4)(A), f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 119 1 (iv) a description of the obligation of 2 the qualified beneficiary under paragraph 3 (2)(C) to notify the plan providing continu 4 ation coverage of eligibility for subsequent 5 coverage under another group health plan 6 or eligibility for benefits under title XVIII 7 of the Social Security Act and the penalty 8 provided for failure to so notify the plan, 9 and 10 (v) a description, displayed in a 11 prominent manner, of the qualified bene12 ficiary’s right to a reduced premium and 13 any conditions on entitlement to the re14 duced premium. 15 (C) NOTICE RELATING TO RETROACTIVE 16 COVERAGE.—In the case of an individual de17 scribed in paragraph (3)(A) who has elected 18 COBRA continuation coverage as of the date of 19 enactment of this Act or an individual described 20 in paragraph (4)(A), the administrator of the 21 group health plan (or other entity) involved 22 shall provide (within 60 days after the date of 23 enactment of this Act) for the additional notifi 24 cation required to be provided under subpara 25 graph (A). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 120 1 (D) MODEL NOTICES.—Not later than 30 2 days after the date of enactment of this Act, 3 the Secretary of the Labor, in consultation with 4 the Secretary of the Treasury and the Secretary 5 of Health and Human Services, shall prescribe 6 models for the additional notification required 7 under this paragraph. 8 (8) SAFEGUARDS.—The Secretary of the Treas9 ury shall provide such rules, procedures, regulations, 10 and other guidance as may be necessary and appro11 priate to prevent fraud and abuse under this sub12 section. 13 (9) OUTREACH.—The Secretary of Labor, in 14 consultation with the Secretary of the Treasury and 15 the Secretary of Health and Human Services, shall 16 provide outreach consisting of public education and 17 enrollment assistance relating to premium reduction 18 provided under this subsection. Such outreach shall 19 target employers, group health plan administrators, 20 public assistance programs, States, insurers, and 21 other entities as determined appropriate by such 22 Secretaries. Such outreach shall include an initial 23 focus on those individuals electing continuation cov 24 erage who are referred to in paragraph (7)(C). In 25 formation on such premium reduction, including en- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 121 1 rollment, shall also be made available on website of 2 the Departments of Labor, Treasury, and Health 3 and Human Services. 4 (10) DEFINITIONS.—For purposes of this sub 5 section— 6 (A) ADMINISTRATOR.—The term ‘‘admin7 istrator’’ has the meaning given such term in 8 section 3(16) of the Employee Retirement In9 come Security Act of 1974 10 (B) COBRA CONTINUATION COVERAGE.— 11 The term ‘‘COBRA continuation coverage’’ 12 means continuation coverage provided pursuant 13 to part 6 of subtitle B of title I of the Em14 ployee Retirement Income Security Act of 1974 15 (other than under section 609), title XXII of 16 the Public Health Service Act, section 4980B of 17 the Internal Revenue Code of 1986 (other than 18 subsection (f)(1) of such section insofar as it 19 relates to pediatric vaccines), or section 8905a 20 of title 5, United States Code, or under a State 21 program that provides continuation coverage 22 comparable to such continuation coverage. Such 23 term does not include coverage under a health 24 flexible spending arrangement. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 122 1 (C) COBRA CONTINUATION PROVISION.— 2 The term ‘‘COBRA continuation provision’’ 3 means the provisions of law described in sub 4 paragraph (B). 5 (D) COVERED EMPLOYEE.—The term 6 ‘‘covered employee’’ has the meaning given such 7 term in section 607(2) of the Employee Retire8 ment Income Security Act of 1974. 9 (E) QUALIFIED BENEFICIARY.—The term 10 ‘‘qualified beneficiary’’ has the meaning given 11 such term in section 607(3) of the Employee 12 Retirement Income Security Act of 1974. 13 (F) GROUP HEALTH PLAN.—The term 14 ‘‘group health plan’’ has the meaning given 15 such term in section 607(1) of the Employee 16 Retirement Income Security Act of 1974. 17 (G) STATE.—The term ‘‘State’’ includes 18 the District of Columbia, the Commonwealth of 19 Puerto Rico, the Virgin Islands, Guam, Amer20 ican Samoa, and the Commonwealth of the 21 Northern Mariana Islands. 22 (11) REPORTS.— 23 (A) INTERIM REPORT.—The Secretary of 24 the Treasury shall submit an interim report to 25 the Committee on Education and Labor, the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 123 1 Committee on Ways and Means, and the Com 2 mittee on Energy and Commerce of the House 3 of Representatives and the Committee on 4 Health, Education, Labor, and Pensions and 5 the Committee on Finance of the Senate re6 garding the premium reduction provided under 7 this subsection that includes— 8 (i) the number of individuals provided 9 such assistance as of the date of the re10 port; and 11 (ii) the total amount of expenditures 12 incurred (with administrative expenditures 13 noted separately) in connection with such 14 assistance as of the date of the report. 15 (B) FINAL REPORT.—As soon as prac16 ticable after the last period of COBRA continu17 ation coverage for which premium reduction is 18 provided under this section, the Secretary of the 19 Treasury shall submit a final report to each 20 Committee referred to in subparagraph (A) that 21 includes— 22 (i) the number of individuals provided 23 premium reduction under this section; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 124 1 (ii) the average dollar amount 2 (monthly and annually) of premium reduc 3 tions provided to such individuals; and 4 (iii) the total amount of expenditures 5 incurred (with administrative expenditures 6 noted separately) in connection with pre7 mium reduction under this section. 8 (12) COBRA PREMIUM ASSISTANCE.— 9 (A) IN GENERAL.—Subchapter B of chap10 ter 65 of the Internal Revenue Code of 1986 is 11 amended by adding at the end the following 12 new section: 13 ‘‘SEC. 6431. COBRA PREMIUM ASSISTANCE. 14 ‘‘(a) IN GENERAL.—The entity to whom premiums 15 are payable under COBRA continuation coverage shall be 16 reimbursed for the amount of premiums not paid by plan 17 beneficiaries by reason of section 3002(a) of the Health 18 Insurance Assistance for the Unemployed Act of 2009. 19 Such amount shall be treated as a credit against the re20 quirement of such entity to make deposits of payroll taxes. 21 To the extent that such amount exceeds the amount of 22 such taxes, the Secretary shall pay to such entity the 23 amount of such excess. No payment may be made under 24 this subsection to an entity with respect to any assistance 25 eligible individual until after such entity has received the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 125 1 reduced premium from such individual required under sec2 tion 3002(a)(1)(A) of such Act. 3 ‘‘(b) PAYROLL TAXES.—For purposes of this section, 4 the term ‘payroll taxes’ means— 5 ‘‘(1) amounts required to be deducted and with6 held for the payroll period under section 3401 (relat7 ing to wage withholding), 8 ‘‘(2) amounts required to be deducted for the 9 payroll period under section 3102 (relating to FICA 10 employee taxes), and 11 ‘‘(3) amounts of the taxes imposed for the pay12 roll period under section 3111 (relating to FICA em13 ployer taxes). 14 ‘‘(c) TREATMENT OF CREDIT.—Except as otherwise 15 provided by the Secretary, the credit described in sub16 section (a) shall be applied as though the employer had 17 paid to the Secretary, on the day that the qualified bene18 ficiary’s premium payment is received, an amount equal 19 to such credit. 20 ‘‘(d) TREATMENT OF PAYMENT.—For purposes of 21 section 1324(b)(2) of title 31, United States Code, any 22 payment under this subsection shall be treated in the same 23 manner as a refund of the credit under section 35. 24 ‘‘(e) REPORTING.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 126 1 ‘‘(1) IN GENERAL.—Each entity entitled to re 2 imbursement under subsection (a) for any period 3 shall submit such reports as the Secretary may re 4 quire, including— 5 ‘‘(A) an attestation of involuntary termi6 nation of employment for each covered em7 ployee on the basis of whose termination entitle8 ment to reimbursement is claimed under sub9 section (a), and 10 ‘‘(B) a report of the amount of payroll 11 taxes offset under subsection (a) for the report12 ing period and the estimated offsets of such 13 taxes for the subsequent reporting period in 14 connection with reimbursements under sub15 section (a). 16 ‘‘(2) TIMING OF REPORTS RELATING TO 17 AMOUNT OF PAYROLL TAXES.— Reports required 18 under paragraph (1)(B) shall be submitted at the 19 same time as deposits of taxes imposed by chapters 20 21, 22, and 24 or at such time as is specified by the 21 Secretary. 22 ‘‘(f) REGULATIONS.—The Secretary may issue such 23 regulations or other guidance as may be necessary or ap24 propriate to carry out this section, including the require25 ment to report information or the establishment of other f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 127 1 methods for verifying the correct amounts of payments 2 and credits under this section.’’. 3 (B) SOCIAL SECURITY TRUST FUNDS HELD 4 HARMLESS.—In determining any amount trans 5 ferred or appropriated to any fund under the 6 Social Security Act, section 6431 of the Inter7 nal Revenue Code of 1986 shall not be taken 8 into account. 9 (C) CLERICAL AMENDMENT.—The table of 10 sections for subchapter B of chapter 65 of the 11 Internal Revenue Code of 1986 is amended by 12 adding at the end the following new item: ‘‘Sec. 6431. COBRA premium assistance.’’. 13 (D) EFFECTIVE DATE.—The amendments 14 made by this paragraph shall apply to pre15 miums to which subsection (a)(1)(A) applies. 16 (13) PENALTY FOR FAILURE TO NOTIFY 17 HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR 18 PREMIUM ASSISTANCE.— 19 (A) IN GENERAL.—Part I of subchapter B 20 of chapter 68 of the Internal Revenue Code of 21 1986 is amended by adding at the end the fol 22 lowing new section: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 128 1 ‘‘SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH 2 PLAN OF CESSATION OF ELIGIBILITY FOR 3 COBRA PREMIUM ASSISTANCE. 4 ‘‘(a) IN GENERAL.—Any person required to notify a 5 group health plan under section 3002(a)(2)(C)) of the 6 Health Insurance Assistance for the Unemployed Act of 7 2009 who fails to make such a notification at such time 8 and in such manner as the Secretary of Labor may require 9 shall pay a penalty of 110 percent of the premium reduc10 tion provided under such section after termination of eligi11 bility under such subsection. 12 ‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty 13 shall be imposed under subsection (a) with respect to any 14 failure if it is shown that such failure is due to reasonable 15 cause and not to willful neglect.’’. 16 (B) CLERICAL AMENDMENT.—The table of 17 sections of part I of subchapter B of chapter 68 18 of such Code is amended by adding at the end 19 the following new item: ‘‘Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility for COBRA premium assistance.’’. 20 (C) EFFECTIVE DATE.—The amendments 21 made by this paragraph shall apply to failures 22 occurring after the date of the enactment of 23 this Act. 24 (14) COORDINATION WITH HCTC.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 129 1 (A) IN GENERAL.—Subsection (g) of sec 2 tion 35 of the Internal Revenue Code of 1986 3 is amended by redesignating paragraph (9) as 4 paragraph (10) and inserting after paragraph 5 (8) the following new paragraph: 6 ‘‘(9) COBRA PREMIUM ASSISTANCE.—In the 7 case of an assistance eligible individual who receives 8 premium reduction for COBRA continuation cov9 erage under section 3002(a) of the Health Insurance 10 Assistance for the Unemployed Act of 2009 for any 11 month during the taxable year, such individual shall 12 not be treated as an eligible individual, a certified 13 individual, or a qualifying family member for pur14 poses of this section or section 7527 with respect to 15 such month.’’. 16 (B) EFFECTIVE DATE.—The amendment 17 made by subparagraph (A) shall apply to tax18 able years ending after the date of the enact19 ment of this Act. 20 (15) EXCLUSION OF COBRA PREMIUM ASSIST21 ANCE FROM GROSS INCOME.— 22 (A) IN GENERAL.—Part III of subchapter 23 B of chapter 1 of the Internal Revenue Code of 24 1986 is amended by inserting after section 25 139B the following new section: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 130 1 ‘‘SEC. 139C. COBRA PREMIUM ASSISTANCE. 2 ‘‘In the case of an assistance eligible individual (as 3 defined in section 3002 of the Health Insurance Assist4 ance for the Unemployed Act of 2009), gross income does 5 not include any premium reduction provided under sub6 section (a) of such section.’’. 7 (B) CLERICAL AMENDMENT.—The table of 8 sections for part III of subchapter B of chapter 9 1 of such Code is amended by inserting after 10 the item relating to section 139B the following 11 new item: ‘‘Sec. 139C. COBRA premium assistance.’’. 12 (C) EFFECTIVE DATE.—The amendments 13 made by this paragraph shall apply to taxable 14 years ending after the date of the enactment of 15 this Act. 16 (b) EXTENSION OF COBRA BENEFITS FOR OLDER 17 OR LONG-TERM EMPLOYEES.— 18 (1) ERISA AMENDMENT.—Section 602(2)(A) 19 of the Employee Retirement Income Security Act of 20 1974 is amended by adding at the end the following 21 new clauses: 22 ‘‘(x) SPECIAL RULE FOR OLDER OR 23 LONG-TERM EMPLOYEES GENERALLY.—In 24 the case of a qualifying event described in 25 section 603(2) with respect to a covered f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 131 1 employee who (as of such qualifying event) 2 has attained age 55 or has completed 10 3 or more years of service with the entity 4 that is the employer at the time of the 5 qualifying event, clauses (i) and (ii) shall 6 not apply. 7 ‘‘(xi) YEAR OF SERVICE.— For pur8 poses of this subparagraph, the term ‘year 9 of service’ shall have the meaning provided 10 in section 202(a)(3).’’. 11 (2) IRC AMENDMENT.—Clause (i) of section 12 4980B(f)(2)(B) of the Internal Revenue Code of 13 1986 is amended by adding at the end the following 14 new subclauses: 15 ‘‘(X) SPECIAL RULE FOR OLDER 16 OR LONG-TERM EMPLOYEES GEN17 ERALLY.—In the case of a qualifying 18 event described in paragraph (3)(B) 19 with respect to a covered employee 20 who (as of such qualifying event) has 21 attained age 55 or has completed 10 22 or more years of service with the enti 23 ty that is the employer at the time of 24 the qualifying event, subclauses (I) 25 and (II) shall not apply. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 132 1 ‘‘(XI) YEAR OF SERVICE.— For 2 purposes of this clause, the term ‘year 3 of service’ shall have the meaning pro 4 vided in section 202(a)(3) of the Em 5 ployee Retirement Income Security 6 Act of 1974.’’. 7 (3) PHSA AMENDMENT.—Section 2202(2)(A) 8 of the Public Health Service Act is amended by add9 ing at the end the following new clauses: 10 ‘‘(viii) SPECIAL RULE FOR OLDER OR 11 LONG-TERM EMPLOYEES GENERALLY.—In 12 the case of a qualifying event described in 13 section 2203(2) with respect to a covered 14 employee who (as of such qualifying event) 15 has attained age 55 or has completed 10 16 or more years of service with the entity 17 that is the employer at the time of the 18 qualifying event, clauses (i) and (ii) shall 19 not apply. 20 ‘‘(ix) YEAR OF SERVICE.— For pur21 poses of this subparagraph, the term ‘year 22 of service’ shall have the meaning provided 23 in section 202(a)(3) of the Employee Re 24 tirement Income Security Act of 1974.’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 133 1 (4) EFFECTIVE DATE OF AMENDMENTS.—The 2 amendments made by this subsection shall apply to 3 periods of coverage which would (without regard to 4 the amendments made by this section) end on or 5 after the date of the enactment of this Act. 6 SEC. 3003. TEMPORARY OPTIONAL MEDICAID COVERAGE 7 FOR THE UNEMPLOYED. 8 (a) IN GENERAL.—Section 1902 of the Social Secu9 rity Act (42 U.S.C. 1396b) is amended— 10 (1) in subsection (a)(10)(A)(ii)— 11 (A) by striking ‘‘or’’ at the end of sub12 clause (XVIII); 13 (B) by adding ‘‘or’’ at the end of subclause 14 (XIX); and 15 (C) by adding at the end the following new 16 subclause 17 ‘‘(XX) who are described in sub18 section (dd)(1) (relating to certain un19 employed individuals and their fami20 lies);’’; and 21 (2) by adding at the end the following new sub22 section: 23 ‘‘(dd)(1) Individuals described in this paragraph 24 are— 25 ‘‘(A) individuals who— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 134 1 ‘‘(i) are within one or more of the categories de 2 scribed in paragraph (2), as elected under the State 3 plan; and 4 ‘‘(ii) meet the applicable requirements of para 5 graph (3); and 6 ‘‘(B) individuals who— 7 ‘‘(i) are the spouse, or dependent child under 8 19 years of age, of an individual described in sub9 paragraph (A); and 10 ‘‘(ii) meet the requirement of paragraph (3)(B). 11 ‘‘(2) The categories of individuals described in this 12 paragraph are each of the following: 13 ‘‘(A) Individuals who are receiving unemploy14 ment compensation benefits. 15 ‘‘(B) Individuals who were receiving, but have 16 exhausted, unemployment compensation benefits on 17 or after July 1, 2008. 18 ‘‘(C) Individuals who are involuntarily unem19 ployed and were involuntarily separated from em20 ployment on or after September 1, 2008, and before 21 January 1, 2011, whose family gross income does 22 not exceed a percentage specified by the State (not 23 to exceed 200 percent) of the income official poverty 24 line (as defined by the Office of Management and 25 Budget, and revised annually in accordance with sec f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 135 1 tion 673(2) of the Omnibus Budget Reconciliation 2 Act of 1981) applicable to a family of the size in 3 volved, and who, but for subsection 4 (a)(10)(A)(ii)(XX), are not eligible for medical as 5 sistance under this title or health assistance under 6 title XXI. 7 ‘‘(D) Individuals who are involuntarily unem8 ployed and were involuntarily separated from em9 ployment on or after September 1, 2008, and before 10 January 1, 2011, who are members of households 11 participating in the supplemental nutrition assist12 ance program established under the Food and Nutri13 tion Act of 2008 (7 U.S.C. 2011 et seq), and who, 14 but for subsection (a)(10)(A)(ii)(XX), are not eligi15 ble for medical assistance under this title or health 16 assistance under title XXI. 17 A State plan may elect one or more of the categories de18 scribed in this paragraph but may not elect the category 19 described in subparagraph (B) unless the State plan also 20 elects the category described in subparagraph (A). 21 ‘‘(3) The requirements of this paragraph with respect 22 to an individual are the following: 23 ‘‘(A) In the case of individuals within a cat 24 egory described in subparagraph (A) or (B) of para 25 graph (2), the individual was involuntarily separated f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 136 1 from employment on or after September 1, 2008, 2 and before January 1, 2011, or meets such com 3 parable requirement as the Secretary specifies 4 through rule, guidance, or otherwise in the case of 5 an individual who was an independent contractor. 6 ‘‘(B) The individual is not otherwise covered 7 under creditable coverage, as defined in section 8 2701(c) of the Public Health Service Act (42 U.S.C. 9 300gg(c)), but applied without regard to paragraph 10 (1)(F) of such section and without regard to cov11 erage provided by reason of the application of sub12 section (a)(10)(A)(ii)(XX). 13 ‘‘(4)(A) No income or resources test shall be applied 14 with respect to any category of individuals described in 15 subparagraph (A), (B), or (D) of paragraph (2) who are 16 eligible for medical assistance only by reason of the appli17 cation of subsection (a)(10)(A)(ii)(XX). 18 ‘‘(B) Nothing in this subsection shall be construed 19 to prevent a State from imposing a resource test for the 20 category of individuals described in paragraph (2)(C)). 21 ‘‘(C) In the case of individuals provided medical as22 sistance by reason of the application of subsection 23 (a)(10)(A)(ii)(XX), the requirements of subsections 24 (i)(22) and (x) shall not apply.’’. 25 (b) 100 PERCENT FEDERAL MATCHING RATE.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 137 1 (1) FMAP FOR TIME-LIMITED PERIOD.—The 2 third sentence of section 1905(b) of such Act (42 3 U.S.C. 1396d(b)) is amended by inserting before the 4 period at the end the following: ‘‘and for items and 5 services furnished on or after the date of enactment 6 of this Act and before January 1, 2011, to individ7 uals who are eligible for medical assistance only by 8 reason of the application of section 9 1902(a)(10)(A)(ii)(XX)’’. 10 (2) CERTAIN ENROLLMENT-RELATED ADMINIS11 TRATIVE COSTS.—Notwithstanding any other provi12 sion of law, for purposes of applying section 1903(a) 13 of the Social Security Act (42 U.S.C. 1396b(a)), 14 with respect to expenditures incurred on or after the 15 date of the enactment of this Act and before Janu16 ary 1, 2011, for costs of administration (including 17 outreach and the modification and operation of eligi18 bility information systems) attributable to eligibility 19 determination and enrollment of individuals who are 20 eligible for medical assistance only by reason of the 21 application of section 1902(a)(10)(A)(ii)(XX) of 22 such Act, as added by subsection (a)(1), the Federal 23 matching percentage shall be 100 percent instead of 24 the matching percentage otherwise applicable. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 138 1 (c) CONFORMING AMENDMENTS.—(1) Section 2 1903(f)(4) of such Act (42 U.S.C. 1396c(f)(4)) is amend3 ed by inserting ‘‘1902(a)(10)(A)(ii)(XX), or’’ after 4 ‘‘1902(a)(10)(A)(ii)(XIX),’’. 5 (2) Section 1905(a) of such Act (42 U.S.C. 6 1396d(a)) is amended, in the matter preceding paragraph 7 (1)— 8 (A) by striking ‘‘or’’ at the end of clause (xii); 9 (B) by adding ‘‘or’’ at the end of clause (xiii); 10 and 11 (C) by inserting after clause (xiii) the following 12 new clause: 13 ‘‘(xiv) individuals described in section 14 1902(dd)(1),’’. 15 TITLE Iv—HEALTH 16 INFORMATION TECHNOLOGY 17 SEC. 4001. SHORT TITLE; TABLE OF CONTENTS OF TITLE. 18 (a) SHORT TITLE.—This title may be cited as the 19 ‘‘Health Information Technology for Economic and Clin20 ical Health Act’’ or the ‘‘HITECH Act’’. 21 (b) TABLE OF CONTENTS OF TITLE.—The table of 22 contents of this title is as follows: Sec. 4001. Short title; table of contents of title. Subtitle A—Promotion of Health Information Technology PART I—IMPROVING HEALTH CARE QUALITY, SAFETY, AND EFFICIENCY Sec. 4101. ONCHIT; standards development and adoption. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 139 ‘‘TITLE XXX—HEALTH INFORMATION TECHNOLOGY AND QUALITY ‘‘Sec. 3000. Definitions. ‘‘Subtitle A—Promotion of Health Information Technology ‘‘Sec. 3001. Office of the National Coordinator for Health Information Technology. ‘‘Sec. 3002. HIT Policy Committee. ‘‘Sec. 3003. HIT Standards Committee. ‘‘Sec. 3004. Process for adoption of endorsed recommendations; adoption of initial set of standards, implementation specifications, and certification criteria. ‘‘Sec. 3005. Application and use of adopted standards and implementation specifications by Federal agencies. ‘‘Sec. 3006. Voluntary application and use of adopted standards and im plementation specifications by private entities. ‘‘Sec. 3007. Federal health information technology. ‘‘Sec. 3008. Transitions. ‘‘Sec. 3009. Relation to HIPAA privacy and security law. ‘‘Sec. 3010. Authorization for appropriations. Sec. 4102. Technical amendment. PART II—APPLICATION AND USE OF ADOPTED HEALTH INFORMATION TECHNOLOGY STANDARDS; REPORTS Sec. 4111. Coordination of Federal activities with adopted standards and imple mentation specifications. Sec. 4112. Application to private entities. Sec. 4113. Study and reports. Subtitle B—Testing of Health Information Technology Sec. 4201. National Institute for Standards and Technology testing. Sec. 4202. Research and development programs. Subtitle C—Incentives for the Use of Health Information Technology PART I—GRANTS AND LOANS FUNDING Sec. 4301. Grant, loan, and demonstration programs. ‘‘Subtitle B—Incentives for the Use of Health Information Technology ‘‘Sec. 3011. Immediate funding to strengthen the health information tech nology infrastructure. ‘‘Sec. 3012. Health information technology implementation assistance. ‘‘Sec. 3013. State grants to promote health information technology. ‘‘Sec. 3014. Competitive grants to States and Indian tribes for the devel opment of loan programs to facilitate the widespread adoption of certified EHR technology. ‘‘Sec. 3015. Demonstration program to integrate information technology into clinical education. ‘‘Sec. 3016. Information technology professionals on health care. ‘‘Sec. 3017. General grant and loan provisions. ‘‘Sec. 3018. Authorization for appropriations. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 140 PART II—MEDICARE PROGRAM Sec. 4311. Incentives for eligible professionals. Sec. 4312. Incentives for hospitals. Sec. 4313. Treatment of payments and savings; implementation funding. Sec. 4314. Study on application of HIT payment incentives for providers not receiving other incentive payments. PART III—MEDICAID FUNDING Sec. 4321. Medicaid provider HIT adoption and operation payments; implementation funding. Subtitle D—Privacy Sec. 4400. Definitions. PART I—IMPROVED PRIVACY PROVISIONS AND SECURITY PROVISIONS Sec. 4401. Application of security provisions and penalties to business associ ates of covered entities; annual guidance on security provisions. Sec. 4402. Notification in the case of breach. Sec. 4403. Education on Health Information Privacy. Sec. 4404. Application of privacy provisions and penalties to business associates of covered entities. Sec. 4405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format. Sec. 4406. Conditions on certain contacts as part of health care operations. Sec. 4407. Temporary breach notification requirement for vendors of personal health records and other non-HIPAA covered entities. Sec. 4408. Business associate contracts required for certain entities. Sec. 4409. Clarification of application of wrongful disclosures criminal pen alties. Sec. 4410. Improved enforcement. Sec. 4411. Audits. PART II—RELATIONSHIP TO OTHER LAWS; REGULATORY REFERENCES; EFFECTIVE DATE; REPORTS Sec. 4421. Relationship to other laws. Sec. 4422. Regulatory references. Sec. 4423. Effective date. Sec. 4424. Studies, reports, guidance. Subtitle E—Miscellaneous Medicare Provisions Sec. 4501. Moratoria on certain Medicare regulations. Sec. 4502. Long-term care hospital technical corrections. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 141 1 Subtitle A—Promotion of Health 2 Information Technology 3 PART I—IMPROVING HEALTH CARE QUALITY, 4 SAFETY, AND EFFICIENCY 5 SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOP6 TION. 7 The Public Health Service Act (42 U.S.C. 201 et 8 seq.) is amended by adding at the end the following: 9 ‘‘TITLE XXX—HEALTH INFORMA10 TION TECHNOLOGY AND 11 QUALITY 12 ‘‘SEC. 3000. DEFINITIONS. 13 ‘‘In this title: 14 ‘‘(1) CERTIFIED EHR TECHNOLOGY.—The term 15 ‘certified EHR technology’ means a qualified elec16 tronic health record that is certified pursuant to sec17 tion 3001(c)(5) as meeting standards adopted under 18 section 3004 that are applicable to the type of 19 record involved (as determined by the Secretary, 20 such as an ambulatory electronic health record for 21 office-based physicians or an inpatient hospital elec 22 tronic health record for hospitals). 23 ‘‘(2) ENTERPRISE INTEGRATION.—The term 24 ‘enterprise integration’ means the electronic linkage 25 of health care providers, health plans, the govern- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 142 1 ment, and other interested parties, to enable the 2 electronic exchange and use of health information 3 among all the components in the health care infra 4 structure in accordance with applicable law, and 5 such term includes related application protocols and 6 other related standards. 7 ‘‘(3) HEALTH CARE PROVIDER.—The term 8 ‘health care provider’ means a hospital, skilled nurs9 ing facility, nursing facility, home health entity or 10 other long term care facility, health care clinic, Fed11 erally qualified health center, group practice (as de12 fined in section 1877(h)(4) of the Social Security 13 Act), a pharmacist, a pharmacy, a laboratory, a phy14 sician (as defined in section 1861(r) of the Social 15 Security Act), a practitioner (as described in section 16 1842(b)(18)(C) of the Social Security Act), a pro17 vider operated by, or under contract with, the Indian 18 Health Service or by an Indian tribe (as defined in 19 the Indian Self-Determination and Education Assist20 ance Act), tribal organization, or urban Indian orga21 nization (as defined in section 4 of the Indian 22 Health Care Improvement Act), a rural health clinic, 23 a covered entity under section 340B, and any other 24 category of facility or clinician determined appro 25 priate by the Secretary. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 143 1 ‘‘(4) HEALTH INFORMATION.—The term ‘health 2 information’ has the meaning given such term in 3 section 1171(4) of the Social Security Act. 4 ‘‘(5) HEALTH INFORMATION TECHNOLOGY.— 5 The term ‘health information technology’ means 6 hardware, software, integrated technologies and re7 lated licenses, intellectual property, upgrades, and 8 packaged solutions sold as services that are specifi9 cally designed for use by health care entities for the 10 electronic creation, maintenance, or exchange of 11 health information. 12 ‘‘(6) HEALTH PLAN.—The term ‘health plan’ 13 has the meaning given such term in section 1171(5) 14 of the Social Security Act. 15 ‘‘(7) HIT POLICY COMMITTEE.—The term ‘HIT 16 Policy Committee’ means such Committee estab17 lished under section 3002(a). 18 ‘‘(8) HIT STANDARDS COMMITTEE.—The term 19 ‘HIT Standards Committee’ means such Committee 20 established under section 3003(a). 21 ‘‘(9) INDIVIDUALLY IDENTIFIABLE HEALTH IN 22 FORMATION.—The term ‘individually identifiable 23 health information’ has the meaning given such term 24 in section 1171(6) of the Social Security Act. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 144 1 ‘‘(10) LABORATORY.—The term ‘laboratory’ 2 has the meaning given such term in section 353(a). 3 ‘‘(11) NATIONAL COORDINATOR.—The term 4 ‘National Coordinator’ means the head of the Office 5 of the National Coordinator for Health Information 6 Technology established under section 3001(a). 7 ‘‘(12) PHARMACIST.—The term ‘pharmacist’ 8 has the meaning given such term in section 804(2) 9 of the Federal Food, Drug, and Cosmetic Act. 10 ‘‘(13) QUALIFIED ELECTRONIC HEALTH 11 RECORD.—The term ‘qualified electronic health 12 record’ means an electronic record of health-related 13 information on an individual that— 14 ‘‘(A) includes patient demographic and 15 clinical health information, such as medical his16 tory and problem lists; and 17 ‘‘(B) has the capacity— 18 ‘‘(i) to provide clinical decision sup19 port; 20 ‘‘(ii) to support physician order entry; 21 ‘‘(iii) to capture and query informa 22 tion relevant to health care quality; and 23 ‘‘(iv) to exchange electronic health in 24 formation with, and integrate such infor 25 mation from other sources. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 145 1 ‘‘(14) STATE.—The term ‘State’ means each of 2 the several States, the District of Columbia, Puerto 3 Rico, the Virgin Islands, Guam, American Samoa, 4 and the Northern Mariana Islands. 5 ‘‘Subtitle A—Promotion of Health 6 Information Technology 7 ‘‘SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR 8 HEALTH INFORMATION TECHNOLOGY. 9 ‘‘(a) ESTABLISHMENT.—There is established within 10 the Department of Health and Human Services an Office 11 of the National Coordinator for Health Information Tech12 nology (referred to in this section as the ‘Office’). The Of13 fice shall be headed by a National Coordinator who shall 14 be appointed by the Secretary and shall report directly to 15 the Secretary. 16 ‘‘(b) PURPOSE.—The National Coordinator shall per17 form the duties under subsection (c) in a manner con18 sistent with the development of a nationwide health infor19 mation technology infrastructure that allows for the elec20 tronic use and exchange of information and that— 21 ‘‘(1) ensures that each patient’s health informa 22 tion is secure and protected, in accordance with ap 23 plicable law; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 146 1 ‘‘(2) improves health care quality, reduces med 2 ical errors, and advances the delivery of patient-cen 3 tered medical care; 4 ‘‘(3) reduces health care costs resulting from 5 inefficiency, medical errors, inappropriate care, du6 plicative care, and incomplete information; 7 ‘‘(4) provides appropriate information to help 8 guide medical decisions at the time and place of 9 care; 10 ‘‘(5) ensures the inclusion of meaningful public 11 input in such development of such infrastructure; 12 ‘‘(6) improves the coordination of care and in13 formation among hospitals, laboratories, physician 14 offices, and other entities through an effective infra15 structure for the secure and authorized exchange of 16 health care information; 17 ‘‘(7) improves public health activities and facili18 tates the early identification and rapid response to 19 public health threats and emergencies, including bio20 terror events and infectious disease outbreaks; 21 ‘‘(8) facilitates health and clinical research and 22 health care quality; 23 ‘‘(9) promotes prevention of chronic diseases; 24 ‘‘(10) promotes a more effective marketplace, 25 greater competition, greater systems analysis, in- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 147 1 creased consumer choice, and improved outcomes in 2 health care services; and 3 ‘‘(11) improves efforts to reduce health dispari4 ties. 5 ‘‘(c) DUTIES OF THE NATIONAL COORDINATOR.— 6 ‘‘(1) STANDARDS.—The National Coordinator 7 shall review and determine whether to endorse each 8 standard, implementation specification, and certifi9 cation criterion for the electronic exchange and use 10 of health information that is recommended by the 11 HIT Standards Committee under section 3003 for 12 purposes of adoption under section 3004. The Coor13 dinator shall make such determination, and report to 14 the Secretary such determination, not later than 45 15 days after the date the recommendation is received 16 by the Coordinator. 17 ‘‘(2) HIT POLICY COORDINATION.— 18 ‘‘(A) IN GENERAL.—The National Coordi19 nator shall coordinate health information tech20 nology policy and programs of the Department 21 with those of other relevant executive branch 22 agencies with a goal of avoiding duplication of 23 efforts and of helping to ensure that each agen 24 cy undertakes health information technology ac 25 tivities primarily within the areas of its greatest f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 148 1 expertise and technical capability and in a man 2 ner towards a coordinated national goal. 3 ‘‘(B) HIT POLICY AND STANDARDS COM 4 MITTEES.—The National Coordinator shall be a 5 leading member in the establishment and oper6 ations of the HIT Policy Committee and the 7 HIT Standards Committee and shall serve as a 8 liaison among those two Committees and the 9 Federal Government. 10 ‘‘(3) STRATEGIC PLAN.— 11 ‘‘(A) IN GENERAL.—The National Coordi12 nator shall, in consultation with other appro13 priate Federal agencies (including the National 14 Institute of Standards and Technology), update 15 the Federal Health IT Strategic Plan (devel16 oped as of June 3, 2008) to include specific ob17 jectives, milestones, and metrics with respect to 18 the following: 19 ‘‘(i) The electronic exchange and use 20 of health information and the enterprise 21 integration of such information. 22 ‘‘(ii) The utilization of an electronic 23 health record for each person in the United 24 States by 2014. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 149 1 ‘‘(iii) The incorporation of privacy and 2 security protections for the electronic ex 3 change of an individual’s individually iden 4 tifiable health information. 5 ‘‘(iv) Ensuring security methods to 6 ensure appropriate authorization and elec7 tronic authentication of health information 8 and specifying technologies or methodolo9 gies for rendering health information unus10 able, unreadable, or indecipherable. 11 ‘‘(v) Specifying a framework for co12 ordination and flow of recommendations 13 and policies under this subtitle among the 14 Secretary, the National Coordinator, the 15 HIT Policy Committee, the HIT Standards 16 Committee, and other health information 17 exchanges and other relevant entities. 18 ‘‘(vi) Methods to foster the public un19 derstanding of health information tech20 nology. 21 ‘‘(vii) Strategies to enhance the use of 22 health information technology in improving 23 the quality of health care, reducing medical 24 errors, reducing health disparities, improv f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 150 1 ing public health, and improving the con 2 tinuity of care among health care settings. 3 ‘‘(B) COLLABORATION.—The strategic 4 plan shall be updated through collaboration of 5 public and private entities. 6 ‘‘(C) MEASURABLE OUTCOME GOALS.— 7 The strategic plan update shall include measur8 able outcome goals. 9 ‘‘(D) PUBLICATION.—The National Coor10 dinator shall republish the strategic plan, in11 cluding all updates. 12 ‘‘(4) WEBSITE.—The National Coordinator 13 shall maintain and frequently update an Internet 14 website on which there is posted information on the 15 work, schedules, reports, recommendations, and 16 other information to ensure transparency in pro17 motion of a nationwide health information tech18 nology infrastructure. 19 ‘‘(5) CERTIFICATION.— 20 ‘‘(A) IN GENERAL.—The National Coordi21 nator, in consultation with the Director of the 22 National Institute of Standards and Tech 23 nology, shall develop a program (either directly 24 or by contract) for the voluntary certification of 25 health information technology as being in com f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 151 1 pliance with applicable certification criteria 2 adopted under this subtitle. Such program shall 3 include testing of the technology in accordance 4 with section 4201(b) of the HITECH Act. 5 ‘‘(B) CERTIFICATION CRITERIA DE6 SCRIBED.—In this title, the term ‘certification 7 criteria’ means, with respect to standards and 8 implementation specifications for health infor9 mation technology, criteria to establish that the 10 technology meets such standards and implemen11 tation specifications. 12 ‘‘(6) REPORTS AND PUBLICATIONS.— 13 ‘‘(A) REPORT ON ADDITIONAL FUNDING 14 OR AUTHORITY NEEDED.—Not later than 12 15 months after the date of the enactment of this 16 title, the National Coordinator shall submit to 17 the appropriate committees of jurisdiction of 18 the House of Representatives and the Senate a 19 report on any additional funding or authority 20 the Coordinator or the HIT Policy Committee 21 or HIT Standards Committee requires to evalu22 ate and develop standards, implementation 23 specifications, and certification criteria, or to 24 achieve full participation of stakeholders in the 25 adoption of a nationwide health information f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 152 1 technology infrastructure that allows for the 2 electronic use and exchange of health informa3 tion. 4 ‘‘(B) IMPLEMENTATION REPORT.—The 5 National Coordinator shall prepare a report 6 that identifies lessons learned from major pub7 lic and private health care systems in their im8 plementation of health information technology, 9 including information on whether the tech10 nologies and practices developed by such sys11 tems may be applicable to and usable in whole 12 or in part by other health care providers. 13 ‘‘(C) ASSESSMENT OF IMPACT OF HIT ON 14 COMMUNITIES WITH HEALTH DISPARITIES AND 15 UNINSURED, UNDERINSURED, AND MEDICALLY 16 UNDERSERVED AREAS.—The National Coordi17 nator shall assess and publish the impact of 18 health information technology in communities 19 with health disparities and in areas with a high 20 proportion of individuals who are uninsured, 21 underinsured, and medically underserved indi 22 viduals (including urban and rural areas) and 23 identify practices to increase the adoption of 24 such technology by health care providers in 25 such communities. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 153 1 ‘‘(D) EVALUATION OF BENEFITS AND 2 COSTS OF THE ELECTRONIC USE AND EX3 CHANGE OF HEALTH INFORMATION.—The Na 4 tional Coordinator shall evaluate and publish 5 evidence on the benefits and costs of the elec6 tronic use and exchange of health information 7 and assess to whom these benefits and costs ac8 crue. 9 ‘‘(E) RESOURCE REQUIREMENTS.—The 10 National Coordinator shall estimate and publish 11 resources required annually to reach the goal of 12 utilization of an electronic health record for 13 each person in the United States by 2014, in14 cluding the required level of Federal funding, 15 expectations for regional, State, and private in16 vestment, and the expected contributions by vol17 unteers to activities for the utilization of such 18 records. 19 ‘‘(7) ASSISTANCE.—The National Coordinator 20 may provide financial assistance to consumer advo21 cacy groups and not-for-profit entities that work in 22 the public interest for purposes of defraying the cost 23 to such groups and entities to participate under, 24 whether in whole or in part, the National Tech 25 nology Transfer Act of 1995 (15 U.S.C. 272 note). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 154 1 ‘‘(8) GOVERNANCE FOR NATIONWIDE HEALTH 2 INFORMATION NETWORK.—The National Coordi 3 nator shall establish a governance mechanism for the 4 nationwide health information network. 5 ‘‘(d) DETAIL OF FEDERAL EMPLOYEES.— 6 ‘‘(1) IN GENERAL.—Upon the request of the 7 National Coordinator, the head of any Federal agen8 cy is authorized to detail, with or without reimburse9 ment from the Office, any of the personnel of such 10 agency to the Office to assist it in carrying out its 11 duties under this section. 12 ‘‘(2) EFFECT OF DETAIL.—Any detail of per13 sonnel under paragraph (1) shall— 14 ‘‘(A) not interrupt or otherwise affect the 15 civil service status or privileges of the Federal 16 employee; and 17 ‘‘(B) be in addition to any other staff of 18 the Department employed by the National Co19 ordinator. 20 ‘‘(3) ACCEPTANCE OF DETAILEES.—Notwith21 standing any other provision of law, the Office may 22 accept detailed personnel from other Federal agen 23 cies without regard to whether the agency described 24 under paragraph (1) is reimbursed. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 155 ‘‘(e) CHIEF PRIVACY OFFICER OF THE OFFICE OF 2 THE NATIONAL COORDINATOR.—Not later than 12 3 months after the date of the enactment of this title, the 4 Secretary shall appoint a Chief Privacy Officer of the Of5 fice of the National Coordinator, whose duty it shall be 6 to advise the National Coordinator on privacy, security, 7 and data stewardship of electronic health information and 8 to coordinate with other Federal agencies (and similar pri9 vacy officers in such agencies), with State and regional 10 efforts, and with foreign countries with regard to the pri11 vacy, security, and data stewardship of electronic individ12 ually identifiable health information. 13 ‘‘SEC. 3002. HIT POLICY COMMITTEE. 14 ‘‘(a) ESTABLISHMENT.—There is established a HIT 15 Policy Committee to make policy recommendations to the 16 National Coordinator relating to the implementation of a 17 nationwide health information technology infrastructure, 18 including implementation of the strategic plan described 19 in section 3001(c)(3). 20 ‘‘(b) DUTIES.— 21 ‘‘(1) RECOMMENDATIONS ON HEALTH INFOR22 MATION TECHNOLOGY INFRASTRUCTURE.—The HIT 23 Policy Committee shall recommend a policy frame24 work for the development and adoption of a nation25 wide health information technology infrastructure f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 156 1 that permits the electronic exchange and use of 2 health information as is consistent with the strategic 3 plan under section 3001(c)(3) and that includes the 4 recommendations under paragraph (2). The Com 5 mittee shall update such recommendations and make 6 new recommendations as appropriate. 7 ‘‘(2) SPECIFIC AREAS OF STANDARD DEVELOP8 MENT.— 9 ‘‘(A) IN GENERAL.—The HIT Policy Com10 mittee shall recommend the areas in which 11 standards, implementation specifications, and 12 certification criteria are needed for the elec13 tronic exchange and use of health information 14 for purposes of adoption under section 3004 15 and shall recommend an order of priority for 16 the development, harmonization, and recogni17 tion of such standards, specifications, and cer18 tification criteria among the areas so rec19 ommended. Such standards and implementation 20 specifications shall include named standards, 21 architectures, and software schemes for the au 22 thentication and security of individually identifi 23 able health information and other information 24 as needed to ensure the reproducible develop- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 157 1 ment of common solutions across disparate en 2 tities. 3 ‘‘(B) AREAS REQUIRED FOR CONSIDER 4 ATION.—For purposes of subparagraph (A), the 5 HIT Policy Committee shall make recommenda6 tions for at least the following areas: 7 ‘‘(i) Technologies that protect the pri8 vacy of health information and promote se9 curity in a qualified electronic health 10 record, including for the segmentation and 11 protection from disclosure of specific and 12 sensitive individually identifiable health in13 formation with the goal of minimizing the 14 reluctance of patients to seek care (or dis15 close information about a condition) be16 cause of privacy concerns, in accordance 17 with applicable law, and for the use and 18 disclosure of limited data sets of such in19 formation. 20 ‘‘(ii) A nationwide health information 21 technology infrastructure that allows for 22 the electronic use and accurate exchange of 23 health information. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 158 1 ‘‘(iii) The utilization of a certified 2 electronic health record for each person in 3 the United States by 2014. 4 ‘‘(iv) Technologies that as a part of a 5 qualified electronic health record allow for 6 an accounting of disclosures made by a 7 covered entity (as defined for purposes of 8 regulations promulgated under section 9 264(c) of the Health Insurance Portability 10 and Accountability Act of 1996) for pur11 poses of treatment, payment, and health 12 care operations (as such terms are defined 13 for purposes of such regulations). 14 ‘‘(v) The use of certified electronic 15 health records to improve the quality of 16 health care, such as by promoting the co17 ordination of health care and improving 18 continuity of health care among health 19 care providers, by reducing medical errors, 20 by improving population health, and by ad21 vancing research and education. 22 ‘‘(C) OTHER AREAS FOR CONSIDER23 ATION.—In making recommendations under 24 subparagraph (A), the HIT Policy Committee 25 may consider the following additional areas: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 159 1 ‘‘(i) The appropriate uses of a nation 2 wide health information infrastructure, in 3 cluding for purposes of— 4 ‘‘(I) the collection of quality data 5 and public reporting; 6 ‘‘(II) biosurveillance and public 7 health; 8 ‘‘(III) medical and clinical re9 search; and 10 ‘‘(IV) drug safety. 11 ‘‘(ii) Self-service technologies that fa12 cilitate the use and exchange of patient in13 formation and reduce wait times. 14 ‘‘(iii) Telemedicine technologies, in 15 order to reduce travel requirements for pa16 tients in remote areas. 17 ‘‘(iv) Technologies that facilitate home 18 health care and the monitoring of patients 19 recuperating at home. 20 ‘‘(v) Technologies that help reduce 21 medical errors. 22 ‘‘(vi) Technologies that facilitate the 23 continuity of care among health settings. 24 ‘‘(vii) Technologies that meet the 25 needs of diverse populations. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 160 1 ‘‘(viii) Any other technology that the 2 HIT Policy Committee finds to be among 3 the technologies with the greatest potential 4 to improve the quality and efficiency of 5 health care. 6 ‘‘(3) FORUM.—The HIT Policy Committee shall 7 serve as a forum for broad stakeholder input with 8 specific expertise in policies relating to the matters 9 described in paragraphs (1) and (2). 10 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 11 ‘‘(1) IN GENERAL.—The National Coordinator 12 shall provide leadership in the establishment and op13 erations of the HIT Policy Committee. 14 ‘‘(2) MEMBERSHIP.—The membership of the 15 HIT Policy Committee shall at least reflect pro16 viders, ancillary healthcare workers, consumers, pur17 chasers, health plans, technology vendors, research18 ers, relevant Federal agencies, and individuals with 19 technical expertise on health care quality, privacy 20 and security, and on the electronic exchange and use 21 of health information. 22 ‘‘(3) CONSIDERATION.—The National Coordi 23 nator shall ensure that the relevant recommenda 24 tions and comments from the National Committee f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 161 1 on Vital and Health Statistics are considered in the 2 development of policies. 3 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 4 Committee Act (5 U.S.C. App.), other than section 14 of 5 such Act, shall apply to the HIT Policy Committee. 6 ‘‘(e) PUBLICATION.—The Secretary shall provide for 7 publication in the Federal Register and the posting on the 8 Internet website of the Office of the National Coordinator 9 for Health Information Technology of all policy rec10 ommendations made by the HIT Policy Committee under 11 this section. 12 ‘‘SEC. 3003. HIT STANDARDS COMMITTEE. 13 ‘‘(a) ESTABLISHMENT.—There is established a com14 mittee to be known as the HIT Standards Committee to 15 recommend to the National Coordinator standards, imple16 mentation specifications, and certification criteria for the 17 electronic exchange and use of health information for pur18 poses of adoption under section 3004, consistent with the 19 implementation of the strategic plan described in section 20 3001(c)(3) and beginning with the areas listed in section 21 3002(b)(2)(B) in accordance with policies developed by 22 the HIT Policy Committee. 23 ‘‘(b) DUTIES.— 24 ‘‘(1) STANDARD DEVELOPMENT.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 162 1 ‘‘(A) IN GENERAL.—The HIT Standards 2 Committee shall recommend to the National 3 Coordinator standards, implementation speci 4 fications, and certification criteria described in 5 subsection (a) that have been developed, har6 monized, or recognized by the HIT Standards 7 Committee. The HIT Standards Committee 8 shall update such recommendations and make 9 new recommendations as appropriate, including 10 in response to a notification sent under section 11 3004(b)(2). Such recommendations shall be 12 consistent with the latest recommendations 13 made by the HIT Policy Committee. 14 ‘‘(B) PILOT TESTING OF STANDARDS AND 15 IMPLEMENTATION SPECIFICATIONS.—In the de16 velopment, harmonization, or recognition of 17 standards and implementation specifications, 18 the HIT Standards Committee shall, as appro19 priate, provide for the testing of such standards 20 and specifications by the National Institute for 21 Standards and Technology under section 4201 22 of the HITECH Act. 23 ‘‘(C) CONSISTENCY.—The standards, im 24 plementation specifications, and certification 25 criteria recommended under this subsection f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 163 1 shall be consistent with the standards for infor 2 mation transactions and data elements adopted 3 pursuant to section 1173 of the Social Security 4 Act. 5 ‘‘(2) FORUM.—The HIT Standards Committee 6 shall serve as a forum for the participation of a 7 broad range of stakeholders to provide input on the 8 development, harmonization, and recognition of 9 standards, implementation specifications, and certifi10 cation criteria necessary for the development and 11 adoption of a nationwide health information tech12 nology infrastructure that allows for the electronic 13 use and exchange of health information. 14 ‘‘(3) SCHEDULE.—Not later than 90 days after 15 the date of the enactment of this title, the HIT 16 Standards Committee shall develop a schedule for 17 the assessment of policy recommendations developed 18 by the HIT Policy Committee under section 3002. 19 The HIT Standards Committee shall update such 20 schedule annually. The Secretary shall publish such 21 schedule in the Federal Register. 22 ‘‘(4) PUBLIC INPUT.—The HIT Standards 23 Committee shall conduct open public meetings and 24 develop a process to allow for public comment on the 25 schedule described in paragraph (3) and rec- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 164 1 ommendations described in this subsection. Under 2 such process comments shall be submitted in a time 3 ly manner after the date of publication of a rec 4 ommendation under this subsection. 5 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 6 ‘‘(1) IN GENERAL.—The National Coordinator 7 shall provide leadership in the establishment and op8 erations of the HIT Standards Committee. 9 ‘‘(2) MEMBERSHIP.—The membership of the 10 HIT Standards Committee shall at least reflect pro11 viders, ancillary healthcare workers, consumers, pur12 chasers, health plans, technology vendors, research13 ers, relevant Federal agencies, and individuals with 14 technical expertise on health care quality, privacy 15 and security, and on the electronic exchange and use 16 of health information. 17 ‘‘(3) CONSIDERATION.—The National Coordi18 nator shall ensure that the relevant recommenda19 tions and comments from the National Committee 20 on Vital and Health Statistics are considered in the 21 development of standards. 22 ‘‘(4) ASSISTANCE.—For the purposes of car 23 rying out this section, the Secretary may provide or 24 ensure that financial assistance is provided by the 25 HIT Standards Committee to defray in whole or in f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 165 1 part any membership fees or dues charged by such 2 Committee to those consumer advocacy groups and 3 not for profit entities that work in the public inter 4 est as a part of their mission. 5 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 6 Committee Act (5 U.S.C. App.), other than section 14, 7 shall apply to the HIT Standards Committee. 8 ‘‘(e) PUBLICATION.—The Secretary shall provide for 9 publication in the Federal Register and the posting on the 10 Internet website of the Office of the National Coordinator 11 for Health Information Technology of all recommenda12 tions made by the HIT Standards Committee under this 13 section. 14 ‘‘SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED REC15 OMMENDATIONS; ADOPTION OF INITIAL SET 16 OF STANDARDS, IMPLEMENTATION SPECI17 FICATIONS, AND CERTIFICATION CRITERIA. 18 ‘‘(a) PROCESS FOR ADOPTION OF ENDORSED REC19 OMMENDATIONS.— 20 ‘‘(1) REVIEW OF ENDORSED STANDARDS, IM21 PLEMENTATION SPECIFICATIONS, AND CERTIFI22 CATION CRITERIA.—Not later than 90 days after the 23 date of receipt of standards, implementation speci 24 fications, or certification criteria endorsed under sec 25 tion 3001(c), the Secretary, in consultation with rep- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 166 1 resentatives of other relevant Federal agencies, shall 2 jointly review such standards, implementation speci 3 fications, or certification criteria and shall determine 4 whether or not to propose adoption of such stand 5 ards, implementation specifications, or certification 6 criteria. 7 ‘‘(2) DETERMINATION TO ADOPT STANDARDS, 8 IMPLEMENTATION SPECIFICATIONS, AND CERTIFI9 CATION CRITERIA.—If the Secretary determines— 10 ‘‘(A) to propose adoption of any grouping 11 of such standards, implementation specifica12 tions, or certification criteria, the Secretary 13 shall, by regulation, determine whether or not 14 to adopt such grouping of standards, implemen15 tation specifications, or certification criteria; or 16 ‘‘(B) not to propose adoption of any group17 ing of standards, implementation specifications, 18 or certification criteria, the Secretary shall no19 tify the National Coordinator and the HIT 20 Standards Committee in writing of such deter21 mination and the reasons for not proposing the 22 adoption of such recommendation. 23 ‘‘(3) PUBLICATION.—The Secretary shall pro 24 vide for publication in the Federal Register of all de f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 167 1 terminations made by the Secretary under para 2 graph (1). 3 ‘‘(b) ADOPTION OF INITIAL SET OF STANDARDS, IM4 PLEMENTATION SPECIFICATIONS, AND CERTIFICATION 5 CRITERIA.— 6 ‘‘(1) IN GENERAL.—Not later than December 7 31, 2009, the Secretary shall, through the rule8 making process described in section 3003, adopt an 9 initial set of standards, implementation specifica10 tions, and certification criteria for the areas required 11 for consideration under section 3002(b)(2)(B). 12 ‘‘(2) APPLICATION OF CURRENT STANDARDS, 13 IMPLEMENTATION SPECIFICATIONS, AND CERTIFI14 CATION CRITERIA.—The standards, implementation 15 specifications, and certification criteria adopted be16 fore the date of the enactment of this title through 17 the process existing through the Office of the Na18 tional Coordinator for Health Information Tech19 nology may be applied towards meeting the require20 ment of paragraph (1). 21 ‘‘SEC. 3005. APPLICATION AND USE OF ADOPTED STAND22 ARDS AND IMPLEMENTATION SPECIFICA 23 TIONS BY FEDERAL AGENCIES. 24 ‘‘For requirements relating to the application and use 25 by Federal agencies of the standards and implementation f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 168 1 specifications adopted under section 3004, see section 2 4111 of the HITECH Act. 3 ‘‘SEC. 3006. VOLUNTARY APPLICATION AND USE OF ADOPT4 ED STANDARDS AND IMPLEMENTATION 5 SPECIFICATIONS BY PRIVATE ENTITIES. 6 ‘‘(a) IN GENERAL.—Except as provided under section 7 4112 of the HITECH Act, any standard or implementa8 tion specification adopted under section 3004 shall be vol9 untary with respect to private entities. 10 ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this sub11 title shall be construed to require that a private entity that 12 enters into a contract with the Federal Government apply 13 or use the standards and implementation specifications 14 adopted under section 3004 with respect to activities not 15 related to the contract. 16 ‘‘SEC. 3007. FEDERAL HEALTH INFORMATION TECH17 NOLOGY. 18 ‘‘(a) IN GENERAL.—The National Coordinator shall 19 support the development, routine updating and provision 20 of qualified EHR technology (as defined in section 3000) 21 consistent with subsections (b) and (c) unless the Sec22 retary determines that the needs and demands of pro23 viders are being substantially and adequately met through 24 the marketplace. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 169 1 ‘‘(b) CERTIFICATION.—In making such EHR tech2 nology publicly available, the National Coordinator shall 3 ensure that the qualified EHR technology described in 4 subsection (a) is certified under the program developed 5 under section 3001(c)(3) to be in compliance with applica6 ble standards adopted under section 3003(a). 7 ‘‘(c) AUTHORIZATION TO CHARGE A NOMINAL 8 FEE.—The National Coordinator may impose a nominal 9 fee for the adoption by a health care provider of the health 10 information technology system developed or approved 11 under subsection (a) and (b). Such fee shall take into ac12 count the financial circumstances of smaller providers, low 13 income providers, and providers located in rural or other 14 medically underserved areas. 15 ‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec16 tion shall be construed to require that a private or govern17 ment entity adopt or use the technology provided under 18 this section. 19 ‘‘SEC. 3008. TRANSITIONS. 20 ‘‘(a) ONCHIT.—To the extent consistent with sec21 tion 3001, all functions, personnel, assets, liabilities, and 22 administrative actions applicable to the National Coordi23 nator for Health Information Technology appointed under 24 Executive Order 13335 or the Office of such National Co25 ordinator on the date before the date of the enactment f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 170 1 of this title shall be transferred to the National Coordi2 nator appointed under section 3001(a) and the Office of 3 such National Coordinator as of the date of the enactment 4 of this title. 5 ‘‘(b) AHIC.— 6 ‘‘(1) To the extent consistent with sections 7 3002 and 3003, all functions, personnel, assets, and 8 liabilities applicable to the AHIC Successor, Inc. 9 doing business as the National eHealth Collaborative 10 as of the day before the date of the enactment of 11 this title shall be transferred to the HIT Policy 12 Committee or the HIT Standards Committee, estab13 lished under section 3002(a) or 3003(a), as appro14 priate, as of the date of the enactment of this title. 15 ‘‘(2) In carrying out section 3003(b)(1)(A), 16 until recommendations are made by the HIT Policy 17 Committee, recommendations of the HIT Standards 18 Committee shall be consistent with the most recent 19 recommendations made by such AHIC Successor, 20 Inc. 21 ‘‘(c) RULES OF CONSTRUCTION.— 22 ‘‘(1) ONCHIT.—Nothing in section 3001 or 23 subsection (a) shall be construed as requiring the 24 creation of a new entity to the extent that the Office 25 of the National Coordinator for Health Information f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 171 1 Technology established pursuant to Executive Order 2 13335 is consistent with the provisions of section 3 3001. 4 ‘‘(2) AHIC.—Nothing in sections 3002 or 3003 5 or subsection (b) shall be construed as prohibiting 6 the AHIC Successor, Inc. doing business as the Na7 tional eHealth Collaborative from modifying its char8 ter, duties, membership, and any other structure or 9 function required to be consistent with section 3002 10 and 3003 in a manner that would permit the Sec11 retary to choose to recognize such Community as the 12 HIT Policy Committee or the HIT Standards Com13 mittee. 14 ‘‘SEC. 3009. RELATION TO HIPAA PRIVACY AND SECURITY 15 LAW. 16 ‘‘(a) IN GENERAL.—With respect to the relation of 17 this title to HIPAA privacy and security law: 18 ‘‘(1) This title may not be construed as having 19 any effect on the authorities of the Secretary under 20 HIPAA privacy and security law. 21 ‘‘(2) The purposes of this title include ensuring 22 that the health information technology standards 23 and implementation specifications adopted under 24 section 3004 take into account the requirements of 25 HIPAA privacy and security law. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 172 1 ‘‘(b) DEFINITION.—For purposes of this section, the 2 term ‘HIPAA privacy and security law’ means— 3 ‘‘(1) the provisions of part C of title XI of the 4 Social Security Act, section 264 of the Health Insur 5 ance Portability and Accountability Act of 1996, and 6 subtitle D of title IV of the HITECH Act; and 7 ‘‘(2) regulations under such provisions. 8 ‘‘SEC. 3010. AUTHORIZATION FOR APPROPRIATIONS. 9 ‘‘There is authorized to be appropriated to the Office 10 of the National Coordinator for Health Information Tech11 nology to carry out this subtitle $250,000,000 for fiscal 12 year 2009.’’. 13 SEC. 4102. TECHNICAL AMENDMENT. 14 Section 1171(5) of the Social Security Act (42 U.S.C. 15 1320d) is amended by striking ‘‘or C’’ and inserting ‘‘C, 16 or D’’. 17 PART II—APPLICATION AND USE OF ADOPTED 18 HEALTH INFORMATION TECHNOLOGY 19 STANDARDS; REPORTS 20 SEC. 4111. COORDINATION OF FEDERAL ACTIVITIES WITH 21 ADOPTED STANDARDS AND IMPLEMENTA22 TION SPECIFICATIONS. 23 (a) SPENDING ON HEALTH INFORMATION TECH24 NOLOGY SYSTEMS.—As each agency (as defined in the Ex25 ecutive Order issued on August 22, 2006, relating to pro- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 173 1 moting quality and efficient health care in Federal govern2 ment administered or sponsored health care programs) im3 plements, acquires, or upgrades health information tech4 nology systems used for the direct exchange of individually 5 identifiable health information between agencies and with 6 non-Federal entities, it shall utilize, where available, 7 health information technology systems and products that 8 meet standards and implementation specifications adopted 9 under section 3004(b) of the Public Health Service Act, 10 as added by section 4101. 11 (b) FEDERAL INFORMATION COLLECTION ACTIVI12 TIES.—With respect to a standard or implementation 13 specification adopted under section 3004(b) of the Public 14 Health Service Act, as added by section 4101, the Presi15 dent shall take measures to ensure that Federal activities 16 involving the broad collection and submission of health in17 formation are consistent with such standard or implemen18 tation specification, respectively, within three years after 19 the date of such adoption. 20 (c) APPLICATION OF DEFINITIONS.—The definitions 21 contained in section 3000 of the Public Health Service 22 Act, as added by section 4101, shall apply for purposes 23 of this part. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 174 1 SEC. 4112. APPLICATION TO PRIVATE ENTITIES. 2 Each agency (as defined in such Executive Order 3 issued on August 22, 2006, relating to promoting quality 4 and efficient health care in Federal government adminis5 tered or sponsored health care programs) shall require in 6 contracts or agreements with health care providers, health 7 plans, or health insurance issuers that as each provider, 8 plan, or issuer implements, acquires, or upgrades health 9 information technology systems, it shall utilize, where 10 available, health information technology systems and prod11 ucts that meet standards and implementation specifica12 tions adopted under section 3004(b) of the Public Health 13 Service Act, as added by section 4101. 14 SEC. 4113. STUDY AND REPORTS. 15 (a) REPORT ON ADOPTION OF NATIONWIDE SYS16 TEM.—Not later than 2 years after the date of the enact17 ment of this Act and annually thereafter, the Secretary 18 of Health and Human Services shall submit to the appro19 priate committees of jurisdiction of the House of Rep20 resentatives and the Senate a report that— 21 (1) describes the specific actions that have been 22 taken by the Federal Government and private enti 23 ties to facilitate the adoption of a nationwide system 24 for the electronic use and exchange of health infor25 mation; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 175 1 (2) describes barriers to the adoption of such a 2 nationwide system; and 3 (3) contains recommendations to achieve full 4 implementation of such a nationwide system. 5 (b) REIMBURSEMENT INCENTIVE STUDY AND RE6 PORT.— 7 (1) STUDY.—The Secretary of Health and 8 Human Services shall carry out, or contract with a 9 private entity to carry out, a study that examines 10 methods to create efficient reimbursement incentives 11 for improving health care quality in Federally quali12 fied health centers, rural health clinics, and free 13 clinics. 14 (2) REPORT.—Not later than 2 years after the 15 date of the enactment of this Act, the Secretary of 16 Health and Human Services shall submit to the ap17 propriate committees of jurisdiction of the House of 18 Representatives and the Senate a report on the 19 study carried out under paragraph (1). 20 (c) AGING SERVICES TECHNOLOGY STUDY AND RE21 PORT.— 22 (1) IN GENERAL.—The Secretary of Health and 23 Human Services shall carry out, or contract with a 24 private entity to carry out, a study of matters relat 25 ing to the potential use of new aging services tech- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 176 1 nology to assist seniors, individuals with disabilities, 2 and their caregivers throughout the aging process. 3 (2) MATTERS TO BE STUDIED.—The study 4 under paragraph (1) shall include— 5 (A) an evaluation of— 6 (i) methods for identifying current, 7 emerging, and future health technology 8 that can be used to meet the needs of sen9 iors and individuals with disabilities and 10 their caregivers across all aging services 11 settings, as specified by the Secretary; 12 (ii) methods for fostering scientific in13 novation with respect to aging services 14 technology within the business and aca15 demic communities; and 16 (iii) developments in aging services 17 technology in other countries that may be 18 applied in the United States; and 19 (B) identification of— 20 (i) barriers to innovation in aging 21 services technology and devising strategies 22 for removing such barriers; and 23 (ii) barriers to the adoption of aging 24 services technology by health care pro- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 177 1 viders and consumers and devising strate 2 gies to removing such barriers. 3 (3) REPORT.—Not later than 24 months after 4 the date of the enactment of this Act, the Secretary 5 shall submit to the appropriate committees of juris6 diction of the House of Representatives and of the 7 Senate a report on the study carried out under para8 graph (1). 9 (4) DEFINITIONS.—For purposes of this sub10 section: 11 (A) AGING SERVICES TECHNOLOGY.—The 12 term ‘‘aging services technology’’ means health 13 technology that meets the health care needs of 14 seniors, individuals with disabilities, and the 15 caregivers of such seniors and individuals. 16 (B) SENIOR.—The term ‘‘senior’’ has such 17 meaning as specified by the Secretary. 18 Subtitle B—Testing of Health 19 Information Technology 20 SEC. 4201. NATIONAL INSTITUTE FOR STANDARDS AND 21 TECHNOLOGY TESTING. 22 (a) PILOT TESTING OF STANDARDS AND IMPLEMEN23 TATION SPECIFICATIONS.—In coordination with the HIT 24 Standards Committee established under section 3003 of 25 the Public Health Service Act, as added by section 4101, f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 178 1 with respect to the development of standards and imple2 mentation specifications under such section, the Director 3 of the National Institute for Standards and Technology 4 shall test such standards and implementation specifica5 tions, as appropriate, in order to assure the efficient im6 plementation and use of such standards and implementa7 tion specifications. 8 (b) VOLUNTARY TESTING PROGRAM.—In coordina9 tion with the HIT Standards Committee established under 10 section 3003 of the Public Health Service Act, as added 11 by section 4101, with respect to the development of stand12 ards and implementation specifications under such sec13 tion, the Director of the National Institute of Standards 14 and Technology shall support the establishment of a con15 formance testing infrastructure, including the develop16 ment of technical test beds. The development of this con17 formance testing infrastructure may include a program to 18 accredit independent, non-Federal laboratories to perform 19 testing. 20 SEC. 4202. RESEARCH AND DEVELOPMENT PROGRAMS. 21 (a) HEALTH CARE INFORMATION ENTERPRISE INTE22 GRATION RESEARCH CENTERS.— 23 (1) IN GENERAL.—The Director of the National 24 Institute of Standards and Technology, in consulta 25 tion with the Director of the National Science Foun f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 179 1 dation and other appropriate Federal agencies, shall 2 establish a program of assistance to institutions of 3 higher education (or consortia thereof which may in 4 clude nonprofit entities and Federal Government 5 laboratories) to establish multidisciplinary Centers 6 for Health Care Information Enterprise Integration. 7 (2) REVIEW; COMPETITION.—Grants shall be 8 awarded under this subsection on a merit-reviewed, 9 competitive basis. 10 (3) PURPOSE.—The purposes of the Centers de11 scribed in paragraph (1) shall be— 12 (A) to generate innovative approaches to 13 health care information enterprise integration 14 by conducting cutting-edge, multidisciplinary 15 research on the systems challenges to health 16 care delivery; and 17 (B) the development and use of health in18 formation technologies and other complemen19 tary fields. 20 (4) RESEARCH AREAS.—Research areas may in21 clude— 22 (A) interfaces between human information 23 and communications technology systems; 24 (B) voice-recognition systems; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 180 1 (C) software that improves interoperability 2 and connectivity among health information sys 3 tems; 4 (D) software dependability in systems crit 5 ical to health care delivery; 6 (E) measurement of the impact of informa7 tion technologies on the quality and productivity 8 of health care; 9 (F) health information enterprise manage10 ment; 11 (G) health information technology security 12 and integrity; and 13 (H) relevant health information technology 14 to reduce medical errors. 15 (5) APPLICATIONS.—An institution of higher 16 education (or a consortium thereof) seeking funding 17 under this subsection shall submit an application to 18 the Director of the National Institute of Standards 19 and Technology at such time, in such manner, and 20 containing such information as the Director may re21 quire. The application shall include, at a minimum, 22 a description of— 23 (A) the research projects that will be un 24 dertaken by the Center established pursuant to f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 181 1 assistance under paragraph (1) and the respec 2 tive contributions of the participating entities; 3 (B) how the Center will promote active col 4 laboration among scientists and engineers from 5 different disciplines, such as information tech6 nology, biologic sciences, management, social 7 sciences, and other appropriate disciplines; 8 (C) technology transfer activities to dem9 onstrate and diffuse the research results, tech10 nologies, and knowledge; and 11 (D) how the Center will contribute to the 12 education and training of researchers and other 13 professionals in fields relevant to health infor14 mation enterprise integration. 15 (b) NATIONAL INFORMATION TECHNOLOGY RE16 SEARCH AND DEVELOPMENT PROGRAM.—The National 17 High-Performance Computing Program established by 18 section 101 of the High-Performance Computing Act of 19 1991 (15 U.S.C. 5511) shall coordinate Federal research 20 and development programs related to the development and 21 deployment of health information technology, including ac22 tivities related to— 23 (1) computer infrastructure; 24 (2) data security; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 182 1 (3) development of large-scale, distributed, reli 2 able computing systems; 3 (4) wired, wireless, and hybrid high-speed net 4 working; 5 (5) development of software and software-inten6 sive systems; 7 (6) human-computer interaction and informa8 tion management technologies; and 9 (7) the social and economic implications of in10 formation technology. 11 Subtitle C—Incentives for the Use 12 of Health Information Technology 13 PART I—GRANTS AND LOANS FUNDING 14 SEC. 4301. GRANT, LOAN, AND DEMONSTRATION PRO15 GRAMS. 16 Title XXX of the Public Health Service Act, as added 17 by section 4101, is amended by adding at the end the fol18 lowing new subtitle: 19 ‘‘Subtitle B—Incentives for the Use 20 of Health Information Technology 21 ‘‘SEC. 3011. IMMEDIATE FUNDING TO STRENGTHEN THE 22 HEALTH INFORMATION TECHNOLOGY INFRA 23 STRUCTURE. 24 ‘‘(a) IN GENERAL.—The Secretary of Health and 25 Human Services shall, using amounts appropriated under f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 183 1 section 3018, invest in the infrastructure necessary to 2 allow for and promote the electronic exchange and use of 3 health information for each individual in the United States 4 consistent with the goals outlined in the strategic plan de5 veloped by the National Coordinator (and as available) 6 under section 3001. To the greatest extent practicable, the 7 Secretary shall ensure that any funds so appropriated 8 shall be used for the acquisition of health information 9 technology that meets standards and certification criteria 10 adopted before the date of the enactment of this title until 11 such date as the standards are adopted under section 12 3004. The Secretary shall invest funds through the dif13 ferent agencies with expertise in such goals, such as the 14 Office of the National Coordinator for Health Information 15 Technology, the Health Resources and Services Adminis16 tration, the Agency for Healthcare Research and Quality, 17 the Centers of Medicare & Medicaid Services, the Centers 18 for Disease Control and Prevention, and the Indian 19 Health Service to support the following: 20 ‘‘(1) Health information technology architecture 21 that will support the nationwide electronic exchange 22 and use of health information in a secure, private, 23 and accurate manner, including connecting health 24 information exchanges, and which may include up 25 dating and implementing the infrastructure nec f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 184 1 essary within different agencies of the Department 2 of Health and Human Services to support the elec 3 tronic use and exchange of health information. 4 ‘‘(2) Development and adoption of appropriate 5 certified electronic health records for categories of 6 providers not eligible for support under title XVIII 7 or XIX of the Social Security Act for the adoption 8 of such records. 9 ‘‘(3) Training on and dissemination of informa10 tion on best practices to integrate health information 11 technology, including electronic health records, into 12 a provider’s delivery of care, consistent with best 13 practices learned from the Health Information Tech14 nology Research Center developed under section 302, 15 including community health centers receiving assist16 ance under section 330 of the Public Health Service 17 Act, covered entities under section 340B of such 18 Act, and providers participating in one or more of 19 the programs under titles XVIII, XIX, and XXI of 20 the Social Security Act (relating to Medicare, Med21 icaid, and the State Children’s Health Insurance 22 Program). 23 ‘‘(4) Infrastructure and tools for the promotion 24 of telemedicine, including coordination among Fed 25 eral agencies in the promotion of telemedicine. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 185 1 ‘‘(5) Promotion of the interoperability of clinical 2 data repositories or registries. 3 ‘‘(6) Promotion of technologies and best prac 4 tices that enhance the protection of health informa 5 tion by all holders of individually identifiable health 6 information. 7 ‘‘(7) Improve and expand the use of health in8 formation technology by public health departments. 9 ‘‘(8) Provide $300 million to support regional 10 or sub-national efforts towards health information 11 exchange. 12 ‘‘(b) COORDINATION.—The Secretary shall ensure 13 funds under this section are used in a coordinated manner 14 with other health information promotion activities. 15 ‘‘(c) ADDITIONAL USE OF FUNDS.—In addition to 16 using funds as provided in subsection (a), the Secretary 17 may use amounts appropriated under section 3018 to 18 carry out activities that are provided for under laws in 19 effect on the date of the enactment of this title. 20 ‘‘SEC. 3012. HEALTH INFORMATION TECHNOLOGY IMPLE21 MENTATION ASSISTANCE. 22 ‘‘(a) HEALTH INFORMATION TECHNOLOGY EXTEN23 SION PROGRAM.—To assist health care providers to adopt, 24 implement, and effectively use certified EHR technology 25 that allows for the electronic exchange and use of health f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 186 1 information, the Secretary, acting through the Office of 2 the National Coordinator, shall establish a health informa3 tion technology extension program to provide health infor4 mation technology assistance services to be carried out 5 through the Department of Health and Human Services. 6 The National Coordinator shall consult with other Federal 7 agencies with demonstrated experience and expertise in in8 formation technology services, such as the National Insti9 tute of Standards and Technology, in developing and im10 plementing this program. 11 ‘‘(b) HEALTH INFORMATION TECHNOLOGY RE12 SEARCH CENTER.— 13 ‘‘(1) IN GENERAL.—The Secretary shall create 14 a Health Information Technology Research Center 15 (in this section referred to as the ‘Center’) to pro16 vide technical assistance and develop or recognize 17 best practices to support and accelerate efforts to 18 adopt, implement, and effectively utilize health infor19 mation technology that allows for the electronic ex20 change and use of information in compliance with 21 standards, implementation specifications, and certifi 22 cation criteria adopted under section 3004(b). 23 ‘‘(2) INPUT.—The Center shall incorporate 24 input from— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 187 1 ‘‘(A) other Federal agencies with dem 2 onstrated experience and expertise in informa 3 tion technology services such as the National 4 Institute of Standards and Technology; 5 ‘‘(B) users of health information tech6 nology, such as providers and their support and 7 clerical staff and others involved in the care and 8 care coordination of patients, from the health 9 care and health information technology indus10 try; and 11 ‘‘(C) others as appropriate. 12 ‘‘(3) PURPOSES.—The purposes of the Center 13 are to— 14 ‘‘(A) provide a forum for the exchange of 15 knowledge and experience; 16 ‘‘(B) accelerate the transfer of lessons 17 learned from existing public and private sector 18 initiatives, including those currently receiving 19 Federal financial support; 20 ‘‘(C) assemble, analyze, and widely dis21 seminate evidence and experience related to the 22 adoption, implementation, and effective use of 23 health information technology that allows for 24 the electronic exchange and use of information f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 188 1 including through the regional centers described 2 in subsection (c); 3 ‘‘(D) provide technical assistance for the 4 establishment and evaluation of regional and 5 local health information networks to facilitate 6 the electronic exchange of information across 7 health care settings and improve the quality of 8 health care; 9 ‘‘(E) provide technical assistance for the 10 development and dissemination of solutions to 11 barriers to the exchange of electronic health in12 formation; and 13 ‘‘(F) learn about effective strategies to 14 adopt and utilize health information technology 15 in medically underserved communities. 16 ‘‘(c) HEALTH INFORMATION TECHNOLOGY RE17 GIONAL EXTENSION CENTERS.— 18 ‘‘(1) IN GENERAL.—The Secretary shall provide 19 assistance for the creation and support of regional 20 centers (in this subsection referred to as ‘regional 21 centers’) to provide technical assistance and dissemi 22 nate best practices and other information learned 23 from the Center to support and accelerate efforts to 24 adopt, implement, and effectively utilize health infor 25 mation technology that allows for the electronic ex- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 189 1 change and use of information in compliance with 2 standards, implementation specifications, and certifi 3 cation criteria adopted under section 3004. Activities 4 conducted under this subsection shall be consistent 5 with the strategic plan developed by the National 6 Coordinator, (and, as available) under section 3001. 7 ‘‘(2) AFFILIATION.—Regional centers shall be 8 affiliated with any US-based nonprofit institution or 9 organization, or group thereof, that applies and is 10 awarded financial assistance under this section. Indi11 vidual awards shall be decided on the basis of merit. 12 ‘‘(3) OBJECTIVE.—The objective of the regional 13 centers is to enhance and promote the adoption of 14 health information technology through— 15 ‘‘(A) assistance with the implementation, 16 effective use, upgrading, and ongoing mainte17 nance of health information technology, includ18 ing electronic health records, to healthcare pro19 viders nationwide; 20 ‘‘(B) broad participation of individuals 21 from industry, universities, and State govern22 ments; 23 ‘‘(C) active dissemination of best practices 24 and research on the implementation, effective 25 use, upgrading, and ongoing maintenance of f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 190 1 health information technology, including elec 2 tronic health records, to health care providers 3 in order to improve the quality of healthcare 4 and protect the privacy and security of health 5 information; 6 ‘‘(D) participation, to the extent prac7 ticable, in health information exchanges; and 8 ‘‘(E) utilization, when appropriate, of the 9 expertise and capability that exists in federal 10 agencies other than the Department; and 11 ‘‘(F) integration of health information 12 technology, including electronic health records, 13 into the initial and ongoing training of health 14 professionals and others in the healthcare in15 dustry that would be instrumental to improving 16 the quality of healthcare through the smooth 17 and accurate electronic use and exchange of 18 health information. 19 ‘‘(4) REGIONAL ASSISTANCE.—Each regional 20 center shall aim to provide assistance and education 21 to all providers in a region, but shall prioritize any 22 direct assistance first to the following: 23 ‘‘(A) Public or not-for-profit hospitals or 24 critical access hospitals. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 191 1 ‘‘(B) Federally qualified health centers (as 2 defined in section 1861(aa)(4) of the Social Se 3 curity Act). 4 ‘‘(C) Entities that are located in rural and 5 other areas that serve uninsured, underinsured, 6 and medically underserved individuals (regard7 less of whether such area is urban or rural). 8 ‘‘(D) Individual or small group practices 9 (or a consortium thereof) that are primarily fo10 cused on primary care. 11 ‘‘(5) FINANCIAL SUPPORT.—The Secretary may 12 provide financial support to any regional center cre13 ated under this subsection for a period not to exceed 14 four years. The Secretary may not provide more 15 than 50 percent of the capital and annual operating 16 and maintenance funds required to create and main17 tain such a center, except in an instance of national 18 economic conditions which would render this cost19 share requirement detrimental to the program and 20 upon notification to Congress as to the justification 21 to waive the cost-share requirement. 22 ‘‘(6) NOTICE OF PROGRAM DESCRIPTION AND 23 AVAILABILITY OF FUNDS.—The Secretary shall pub 24 lish in the Federal Register, not later than 90 days 25 after the date of the enactment of this Act, a draft f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 192 1 description of the program for establishing regional 2 centers under this subsection. Such description shall 3 include the following: 4 ‘‘(A) A detailed explanation of the program 5 and the programs goals. 6 ‘‘(B) Procedures to be followed by the ap7 plicants. 8 ‘‘(C) Criteria for determining qualified ap9 plicants. 10 ‘‘(D) Maximum support levels expected to 11 be available to centers under the program. 12 ‘‘(7) APPLICATION REVIEW.—The Secretary 13 shall subject each application under this subsection 14 to merit review. In making a decision whether to ap15 prove such application and provide financial support, 16 the Secretary shall consider at a minimum the mer17 its of the application, including those portions of the 18 application regarding— 19 ‘‘(A) the ability of the applicant to provide 20 assistance under this subsection and utilization 21 of health information technology appropriate to 22 the needs of particular categories of health care 23 providers; 24 ‘‘(B) the types of service to be provided to 25 health care providers; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 193 1 ‘‘(C) geographical diversity and extent of 2 service area; and 3 ‘‘(D) the percentage of funding and 4 amount of in-kind commitment from other 5 sources. 6 ‘‘(8) BIENNIAL EVALUATION.—Each regional 7 center which receives financial assistance under this 8 subsection shall be evaluated biennially by an evalua9 tion panel appointed by the Secretary. Each evalua10 tion panel shall be composed of private experts, none 11 of whom shall be connected with the center involved, 12 and of Federal officials. Each evaluation panel shall 13 measure the involved center’s performance against 14 the objective specified in paragraph (3). The Sec15 retary shall not continue to provide funding to a re16 gional center unless its evaluation is overall positive. 17 ‘‘(9) CONTINUING SUPPORT.—After the second 18 year of assistance under this subsection a regional 19 center may receive additional support under this 20 subsection if it has received positive evaluations and 21 a finding by the Secretary that continuation of Fed 22 eral funding to the center was in the best interest 23 of provision of health information technology exten 24 sion services. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 194 1 ‘‘SEC. 3013. STATE GRANTS TO PROMOTE HEALTH INFOR2 MATION TECHNOLOGY. 3 ‘‘(a) IN GENERAL.—The Secretary, acting through 4 the National Coordinator, shall establish a program in ac5 cordance with this section to facilitate and expand the 6 electronic movement and use of health information among 7 organizations according to nationally recognized stand8 ards. 9 ‘‘(b) PLANNING GRANTS.—The Secretary may award 10 a grant to a State or qualified State-designated entity (as 11 described in subsection (d)) that submits an application 12 to the Secretary at such time, in such manner, and con13 taining such information as the Secretary may specify, for 14 the purpose of planning activities described in subsection 15 (b). 16 ‘‘(c) IMPLEMENTATION GRANTS.—The Secretary 17 may award a grant to a State or qualified State designated 18 entity that— 19 ‘‘(1) has submitted, and the Secretary has ap20 proved, a plan described in subsection (c) (regardless 21 of whether such plan was prepared using amounts 22 awarded under paragraph (1)); and 23 ‘‘(2) submits an application at such time, in 24 such manner, and containing such information as 25 the Secretary may specify. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 195 1 ‘‘(d) USE OF FUNDS.—Amounts received under a 2 grant under subsection (a)(3) shall be used to conduct ac3 tivities to facilitate and expand the electronic movement 4 and use of health information among organizations ac5 cording to nationally recognized standards through activi6 ties that include— 7 ‘‘(1) enhancing broad and varied participation 8 in the authorized and secure nationwide electronic 9 use and exchange of health information; 10 ‘‘(2) identifying State or local resources avail11 able towards a nationwide effort to promote health 12 information technology; 13 ‘‘(3) complementing other Federal grants, pro14 grams, and efforts towards the promotion of health 15 information technology; 16 ‘‘(4) providing technical assistance for the de17 velopment and dissemination of solutions to barriers 18 to the exchange of electronic health information; 19 ‘‘(5) promoting effective strategies to adopt and 20 utilize health information technology in medically 21 underserved communities; 22 ‘‘(6) assisting patients in utilizing health infor 23 mation technology; 24 ‘‘(7) encouraging clinicians to work with Health 25 Information Technology Regional Extension Centers f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 196 1 as described in section 3012, to the extent they are 2 available and valuable; 3 ‘‘(8) supporting public health agencies’ author 4 ized use of and access to electronic health informa5 tion; 6 ‘‘(9) promoting the use of electronic health 7 records for quality improvement including through 8 quality measures reporting; and 9 ‘‘(10) such other activities as the Secretary may 10 specify. 11 ‘‘(e) PLAN.— 12 ‘‘(1) IN GENERAL.—A plan described in this 13 subsection is a plan that describes the activities to 14 be carried out by a State or by the qualified State15 designated entity within such State to facilitate and 16 expand the electronic movement and use of health 17 information among organizations according to na18 tionally recognized standards and implementation 19 specifications. 20 ‘‘(2) REQUIRED ELEMENTS.—A plan described 21 in paragraph (1) shall— 22 ‘‘(A) be pursued in the public interest; 23 ‘‘(B) be consistent with the strategic plan 24 developed by the National Coordinator, (and, as 25 available) under section 3001; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 197 1 ‘‘(C) include a description of the ways the 2 State or qualified State-designated entity will 3 carry out the activities described in subsection 4 (b); and 5 ‘‘(D) contain such elements as the Sec6 retary may require. 7 ‘‘(f) QUALIFIED STATE-DESIGNATED ENTITY.—For 8 purposes of this section, to be a qualified State-designated 9 entity, with respect to a State, an entity shall— 10 ‘‘(1) be designated by the State as eligible to 11 receive awards under this section; 12 ‘‘(2) be a not-for-profit entity with broad stake13 holder representation on its governing board; 14 ‘‘(3) demonstrate that one of its principal goals 15 is to use information technology to improve health 16 care quality and efficiency through the authorized 17 and secure electronic exchange and use of health in18 formation; 19 ‘‘(4) adopt nondiscrimination and conflict of in20 terest policies that demonstrate a commitment to 21 open, fair, and nondiscriminatory participation by 22 stakeholders; and 23 ‘‘(5) conform to such other requirements as the 24 Secretary may establish. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 198 1 ‘‘(g) REQUIRED CONSULTATION.—In carrying out 2 activities described in subsections (a)(2) and (a)(3), a 3 State or qualified State-designated entity shall consult 4 with and consider the recommendations of— 5 ‘‘(1) health care providers (including providers 6 that provide services to low income and underserved 7 populations); 8 ‘‘(2) health plans; 9 ‘‘(3) patient or consumer organizations that 10 represent the population to be served; 11 ‘‘(4) health information technology vendors; 12 ‘‘(5) health care purchasers and employers; 13 ‘‘(6) public health agencies; 14 ‘‘(7) health professions schools, universities and 15 colleges; 16 ‘‘(8) clinical researchers; 17 ‘‘(9) other users of health information tech18 nology such as the support and clerical staff of pro19 viders and others involved in the care and care co20 ordination of patients; and 21 ‘‘(10) such other entities, as may be determined 22 appropriate by the Secretary. 23 ‘‘(h) CONTINUOUS IMPROVEMENT.—The Secretary 24 shall annually evaluate the activities conducted under this 25 section and shall, in awarding grants under this section, f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 199 1 implement the lessons learned from such evaluation in a 2 manner so that awards made subsequent to each such 3 evaluation are made in a manner that, in the determina4 tion of the Secretary, will lead towards the greatest im5 provement in quality of care, decrease in costs, and the 6 most effective authorized and secure electronic exchange 7 of health information. 8 ‘‘(i) REQUIRED MATCH.— 9 ‘‘(1) IN GENERAL.—For a fiscal year (begin10 ning with fiscal year 2011), the Secretary may not 11 make a grant under subsection (a) to a State unless 12 the State agrees to make available non-Federal con13 tributions (which may include in-kind contributions) 14 toward the costs of a grant awarded under sub15 section (a)(3) in an amount equal to— 16 ‘‘(A) for fiscal year 2011, not less than $1 17 for each $10 of Federal funds provided under 18 the grant; 19 ‘‘(B) for fiscal year 2012, not less than $1 20 for each $7 of Federal funds provided under 21 the grant; and 22 ‘‘(C) for fiscal year 2013 and each subse 23 quent fiscal year, not less than $1 for each $3 24 of Federal funds provided under the grant. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 200 1 ‘‘(2) AUTHORITY TO REQUIRE STATE MATCH 2 FOR FISCAL YEARS BEFORE FISCAL YEAR 2011.—For 3 any fiscal year during the grant program under this 4 section before fiscal year 2011, the Secretary may 5 determine the extent to which there shall be required 6 a non-Federal contribution from a State receiving a 7 grant under this section. 8 ‘‘SEC. 3014. COMPETITIVE GRANTS TO STATES AND INDIAN 9 TRIBES FOR THE DEVELOPMENT OF LOAN 10 PROGRAMS TO FACILITATE THE WIDE11 SPREAD ADOPTION OF CERTIFIED EHR TECH12 NOLOGY. 13 ‘‘(a) IN GENERAL.—The National Coordinator may 14 award competitive grants to eligible entities for the estab15 lishment of programs for loans to health care providers 16 to conduct the activities described in subsection (e). 17 ‘‘(b) ELIGIBLE ENTITY DEFINED.—For purposes of 18 this subsection, the term ‘eligible entity’ means a State 19 or Indian tribe (as defined in the Indian Self-Determina20 tion and Education Assistance Act) that— 21 ‘‘(1) submits to the National Coordinator an 22 application at such time, in such manner, and con 23 taining such information as the National Coordi 24 nator may require; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 201 1 ‘‘(2) submits to the National Coordinator a 2 strategic plan in accordance with subsection (d) and 3 provides to the National Coordinator assurances that 4 the entity will update such plan annually in accord 5 ance with such subsection; 6 ‘‘(3) provides assurances to the National Coor7 dinator that the entity will establish a Loan Fund 8 in accordance with subsection (c); 9 ‘‘(4) provides assurances to the National Coor10 dinator that the entity will not provide a loan from 11 the Loan Fund to a health care provider unless the 12 provider agrees to— 13 ‘‘(A) submit reports on quality measures 14 adopted by the Federal Government (by not 15 later than 90 days after the date on which such 16 measures are adopted), to— 17 ‘‘(i) the Director of the Centers for 18 Medicare & Medicaid Services (or his or 19 her designee), in the case of an entity par20 ticipating in the Medicare program under 21 title XVIII of the Social Security Act or 22 the Medicaid program under title XIX of 23 such Act; or 24 ‘‘(ii) the Secretary in the case of other 25 entities; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 202 1 ‘‘(B) demonstrate to the satisfaction of the 2 Secretary (through criteria established by the 3 Secretary) that any certified EHR technology 4 purchased, improved, or otherwise financially 5 supported under a loan under this section is 6 used to exchange health information in a man7 ner that, in accordance with law and standards 8 (as adopted under section 3005) applicable to 9 the exchange of information, improves the qual10 ity of health care, such as promoting care co11 ordination; and 12 ‘‘(C) comply with such other requirements 13 as the entity or the Secretary may require; 14 ‘‘(D) include a plan on how health care 15 providers involved intend to maintain and sup16 port the certified EHR technology over time; 17 ‘‘(E) include a plan on how the health care 18 providers involved intend to maintain and sup19 port the certified EHR technology that would 20 be purchased with such loan, including the type 21 of resources expected to be involved and any 22 such other information as the State or Indian 23 Tribe, respectively, may require; and 24 ‘‘(5) agrees to provide matching funds in ac 25 cordance with subsection (i). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 203 1 ‘‘(c) ESTABLISHMENT OF FUND.—For purposes of 2 subsection (b)(3), an eligible entity shall establish a cer3 tified EHR technology loan fund (referred to in this sub4 section as a ‘Loan Fund’) and comply with the other re5 quirements contained in this section. A grant to an eligible 6 entity under this section shall be deposited in the Loan 7 Fund established by the eligible entity. No funds author8 ized by other provisions of this title to be used for other 9 purposes specified in this title shall be deposited in any 10 Loan Fund. 11 ‘‘(d) STRATEGIC PLAN.— 12 ‘‘(1) IN GENERAL.—For purposes of subsection 13 (b)(2), a strategic plan of an eligible entity under 14 this subsection shall identify the intended uses of 15 amounts available to the Loan Fund of such entity. 16 ‘‘(2) CONTENTS.—A strategic plan under para17 graph (1), with respect to a Loan Fund of an eligi18 ble entity, shall include for a year the following: 19 ‘‘(A) A list of the projects to be assisted 20 through the Loan Fund during such year. 21 ‘‘(B) A description of the criteria and 22 methods established for the distribution of 23 funds from the Loan Fund during the year. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 204 1 ‘‘(C) A description of the financial status 2 of the Loan Fund as of the date of submission 3 of the plan. 4 ‘‘(D) The short-term and long-term goals 5 of the Loan Fund. 6 ‘‘(e) USE OF FUNDS.—Amounts deposited in a Loan 7 Fund, including loan repayments and interest earned on 8 such amounts, shall be used only for awarding loans or 9 loan guarantees, making reimbursements described in sub10 section (g)(4)(A), or as a source of reserve and security 11 for leveraged loans, the proceeds of which are deposited 12 in the Loan Fund established under subsection (a). Loans 13 under this section may be used by a health care provider 14 to— 15 ‘‘(1) facilitate the purchase of certified EHR 16 technology; 17 ‘‘(2) enhance the utilization of certified EHR 18 technology; 19 ‘‘(3) train personnel in the use of such tech20 nology; or 21 ‘‘(4) improve the secure electronic exchange of 22 health information. 23 ‘‘(f) TYPES OF ASSISTANCE.—Except as otherwise 24 limited by applicable State law, amounts deposited into a f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 205 1 Loan Fund under this subsection may only be used for 2 the following: 3 ‘‘(1) To award loans that comply with the fol 4 lowing: 5 ‘‘(A) The interest rate for each loan shall 6 not exceed the market interest rate. 7 ‘‘(B) The principal and interest payments 8 on each loan shall commence not later than 1 9 year after the date the loan was awarded, and 10 each loan shall be fully amortized not later than 11 10 years after the date of the loan. 12 ‘‘(C) The Loan Fund shall be credited with 13 all payments of principal and interest on each 14 loan awarded from the Loan Fund. 15 ‘‘(2) To guarantee, or purchase insurance for, 16 a local obligation (all of the proceeds of which fi17 nance a project eligible for assistance under this 18 subsection) if the guarantee or purchase would im19 prove credit market access or reduce the interest 20 rate applicable to the obligation involved. 21 ‘‘(3) As a source of revenue or security for the 22 payment of principal and interest on revenue or gen 23 eral obligation bonds issued by the eligible entity if 24 the proceeds of the sale of the bonds will be depos 25 ited into the Loan Fund. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 206 1 ‘‘(4) To earn interest on the amounts deposited 2 into the Loan Fund. 3 ‘‘(5) To make reimbursements described in sub 4 section (g)(4)(A). 5 ‘‘(g) ADMINISTRATION OF LOAN FUNDS.— 6 ‘‘(1) COMBINED FINANCIAL ADMINISTRATION.— 7 An eligible entity may (as a convenience and to 8 avoid unnecessary administrative costs) combine, in 9 accordance with applicable State law, the financial 10 administration of a Loan Fund established under 11 this subsection with the financial administration of 12 any other revolving fund established by the entity if 13 otherwise not prohibited by the law under which the 14 Loan Fund was established. 15 ‘‘(2) COST OF ADMINISTERING FUND.—Each el16 igible entity may annually use not to exceed 4 per17 cent of the funds provided to the entity under a 18 grant under this subsection to pay the reasonable 19 costs of the administration of the programs under 20 this section, including the recovery of reasonable 21 costs expended to establish a Loan Fund which are 22 incurred after the date of the enactment of this title. 23 ‘‘(3) GUIDANCE AND REGULATIONS.—The Na24 tional Coordinator shall publish guidance and pro- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 207 1 mulgate regulations as may be necessary to carry 2 out the provisions of this section, including— 3 ‘‘(A) provisions to ensure that each eligible 4 entity commits and expends funds allotted to 5 the entity under this subsection as efficiently as 6 possible in accordance with this title and appli7 cable State laws; and 8 ‘‘(B) guidance to prevent waste, fraud, and 9 abuse. 10 ‘‘(4) PRIVATE SECTOR CONTRIBUTIONS.— 11 ‘‘(A) IN GENERAL.—A Loan Fund estab12 lished under this subsection may accept con13 tributions from private sector entities, except 14 that such entities may not specify the recipient 15 or recipients of any loan issued under this sub16 section. An eligible entity may agree to reim17 burse a private sector entity for any contribu18 tion made under this subparagraph, except that 19 the amount of such reimbursement may not be 20 greater than the principal amount of the con21 tribution made. 22 ‘‘(B) AVAILABILITY OF INFORMATION.— 23 An eligible entity shall make publicly available 24 the identity of, and amount contributed by, any 25 private sector entity under subparagraph (A) f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 208 1 and may issue letters of commendation or make 2 other awards (that have no financial value) to 3 any such entity. 4 ‘‘(h) MATCHING REQUIREMENTS.— 5 ‘‘(1) IN GENERAL.—The National Coordinator 6 may not make a grant under subsection (a) to an el7 igible entity unless the entity agrees to make avail8 able (directly or through donations from public or 9 private entities) non-Federal contributions in cash to 10 the costs of carrying out the activities for which the 11 grant is awarded in an amount equal to not less 12 than $1 for each $5 of Federal funds provided under 13 the grant. 14 ‘‘(2) DETERMINATION OF AMOUNT OF NON15 FEDERAL CONTRIBUTION.—In determining the 16 amount of non-Federal contributions that an eligible 17 entity has provided pursuant to subparagraph (A), 18 the National Coordinator may not include any 19 amounts provided to the entity by the Federal Gov20 ernment. 21 ‘‘(i) EFFECTIVE DATE.—The Secretary may not 22 make an award under this section prior to January 1, 23 2010. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 209 1 ‘‘SEC. 3015. DEMONSTRATION PROGRAM TO INTEGRATE IN2 FORMATION TECHNOLOGY INTO CLINICAL 3 EDUCATION. 4 ‘‘(a) IN GENERAL.—The Secretary may award grants 5 under this section to carry out demonstration projects to 6 develop academic curricula integrating certified EHR 7 technology in the clinical education of health professionals. 8 Such awards shall be made on a competitive basis and 9 pursuant to peer review. 10 ‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 11 under subsection (a), an entity shall— 12 ‘‘(1) submit to the Secretary an application at 13 such time, in such manner, and containing such in14 formation as the Secretary may require; 15 ‘‘(2) submit to the Secretary a strategic plan 16 for integrating certified EHR technology in the clin17 ical education of health professionals to reduce med18 ical errors and enhance health care quality; 19 ‘‘(3) be— 20 ‘‘(A) a school of medicine, osteopathic 21 medicine, dentistry, or pharmacy, a graduate 22 program in behavioral or mental health, or any 23 other graduate health professions school; 24 ‘‘(B) a graduate school of nursing or phy 25 sician assistant studies; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 210 1 ‘‘(C) a consortium of two or more schools 2 described in subparagraph (A) or (B); or 3 ‘‘(D) an institution with a graduate med 4 ical education program in medicine, osteopathic 5 medicine, dentistry, pharmacy, nursing, or phy6 sician assistance studies. 7 ‘‘(4) provide for the collection of data regarding 8 the effectiveness of the demonstration project to be 9 funded under the grant in improving the safety of 10 patients, the efficiency of health care delivery, and 11 in increasing the likelihood that graduates of the 12 grantee will adopt and incorporate certified EHR 13 technology, in the delivery of health care services; 14 and 15 ‘‘(5) provide matching funds in accordance with 16 subsection (d). 17 ‘‘(c) USE OF FUNDS.— 18 ‘‘(1) IN GENERAL.—With respect to a grant 19 under subsection (a), an eligible entity shall— 20 ‘‘(A) use grant funds in collaboration with 21 2 or more disciplines; and 22 ‘‘(B) use grant funds to integrate certified 23 EHR technology into community-based clinical 24 education. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 211 1 ‘‘(2) LIMITATION.—An eligible entity shall not 2 use amounts received under a grant under sub 3 section (a) to purchase hardware, software, or serv4 ices. 5 ‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 6 provide more than 50 percent of the costs of any activity 7 for which assistance is provided under subsection (a), ex8 cept in an instance of national economic conditions which 9 would render the cost-share requirement under this sub10 section detrimental to the program and upon notification 11 to Congress as to the justification to waive the cost-share 12 requirement. 13 ‘‘(e) EVALUATION.—The Secretary shall take such 14 action as may be necessary to evaluate the projects funded 15 under this section and publish, make available, and dis16 seminate the results of such evaluations on as wide a basis 17 as is practicable. 18 ‘‘(f) REPORTS.—Not later than 1 year after the date 19 of enactment of this title, and annually thereafter, the Sec20 retary shall submit to the Committee on Health, Edu21 cation, Labor, and Pensions and the Committee on Fi22 nance of the Senate, and the Committee on Energy and 23 Commerce of the House of Representatives a report 24 that— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 212 1 ‘‘(1) describes the specific projects established 2 under this section; and 3 ‘‘(2) contains recommendations for Congress 4 based on the evaluation conducted under subsection 5 (e). 6 ‘‘SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS 7 ON HEALTH CARE. 8 ‘‘(a) IN GENERAL.—The Secretary, in consultation 9 with the Director of the National Science Foundation, 10 shall provide assistance to institutions of higher education 11 (or consortia thereof) to establish or expand medical 12 health informatics education programs, including certifi13 cation, undergraduate, and masters degree programs, for 14 both health care and information technology students to 15 ensure the rapid and effective utilization and development 16 of health information technologies (in the United States 17 health care infrastructure). 18 ‘‘(b) ACTIVITIES.—Activities for which assistance 19 may be provided under subsection (a) may include the fol20 lowing: 21 ‘‘(1) Developing and revising curricula in med 22 ical health informatics and related disciplines. 23 ‘‘(2) Recruiting and retaining students to the 24 program involved. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 213 1 ‘‘(3) Acquiring equipment necessary for student 2 instruction in these programs, including the installa 3 tion of testbed networks for student use. 4 ‘‘(4) Establishing or enhancing bridge programs 5 in the health informatics fields between community 6 colleges and universities. 7 ‘‘(c) PRIORITY.—In providing assistance under sub8 section (a), the Secretary shall give preference to the fol9 lowing: 10 ‘‘(1) Existing education and training programs. 11 ‘‘(2) Programs designed to be completed in less 12 than six months. 13 ‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 14 provide more than 50 percent of the costs of any activity 15 for which assistance is provided under subsection (a), ex16 cept in an instance of national economic conditions which 17 would render the cost-share requirement under this sub18 section detrimental to the program and upon notification 19 to Congress as to the justification to waive the cost-share 20 requirement. 21 ‘‘SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS. 22 ‘‘(a) REPORTS.—The Secretary may require that an 23 entity receiving assistance under this title shall submit to 24 the Secretary, not later than the date that is 1 year after f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 214 1 the date of receipt of such assistance, a report that in2 cludes— 3 ‘‘(1) an analysis of the effectiveness of the ac 4 tivities for which the entity receives such assistance, 5 as compared to the goals for such activities; and 6 ‘‘(2) an analysis of the impact of the project on 7 health care quality and safety. 8 ‘‘(b) REQUIREMENT TO IMPROVE QUALITY OF CARE 9 AND DECREASE IN COSTS.—The National Coordinator 10 shall annually evaluate the activities conducted under this 11 title and shall, in awarding grants, implement the lessons 12 learned from such evaluation in a manner so that awards 13 made subsequent to each such evaluation are made in a 14 manner that, in the determination of the National Coordi15 nator, will result in the greatest improvement in the qual16 ity and efficiency of health care. 17 ‘‘SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS. 18 ‘‘For the purposes of carrying out this subtitle, there 19 is authorized to be appropriated such sums as may be nec20 essary for each of the fiscal years 2009 through 2013. 21 Amounts so appropriated shall remain available until ex22 pended.’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 215 1 PART II—MEDICARE PROGRAM 2 SEC. 4311. INCENTIVES FOR ELIGIBLE PROFESSIONALS. 3 (a) INCENTIVE PAYMENTS.—Section 1848 of the So4 cial Security Act (42 U.S.C. 1395w–4) is amended by add5 ing at the end the following new subsection: 6 ‘‘(o) INCENTIVES FOR ADOPTION AND MEANINGFUL 7 USE OF CERTIFIED EHR TECHNOLOGY.— 8 ‘‘(1) INCENTIVE PAYMENTS.— 9 ‘‘(A) IN GENERAL.—Subject to the suc10 ceeding subparagraphs of this paragraph, with 11 respect to covered professional services fur12 nished by an eligible professional during a pay13 ment year (as defined in subparagraph (E)), if 14 the eligible professional is a meaningful EHR 15 user (as determined under paragraph (2)) for 16 the reporting period with respect to such year, 17 in addition to the amount otherwise paid under 18 this part, there also shall be paid to the eligible 19 professional (or to an employer or facility in the 20 cases described in clause (A) of section 21 1842(b)(6)), from the Federal Supplementary 22 Medical Insurance Trust Fund established 23 under section 1841 an amount equal to 75 per 24 cent of the Secretary’s estimate (based on 25 claims submitted not later than 2 months after 26 the end of the payment year) of the allowed f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 216 1 charges under this part for all such covered 2 professional services furnished by the eligible 3 professional during such year. 4 ‘‘(B) LIMITATIONS ON AMOUNTS OF IN5 CENTIVE PAYMENTS.— 6 ‘‘(i) IN GENERAL.—In no case shall 7 the amount of the incentive payment pro8 vided under this paragraph for an eligible 9 professional for a payment year exceed the 10 applicable amount specified under this sub11 paragraph with respect to such eligible 12 professional and such year. 13 ‘‘(ii) AMOUNT.—Subject to clause 14 (iii), the applicable amount specified in this 15 subparagraph for an eligible professional is 16 as follows: 17 ‘‘(I) For the first payment year 18 for such professional, $15,000. 19 ‘‘(II) For the second payment 20 year for such professional, $12,000. 21 ‘‘(III) For the third payment 22 year for such professional, $8,000. 23 ‘‘(IV) For the fourth payment 24 year for such professional, $4,000. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 217 1 ‘‘(V) For the fifth payment year 2 for such professional, $2,000. 3 ‘‘(VI) For any succeeding pay 4 ment year for such professional, $0. 5 ‘‘(iii) PHASE DOWN FOR ELIGIBLE 6 PROFESSIONALS FIRST ADOPTING EHR 7 AFTER 2013.—If the first payment year for 8 an eligible professional is after 2013, then 9 the amount specified in this subparagraph 10 for a payment year for such professional is 11 the same as the amount specified in clause 12 (ii) for such payment year for an eligible 13 professional whose first payment year is 14 2013. If the first payment year for an eli15 gible professional is after 2015 then the 16 applicable amount specified in this sub17 paragraph for such professional for such 18 year and any subsequent year shall be $0. 19 ‘‘(C) NON-APPLICATION TO HOSPITAL20 BASED ELIGIBLE PROFESSIONALS.— 21 ‘‘(i) IN GENERAL.—No incentive pay 22 ment may be made under this paragraph 23 in the case of a hospital-based eligible pro24 fessional. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 218 1 ‘‘(ii) HOSPITAL-BASED ELIGIBLE PRO 2 FESSIONAL.—For purposes of clause (i), 3 the term ‘hospital-based eligible profes 4 sional’ means, with respect to covered pro 5 fessional services furnished by an eligible 6 professional during the reporting period for 7 a payment year, an eligible professional, 8 such as a pathologist, anesthesiologist, or 9 emergency physician, who furnishes sub10 stantially all of such services in a hospital 11 setting (whether inpatient or outpatient) 12 and through the use of the facilities and 13 equipment, including computer equipment, 14 of the hospital. 15 ‘‘(D) PAYMENT.— 16 ‘‘(i) FORM OF PAYMENT.—The pay17 ment under this paragraph may be in the 18 form of a single consolidated payment or 19 in the form of such periodic installments 20 as the Secretary may specify. 21 ‘‘(ii) COORDINATION OF APPLICATION 22 OF LIMITATION FOR PROFESSIONALS IN 23 DIFFERENT PRACTICES.—In the case of an 24 eligible professional furnishing covered pro 25 fessional services in more than one practice f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 219 1 (as specified by the Secretary), the Sec 2 retary shall establish rules to coordinate 3 the incentive payments, including the ap 4 plication of the limitation on amounts of 5 such incentive payments under this para6 graph, among such practices. 7 ‘‘(iii) COORDINATION WITH MED8 ICAID.—The Secretary shall seek, to the 9 maximum extent practicable, to avoid du10 plicative requirements from Federal and 11 State Governments to demonstrate mean12 ingful use of certified EHR technology 13 under this title and title XIX. In doing so, 14 the Secretary may deem satisfaction of 15 State requirements for such meaningful 16 use for a payment year under title XIX to 17 be sufficient to qualify as meaningful use 18 under this subsection and subsection (a)(7) 19 and vice versa. The Secretary may also ad20 just the reporting periods under such title 21 and such subsections in order to carry out 22 this clause. 23 ‘‘(E) PAYMENT YEAR DEFINED.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 220 1 ‘‘(i) IN GENERAL.—For purposes of 2 this subsection, the term ‘payment year’ 3 means a year beginning with 2011. 4 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT 5 YEAR.—The term ‘first payment year’ 6 means, with respect to covered professional 7 services furnished by an eligible profes8 sional, the first year for which an incentive 9 payment is made for such services under 10 this subsection. The terms ‘second pay11 ment year’, ‘third payment year’, ‘fourth 12 payment year’, and ‘fifth payment year’ 13 mean, with respect to covered professional 14 services furnished by such eligible profes15 sional, each successive year immediately 16 following the first payment year for such 17 professional. 18 ‘‘(2) MEANINGFUL EHR USER.— 19 ‘‘(A) IN GENERAL.—For purposes of para20 graph (1), an eligible professional shall be 21 treated as a meaningful EHR user for a report 22 ing period for a payment year (or, for purposes 23 of subsection (a)(7), for a reporting period 24 under such subsection for a year) if each of the 25 following requirements is met: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 221 1 ‘‘(i) MEANINGFUL USE OF CERTIFIED 2 EHR TECHNOLOGY.—The eligible profes 3 sional demonstrates to the satisfaction of 4 the Secretary, in accordance with subpara 5 graph (C)(i), that during such period the 6 professional is using certified EHR tech7 nology in a meaningful manner, which 8 shall include the use of electronic pre9 scribing as determined to be appropriate 10 by the Secretary. 11 ‘‘(ii) INFORMATION EXCHANGE.—The 12 eligible professional demonstrates to the 13 satisfaction of the Secretary, in accordance 14 with subparagraph (C)(i), that during such 15 period such certified EHR technology is 16 connected in a manner that provides, in 17 accordance with law and standards appli18 cable to the exchange of information, for 19 the electronic exchange of health informa20 tion to improve the quality of health care, 21 such as promoting care coordination. 22 ‘‘(iii) REPORTING ON MEASURES 23 USING EHR.—Subject to subparagraph 24 (B)(ii) and using such certified EHR tech 25 nology, the eligible professional submits in- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 222 1 formation for such period, in a form and 2 manner specified by the Secretary, on such 3 clinical quality measures and such other 4 measures as selected by the Secretary 5 under subparagraph (B)(i). 6 The Secretary may provide for the use of alter7 native means for meeting the requirements of 8 clauses (i), (ii), and (iii) in the case of an eligi9 ble professional furnishing covered professional 10 services in a group practice (as defined by the 11 Secretary). The Secretary shall seek to improve 12 the use of electronic health records and health 13 care quality over time by requiring more strin14 gent measures of meaningful use selected under 15 this paragraph. 16 ‘‘(B) REPORTING ON MEASURES.— 17 ‘‘(i) SELECTION.—The Secretary shall 18 select measures for purposes of subpara19 graph (A)(iii) but only consistent with the 20 following: 21 ‘‘(I) The Secretary shall provide 22 preference to clinical quality measures 23 that have been endorsed by the entity 24 with a contract with the Secretary 25 under section 1890(a). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 223 1 ‘‘(II) Prior to any measure being 2 selected under this subparagraph, the 3 Secretary shall publish in the Federal 4 Register such measure and provide for 5 a period of public comment on such 6 measure. 7 ‘‘(III) The Secretary shall, to the 8 extent practicable, select the same 9 measures for purposes of subpara10 graph (A)(iii) as are selected for qual11 ity purposes under title XIX. 12 ‘‘(ii) LIMITATION.—The Secretary 13 may not require the electronic reporting of 14 information on clinical quality measures 15 under subparagraph (A)(iii) unless the 16 Secretary has the capacity to accept the in17 formation electronically, which may be on 18 a pilot basis. 19 ‘‘(iii) COORDINATION OF REPORTING 20 OF INFORMATION.—In selecting such 21 measures, and in establishing the form and 22 manner for reporting measures under sub 23 paragraph (A)(iii), the Secretary shall seek 24 to avoid redundant or duplicative reporting f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 224 1 otherwise required, including reporting 2 under subsection (k)(2)(C). 3 ‘‘(C) DEMONSTRATION OF MEANINGFUL 4 USE OF CERTIFIED EHR TECHNOLOGY AND IN 5 FORMATION EXCHANGE.— 6 ‘‘(i) IN GENERAL.—A professional 7 may satisfy the demonstration requirement 8 of clauses (i) and (ii) of subparagraph (A) 9 through means specified by the Secretary, 10 which may include— 11 ‘‘(I) an attestation; 12 ‘‘(II) the submission of claims 13 with appropriate coding (such as a 14 code indicating that a patient encoun15 ter was documented using certified 16 EHR technology); 17 ‘‘(III) a survey response; 18 ‘‘(IV) reporting under subpara19 graph (A)(iii); and 20 ‘‘(V) other means specified by the 21 Secretary. 22 ‘‘(ii) USE OF PART D DATA.—Not23 withstanding sections 1860D–15(d)(2)(B) 24 and 1860D–15(f)(2), the Secretary may 25 use data regarding drug claims submitted f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 225 1 for purposes of section 1860D–15 that are 2 necessary for purposes of subparagraph 3 (A). 4 ‘‘(3) APPLICATION.— 5 ‘‘(A) PHYSICIAN REPORTING SYSTEM 6 RULES.—Paragraphs (5), (6), and (8) of sub7 section (k) shall apply for purposes of this sub8 section in the same manner as they apply for 9 purposes of such subsection. 10 ‘‘(B) COORDINATION WITH OTHER PAY11 MENTS.—The provisions of this subsection shall 12 not be taken into account in applying the provi13 sions of subsection (m) of this section and of 14 section 1833(m) and any payment under such 15 provisions shall not be taken into account in 16 computing allowable charges under this sub17 section. 18 ‘‘(C) LIMITATIONS ON REVIEW.—There 19 shall be no administrative or judicial review 20 under section 1869, section 1878, or otherwise 21 of the determination of any incentive payment 22 under this subsection and the payment adjust 23 ment under subsection (a)(7), including the de 24 termination of a meaningful EHR user under 25 paragraph (2), a limitation under paragraph f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 226 1 (1)(B), and the exception under subsection 2 (a)(7)(B). 3 ‘‘(D) POSTING ON WEBSITE.—The Sec4 retary shall post on the Internet website of the 5 Centers for Medicare & Medicaid Services, in an 6 easily understandable format, a list of the 7 names, business addresses, and business phone 8 numbers of the eligible professionals who are 9 meaningful EHR users and, as determined ap10 propriate by the Secretary, of group practices 11 receiving incentive payments under paragraph 12 (1). 13 ‘‘(4) CERTIFIED EHR TECHNOLOGY DEFINED.— 14 For purposes of this section, the term ‘certified 15 EHR technology’ means a qualified electronic health 16 record (as defined in 3000(13) of the Public Health 17 Service Act) that is certified pursuant to section 18 3001(c)(5) of such Act as meeting standards adopt19 ed under section 3004 of such Act that are applica20 ble to the type of record involved (as determined by 21 the Secretary, such as an ambulatory electronic 22 health record for office-based physicians or an inpa 23 tient hospital electronic health record for hospitals). 24 ‘‘(5) DEFINITIONS.—For purposes of this sub25 section: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 227 1 ‘‘(A) COVERED PROFESSIONAL SERV 2 ICES.—The term ‘covered professional services’ 3 has the meaning given such term in subsection 4 (k)(3). 5 ‘‘(B) ELIGIBLE PROFESSIONAL.—The term 6 ‘eligible professional’ means a physician, as de7 fined in section 1861(r). 8 ‘‘(C) REPORTING PERIOD.—The term ‘re9 porting period’ means any period (or periods), 10 with respect to a payment year, as specified by 11 the Secretary.’’. 12 (b) INCENTIVE PAYMENT ADJUSTMENT.—Section 13 1848(a) of the Social Security Act (42 U.S.C. 1395w– 14 4(a)) is amended by adding at the end the following new 15 paragraph: 16 ‘‘(7) INCENTIVES FOR MEANINGFUL USE OF 17 CERTIFIED EHR TECHNOLOGY.— 18 ‘‘(A) ADJUSTMENT.— 19 ‘‘(i) IN GENERAL.—Subject to sub20 paragraphs (B) and (D), with respect to 21 covered professional services furnished by 22 an eligible professional during 2016 or any 23 subsequent payment year, if the eligible 24 professional is not a meaningful EHR user 25 (as determined under subsection (o)(2)) for f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 228 1 a reporting period for the year, the fee 2 schedule amount for such services fur 3 nished by such professional during the year 4 (including the fee schedule amount for pur 5 poses of determining a payment based on 6 such amount) shall be equal to the applica7 ble percent of the fee schedule amount that 8 would otherwise apply to such services 9 under this subsection (determined after ap10 plication of paragraph (3) but without re11 gard to this paragraph). 12 ‘‘(ii) APPLICABLE PERCENT.—Subject 13 to clause (iii), for purposes of clause (i), 14 the term ‘applicable percent’ means— 15 ‘‘(I) for 2016, 99 percent; 16 ‘‘(II) for 2017, 98 percent; and 17 ‘‘(III) for 2018 and each subse18 quent year, 97 percent. 19 ‘‘(iii) AUTHORITY TO DECREASE AP20 PLICABLE PERCENTAGE FOR 2019 AND 21 SUBSEQUENT YEARS.—For 2019 and each 22 subsequent year, if the Secretary finds that 23 the proportion of eligible professionals who 24 are meaningful EHR users (as determined 25 under subsection (o)(2)) is less than 75 f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 229 1 percent, the applicable percent shall be de 2 creased by 1 percentage point from the ap 3 plicable percent in the preceding year, but 4 in no case shall the applicable percent be 5 less than 95 percent. 6 ‘‘(B) SIGNIFICANT HARDSHIP EXCEP7 TION.—The Secretary may, on a case-by-case 8 basis, exempt an eligible professional from the 9 application of the payment adjustment under 10 subparagraph (A) if the Secretary determines, 11 subject to annual renewal, that compliance with 12 the requirement for being a meaningful EHR 13 user would result in a significant hardship, such 14 as in the case of an eligible professional who 15 practices in a rural area without sufficient 16 Internet access. In no case may an eligible pro17 fessional be granted an exemption under this 18 subparagraph for more than 5 years. 19 ‘‘(C) APPLICATION OF PHYSICIAN REPORT20 ING SYSTEM RULES.—Paragraphs (5), (6), and 21 (8) of subsection (k) shall apply for purposes of 22 this paragraph in the same manner as they 23 apply for purposes of such subsection. 24 ‘‘(D) NON-APPLICATION TO HOSPITAL25 BASED ELIGIBLE PROFESSIONALS.—No pay- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 230 1 ment adjustment may be made under subpara 2 graph (A) in the case of hospital-based eligible 3 professionals (as defined in subsection 4 (o)(1)(C)(ii)). 5 ‘‘(E) DEFINITIONS.—For purposes of this 6 paragraph: 7 ‘‘(i) COVERED PROFESSIONAL SERV8 ICES.—The term ‘covered professional 9 services’ has the meaning given such term 10 in subsection (k)(3). 11 ‘‘(ii) ELIGIBLE PROFESSIONAL.—The 12 term ‘eligible professional’ means a physi13 cian, as defined in section 1861(r). 14 ‘‘(iii) REPORTING PERIOD.—The term 15 ‘reporting period’ means, with respect to a 16 year, a period specified by the Secretary.’’. 17 (c) APPLICATION TO CERTAIN HMO-AFFILIATED 18 ELIGIBLE PROFESSIONALS.—Section 1853 of the Social 19 Security Act (42 U.S.C. 1395w–23) is amended by adding 20 at the end the following new subsection: 21 ‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL IN22 CENTIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOP23 TION AND MEANINGFUL USE OF CERTIFIED EHR TECH24 NOLOGY.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 231 1 ‘‘(1) IN GENERAL.—Subject to paragraphs (3) 2 and (4), in the case of a qualifying MA organization, 3 the provisions of sections 1848(o) and 1848(a)(7) 4 shall apply with respect to eligible professionals de 5 scribed in paragraph (2) of the organization who the 6 organization attests under paragraph (6) to be 7 meaningful EHR users in a similar manner as they 8 apply to eligible professionals under such sections. 9 Incentive payments under paragraph (3) shall be 10 made to and payment adjustments under paragraph 11 (4) shall apply to such qualifying organizations. 12 ‘‘(2) ELIGIBLE PROFESSIONAL DESCRIBED.— 13 With respect to a qualifying MA organization, an eli14 gible professional described in this paragraph is an 15 eligible professional (as defined for purposes of sec16 tion 1848(o)) who— 17 ‘‘(A)(i) is employed by the organization, or 18 ‘‘(ii)(I) is employed by, or is a partner of, 19 an entity that through contract with the organi20 zation furnishes at least 80 percent of the enti21 ty’s patient care services to enrollees of such or 22 ganization; and 23 ‘‘(II) furnishes at least 75 percent of the 24 professional services of the eligible professional 25 to enrollees of the organization; and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 232 1 ‘‘(B) furnishes, on average, at least 20 2 hours per week of patient care services. 3 ‘‘(3) ELIGIBLE PROFESSIONAL INCENTIVE PAY 4 MENTS.— 5 ‘‘(A) IN GENERAL.—In applying section 6 1848(o) under paragraph (1), instead of the ad7 ditional payment amount under section 8 1848(o)(1)(A) and subject to subparagraph 9 (B), the Secretary may substitute an amount 10 determined by the Secretary to the extent fea11 sible and practical to be similar to the esti12 mated amount in the aggregate that would be 13 payable if payment for services furnished by 14 such professionals was payable under part B in15 stead of this part. 16 ‘‘(B) AVOIDING DUPLICATION OF PAY17 MENTS.— 18 ‘‘(i) IN GENERAL.—If an individual is 19 an eligible professional described in para20 graph (2) and also is eligible for the max21 imum incentive payment under section 22 1848(o)(1)(A) for the same payment pe 23 riod, the payment incentive shall be made 24 only under such section and not under this 25 subsection. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 233 1 ‘‘(ii) METHODS.—In the case of an in 2 dividual who is an eligible professional de 3 scribed in paragraph (2) and also is eligi 4 ble for an incentive payment under section 5 1848(o)(1)(A) but is not described in 6 clause (i) for the same payment period, the 7 Secretary shall develop a process— 8 ‘‘(I) to ensure that duplicate pay9 ments are not made with respect to 10 an eligible professional both under 11 this subsection and under section 12 1848(o)(1)(A); and 13 ‘‘(II) to collect data from Medi14 care Advantage organizations to en15 sure against such duplicate payments. 16 ‘‘(C) FIXED SCHEDULE FOR APPLICATION 17 OF LIMITATION ON INCENTIVE PAYMENTS FOR 18 ALL ELIGIBLE PROFESSIONALS.—In applying 19 section 1848(o)(1)(B)(ii) under subparagraph 20 (A), in accordance with rules specified by the 21 Secretary, a qualifying MA organization shall 22 specify a year (not earlier than 2011) that shall 23 be treated as the first payment year for all eli 24 gible professionals with respect to such organi25 zation. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 234 1 ‘‘(4) PAYMENT ADJUSTMENT.— 2 ‘‘(A) IN GENERAL.—In applying section 3 1848(a)(7) under paragraph (1), instead of the 4 payment adjustment being an applicable per 5 cent of the fee schedule amount for a year 6 under such section, subject to subparagraph 7 (D), the payment adjustment under paragraph 8 (1) shall be equal to the percent specified in 9 subparagraph (B) for such year of the payment 10 amount otherwise provided under this section 11 for such year. 12 ‘‘(B) SPECIFIED PERCENT.—The percent 13 specified under this subparagraph for a year is 14 100 percent minus a number of percentage 15 points equal to the product of— 16 ‘‘(i) the number of percentage points 17 by which the applicable percent (under sec18 tion 1848(a)(7)(A)(ii)) for the year is less 19 than 100 percent; and 20 ‘‘(ii) the Medicare physician expendi21 ture proportion specified in subparagraph 22 (C) for the year. 23 ‘‘(C) MEDICARE PHYSICIAN EXPENDITURE 24 PROPORTION.—The Medicare physician expend 25 iture proportion under this subparagraph for a f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 235 1 year is the Secretary’s estimate of the propor 2 tion, of the expenditures under parts A and B 3 that are not attributable to this part, that are 4 attributable to expenditures for physicians’ 5 services. 6 ‘‘(D) APPLICATION OF PAYMENT ADJUST7 MENT.—In the case that a qualifying MA orga8 nization attests that not all eligible profes9 sionals are meaningful EHR users with respect 10 to a year, the Secretary shall apply the payment 11 adjustment under this paragraph based on the 12 proportion of such eligible professionals that are 13 not meaningful EHR users for such year. 14 ‘‘(5) QUALIFYING MA ORGANIZATION DE15 FINED.—In this subsection and subsection (m), the 16 term ‘qualifying MA organization’ means a Medicare 17 Advantage organization that is organized as a health 18 maintenance organization (as defined in section 19 2791(b)(3) of the Public Health Service Act). 20 ‘‘(6) MEANINGFUL EHR USER ATTESTATION.— 21 For purposes of this subsection and subsection (m), 22 a qualifying MA organization shall submit an attes 23 tation, in a form and manner specified by the Sec 24 retary which may include the submission of such at- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 236 1 testation as part of submission of the initial bid 2 under section 1854(a)(1)(A)(iv), identifying— 3 ‘‘(A) whether each eligible professional de 4 scribed in paragraph (2), with respect to such 5 organization is a meaningful EHR user (as de6 fined in section 1848(o)(3)) for a year specified 7 by the Secretary; and 8 ‘‘(B) whether each eligible hospital de9 scribed in subsection (m)(1), with respect to 10 such organization, is a meaningful EHR user 11 (as defined in section 1886(n)(3)) for an appli12 cable period specified by the Secretary.’’. 13 (d) CONFORMING AMENDMENTS.—Section 1853 of 14 the Social Security Act (42 U.S.C. 1395w–23) is amend15 ed— 16 (1) in subsection (a)(1)(A), by striking ‘‘and 17 (i)’’ and inserting ‘‘(i), and (l)’’; 18 (2) in subsection (c)— 19 (A) in paragraph (1)(D)(i), by striking 20 ‘‘section 1886(h)’’ and inserting ‘‘sections 21 1848(o) and 1886(h)’’; and 22 (B) in paragraph (6)(A), by inserting after 23 ‘‘under part B,’’ the following: ‘‘excluding ex 24 penditures attributable to subsections (a)(7) 25 and (o) of section 1848,’’; and f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 237 1 (3) in subsection (f), by inserting ‘‘and for pay 2 ments under subsection (l)’’ after ‘‘with the organi 3 zation’’. 4 (e) CONFORMING AMENDMENTS TO E-PRE5 SCRIBING.— 6 (1) Section 1848(a)(5)(A) of the Social Security 7 Act (42 U.S.C. 1395w–4(a)(5)(A)) is amended— 8 (A) in clause (i), by striking ‘‘or any sub9 sequent year’’ and inserting ‘‘, 2013, 2014, or 10 2015’’; and 11 (B) in clause (ii), by striking ‘‘and each 12 subsequent year’’ and inserting ‘‘and 2015’’. 13 (2) Section 1848(m)(2) of such Act (42 U.S.C. 14 1395w–4(m)(2)) is amended— 15 (A) in subparagraph (A), by striking ‘‘For 16 2009’’ and inserting ‘‘Subject to subparagraph 17 (D), for 2009’’; and 18 (B) by adding at the end the following new 19 subparagraph: 20 ‘‘(D) LIMITATION WITH RESPECT TO EHR 21 INCENTIVE PAYMENTS.—The provisions of this 22 paragraph shall not apply to an eligible profes 23 sional (or, in the case of a group practice under 24 paragraph (3)(C), to the group practice) if, for 25 the reporting period the eligible professional (or f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 238 1 group practice) receives an incentive payment 2 under subsection (o)(1)(A) with respect to a 3 certified EHR technology (as defined in sub 4 section (o)(6)(A)) that has the capability of 5 electronic prescribing.’’. 6 SEC. 4312. INCENTIVES FOR HOSPITALS. 7 (a) INCENTIVE PAYMENT.—Section 1886 of the So 8 cial Security Act (42 U.S.C. 1395ww) is amended by add 9 ing at the end the following new subsection: 10 ‘‘(n) INCENTIVES FOR ADOPTION AND MEANINGFUL 11 USE OF CERTIFIED EHR TECHNOLOGY.— 12 ‘‘(1) IN GENERAL.—Subject to the succeeding 13 provisions of this subsection, with respect to inpa14 tient hospital services furnished by an eligible hos15 pital during a payment year (as defined in para16 graph (2)(G)), if the eligible hospital is a meaningful 17 EHR user (as determined under paragraph (3)) for 18 the reporting period with respect to such year, in ad19 dition to the amount otherwise paid under this sec20 tion, there also shall be paid to the eligible hospital, 21 from the Federal Hospital Insurance Trust Fund es 22 tablished under section 1817, an amount equal to 23 the applicable amount specified in paragraph (2)(A) 24 for the hospital for such payment year. 25 ‘‘(2) PAYMENT AMOUNT.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 239 1 ‘‘(A) IN GENERAL.—Subject to the suc 2 ceeding subparagraphs of this paragraph, the 3 applicable amount specified in this subpara 4 graph for an eligible hospital for a payment 5 year is equal to the product of the following: 6 ‘‘(i) INITIAL AMOUNT.—The sum of— 7 ‘‘(I) the base amount specified in 8 subparagraph (B); plus 9 ‘‘(II) the discharge related 10 amount specified in subparagraph (C) 11 for a 12-month period selected by the 12 Secretary with respect to such pay13 ment year. 14 ‘‘(ii) MEDICARE SHARE.—The Medi15 care share as specified in subparagraph 16 (D) for the hospital for a period selected 17 by the Secretary with respect to such pay18 ment year. 19 ‘‘(iii) TRANSITION FACTOR.—The 20 transition factor specified in subparagraph 21 (E) for the hospital for the payment year. 22 ‘‘(B) BASE AMOUNT.—The base amount 23 specified in this subparagraph is $2,000,000. 24 ‘‘(C) DISCHARGE RELATED AMOUNT.—The 25 discharge related amount specified in this sub- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 240 1 paragraph for a 12-month period selected by 2 the Secretary shall be determined as the sum of 3 the amount, based upon total discharges (re 4 gardless of any source of payment) for the pe 5 riod, for each discharge up to the 23,000th dis6 charge as follows: 7 ‘‘(i) For the 1,150th through the 8 9,200nd discharge, $200. 9 ‘‘(ii) For the 9,201st through the 10 13,800th discharge, 50 percent of the 11 amount specified in clause (i). 12 ‘‘(iii) For the 13,801st through the 13 23,000th discharge, 30 percent of the 14 amount specified in clause (i). 15 ‘‘(D) MEDICARE SHARE.—The Medicare 16 share specified under this subparagraph for a 17 hospital for a period selected by the Secretary 18 for a payment year is equal to the fraction— 19 ‘‘(i) the numerator of which is the 20 sum (for such period and with respect to 21 the hospital) of— 22 ‘‘(I) the number of inpatient-bed 23 days (as established by the Secretary) 24 which are attributable to individuals f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 241 1 with respect to whom payment may be 2 made under part A; and 3 ‘‘(II) the number of inpatient 4 bed-days (as so established) which are 5 attributable to individuals who are en6 rolled with a Medicare Advantage or7 ganization under part C; and 8 ‘‘(ii) the denominator of which is the 9 product of— 10 ‘‘(I) the total number of inpa11 tient-bed-days with respect to the hos12 pital during such period; and 13 ‘‘(II) the total amount of the hos14 pital’s charges during such period, not 15 including any charges that are attrib16 utable to charity care (as such term is 17 used for purposes of hospital cost re18 porting under this title), divided by 19 the total amount of the hospital’s 20 charges during such period. 21 Insofar as the Secretary determines that data 22 are not available on charity care necessary to 23 calculate the portion of the formula specified in 24 clause (ii)(II), the Secretary shall use data on 25 uncompensated care and may adjust such data f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 242 1 so as to be an appropriate proxy for charity 2 care including a downward adjustment to elimi 3 nate bad debt data from uncompensated care 4 data. In the absence of the data necessary, with 5 respect to a hospital, for the Secretary to com6 pute the amount described in clause (ii)(II), the 7 amount under such clause shall be deemed to 8 be 1. In the absence of data, with respect to a 9 hospital, necessary to compute the amount de10 scribed in clause (i)(II), the amount under such 11 clause shall be deemed to be 0. 12 ‘‘(E) TRANSITION FACTOR SPECIFIED.— 13 ‘‘(i) IN GENERAL.—Subject to clause 14 (ii), the transition factor specified in this 15 subparagraph for an eligible hospital for a 16 payment year is as follows: 17 ‘‘(I) For the first payment year 18 for such hospital, 1. 19 ‘‘(II) For the second payment 20 year for such hospital, 3/4. 21 ‘‘(III) For the third payment 22 year for such hospital, 1/2. 23 ‘‘(IV) For the fourth payment 24 year for such hospital, 1/4. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 243 1 ‘‘(V) For any succeeding pay 2 ment year for such hospital, 0. 3 ‘‘(ii) PHASE DOWN FOR ELIGIBLE 4 HOSPITALS FIRST ADOPTING EHR AFTER 5 2013.—If the first payment year for an eli6 gible hospital is after 2013, then the tran7 sition factor specified in this subparagraph 8 for a payment year for such hospital is the 9 same as the amount specified in clause (i) 10 for such payment year for an eligible hos11 pital for which the first payment year is 12 2013. If the first payment year for an eli13 gible hospital is after 2015 then the transi14 tion factor specified in this subparagraph 15 for such hospital and for such year and 16 any subsequent year shall be 0. 17 ‘‘(F) FORM OF PAYMENT.—The payment 18 under this subsection for a payment year may 19 be in the form of a single consolidated payment 20 or in the form of such periodic installments as 21 the Secretary may specify. 22 ‘‘(G) PAYMENT YEAR DEFINED.— 23 ‘‘(i) IN GENERAL.—For purposes of 24 this subsection, the term ‘payment year’ f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 244 1 means a fiscal year beginning with fiscal 2 year 2011. 3 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT 4 YEAR.—The term ‘first payment year’ 5 means, with respect to inpatient hospital 6 services furnished by an eligible hospital, 7 the first fiscal year for which an incentive 8 payment is made for such services under 9 this subsection. The terms ‘second pay10 ment year’, ‘third payment year’, and 11 ‘fourth payment year’ mean, with respect 12 to an eligible hospital, each successive year 13 immediately following the first payment 14 year for that hospital. 15 ‘‘(3) MEANINGFUL EHR USER.— 16 ‘‘(A) IN GENERAL.—For purposes of para17 graph (1), an eligible hospital shall be treated 18 as a meaningful EHR user for a reporting pe19 riod for a payment year (or, for purposes of 20 subsection (b)(3)(B)(ix), for a reporting period 21 under such subsection for a fiscal year) if the 22 following requirements are met: 23 ‘‘(i) MEANINGFUL USE OF CERTIFIED 24 EHR TECHNOLOGY.—The eligible hospital 25 demonstrates to the satisfaction of the Sec f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 245 1 retary, in accordance with subparagraph 2 (C)(i), that during such period the hospital 3 is using certified EHR technology in a 4 meaningful manner. 5 ‘‘(ii) INFORMATION EXCHANGE.—The 6 eligible hospital demonstrates to the satis7 faction of the Secretary, in accordance 8 with subparagraph (C)(i), that during such 9 period such certified EHR technology is 10 connected in a manner that provides, in 11 accordance with law and standards appli12 cable to the exchange of information, for 13 the electronic exchange of health informa14 tion to improve the quality of health care, 15 such as promoting care coordination. 16 ‘‘(iii) REPORTING ON MEASURES 17 USING EHR.—Subject to subparagraph 18 (B)(ii) and using such certified EHR tech19 nology, the eligible hospital submits infor20 mation for such period, in a form and 21 manner specified by the Secretary, on such 22 clinical quality measures and such other 23 measures as selected by the Secretary 24 under subparagraph (B)(i). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 246 1 The Secretary shall seek to improve the use of 2 electronic health records and health care quality 3 over time by requiring more stringent measures 4 of meaningful use selected under this para 5 graph. 6 ‘‘(B) REPORTING ON MEASURES.— 7 ‘‘(i) SELECTION.—The Secretary may 8 select measures for purposes of subpara9 graph (A)(iii) but only consistent with the 10 following: 11 ‘‘(I) The Secretary shall provide 12 preference to clinical quality measures 13 that have been selected for purposes 14 of applying subsection (b)(3)(B)(viii) 15 or that have been endorsed by the en16 tity with a contract with the Secretary 17 under section 1890(a). 18 ‘‘(II) Prior to any measure (other 19 than a clinical quality measure that 20 has been selected for purposes of ap21 plying subsection (b)(3)(B)(viii)) 22 being selected under this subpara 23 graph, the Secretary shall publish in 24 the Federal Register such measure f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 247 1 and provide for a period of public 2 comment on such measure. 3 ‘‘(ii) LIMITATIONS.—The Secretary 4 may not require the electronic reporting of 5 information on clinical quality measures 6 under subparagraph (A)(iii) unless the 7 Secretary has the capacity to accept the in8 formation electronically, which may be on 9 a pilot basis. 10 ‘‘(iii) COORDINATION OF REPORTING 11 OF INFORMATION.—In selecting such 12 measures, and in establishing the form and 13 manner for reporting measures under sub14 paragraph (A)(iii), the Secretary shall seek 15 to avoid redundant or duplicative reporting 16 with reporting otherwise required, includ17 ing reporting under subsection 18 (b)(3)(B)(viii). 19 ‘‘(C) DEMONSTRATION OF MEANINGFUL 20 USE OF CERTIFIED EHR TECHNOLOGY AND IN21 FORMATION EXCHANGE.— 22 ‘‘(i) IN GENERAL.—A hospital may 23 satisfy the demonstration requirement of 24 clauses (i) and (ii) of subparagraph (A) f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 248 1 through means specified by the Secretary, 2 which may include— 3 ‘‘(I) an attestation; 4 ‘‘(II) the submission of claims 5 with appropriate coding (such as a 6 code indicating that inpatient care 7 was documented using certified EHR 8 technology); 9 ‘‘(III) a survey response; 10 ‘‘(IV) reporting under subpara11 graph (A)(iii); and 12 ‘‘(V) other means specified by the 13 Secretary. 14 ‘‘(ii) USE OF PART D DATA.—Not15 withstanding sections 1860D–15(d)(2)(B) 16 and 1860D–15(f)(2), the Secretary may 17 use data regarding drug claims submitted 18 for purposes of section 1860D–15 that are 19 necessary for purposes of subparagraph 20 (A). 21 ‘‘(4) APPLICATION.— 22 ‘‘(A) LIMITATIONS ON REVIEW.—There 23 shall be no administrative or judicial review 24 under section 1869, section 1878, or otherwise 25 of the determination of any incentive payment f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 249 1 under this subsection and the payment adjust 2 ment under subsection (b)(3)(B)(ix), including 3 the determination of a meaningful EHR user 4 under paragraph (3), determination of meas 5 ures applicable to services furnished by eligible 6 hospitals under this subsection, and the excep7 tion under subsection (b)(3)(B)(ix)(II). 8 ‘‘(B) POSTING ON WEBSITE.—The Sec9 retary shall post on the Internet website of the 10 Centers for Medicare & Medicaid Services, in an 11 easily understandable format, a list of the 12 names of the eligible hospitals that are mean13 ingful EHR users under this subsection or sub14 section (b)(3)(B)(ix) and other relevant data as 15 determined appropriate by the Secretary. The 16 Secretary shall ensure that a hospital has the 17 opportunity to review the other relevant data 18 that are to be made public with respect to the 19 hospital prior to such data being made public. 20 ‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 21 The term ‘certified EHR technology’ has the mean 22 ing given such term in section 1848(o)(4). 23 ‘‘(6) DEFINITIONS.—For purposes of this sub24 section: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 250 1 ‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eli 2 gible hospital’ means a subsection (d) hospital. 3 ‘‘(B) REPORTING PERIOD.—The term ‘re 4 porting period’ means any period (or periods), 5 with respect to a payment year, as specified by 6 the Secretary.’’. 7 (b) INCENTIVE MARKET BASKET ADJUSTMENT.— 8 Section 1886(b)(3)(B) of the Social Security Act (42 9 U.S.C. 1395ww(b)(3)(B)) is amended— 10 (1) in clause (viii)(I), by inserting ‘‘(or, begin11 ning with fiscal year 2016, by one-quarter)’’ after 12 ‘‘2.0 percentage points’’; and 13 (2) by adding at the end the following new 14 clause: 15 ‘‘(ix)(I) For purposes of clause (i) for fiscal year 16 2016 and each subsequent fiscal year, in the case of an 17 eligible hospital (as defined in subsection (n)(6)(A)) that 18 is not a meaningful EHR user (as defined in subsection 19 (n)(3)) for the reporting period for such fiscal year, three20 quarters of the applicable percentage increase otherwise 21 applicable under clause (i) for such fiscal year shall be 22 reduced by 331/3 percent for fiscal year 2016, 662/3 per23 cent for fiscal year 2017, and 100 percent for fiscal year 24 2018 and each subsequent fiscal year. Such reduction 25 shall apply only with respect to the fiscal year involved f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 251 1 and the Secretary shall not take into account such reduc2 tion in computing the applicable percentage increase under 3 clause (i) for a subsequent fiscal year. 4 ‘‘(II) The Secretary may, on a case-by-case basis, ex5 empt a subsection (d) hospital from the application of sub6 clause (I) with respect to a fiscal year if the Secretary 7 determines, subject to annual renewal, that requiring such 8 hospital to be a meaningful EHR user during such fiscal 9 year would result in a significant hardship, such as in the 10 case of a hospital in a rural area without sufficient Inter11 net access. In no case may a hospital be granted an ex12 emption under this subclause for more than 5 years. 13 ‘‘(III) For fiscal year 2016 and each subsequent fis14 cal year, a State in which hospitals are paid for services 15 under section 1814(b)(3) shall adjust the payments to 16 each subsection (d) hospital in the State that is not a 17 meaningful EHR user (as defined in subsection (n)(3)) 18 in a manner that is designed to result in an aggregate 19 reduction in payments to hospitals in the State that is 20 equivalent to the aggregate reduction that would have oc21 curred if payments had been reduced to each subsection 22 (d) hospital in the State in a manner comparable to the 23 reduction under the previous provisions of this clause. The 24 State shall report to the Secretary the methodology it will f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 252 1 use to make the payment adjustment under the previous 2 sentence. 3 ‘‘(IV) For purposes of this clause, the term ‘reporting 4 period’ means, with respect to a fiscal year, any period 5 (or periods), with respect to the fiscal year, as specified 6 by the Secretary.’’. 7 (c) APPLICATION TO CERTAIN HMO-AFFILIATED 8 ELIGIBLE HOSPITALS.—Section 1853 of the Social Secu9 rity Act (42 U.S.C. 1395w-23), as amended by section 10 l311(c), is further amended by adding at the end the 11 following new subsection: 12 ‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN13 TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION 14 AND MEANINGFUL USE OF CERTIFIED EHR TECH15 NOLOGY.— 16 ‘‘(1) APPLICATION.—Subject to paragraphs (3) 17 and (4), in the case of a qualifying MA organization, 18 the provisions of sections 1886(n) and 19 1886(b)(3)(B)(ix) shall apply with respect to eligible 20 hospitals described in paragraph (2) of the organiza21 tion which the organization attests under subsection 22 (l)(6) to be meaningful EHR users in a similar man 23 ner as they apply to eligible hospitals under such 24 sections. Incentive payments under paragraph (3) 25 shall be made to and payment adjustments under f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 253 1 paragraph (4) shall apply to such qualifying organi 2 zations. 3 ‘‘(2) ELIGIBLE HOSPITAL DESCRIBED.—With 4 respect to a qualifying MA organization, an eligible 5 hospital described in this paragraph is an eligible 6 hospital that is under common corporate governance 7 with such organization and serves individuals en8 rolled under an MA plan offered by such organiza9 tion. 10 ‘‘(3) ELIGIBLE HOSPITAL INCENTIVE PAY11 MENTS.— 12 ‘‘(A) IN GENERAL.—In applying section 13 1886(n)(2) under paragraph (1), instead of the 14 additional payment amount under section 15 1886(n)(2), there shall be substituted an 16 amount determined by the Secretary to be simi17 lar to the estimated amount in the aggregate 18 that would be payable if payment for services 19 furnished by such hospitals was payable under 20 part A instead of this part. In implementing the 21 previous sentence, the Secretary— 22 ‘‘(i) shall, insofar as data to deter 23 mine the discharge related amount under 24 section 1886(n)(2)(C) for an eligible hos 25 pital are not available to the Secretary, use f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 254 1 such alternative data and methodology to 2 estimate such discharge related amount as 3 the Secretary determines appropriate; and 4 ‘‘(ii) shall, insofar as data to deter 5 mine the medicare share described in sec6 tion 1886(n)(2)(D) for an eligible hospital 7 are not available to the Secretary, use such 8 alternative data and methodology to esti9 mate such share, which data and method10 ology may include use of the inpatient bed 11 days (or discharges) with respect to an eli12 gible hospital during the appropriate pe13 riod which are attributable to both individ14 uals for whom payment may be made 15 under part A or individuals enrolled in an 16 MA plan under a Medicare Advantage or17 ganization under this part as a proportion 18 of the total number of patient-bed-days (or 19 discharges) with respect to such hospital 20 during such period. 21 ‘‘(B) AVOIDING DUPLICATION OF PAY22 MENTS.— 23 ‘‘(i) IN GENERAL.—In the case of a 24 hospital that for a payment year is an eli 25 gible hospital described in paragraph (2), f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 255 1 is an eligible hospital under section 2 1886(n), and for which at least one-third 3 of their discharges (or bed-days) of Medi 4 care patients for the year are covered 5 under part A, payment for the payment 6 year shall be made only under section 7 1886(n) and not under this subsection. 8 ‘‘(ii) METHODS.—In the case of a 9 hospital that is an eligible hospital de10 scribed in paragraph (2) and also is eligi11 ble for an incentive payment under section 12 1886(n) but is not described in clause (i) 13 for the same payment period, the Secretary 14 shall develop a process— 15 ‘‘(I) to ensure that duplicate pay16 ments are not made with respect to 17 an eligible hospital both under this 18 subsection and under section 1886(n); 19 and 20 ‘‘(II) to collect data from Medi21 care Advantage organizations to en 22 sure against such duplicate payments. 23 ‘‘(4) PAYMENT ADJUSTMENT.— 24 ‘‘(A) Subject to paragraph (3), in the case 25 of a qualifying MA organization (as defined in f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 256 1 section 1853(l)(5)), if, according to the attesta 2 tion of the organization submitted under sub 3 section (l)(6) for an applicable period, one or 4 more eligible hospitals (as defined in section 5 1886(n)(6)(A)) that are under common cor6 porate governance with such organization and 7 that serve individuals enrolled under a plan of8 fered by such organization are not meaningful 9 EHR users (as defined in section 1886(n)(3)) 10 with respect to a period, the payment amount 11 payable under this section for such organization 12 for such period shall be the percent specified in 13 subparagraph (B) for such period of the pay14 ment amount otherwise provided under this sec15 tion for such period. 16 ‘‘(B) SPECIFIED PERCENT.—The percent 17 specified under this subparagraph for a year is 18 100 percent minus a number of percentage 19 points equal to the product of— 20 ‘‘(i) the number of the percentage 21 point reduction effected under section 22 1886(b)(3)(B)(ix)(I) for the period; and 23 ‘‘(ii) the Medicare hospital expendi 24 ture proportion specified in subparagraph 25 (C) for the year. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 257 1 ‘‘(C) MEDICARE HOSPITAL EXPENDITURE 2 PROPORTION.—The Medicare hospital expendi 3 ture proportion under this subparagraph for a 4 year is the Secretary’s estimate of the propor 5 tion, of the expenditures under parts A and B 6 that are not attributable to this part, that are 7 attributable to expenditures for inpatient hos8 pital services. 9 ‘‘(D) APPLICATION OF PAYMENT ADJUST10 MENT.—In the case that a qualifying MA orga11 nization attests that not all eligible hospitals 12 are meaningful EHR users with respect to an 13 applicable period, the Secretary shall apply the 14 payment adjustment under this paragraph 15 based on a methodology specified by the Sec16 retary, taking into account the proportion of 17 such eligible hospitals, or discharges from such 18 hospitals, that are not meaningful EHR users 19 for such period.’’. 20 (d) CONFORMING AMENDMENTS.— 21 (1) Section 1814(b) of the Social Security Act 22 (42 U.S.C. 1395f(b)) is amended— 23 (A) in paragraph (3), in the matter pre 24 ceding subparagraph (A), by inserting ‘‘, sub- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 258 1 ject to section 1886(d)(3)(B)(ix)(III),’’ after 2 ‘‘then’’; and 3 (B) by adding at the end the following: 4 ‘‘For purposes of applying paragraph (3), there 5 shall be taken into account incentive payments, 6 and payment adjustments under subsection 7 (b)(3)(B)(ix) or (n) of section 1886.’’. 8 (2) Section 1851(i)(1) of the Social Security 9 Act (42 U.S.C. 1395w–21(i)(1)) is amended by 10 striking ‘‘and 1886(h)(3)(D)’’ and inserting 11 ‘‘1886(h)(3)(D), and 1853(m)’’. 12 (3) Section 1853 of the Social Security Act (42 13 U.S.C. 1395w–23), as amended by section 14 4311(d)(1), is amended— 15 (A) in subsection (c)— 16 (i) in paragraph (1)(D)(i), by striking 17 ‘‘1848(o)’’ and inserting ‘‘, 1848(o), and 18 1886(n)’’; and 19 (ii) in paragraph (6)(A), by inserting 20 ‘‘and subsections (b)(3)(B)(ix) and (n) of 21 section 1886’’ after ‘‘section 1848’’; and 22 (B) in subsection (f), by inserting ‘‘and 23 subsection (m)’’ after ‘‘under subsection (l)’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 259 1 SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IM2 PLEMENTATION FUNDING. 3 (a) PREMIUM HOLD HARMLESS.— 4 (1) IN GENERAL.—Section 1839(a)(1) of the 5 Social Security Act (42 U.S.C. 1395r(a)(1)) is 6 amended by adding at the end the following: ‘‘In ap7 plying this paragraph there shall not be taken into 8 account additional payments under section 1848(o) 9 and section 1853(l)(3) and the Government con10 tribution under section 1844(a)(3).’’. 11 (2) PAYMENT.—Section 1844(a) of such Act 12 (42 U.S.C. 1395w(a)) is amended— 13 (A) in paragraph (2), by striking the pe14 riod at the end and inserting ‘‘; plus’’; and 15 (B) by adding at the end the following new 16 paragraph: 17 ‘‘(3) a Government contribution equal to the 18 amount of payment incentives payable under sec19 tions 1848(o) and 1853(l)(3).’’. 20 (b) MEDICARE IMPROVEMENT FUND.—Section 1898 21 of the Social Security Act (42 U.S.C. 1395iii), as added 22 by section 7002(a) of the Supplemental Appropriations 23 Act, 2008 (Public Law 110–252) and as amended by sec24 tion 188(a)(2) of the Medicare Improvements for Patients 25 and Providers Act of 2008 (Public Law 110–275; 122 f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 260 1 Stat. 2589) and by section 6 of the QI Program Supple2 mental Funding Act of 2008, is amended— 3 (1) in subsection (a)— 4 (A) by inserting ‘‘medicare’’ before ‘‘fee 5 for-service’’; and 6 (B) by inserting before the period at the 7 end the following: ‘‘including, but not limited 8 to, an increase in the conversion factor under 9 section 1848(d) to address, in whole or in part, 10 any projected shortfall in the conversion factor 11 for 2014 relative to the conversion factor for 12 2008 and adjustments to payments for items 13 and services furnished by providers of services 14 and suppliers under such original medicare fee15 for-service program’’; and 16 (2) in subsection (b)— 17 (A) in paragraph (1), by striking ‘‘during 18 fiscal year 2014,’’ and all that follows and in19 serting the following: ‘‘during— 20 ‘‘(A) fiscal year 2014, $22,290,000,000; 21 and 22 ‘‘(B) fiscal year 2020 and each subsequent 23 fiscal year, the Secretary’s estimate, as of July 24 1 of the fiscal year, of the aggregate reduction 25 in expenditures under this title during the pre- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 261 1 ceding fiscal year directly resulting from the re 2 duction in payment amounts under sections 3 1848(a)(7), 1853(l)(4), 1853(m)(4), and 4 1886(b)(3)(B)(ix).’’; and 5 (B) by adding at the end the following new 6 paragraph: 7 ‘‘(4) NO EFFECT ON PAYMENTS IN SUBSE8 QUENT YEARS.—In the case that expenditures from 9 the Fund are applied to, or otherwise affect, a pay10 ment rate for an item or service under this title for 11 a year, the payment rate for such item or service 12 shall be computed for a subsequent year as if such 13 application or effect had never occurred.’’. 14 (c) IMPLEMENTATION FUNDING.—In addition to 15 funds otherwise available, out of any funds in the Treas16 ury not otherwise appropriated, there are appropriated to 17 the Secretary of Health and Human Services for the Cen18 ter for Medicare & Medicaid Services Program Manage19 ment Account, $60,000,000 for each of fiscal years 2009 20 through 2015 and $30,000,000 for each succeeding fiscal 21 year through fiscal year 2019, which shall be available for 22 purposes of carrying out the provisions of (and amend23 ments made by) this part. Amounts appropriated under 24 this subsection for a fiscal year shall be available until ex25 pended. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 262 1 SEC. 4314. STUDY ON APPLICATION OF HIT PAYMENT IN2 CENTIVES FOR PROVIDERS NOT RECEIVING 3 OTHER INCENTIVE PAYMENTS. 4 (a) STUDY.— 5 (1) IN GENERAL.—The Secretary of Health and 6 Human Services shall conduct a study to determine 7 the extent to which and manner in which payment 8 incentives (such as under title XVIII or XIX of the 9 Social Security Act) and other funding for purposes 10 of implementing and using qualified health informa11 tion technology should be made available to health 12 care providers who are receiving minimal or no pay13 ment incentives or other funding under this Act, 14 under title XVIII or XIX of the Social Security Act, 15 or otherwise, for such purposes. 16 (2) DETAILS OF STUDY.—Such study shall in17 clude an examination of— 18 (A) the adoption rates of qualified health 19 information technology by such health care pro20 viders; 21 (B) the clinical utility of such technology 22 by such health care providers; 23 (C) whether the services furnished by such 24 health care providers are appropriate for or 25 would benefit from the use of such technology; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 263 1 (D) the extent to which such health care 2 providers work in settings that might otherwise 3 receive an incentive payment or other funding 4 under this Act, title XVIII or XIX of the Social 5 Security Act, or otherwise; 6 (E) the potential costs and the potential 7 benefits of making payment incentives and 8 other funding available to such health care pro9 viders; and 10 (F) any other issues the Secretary deems 11 to be appropriate. 12 (b) REPORT.—Not later than June 30, 2010, the 13 Secretary shall submit to Congress a report on the find14 ings and conclusions of the study conducted under sub15 section (a). 16 PART III—MEDICAID FUNDING 17 SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPER18 ATION PAYMENTS; IMPLEMENTATION FUND19 ING. 20 (a) IN GENERAL.—Section 1903 of the Social Secu21 rity Act (42 U.S.C. 1396b) is amended— 22 (1) in subsection (a)(3)— 23 (A) by striking ‘‘and’’ at the end of sub 24 paragraph (D); f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 264 1 (B) by striking ‘‘plus’’ at the end of sub 2 paragraph (E) and inserting ‘‘and’’; and 3 (C) by adding at the end the following new 4 subparagraph: 5 ‘‘(F)(i) 100 percent of so much of the 6 sums expended during such quarter as are at7 tributable to payments for certified EHR tech8 nology (and support services including mainte9 nance and training that is for, or is necessary 10 for the adoption and operation of, such tech11 nology) by Medicaid providers described in sub12 section (t)(1); and 13 ‘‘(ii) 90 percent of so much of the sums ex14 pended during such quarter as are attributable 15 to payments for reasonable administrative ex16 penses related to the administration of pay17 ments described in clause (i) if the State meets 18 the condition described in subsection (t)(9); 19 plus’’; and 20 (2) by inserting after subsection (s) the fol21 lowing new subsection: 22 ‘‘(t)(1) For purposes of subsection (a)(3)(F), the pay23 ments for certified EHR technology (and support services 24 including maintenance that is for, or is necessary for the 25 operation of, such technology) by Medicaid providers de f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 265 1 scribed in this paragraph are payments made by the State 2 in accordance with this subsection of 85 percent of the 3 net allowable costs of Medicaid providers (as defined in 4 paragraph (2)) for such technology (and support services). 5 ‘‘(2) In this subsection and subsection (a)(3)(F), the 6 term ‘Medicaid provider’ means— 7 ‘‘(A) an eligible professional (as defined in 8 paragraph (3)(B)) who is not hospital-based and has 9 at least 30 percent of the professional’s patient vol10 ume (as estimated in accordance with standards es11 tablished by the Secretary) attributable to individ12 uals who are receiving medical assistance under this 13 title; and 14 ‘‘(B)(i) a children’s hospital, (ii) an acute-care 15 hospital that is not described in clause (i) and that 16 has at least 10 percent of the hospital’s patient vol17 ume (as estimated in accordance with standards es18 tablished by the Secretary) attributable to individ19 uals who are receiving medical assistance under this 20 title, or (iii) a Federally-qualified health center or 21 rural health clinic that has at least 30 percent of the 22 center’s or clinic’s patient volume (as estimated in 23 accordance with standards established by the Sec 24 retary) attributable to individuals who are receiving 25 medical assistance under this title. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 266 1 A professional shall not qualify as a Medicaid provider 2 under this subsection unless the professional has waived, 3 in a manner specified by the Secretary, any right to pay4 ment under section 1848(o) with respect to the adoption 5 or support of certified EHR technology by the profes6 sional. In applying clauses (ii) and (iii) of subparagraph 7 (B), the standards established by the Secretary for patient 8 volume shall include individuals enrolled in a Medicaid 9 managed care plan (under section 1903(m) or section 10 1932). 11 ‘‘(3) In this subsection and subsection (a)(3)(F): 12 ‘‘(A) The term ‘certified EHR technology’ 13 means a qualified electronic health record (as de14 fined in 3000(13) of the Public Health Service Act) 15 that is certified pursuant to section 3001(c)(5) of 16 such Act as meeting standards adopted under sec17 tion 3004 of such Act that are applicable to the type 18 of record involved (as determined by the Secretary, 19 such as an ambulatory electronic health record for 20 office-based physicians or an inpatient hospital elec21 tronic health record for hospitals). 22 ‘‘(B) The term ‘eligible professional’ means a 23 physician as defined in paragraphs (1) and (2) of 24 section 1861(r), and includes a nurse mid-wife and 25 a nurse practitioner. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 267 1 ‘‘(C) The term ‘hospital-based’ means, with re 2 spect to an eligible professional, a professional (such 3 as a pathologist, anesthesiologist, or emergency phy 4 sician) who furnishes substantially all of the individ 5 ual’s professional services in a hospital setting 6 (whether inpatient or outpatient) and through the 7 use of the facilities and equipment, including com8 puter equipment, of the hospital. 9 ‘‘(4)(A) The term ‘allowable costs’ means, with re10 spect to certified EHR technology of a Medicaid provider, 11 costs of such technology (and support services including 12 maintenance and training that is for, or is necessary for 13 the adoption and operation of, such technology) as deter14 mined by the Secretary to be reasonable. 15 ‘‘(B) The term ‘net allowable costs’ means allowable 16 costs reduced by any payment that is made to the provider 17 involved from any other source that is directly attributable 18 to payment for certified EHR technology or services de19 scribed in subparagraph (A). 20 ‘‘(C) In no case shall— 21 ‘‘(i) the aggregate allowable costs under this 22 subsection (covering one or more years) with respect 23 to a Medicaid provider described in paragraph 24 (2)(A) for purchase and initial implementation of 25 certified EHR technology (and services described in f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 268 1 subparagraph (A)) exceed $25,000 or include costs 2 over a period of longer than 5 years; 3 ‘‘(ii) for costs not described in clause (i) relat 4 ing to the operation, maintenance, or use of certified 5 EHR technology, the annual allowable costs under 6 this subsection with respect to such a Medicaid pro7 vider for costs not described in clause (i) for any 8 year exceed $10,000; 9 ‘‘(iii) payment described in paragraph (1) for 10 costs described in clause (ii) be made with respect 11 to such a Medicaid provider over a period of more 12 than 5 years; 13 ‘‘(iv) the aggregate allowable costs under this 14 subsection with respect to such a Medicaid provider 15 for all costs exceed $75,000; or 16 ‘‘(v) the allowable costs, whether for purchase 17 and initial implementation, maintenance, or other18 wise, for a Medicaid provider described in paragraph 19 (2)(B) exceed such aggregate or annual limitation as 20 the Secretary shall establish, based on an amount 21 determined by the Secretary as being adequate to 22 adopt and maintain certified EHR technology, con 23 sistent with paragraph (6). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 269 1 ‘‘(5) Payments described in paragraph (1) are not in 2 accordance with this subsection unless the following re3 quirements are met: 4 ‘‘(A) The State provides assurances satisfactory 5 to the Secretary that amounts received under sub6 section (a)(3)(F) with respect to costs of a Medicaid 7 provider are paid directly to such provider without 8 any deduction or rebate. 9 ‘‘(B) Such Medicaid provider is responsible for 10 payment of the costs described in such paragraph 11 that are not provided under this title. 12 ‘‘(C) With respect to payments to such Med13 icaid provider for costs other than costs related to 14 the initial adoption of certified EHR technology, the 15 Medicaid provider demonstrates meaningful use of 16 certified EHR technology through a means that is 17 approved by the State and acceptable to the Sec18 retary, and that may be based upon the methodolo19 gies applied under section 1848(o) or 1886(n). 20 ‘‘(D) To the extent specified by the Secretary, 21 the certified EHR technology is compatible with 22 State or Federal administrative management sys23 tems. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 270 1 ‘‘(6)(A) In no case shall the payments described in 2 paragraph (1), with respect to a hospital, exceed in the 3 aggregate the product of— 4 ‘‘(i) the overall hospital HIT amount for the 5 hospital computed under subparagraph (B); and 6 ‘‘(ii) the Medicaid share for such hospital com7 puted under subparagraph (C). 8 ‘‘(B) For purposes of this paragraph, the overall hos9 pital HIT amount, with respect to a hospital, is the sum 10 of the applicable amounts specified in section 11 1886(n)(2)(A) for such hospital for the first 4 payment 12 years (as estimated by the Secretary) determined as if the 13 Medicare share specified in clause (ii) of such section were 14 1. The Secretary shall publish in the Federal Register the 15 overall hospital HIT amount for each hospital eligible for 16 payments under this subsection. In computing amounts 17 under clause (ii) for payment years after the first payment 18 year, the Secretary shall assume that in subsequent pay19 ment years discharges increase at an annual rate of 2 per20 cent per year. 21 ‘‘(C) The Medicaid share computed under this sub22 paragraph, for a hospital for a period specified by the Sec23 retary, shall be calculated in the same manner as the 24 Medicare share under section 1886(n)(2)(D) for such a 25 hospital and period, except that there shall be substituted f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 271 1 for the numerator under clause (i) of such section the 2 amount that is equal to the number of inpatient-bed-days 3 (as established by the Secretary) which are attributable 4 to individuals who are receiving medical assistance under 5 this title and who are not described in section 6 1886(n)(2)(D)(i). In computing inpatient-bed-days under 7 the previous sentence, the Secretary shall take into ac8 count inpatient-bed-days attributable to inpatient-bed9 days that are paid for individuals enrolled in a Medicaid 10 managed care plan (under section 1903(m) or section 11 1932). 12 ‘‘(7) With respect to health care providers other than 13 hospitals, the Secretary shall ensure coordination of the 14 different programs for payment of such health care pro15 viders for adoption or use of health information technology 16 (including certified EHR technology), as well as payments 17 for such health care providers provided under this title or 18 title XVIII, to assure no duplication of funding. 19 ‘‘(8) In carrying out paragraph (5)(C), the State and 20 Secretary shall seek, to the maximum extent practicable, 21 to avoid duplicative requirements from Federal and State 22 Governments to demonstrate meaningful use of certified 23 EHR technology under this title and title XVIII. In doing 24 so, the Secretary may deem satisfaction of requirements 25 for such meaningful use for a payment year under title f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 272 1 XVIII to be sufficient to qualify as meaningful use under 2 this subsection. The Secretary may also specify the report3 ing periods under this subsection in order to carry out this 4 paragraph. 5 ‘‘(9) In order to be provided Federal financial partici6 pation under subsection (a)(3)(F)(ii), a State must dem7 onstrate to the satisfaction of the Secretary, that the 8 State— 9 ‘‘(A) is using the funds provided for the pur10 poses of administering payments under this sub11 section, including tracking of meaningful use by 12 Medicaid providers; 13 ‘‘(B) conducting adequate oversight of the pro14 gram under this subsection, including routine track15 ing of meaningful use attestations and reporting 16 mechanisms; and 17 ‘‘(C) be pursuing initiatives to encourage the 18 adoption of certified EHR technology to promote 19 health care quality and the exchange of health care 20 information under this title, subject to applicable 21 laws and regulations governing such exchange. 22 ‘‘(10) The Secretary shall periodically submit reports 23 to the Committee on Energy and Commerce of the House 24 of Representatives and the Committee on Finance of the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 273 1 Senate on status, progress, and oversight of payments 2 under paragraph (1).’’. 3 (b) IMPLEMENTATION FUNDING.—In addition to 4 funds otherwise available, out of any funds in the Treas5 ury not otherwise appropriated, there are appropriated to 6 the Secretary of Health and Human Services for the Cen7 ter for Medicare & Medicaid Services Program Manage8 ment Account, $40,000,000 for each of fiscal years 2009 9 through 2015 and $20,000,000 for each succeeding fiscal 10 year through fiscal year 2019, which shall be available for 11 purposes of carrying out the provisions of (and the amend12 ments made by) this part. Amounts appropriated under 13 this subsection for a fiscal year shall be available until ex14 pended. 15 Subtitle D—Privacy 16 SEC. 4400. DEFINITIONS. 17 In this subtitle, except as specified otherwise: 18 (1) BREACH.—The term ‘‘breach’’ means the 19 unauthorized acquisition, access, use, or disclosure 20 of protected health information which compromises 21 the security, privacy, or integrity of protected health 22 information maintained by or on behalf of a person. 23 Such term does not include any unintentional acqui 24 sition, access, use, or disclosure of such information 25 by an employee or agent of the covered entity or f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 274 1 business associate involved if such acquisition, ac 2 cess, use, or disclosure, respectively, was made in 3 good faith and within the course and scope of the 4 employment or other contractual relationship of such 5 employee or agent, respectively, with the covered en6 tity or business associate and if such information is 7 not further acquired, accessed, used, or disclosed by 8 such employee or agent. 9 (2) BUSINESS ASSOCIATE.—The term ‘‘business 10 associate’’ has the meaning given such term in sec11 tion 160.103 of title 45, Code of Federal Regula12 tions. 13 (3) COVERED ENTITY.—The term ‘‘covered en14 tity’’ has the meaning given such term in section 15 160.103 of title 45, Code of Federal Regulations. 16 (4) DISCLOSE.—The terms ‘‘disclose’’ and ‘‘dis17 closure’’ have the meaning given the term ‘‘disclo18 sure’’ in section 160.103 of title 45, Code of Federal 19 Regulations. 20 (5) ELECTRONIC HEALTH RECORD.—The term 21 ‘‘electronic health record’’ means an electronic 22 record of health-related information on an individual 23 that is created, gathered, managed, and consulted by 24 authorized health care clinicians and staff. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 275 1 (6) HEALTH CARE OPERATIONS.—The term 2 ‘‘health care operation’’ has the meaning given such 3 term in section 164.501 of title 45, Code of Federal 4 Regulations. 5 (7) HEALTH CARE PROVIDER.—The term 6 ‘‘health care provider’’ has the meaning given such 7 term in section 160.103 of title 45, Code of Federal 8 Regulations. 9 (8) HEALTH PLAN.—The term ‘‘health plan’’ 10 has the meaning given such term in section 1171(5) 11 of the Social Security Act. 12 (9) NATIONAL COORDINATOR.—The term ‘‘Na13 tional Coordinator’’ means the head of the Office of 14 the National Coordinator for Health Information 15 Technology established under section 3001(a) of the 16 Public Health Service Act, as added by section 17 4101. 18 (10) PAYMENT.—The term ‘‘payment’’ has the 19 meaning given such term in section 164.501 of title 20 45, Code of Federal Regulations. 21 (11) PERSONAL HEALTH RECORD.—The term 22 ‘‘personal health record’’ means an electronic record 23 of individually identifiable health information on an 24 individual that can be drawn from multiple sources f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 276 1 and that is managed, shared, and controlled by or 2 for the individual. 3 (12) PROTECTED HEALTH INFORMATION.—The 4 term ‘‘protected health information’’ has the mean 5 ing given such term in section 160.103 of title 45, 6 Code of Federal Regulations. 7 (13) SECRETARY.—The term ‘‘Secretary’’ 8 means the Secretary of Health and Human Services. 9 (14) SECURITY.—The term ‘‘security’’ has the 10 meaning given such term in section 164.304 of title 11 45, Code of Federal Regulations. 12 (15) STATE.—The term ‘‘State’’ means each of 13 the several States, the District of Columbia, Puerto 14 Rico, the Virgin Islands, Guam, American Samoa, 15 and the Northern Mariana Islands. 16 (16) TREATMENT.—The term ‘‘treatment’’ has 17 the meaning given such term in section 164.501 of 18 title 45, Code of Federal Regulations. 19 (17) USE.—The term ‘‘use’’ has the meaning 20 given such term in section 160.103 of title 45, Code 21 of Federal Regulations. 22 (18) VENDOR OF PERSONAL HEALTH 23 RECORDS.—The term ‘‘vendor of personal health 24 records’’ means an entity, other than a covered enti f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 277 1 ty (as defined in paragraph (3)), that offers or 2 maintains a personal health record. 3 PART I—IMPROVED PRIVACY PROVISIONS AND 4 SECURITY PROVISIONS 5 SEC. 4401. APPLICATION OF SECURITY PROVISIONS AND 6 PENALTIES TO BUSINESS ASSOCIATES OF 7 COVERED ENTITIES; ANNUAL GUIDANCE ON 8 SECURITY PROVISIONS. 9 (a) APPLICATION OF SECURITY PROVISIONS.—Sec10 tions 164.308, 164.310, 164.312, and 164.316 of title 45, 11 Code of Federal Regulations, shall apply to a business as12 sociate of a covered entity in the same manner that such 13 sections apply to the covered entity. The additional re14 quirements of this title that relate to security and that 15 are made applicable with respect to covered entities shall 16 also be applicable to such a business associate and shall 17 be incorporated into the business associate agreement be18 tween the business associate and the covered entity. 19 (b) APPLICATION OF CIVIL AND CRIMINAL PEN20 ALTIES.—In the case of a business associate that violates 21 any security provision specified in subsection (a), sections 22 1176 and 1177 of the Social Security Act (42 U.S.C. 23 1320d-5, 1320d-6) shall apply to the business associate 24 with respect to such violation in the same manner such f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 278 1 sections apply to a covered entity that violates such secu2 rity provision. 3 (c) ANNUAL GUIDANCE.—For the first year begin4 ning after the date of the enactment of this Act and annu5 ally thereafter, the Secretary of Health and Human Serv6 ices shall, in consultation with industry stakeholders, an7 nually issue guidance on the most effective and appro8 priate technical safeguards for use in carrying out the sec9 tions referred to in subsection (a) and the security stand10 ards in subpart C of part 164 of title 45, Code of Federal 11 Regulations, as such provisions are in effect as of the date 12 before the enactment of this Act. 13 SEC. 4402. NOTIFICATION IN THE CASE OF BREACH. 14 (a) IN GENERAL.—A covered entity that accesses, 15 maintains, retains, modifies, records, stores, destroys, or 16 otherwise holds, uses, or discloses unsecured protected 17 health information (as defined in subsection (h)(1)) shall, 18 in the case of a breach of such information that is discov19 ered by the covered entity, notify each individual whose 20 unsecured protected health information has been, or is 21 reasonably believed by the covered entity to have been, 22 accessed, acquired, or disclosed as a result of such breach. 23 (b) NOTIFICATION OF COVERED ENTITY BY BUSI24 NESS ASSOCIATE.—A business associate of a covered enti25 ty that accesses, maintains, retains, modifies, records, f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 279 1 stores, destroys, or otherwise holds, uses, or discloses un2 secured protected health information shall, following the 3 discovery of a breach of such information, notify the cov4 ered entity of such breach. Such notice shall include the 5 identification of each individual whose unsecured protected 6 health information has been, or is reasonably believed by 7 the business associate to have been, accessed, acquired, 8 or disclosed during such breach. 9 (c) BREACHES TREATED AS DISCOVERED.—For pur10 poses of this section, a breach shall be treated as discov11 ered by a covered entity or by a business associate as of 12 the first day on which such breach is known to such entity 13 or associate, respectively, (including any person, other 14 than the individual committing the breach, that is an em15 ployee, officer, or other agent of such entity or associate, 16 respectively) or should reasonably have been known to 17 such entity or associate (or person) to have occurred. 18 (d) TIMELINESS OF NOTIFICATION.— 19 (1) IN GENERAL.—Subject to subsection (g), all 20 notifications required under this section shall be 21 made without unreasonable delay and in no case 22 later than 60 calendar days after the discovery of a 23 breach by the covered entity involved (or business 24 associate involved in the case of a notification re 25 quired under subsection (b)). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 280 1 (2) BURDEN OF PROOF.—The covered entity in 2 volved (or business associate involved in the case of 3 a notification required under subsection (b)), shall 4 have the burden of demonstrating that all notifica 5 tions were made as required under this part, includ6 ing evidence demonstrating the necessity of any 7 delay. 8 (e) METHODS OF NOTICE.— 9 (1) INDIVIDUAL NOTICE.—Notice required 10 under this section to be provided to an individual, 11 with respect to a breach, shall be provided promptly 12 and in the following form: 13 (A) Written notification by first-class mail 14 to the individual (or the next of kin of the indi15 vidual if the individual is deceased) at the last 16 known address of the individual or the next of 17 kin, respectively, or, if specified as a preference 18 by the individual, by electronic mail. The notifi19 cation may be provided in one or more mailings 20 as information is available. 21 (B) In the case in which there is insuffi 22 cient, or out-of-date contact information (in 23 cluding a phone number, email address, or any 24 other form of appropriate communication) that 25 precludes direct written (or, if specified by the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 281 1 individual under subparagraph (A), electronic) 2 notification to the individual, a substitute form 3 of notice shall be provided, including, in the 4 case that there are 10 or more individuals for 5 which there is insufficient or out-of-date contact 6 information, a conspicuous posting for a period 7 determined by the Secretary on the home page 8 of the Web site of the covered entity involved or 9 notice in major print or broadcast media, in10 cluding major media in geographic areas where 11 the individuals affected by the breach likely re12 side. Such a notice in media or web posting will 13 include a toll-free phone number where an indi14 vidual can learn whether or not the individual’s 15 unsecured protected health information is pos16 sibly included in the breach. 17 (C) In any case deemed by the covered en18 tity involved to require urgency because of pos19 sible imminent misuse of unsecured protected 20 health information, the covered entity, in addi21 tion to notice provided under subparagraph (A), 22 may provide information to individuals by tele 23 phone or other means, as appropriate. 24 (2) MEDIA NOTICE.—Notice shall be provided 25 to prominent media outlets serving a State or juris- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 282 1 diction, following the discovery of a breach described 2 in subsection (a), if the unsecured protected health 3 information of more than 500 residents of such 4 State or jurisdiction is, or is reasonably believed to 5 have been, accessed, acquired, or disclosed during 6 such breach. 7 (3) NOTICE TO SECRETARY.—Notice shall be 8 provided to the Secretary by covered entities of un9 secured protected health information that has been 10 acquired or disclosed in a breach. If the breach was 11 with respect to 500 or more individuals than such 12 notice must be provided immediately. If the breach 13 was with respect to less than 500 individuals, the 14 covered entity involved may maintain a log of any 15 such breach occurring and annually submit such a 16 log to the Secretary documenting such breaches 17 occuring during the year involved. 18 (4) POSTING ON HHS PUBLIC WEBSITE.—The 19 Secretary shall make available to the public on the 20 Internet website of the Department of Health and 21 Human Services a list that identifies each covered 22 entity involved in a breach described in subsection 23 (a) in which the unsecured protected health informa 24 tion of more than 500 individuals is acquired or dis25 closed. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 283 1 (f) CONTENT OF NOTIFICATION.—Regardless of the 2 method by which notice is provided to individuals under 3 this section, notice of a breach shall include, to the extent 4 possible, the following: 5 (1) A brief description of what happened, in6 cluding the date of the breach and the date of the 7 discovery of the breach, if known. 8 (2) A description of the types of unsecured pro9 tected health information that were involved in the 10 breach (such as full name, Social Security number, 11 date of birth, home address, account number, or dis12 ability code). 13 (3) The steps individuals should take to protect 14 themselves from potential harm resulting from the 15 breach. 16 (4) A brief description of what the covered enti17 ty involved is doing to investigate the breach, to 18 mitigate losses, and to protect against any further 19 breaches. 20 (5) Contact procedures for individuals to ask 21 questions or learn additional information, which 22 shall include a toll-free telephone number, an e-mail 23 address, Web site, or postal address. 24 (g) DELAY OF NOTIFICATION AUTHORIZED FOR LAW 25 ENFORCEMENT PURPOSES.—If a law enforcement official f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 284 1 determines that a notification, notice, or posting required 2 under this section would impede a criminal investigation 3 or cause damage to national security, such notification, 4 notice, or posting shall be delayed in the same manner 5 as provided under section 164.528(a)(2) of title 45, Code 6 of Federal Regulations, in the case of a disclosure covered 7 under such section. 8 (h) UNSECURED PROTECTED HEALTH INFORMA9 TION.— 10 (1) DEFINITION.— 11 (A) IN GENERAL.—Subject to subpara12 graph (B), for purposes of this section, the 13 term ‘‘unsecured protected health information’’ 14 means protected health information that is not 15 secured through the use of a technology or 16 methodology specified by the Secretary in the 17 guidance issued under paragraph (2). 18 (B) EXCEPTION IN CASE TIMELY GUID19 ANCE NOT ISSUED.—In the case that the Sec20 retary does not issue guidance under paragraph 21 (2) by the date specified in such paragraph, for 22 purposes of this section, the term ‘‘unsecured 23 protected health information’’ shall mean pro 24 tected health information that is not secured by 25 a technology standard that renders protected f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 285 1 health information unusable, unreadable, or in 2 decipherable to unauthorized individuals and is 3 developed or endorsed by a standards devel 4 oping organization that is accredited by the 5 American National Standards Institute. 6 (2) GUIDANCE.—For purposes of paragraph (1) 7 and section 407(f)(3), not later than the date that 8 is 60 days after the date of the enactment of this 9 Act, the Secretary shall, after consultation with 10 stakeholders, issue (and annually update) guidance 11 specifying the technologies and methodologies that 12 render protected health information unusable, 13 unreadable, or indecipherable to unauthorized indi14 viduals. 15 (i) REPORT TO CONGRESS ON BREACHES.— 16 (1) IN GENERAL.—Not later than 12 months 17 after the date of the enactment of this Act and an18 nually thereafter, the Secretary shall prepare and 19 submit to the Committee on Finance and the Com20 mittee on Health, Education, Labor, and Pensions 21 of the Senate and the Committee on Ways and 22 Means and the Committee on Energy and Commerce 23 of the House of Representatives a report containing 24 the information described in paragraph (2) regard- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 286 1 ing breaches for which notice was provided to the 2 Secretary under subsection (e)(3). 3 (2) INFORMATION.—The information described 4 in this paragraph regarding breaches specified in 5 paragraph (1) shall include— 6 (A) the number and nature of such 7 breaches; and 8 (B) actions taken in response to such 9 breaches. 10 (j) REGULATIONS; EFFECTIVE DATE.—To carry out 11 this section, the Secretary of Health and Human Services 12 shall promulgate interim final regulations by not later 13 than the date that is 180 days after the date of the enact14 ment of this title. The provisions of this section shall apply 15 to breaches that are discovered on or after the date that 16 is 30 days after the date of publication of such interim 17 final regulations. 18 SEC. 4403. EDUCATION ON HEALTH INFORMATION PRI19 VACY. 20 (a) REGIONAL OFFICE PRIVACY ADVISORS.—Not 21 later than 6 months after the date of the enactment of 22 this Act, the Secretary shall designate an individual in 23 each regional office of the Department of Health and 24 Human Services to offer guidance and education to cov25 ered entities, business associates, and individuals on their f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 287 1 rights and responsibilities related to Federal privacy and 2 security requirements for protected health information. 3 (b) EDUCATION INITIATIVE ON USES OF HEALTH IN4 FORMATION.—Not later than 12 months after the date of 5 the enactment of this Act, the Office for Civil Rights with6 in the Department of Health and Human Services shall 7 develop and maintain a multi-faceted national education 8 initiative to enhance public transparency regarding the 9 uses of protected health information, including programs 10 to educate individuals about the potential uses of their 11 protected health information, the effects of such uses, and 12 the rights of individuals with respect to such uses. Such 13 programs shall be conducted in a variety of languages and 14 present information in a clear and understandable man15 ner. 16 SEC. 4404. APPLICATION OF PRIVACY PROVISIONS AND 17 PENALTIES TO BUSINESS ASSOCIATES OF 18 COVERED ENTITIES. 19 (a) APPLICATION OF CONTRACT REQUIREMENTS.— 20 In the case of a business associate of a covered entity that 21 obtains or creates protected health information pursuant 22 to a written contract (or other written arrangement) de23 scribed in section 164.502(e)(2) of title 45, Code of Fed24 eral Regulations, with such covered entity, the business 25 associate may use and disclose such protected health infor f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 288 1 mation only if such use or disclosure, respectively, is in 2 compliance with each applicable requirement of section 3 164.504(e) of such title. The additional requirements of 4 this subtitle that relate to privacy and that are made ap5 plicable with respect to covered entities shall also be appli6 cable to such a business associate and shall be incor7 porated into the business associate agreement between the 8 business associate and the covered entity. 9 (b) APPLICATION OF KNOWLEDGE ELEMENTS ASSO10 CIATED WITH CONTRACTS.—Section 164.504(e)(1)(ii) of 11 title 45, Code of Federal Regulations, shall apply to a 12 business associate described in subsection (a), with respect 13 to compliance with such subsection, in the same manner 14 that such section applies to a covered entity, with respect 15 to compliance with the standards in sections 164.502(e) 16 and 164.504(e) of such title, except that in applying such 17 section 164.504(e)(1)(ii) each reference to the business as18 sociate, with respect to a contract, shall be treated as a 19 reference to the covered entity involved in such contract. 20 (c) APPLICATION OF CIVIL AND CRIMINAL PEN21 ALTIES.—In the case of a business associate that violates 22 any provision of subsection (a) or (b), the provisions of 23 sections 1176 and 1177 of the Social Security Act (42 24 U.S.C. 1320d-5, 1320d-6) shall apply to the business as25 sociate with respect to such violation in the same manner f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 289 1 as such provisions apply to a person who violates a provi2 sion of part C of title XI of such Act. 3 SEC. 4405. RESTRICTIONS ON CERTAIN DISCLOSURES AND 4 SALES OF HEALTH INFORMATION; ACCOUNT 5 ING OF CERTAIN PROTECTED HEALTH IN 6 FORMATION DISCLOSURES; ACCESS TO CER7 TAIN INFORMATION IN ELECTRONIC FOR8 MAT. 9 (a) REQUESTED RESTRICTIONS ON CERTAIN DIS 10 CLOSURES OF HEALTH INFORMATION.—In the case that 11 an individual requests under paragraph (a)(1)(i)(A) of 12 section 164.522 of title 45, Code of Federal Regulations, 13 that a covered entity restrict the disclosure of the pro14 tected health information of the individual, notwith15 standing paragraph (a)(1)(ii) of such section, the covered 16 entity must comply with the requested restriction if— 17 (1) except as otherwise required by law, the dis18 closure is to a health plan for purposes of carrying 19 out payment or health care operations (and is not 20 for purposes of carrying out treatment); and 21 (2) the protected health information pertains 22 solely to a health care item or service for which the 23 health care provider involved has been paid out of 24 pocket in full. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 290 1 (b) DISCLOSURES REQUIRED TO BE LIMITED TO 2 THE LIMITED DATA SET OR THE MINIMUM NEC3 ESSARY.— 4 (1) IN GENERAL.— 5 (A) IN GENERAL.—Subject to subpara6 graph (B), a covered entity shall be treated as 7 being in compliance with section 164.502(b)(1) 8 of title 45, Code of Federal Regulations, with 9 respect to the use, disclosure, or request of pro10 tected health information described in such sec11 tion, only if the covered entity limits such pro12 tected health information, to the extent prac13 ticable, to the limited data set (as defined in 14 section 164.514(e)(2) of such title) or, if needed 15 by such entity, to the minimum necessary to ac16 complish the intended purpose of such use, dis17 closure, or request, respectively. 18 (B) GUIDANCE.—Not later than 18 19 months after the date of the enactment of this 20 section, the Secretary shall issue guidance on 21 what constitutes ‘‘minimum necessary’’ for pur22 poses of subpart E of part 164 of title 45, Code 23 of Federal Regulation. In issuing such guidance 24 the Secretary shall take into consideration the 25 guidance under section 4424(c). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 291 1 (C) SUNSET.—Subparagraph (A) shall not 2 apply on and after the effective date on which 3 the Secretary issues the guidance under sub 4 paragraph (B). 5 (2) DETERMINATION OF MINIMUM NEC6 ESSARY.—For purposes of paragraph (1), in the 7 case of the disclosure of protected health informa8 tion, the covered entity or business associate dis9 closing such information shall determine what con10 stitutes the minimum necessary to accomplish the 11 intended purpose of such disclosure. 12 (3) APPLICATION OF EXCEPTIONS.—The excep13 tions described in section 164.502(b)(2) of title 45, 14 Code of Federal Regulations, shall apply to the re15 quirement under paragraph (1) as of the effective 16 date described in section 4423 in the same manner 17 that such exceptions apply to section 164.502(b)(1) 18 of such title before such date. 19 (4) RULE OF CONSTRUCTION.—Nothing in this 20 subsection shall be construed as affecting the use, 21 disclosure, or request of protected health information 22 that has been de-identified. 23 (c) ACCOUNTING OF CERTAIN PROTECTED HEALTH 24 INFORMATION DISCLOSURES REQUIRED IF COVERED EN25 TITY USES ELECTRONIC HEALTH RECORD.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 292 1 (1) IN GENERAL.—In applying section 164.528 2 of title 45, Code of Federal Regulations, in the case 3 that a covered entity uses or maintains an electronic 4 health record with respect to protected health infor 5 mation— 6 (A) the exception under paragraph 7 (a)(1)(i) of such section shall not apply to dis8 closures through an electronic health record 9 made by such entity of such information; and 10 (B) an individual shall have a right to re11 ceive an accounting of disclosures described in 12 such paragraph of such information made by 13 such covered entity during only the three years 14 prior to the date on which the accounting is re15 quested. 16 (2) REGULATIONS.—The Secretary shall pro17 mulgate regulations on what information shall be 18 collected about each disclosure referred to in para19 graph (1)(A) not later than 18 months after the 20 date on which the Secretary adopts standards on ac21 counting for disclosure described in the section 22 3002(b)(2)(B)(iv) of the Public Health Service Act, 23 as added by section 4101. Such regulations shall 24 only require such information to be collected through 25 an electronic health record in a manner that takes f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 293 1 into account the interests of individuals in learning 2 the circumstances under which their protected health 3 information is being disclosed and takes into account 4 the administrative burden of accounting for such 5 disclosures. 6 (3) CONSTRUCTION.—Nothing in this sub7 section shall be construed as requiring a covered en8 tity to account for disclosures of protected health in9 formation that are not made by such covered entity 10 or by a business associate acting on behalf of the 11 covered entity. 12 (4) EFFECTIVE DATE.— 13 (A) CURRENT USERS OF ELECTRONIC 14 RECORDS.—In the case of a covered entity inso15 far as it acquired an electronic health record as 16 of January 1, 2009, paragraph (1) shall apply 17 to disclosures, with respect to protected health 18 information, made by the covered entity from 19 such a record on and after January 1, 2014. 20 (B) OTHERS.—In the case of a covered en21 tity insofar as it acquires an electronic health 22 record after January 1, 2009, paragraph (1) 23 shall apply to disclosures, with respect to pro 24 tected health information, made by the covered f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 294 1 entity from such record on and after the later 2 of the following: 3 (i) January 1, 2011; or 4 (ii) the date that it acquires an elec 5 tronic health record. 6 (d) REVIEW OF HEALTH CARE OPERATIONS.—Not 7 later than 18 months after the date of the enactment of 8 this title, the Secretary shall promulgate regulations to 9 eliminate from the definition of health care operations 10 under section 164.501 of title 45, Code of Federal Regula11 tions, those activities that can reasonably and efficiently 12 be conducted through the use of information that is de13 identified (in accordance with the requirements of section 14 164.514(b) of such title) or that should require a valid 15 authorization for use or disclosure. In promulgating such 16 regulations, the Secretary may choose to narrow or clarify 17 activities that the Secretary chooses to retain in the defini18 tion of health care operations and the Secretary shall take 19 into account the report under section 424(d). In such reg20 ulations the Secretary shall specify the date on which such 21 regulations shall apply to disclosures made by a covered 22 entity, but in no case would such date be sooner than the 23 date that is 24 months after the date of the enactment 24 of this section. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 295 1 (e) PROHIBITION ON SALE OF ELECTRONIC HEALTH 2 RECORDS OR PROTECTED HEALTH INFORMATION OB3 TAINED FROM ELECTRONIC HEALTH RECORDS.— 4 (1) IN GENERAL.—Except as provided in para 5 graph (2), a covered entity or business associate 6 shall not directly or indirectly receive remuneration 7 in exchange for any protected health information of 8 an individual unless the covered entity obtained from 9 the individual, in accordance with section 164.508 of 10 title 45, Code of Federal Regulations, a valid au11 thorization that includes, in accordance with such 12 section, a specification of whether the protected 13 health information can be further exchanged for re14 muneration by the entity receiving protected health 15 information of that individual. 16 (2) EXCEPTIONS.—Paragraph (1) shall not 17 apply in the following cases: 18 (A) The purpose of the exchange is for re19 search or public health activities (as described 20 in sections 164.501, 164.512(i), and 164.512(b) 21 of title 45, Code of Federal Regulations) and 22 the price charged reflects the costs of prepara 23 tion and transmittal of the data for such pur24 pose. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 296 1 (B) The purpose of the exchange is for the 2 treatment of the individual and the price 3 charges reflects not more than the costs of 4 preparation and transmittal of the data for 5 such purpose. 6 (C) The purpose of the exchange is the 7 health care operation specifically described in 8 subparagraph (iv) of paragraph (6) of the defi9 nition of health care operations in section 10 164.501 of title 45, Code of Federal Regula11 tions. 12 (D) The purpose of the exchange is for re13 muneration that is provided by a covered entity 14 to a business associate for activities involving 15 the exchange of protected health information 16 that the business associate undertakes on behalf 17 of and at the specific request of the covered en18 tity pursuant to a business associate agreement. 19 (E) The purpose of the exchange is to pro20 vide an individual with a copy of the individ21 ual’s protected health information pursuant to 22 section 164.524 of title 45, Code of Federal 23 Regulations. 24 (F) The purpose of the exchange is other 25 wise determined by the Secretary in regulations f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 297 1 to be similarly necessary and appropriate as the 2 exceptions provided in subparagraphs (A) 3 through (E). 4 (3) REGULATIONS.—The Secretary shall pro 5 mulgate regulations to carry out paragraph (this 6 subsection, including exceptions described in para7 graph (2), not later than 18 months after the date 8 of the enactment of this title. 9 (4) EFFECTIVE DATE.—Paragraph (1) shall 10 apply to exchanges occurring on or after the date 11 that is 6 months after the date of the promulgation 12 of final regulations implementing this subsection. 13 (f) ACCESS TO CERTAIN INFORMATION IN ELEC14 TRONIC FORMAT.—In applying section 164.524 of title 15 45, Code of Federal Regulations, in the case that a cov16 ered entity uses or maintains an electronic health record 17 with respect to protected health information of an indi18 vidual— 19 (1) the individual shall have a right to obtain 20 from such covered entity a copy of such information 21 in an electronic format; and 22 (2) notwithstanding paragraph (c)(4) of such 23 section, any fee that the covered entity may impose 24 for providing such individual with a copy of such in 25 formation (or a summary or explanation of such in- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 298 1 formation) if such copy (or summary or explanation) 2 is in an electronic form shall not be greater than the 3 entity’s labor costs in responding to the request for 4 the copy (or summary or explanation). 5 SEC. 4406. CONDITIONS ON CERTAIN CONTACTS AS PART 6 OF HEALTH CARE OPERATIONS. 7 (a) MARKETING.— 8 (1) IN GENERAL.—A communication by a cov 9 ered entity or business associate that is about a 10 product or service and that encourages recipients of 11 the communication to purchase or use the product 12 or service shall not be considered a health care oper13 ation for purposes of subpart E of part 164 of title 14 45, Code of Federal Regulations, unless the commu15 nication is made as described in subparagraph (i), 16 (ii), or (iii) of paragraph (1) of the definition of 17 marketing in section 164.501 of such title. 18 (2) PAYMENT FOR CERTAIN COMMUNICA19 TIONS.—A covered entity or business associate may 20 not receive direct or indirect payment in exchange 21 for making any communication described in sub 22 paragraph (i), (ii), or (iii) of paragraph (1) of the 23 definition of marketing in section 164.501 of title 24 45, Code of Federal Regulations, except— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 299 1 (A) a business associate of a covered entity 2 may receive payment from the covered entity 3 for making any such communication on behalf 4 of the covered entity that is consistent with the 5 written contract (or other written arrangement) 6 described in section 164.502(e)(2) of such title 7 between such business associate and covered en8 tity; and 9 (B) a covered entity may receive payment 10 in exchange for making any such communica11 tion if the entity obtains from the recipient of 12 the communication, in accordance with section 13 164.508 of title 45, Code of Federal Regula14 tions, a valid authorization (as described in 15 paragraph (b) of such section) with respect to 16 such communication. 17 (b) FUNDRAISING.—Fundraising for the benefit of a 18 covered entity shall not be considered a health care oper19 ation for purposes of section 164.501 of title 45, Code of 20 Federal Regulations. 21 (c) EFFECTIVE DATE.—This section shall apply to 22 contracting occurring on or after the effective date speci23 fied under section 4423. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 300 1 SEC. 4407. TEMPORARY BREACH NOTIFICATION REQUIRE2 MENT FOR VENDORS OF PERSONAL HEALTH 3 RECORDS AND OTHER NON-HIPAA COVERED 4 ENTITIES. 5 (a) IN GENERAL.—In accordance with subsection (c), 6 each vendor of personal health records, following the dis7 covery of a breach of security of unsecured PHR identifi8 able health information that is in a personal health record 9 maintained or offered by such vendor, and each entity de10 scribed in clause (ii) or (iii) of section 4424(b)(1)(A), fol11 lowing the discovery of a breach of security of such infor12 mation that is obtained through a product or service pro13 vided by such entity, shall— 14 (1) notify each individual who is a citizen or 15 resident of the United States whose unsecured PHR 16 identifiable health information was acquired by an 17 unauthorized person as a result of such a breach of 18 security; and 19 (2) notify the Federal Trade Commission. 20 (b) NOTIFICATION BY THIRD PARTY SERVICE PRO21 VIDERS.—A third party service provider that provides 22 services to a vendor of personal health records or to an 23 entity described in clause (ii) or (iii) of section 24 4424(b)(1)(A) in connection with the offering or mainte25 nance of a personal health record or a related product or 26 service and that accesses, maintains, retains, modifies, f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 301 1 records, stores, destroys, or otherwise holds, uses, or dis2 closes unsecured PHR identifiable health information in 3 such a record as a result of such services shall, following 4 the discovery of a breach of security of such information, 5 notify such vendor or entity, respectively, of such breach. 6 Such notice shall include the identification of each indi7 vidual whose unsecured PHR identifiable health informa8 tion has been, or is reasonably believed to have been, 9 accessed, acquired, or disclosed during such breach. 10 (c) APPLICATION OF REQUIREMENTS FOR TIMELI11 NESS, METHOD, AND CONTENT OF NOTIFICATIONS.— 12 Subsections (c), (d), (e), and (f) of section 402 shall apply 13 to a notification required under subsection (a) and a ven14 dor of personal health records, an entity described in sub15 section (a) and a third party service provider described 16 in subsection (b), with respect to a breach of security 17 under subsection (a) of unsecured PHR identifiable health 18 information in such records maintained or offered by such 19 vendor, in a manner specified by the Federal Trade Com20 mission. 21 (d) NOTIFICATION OF THE SECRETARY.—Upon re22 ceipt of a notification of a breach of security under sub23 section (a)(2), the Federal Trade Commission shall notify 24 the Secretary of such breach. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 302 1 (e) ENFORCEMENT.—A violation of subsection (a) or 2 (b) shall be treated as an unfair and deceptive act or prac3 tice in violation of a regulation under section 18(a)(1)(B) 4 of the Federal Trade Commission Act (15 U.S.C. 5 57a(a)(1)(B)) regarding unfair or deceptive acts or prac6 tices. 7 (f) DEFINITIONS.—For purposes of this section: 8 (1) BREACH OF SECURITY.—The term ‘‘breach 9 of security’’ means, with respect to unsecured PHR 10 identifiable health information of an individual in a 11 personal health record, acquisition of such informa12 tion without the authorization of the individual. 13 (2) PHR IDENTIFIABLE HEALTH INFORMA14 TION.—The term ‘‘PHR identifiable health informa15 tion’’ means individually identifiable health informa16 tion, as defined in section 1171(6) of the Social Se17 curity Act (42 U.S.C. 1320d(6)), and includes, with 18 respect to an individual, information— 19 (A) that is provided by or on behalf of the 20 individual; and 21 (B) that identifies the individual or with 22 respect to which there is a reasonable basis to 23 believe that the information can be used to 24 identify the individual. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 303 1 (3) UNSECURED PHR IDENTIFIABLE HEALTH 2 INFORMATION.— 3 (A) IN GENERAL.—Subject to subpara 4 graph (B), the term ‘‘unsecured PHR identifi 5 able health information’’ means PHR identifi6 able health information that is not protected 7 through the use of a technology or methodology 8 specified by the Secretary in the guidance 9 issued under section 4402(h)(2). 10 (B) EXCEPTION IN CASE TIMELY GUID11 ANCE NOT ISSUED.—In the case that the Sec12 retary does not issue guidance under section 13 4402(h)(2) by the date specified in such sec14 tion, for purposes of this section, the term ‘‘un15 secured PHR identifiable health information’’ 16 shall mean PHR identifiable health information 17 that is not secured by a technology standard 18 that renders protected health information unus19 able, unreadable, or indecipherable to unauthor20 ized individuals and that is developed or en21 dorsed by a standards developing organization 22 that is accredited by the American National 23 Standards Institute. 24 (g) REGULATIONS; EFFECTIVE DATE; SUNSET.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 304 1 (1) REGULATIONS; EFFECTIVE DATE.—To 2 carry out this section, the Secretary of Health and 3 Human Services shall promulgate interim final regu 4 lations by not later than the date that is 180 days 5 after the date of the enactment of this section. The 6 provisions of this section shall apply to breaches of 7 security that are discovered on or after the date that 8 is 30 days after the date of publication of such in9 terim final regulations. 10 (2) SUNSET.—The provisions of this section 11 shall not apply to breaches of security occurring on 12 or after the earlier of the following the dates: 13 (A) The date on which a standard relating 14 to requirements for entities that are not covered 15 entities that includes requirements relating to 16 breach notification has been promulgated by the 17 Secretary. 18 (B) The date on which a standard relating 19 to requirements for entities that are not covered 20 entities that includes requirements relating to 21 breach notification has been promulgated by the 22 Federal Trade Commission and has taken ef23 fect. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 305 1 SEC. 4408. BUSINESS ASSOCIATE CONTRACTS REQUIRED 2 FOR CERTAIN ENTITIES. 3 Each organization, with respect to a covered entity, 4 that provides data transmission of protected health infor5 mation to such entity (or its business associate) and that 6 requires access on a routine basis to such protected health 7 information, such as a Health Information Exchange Or8 ganization, Regional Health Information Organization, E9 prescribing Gateway, or each vendor that contracts with 10 a covered entity to allow that covered entity to offer a per11 sonal health record to patients as part of its electronic 12 health record, is required to enter into a written contract 13 (or other written arrangement) described in section 14 164.502(e)(2) of title 45, Code of Federal Regulations and 15 a written contract (or other arrangement) described in 16 section 164.308(b) of such title, with such entity and shall 17 be treated as a business associate of the covered entity 18 for purposes of the provisions of this subtitle and subparts 19 C and E of part 164 of title 45, Code of Federal Regula20 tions, as such provisions are in effect as of the date of 21 enactment of this title. 22 SEC. 4409. CLARIFICATION OF APPLICATION OF WRONGFUL 23 DISCLOSURES CRIMINAL PENALTIES. 24 Section 1177(a) of the Social Security Act (42 U.S.C. 25 1320d–6(a)) is amended by adding at the end the fol26 lowing new sentence: ‘‘For purposes of the previous sen f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 306 1 tence, a person (including an employee or other individual) 2 shall be considered to have obtained or disclosed individ3 ually identifiable health information in violation of this 4 part if the information is maintained by a covered entity 5 (as defined in the HIPAA privacy regulation described in 6 section 1180(b)(3)) and the individual obtained or dis7 closed such information without authorization.’’. 8 SEC. 4410. IMPROVED ENFORCEMENT. 9 (a) IN GENERAL.—Section 1176 of the Social Secu10 rity Act (42 U.S.C. 1320d-5) is amended— 11 (1) in subsection (b)(1), by striking ‘‘the act 12 constitutes an offense punishable under section 13 1177’’ and inserting ‘‘a penalty has been imposed 14 under section 1177 with respect to such act’’; and 15 (2) by adding at the end the following new sub16 section: 17 ‘‘(c) NONCOMPLIANCE DUE TO WILLFUL NE18 GLECT.— 19 ‘‘(1) IN GENERAL.—A violation of a provision 20 of this part due to willful neglect is a violation for 21 which the Secretary is required to impose a penalty 22 under subsection (a)(1). 23 ‘‘(2) REQUIRED INVESTIGATION.—For purposes 24 of paragraph (1), the Secretary shall formally inves 25 tigate any complaint of a violation of a provision of f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 307 1 this part if a preliminary investigation of the facts 2 of the complaint indicate such a possible violation 3 due to willful neglect.’’. 4 (b) EFFECTIVE DATE; REGULATIONS.— 5 (1) The amendments made by subsection (a) 6 shall apply to penalties imposed on or after the date 7 that is 24 months after the date of the enactment 8 of this title. 9 (2) Not later than 18 months after the date of 10 the enactment of this title, the Secretary of Health 11 and Human Services shall promulgate regulations to 12 implement such amendments. 13 (c) DISTRIBUTION OF CERTAIN CIVIL MONETARY 14 PENALTIES COLLECTED.— 15 (1) IN GENERAL.—Subject to the regulation 16 promulgated pursuant to paragraph (3), any civil 17 monetary penalty or monetary settlement collected 18 with respect to an offense punishable under this sub19 title or section 1176 of the Social Security Act (42 20 U.S.C. 1320d-5) insofar as such section relates to 21 privacy or security shall be transferred to the Office 22 of Civil Rights of the Department of Health and 23 Human Services to be used for purposes of enforcing 24 the provisions of this subtitle and subparts C and E 25 of part 164 of title 45, Code of Federal Regulations, f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 308 1 as such provisions are in effect as of the date of en 2 actment of this Act. 3 (2) GAO REPORT.—Not later than 18 months 4 after the date of the enactment of this title, the 5 Comptroller General shall submit to the Secretary a 6 report including recommendations for a methodology 7 under which an individual who is harmed by an act 8 that constitutes an offense referred to in paragraph 9 (1) may receive a percentage of any civil monetary 10 penalty or monetary settlement collected with re11 spect to such offense. 12 (3) ESTABLISHMENT OF METHODOLOGY TO 13 DISTRIBUTE PERCENTAGE OF CMPS COLLECTED TO 14 HARMED INDIVIDUALS.—Not later than 3 years 15 after the date of the enactment of this title, the Sec16 retary shall establish by regulation and based on the 17 recommendations submitted under paragraph (2), a 18 methodology under which an individual who is 19 harmed by an act that constitutes an offense re20 ferred to in paragraph (1) may receive a percentage 21 of any civil monetary penalty or monetary settlement 22 collected with respect to such offense. 23 (4) APPLICATION OF METHODOLOGY.—The 24 methodology under paragraph (3) shall be applied 25 with respect to civil monetary penalties or monetary f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 309 1 settlements imposed on or after the effective date of 2 the regulation. 3 (d) TIERED INCREASE IN AMOUNT OF CIVIL MONE4 TARY PENALTIES.— 5 (1) IN GENERAL.—Section 1176(a)(1) of the 6 Social Security Act (42 U.S.C. 1320d-5(a)(1)) is 7 amended by striking ‘‘who violates a provision of 8 this part a penalty of not more than’’ and all that 9 follows and inserting the following: ‘‘who violates a 10 provision of this part— 11 ‘‘(A) in the case of a violation of such pro12 vision in which it is established that the person 13 did not know (and by exercising reasonable dili14 gence would not have known) that such person 15 violated such provision, a penalty for each such 16 violation of an amount that is at least the 17 amount described in paragraph (3)(A) but not 18 to exceed the amount described in paragraph 19 (3)(D); 20 ‘‘(B) in the case of a violation of such pro21 vision in which it is established that the viola 22 tion was due to reasonable cause and not to 23 willful neglect, a penalty for each such violation 24 of an amount that is at least the amount de f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 310 1 scribed in paragraph (3)(B) but not to exceed 2 the amount described in paragraph (3)(D); and 3 ‘‘(C) in the case of a violation of such pro 4 vision in which it is established that the viola 5 tion was due to willful neglect— 6 ‘‘(i) if the violation is corrected as de7 scribed in subsection (b)(3)(A), a penalty 8 in an amount that is at least the amount 9 described in paragraph (3)(C) but not to 10 exceed the amount described in paragraph 11 (3)(D); and 12 ‘‘(ii) if the violation is not corrected 13 as described in such subsection, a penalty 14 in an amount that is at least the amount 15 described in paragraph (3)(D). 16 In determining the amount of a penalty under 17 this section for a violation, the Secretary shall 18 base such determination on the nature and ex19 tent of the violation and the nature and extent 20 of the harm resulting from such violation.’’. 21 (2) TIERS OF PENALTIES DESCRIBED.—Section 22 1176(a) of such Act (42 U.S.C. 1320d-5(a)) is fur 23 ther amended by adding at the end the following 24 new paragraph: f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 311 1 ‘‘(3) TIERS OF PENALTIES DESCRIBED.—For 2 purposes of paragraph (1), with respect to a viola 3 tion by a person of a provision of this part— 4 ‘‘(A) the amount described in this subpara 5 graph is $100 for each such violation, except 6 that the total amount imposed on the person 7 for all such violations of an identical require8 ment or prohibition during a calendar year may 9 not exceed $25,000; 10 ‘‘(B) the amount described in this subpara11 graph is $1,000 for each such violation, except 12 that the total amount imposed on the person 13 for all such violations of an identical require14 ment or prohibition during a calendar year may 15 not exceed $100,000; 16 ‘‘(C) the amount described in this subpara17 graph is $10,000 for each such violation, except 18 that the total amount imposed on the person 19 for all such violations of an identical require20 ment or prohibition during a calendar year may 21 not exceed $250,000; and 22 ‘‘(D) the amount described in this sub 23 paragraph is $50,000 for each such violation, 24 except that the total amount imposed on the 25 person for all such violations of an identical re- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 312 1 quirement or prohibition during a calendar year 2 may not exceed $1,500,000.’’. 3 (3) CONFORMING AMENDMENTS.—Section 4 1176(b) of such Act (42 U.S.C. 1320d-5(b)) is 5 amended— 6 (A) by striking paragraph (2) and redesig7 nating paragraphs (3) and (4) as paragraphs 8 (2) and (3), respectively; and 9 (B) in paragraph (2), as so redesignated— 10 (i) in subparagraph (A), by striking 11 ‘‘in subparagraph (B), a penalty may not 12 be imposed under subsection (a) if’’ and all 13 that follows through ‘‘the failure to comply 14 is corrected’’ and inserting ‘‘in subpara15 graph (B) or subsection (a)(1)(C), a pen16 alty may not be imposed under subsection 17 (a) if the failure to comply is corrected’’; 18 and 19 (ii) in subparagraph (B), by striking 20 ‘‘(A)(ii)’’ and inserting ‘‘(A)’’ each place it 21 appears. 22 (4) EFFECTIVE DATE.—The amendments made 23 by this subsection shall apply to violations occurring 24 after the date of the enactment of this title. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 313 1 (e) ENFORCEMENT THROUGH STATE ATTORNEYS 2 GENERAL.— 3 (1) IN GENERAL.—Section 1176 of the Social 4 Security Act (42 U.S.C. 1320d–5) is amended by 5 adding at the end the following new subsection: 6 ‘‘(c) ENFORCEMENT BY STATE ATTORNEYS GEN7 ERAL.— 8 ‘‘(1) CIVIL ACTION.—Except as provided in 9 subsection (b), in any case in which the attorney 10 general of a State has reason to believe that an in11 terest of one or more of the residents of that State 12 has been or is threatened or adversely affected by 13 any person who violates a provision of this part, the 14 attorney general of the State, as parens patriae, may 15 bring a civil action on behalf of such residents of the 16 State in a district court of the United States of ap17 propriate jurisdiction— 18 ‘‘(A) to enjoin further such violation by the 19 defendant; or 20 ‘‘(B) to obtain damages on behalf of such 21 residents of the State, in an amount equal to 22 the amount determined under paragraph (2). 23 ‘‘(2) STATUTORY DAMAGES.— 24 ‘‘(A) IN GENERAL.—For purposes of para 25 graph (1)(B), the amount determined under f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 314 1 this paragraph is the amount calculated by mul 2 tiplying the number of violations by up to $100. 3 For purposes of the preceding sentence, in the 4 case of a continuing violation, the number of 5 violations shall be determined consistent with 6 the HIPAA privacy regulations (as defined in 7 section 1180(b)(3)) for violations of subsection 8 (a). 9 ‘‘(B) LIMITATION.—The total amount of 10 damages imposed on the person for all viola11 tions of an identical requirement or prohibition 12 during a calendar year may not exceed $25,000. 13 ‘‘(C) REDUCTION OF DAMAGES.—In as14 sessing damages under subparagraph (A), the 15 court may consider the factors the Secretary 16 may consider in determining the amount of a 17 civil money penalty under subsection (a) under 18 the HIPAA privacy regulations. 19 ‘‘(3) ATTORNEY FEES.—In the case of any suc20 cessful action under paragraph (1), the court, in its 21 discretion, may award the costs of the action and 22 reasonable attorney fees to the State. 23 ‘‘(4) NOTICE TO SECRETARY.—The State shall 24 serve prior written notice of any action under para 25 graph (1) upon the Secretary and provide the Sec f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 315 1 retary with a copy of its complaint, except in any 2 case in which such prior notice is not feasible, in 3 which case the State shall serve such notice imme 4 diately upon instituting such action. The Secretary 5 shall have the right— 6 ‘‘(A) to intervene in the action; 7 ‘‘(B) upon so intervening, to be heard on 8 all matters arising therein; and 9 ‘‘(C) to file petitions for appeal. 10 ‘‘(5) CONSTRUCTION.—For purposes of bring11 ing any civil action under paragraph (1), nothing in 12 this section shall be construed to prevent an attor13 ney general of a State from exercising the powers 14 conferred on the attorney general by the laws of that 15 State. 16 ‘‘(6) VENUE; SERVICE OF PROCESS.— 17 ‘‘(A) VENUE.—Any action brought under 18 paragraph (1) may be brought in the district 19 court of the United States that meets applicable 20 requirements relating to venue under section 21 1391 of title 28, United States Code. 22 ‘‘(B) SERVICE OF PROCESS.—In an action 23 brought under paragraph (1), process may be 24 served in any district in which the defendant— 25 ‘‘(i) is an inhabitant; or f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 316 1 ‘‘(ii) maintains a physical place of 2 business. 3 ‘‘(7) LIMITATION ON STATE ACTION WHILE 4 FEDERAL ACTION IS PENDING.—If the Secretary has 5 instituted an action against a person under sub6 section (a) with respect to a specific violation of this 7 part, no State attorney general may bring an action 8 under this subsection against the person with re9 spect to such violation during the pendency of that 10 action. 11 ‘‘(8) APPLICATION OF CMP STATUTE OF LIMI12 TATION.—A civil action may not be instituted with 13 respect to a violation of this part unless an action 14 to impose a civil money penalty may be instituted 15 under subsection (a) with respect to such violation 16 consistent with the second sentence of section 17 1128A(c)(1).’’. 18 (2) CONFORMING AMENDMENTS.—Subsection 19 (b) of such section, as amended by subsection (d)(3), 20 is amended— 21 (A) in paragraph (1), by striking ‘‘A pen 22 alty may not be imposed under subsection (a)’’ 23 and inserting ‘‘No penalty may be imposed 24 under subsection (a) and no damages obtained 25 under subsection (c)’’; f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 317 1 (B) in paragraph (2)(A)— 2 (i) in the matter before clause (i), by 3 striking ‘‘a penalty may not be imposed 4 under subsection (a)’’ and inserting ‘‘no 5 penalty may be imposed under subsection 6 (a) and no damages obtained under sub7 section (c)’’; and 8 (ii) in clause (ii), by inserting ‘‘or 9 damages’’ after ‘‘the penalty’’; 10 (C) in paragraph (2)(B)(i), by striking 11 ‘‘The period’’ and inserting ‘‘With respect to 12 the imposition of a penalty by the Secretary 13 under subsection (a), the period’’; and 14 (D) in paragraph (3), by inserting ‘‘and 15 any damages under subsection (c)’’ after ‘‘any 16 penalty under subsection (a)’’. 17 (3) EFFECTIVE DATE.—The amendments made 18 by this subsection shall apply to violations occurring 19 after the date of the enactment of this Act. 20 (f) ALLOWING CONTINUED USE OF CORRECTIVE AC21 TION.—Such section is further amended by adding at the 22 end the following new subsection: 23 ‘‘(d) ALLOWING CONTINUED USE OF CORRECTIVE 24 ACTION.—Nothing in this section shall be construed as 25 preventing the Office of Civil Rights of the Department f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 318 1 of Health and Human Services from continuing, in its dis2 cretion, to use corrective action without a penalty in cases 3 where the person did not know (and by exercising reason4 able diligence would not have known) of the violation in5 volved.’’. 6 SEC. 4411. AUDITS. 7 The Secretary shall provide for periodic audits to en8 sure that covered entities and business associates that are 9 subject to the requirements of this subtitle and subparts 10 C and E of part 164 of title 45, Code of Federal Regula11 tions, as such provisions are in effect as of the date of 12 enactment of this Act, comply with such requirements. 13 PART II—RELATIONSHIP TO OTHER LAWS; REGU14 LATORY REFERENCES; EFFECTIVE DATE; RE15 PORTS 16 SEC. 4421. RELATIONSHIP TO OTHER LAWS. 17 (a) APPLICATION OF HIPAA STATE PREEMPTION.— 18 Section 1178 of the Social Security Act (42 U.S.C. 19 1320d–7) shall apply to a provision or requirement under 20 this subtitle in the same manner that such section applies 21 to a provision or requirement under part C of title XI of 22 such Act or a standard or implementation specification 23 adopted or established under sections 1172 through 1174 24 of such Act. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 319 1 (b) HEALTH INSURANCE PORTABILITY AND AC2 COUNTABILITY ACT.—The standards governing the pri3 vacy and security of individually identifiable health infor4 mation promulgated by the Secretary under sections 5 262(a) and 264 of the Health Insurance Portability and 6 Accountability Act of 1996 shall remain in effect to the 7 extent that they are consistent with this subtitle. The Sec8 retary shall by rule amend such Federal regulations as re9 quired to make such regulations consistent with this sub10 title. 11 SEC. 4422. REGULATORY REFERENCES. 12 Each reference in this subtitle to a provision of the 13 Code of Federal Regulations refers to such provision as 14 in effect on the date of the enactment of this title (or to 15 the most recent update of such provision). 16 SEC. 4423. EFFECTIVE DATE. 17 Except as otherwise specifically provided, the provi18 sions of part I shall take effect on the date that is 12 19 months after the date of the enactment of this title. 20 SEC. 4424. STUDIES, REPORTS, GUIDANCE. 21 (a) REPORT ON COMPLIANCE.— 22 (1) IN GENERAL.—For the first year beginning 23 after the date of the enactment of this Act and an 24 nually thereafter, the Secretary shall prepare and 25 submit to the Committee on Health, Education, f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 320 1 Labor, and Pensions of the Senate and the Com 2 mittee on Ways and Means and the Committee on 3 Energy and Commerce of the House of Representa 4 tives a report concerning complaints of alleged viola 5 tions of law, including the provisions of this subtitle 6 as well as the provisions of subparts C and E of part 7 164 of title 45, Code of Federal Regulations, (as 8 such provisions are in effect as of the date of enact9 ment of this Act) relating to privacy and security of 10 health information that are received by the Secretary 11 during the year for which the report is being pre12 pared. Each such report shall include, with respect 13 to such complaints received during the year— 14 (A) the number of such complaints; 15 (B) the number of such complaints re16 solved informally, a summary of the types of 17 such complaints so resolved, and the number of 18 covered entities that received technical assist19 ance from the Secretary during such year in 20 order to achieve compliance with such provi21 sions and the types of such technical assistance 22 provided; 23 (C) the number of such complaints that 24 have resulted in the imposition of civil monetary 25 penalties or have been resolved through mone f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 321 1 tary settlements, including the nature of the 2 complaints involved and the amount paid in 3 each penalty or settlement; 4 (D) the number of compliance reviews con 5 ducted and the outcome of each such review; 6 (E) the number of subpoenas or inquiries 7 issued; 8 (F) the Secretary’s plan for improving 9 compliance with and enforcement of such provi10 sions for the following year; and 11 (G) the number of audits performed and a 12 summary of audit findings pursuant to section 13 4411. 14 (2) AVAILABILITY TO PUBLIC.—Each report 15 under paragraph (1) shall be made available to the 16 public on the Internet website of the Department of 17 Health and Human Services. 18 (b) STUDY AND REPORT ON APPLICATION OF PRI19 VACY AND SECURITY REQUIREMENTS TO NON-HIPAA 20 COVERED ENTITIES.— 21 (1) STUDY.—Not later than one year after the 22 date of the enactment of this title, the Secretary, in 23 consultation with the Federal Trade Commission, 24 shall conduct a study, and submit a report under 25 paragraph (2), on privacy and security requirements f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 322 1 for entities that are not covered entities or business 2 associates as of the date of the enactment of this 3 title, including— 4 (A) requirements relating to security, pri 5 vacy, and notification in the case of a breach of 6 security or privacy (including the applicability 7 of an exemption to notification in the case of 8 individually identifiable health information that 9 has been rendered unusable, unreadable, or in10 decipherable through technologies or methodolo11 gies recognized by appropriate professional or12 ganization or standard setting bodies to provide 13 effective security for the information) that 14 should be applied to— 15 (i) vendors of personal health records; 16 (ii) entities that offer products or 17 services through the website of a vendor of 18 personal health records; 19 (iii) entities that are not covered enti20 ties and that offer products or services 21 through the websites of covered entities 22 that offer individuals personal health 23 records; 24 (iv) entities that are not covered enti 25 ties and that access information in a per- f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 323 1 sonal health record or send information to 2 a personal health record; and 3 (v) third party service providers used 4 by a vendor or entity described in clause 5 (i), (ii), (iii), or (iv) to assist in providing 6 personal health record products or services; 7 (B) a determination of which Federal gov8 ernment agency is best equipped to enforce 9 such requirements recommended to be applied 10 to such vendors, entities, and service providers 11 under subparagraph (A); and 12 (C) a timeframe for implementing regula13 tions based on such findings. 14 (2) REPORT.—The Secretary shall submit to 15 the Committee on Finance, the Committee on 16 Health, Education, Labor, and Pensions, and the 17 Committee on Commerce of the Senate and the 18 Committee on Ways and Means and the Committee 19 on Energy and Commerce of the House of Rep20 resentatives a report on the findings of the study 21 under paragraph (1) and shall include in such report 22 recommendations on the privacy and security re 23 quirements described in such paragraph. 24 (c) GUIDANCE ON IMPLEMENTATION SPECIFICATION 25 TO DE-IDENTIFY PROTECTED HEALTH INFORMATION.— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 324 1 Not later than 12 months after the date of the enactment 2 of this title, the Secretary shall, in consultation with stake3 holders, issue guidance on how best to implement the re4 quirements for the de-identification of protected health in5 formation under section 164.514(b) of title 45, Code of 6 Federal Regulations. 7 (d) GAO REPORT ON TREATMENT DISCLOSURES.— 8 Not later than one year after the date of the enactment 9 of this title, the Comptroller General of the United States 10 shall submit to the Committee on Health, Education, 11 Labor, and Pensions of the Senate and the Committee on 12 Ways and Means and the Committee on Energy and Com13 merce of the House of Representatives a report on the 14 best practices related to the disclosure among health care 15 providers of protected health information of an individual 16 for purposes of treatment of such individual. Such report 17 shall include an examination of the best practices imple18 mented by States and by other entities, such as health 19 information exchanges and regional health information or20 ganizations, an examination of the extent to which such 21 best practices are successful with respect to the quality 22 of the resulting health care provided to the individual and 23 with respect to the ability of the health care provider to 24 manage such best practices, and an examination of the 25 use of electronic informed consent for disclosing protected f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 325 1 health information for treatment, payment, and health 2 care operations. 3 Subtitle E—Miscellaneous 4 Medicare Provisions 5 SEC. 4501. MORATORIA ON CERTAIN MEDICARE REGULA6 TIONS. 7 (a) DELAY IN PHASE OUT OF MEDICARE HOSPICE 8 BUDGET NEUTRALITY ADJUSTMENT FACTOR DURING 9 FISCAL YEAR 2009.—Notwithstanding any other provi10 sion of law, including the final rule published on August 11 8, 2008, 73 Federal Register 46464 et seq., relating to 12 Medicare Program; Hospice Wage Index for Fiscal Year 13 2009, the Secretary of Health and Human Services shall 14 not phase out or eliminate the budget neutrality adjust15 ment factor in the Medicare hospice wage index before Oc16 tober 1, 2009, and the Secretary shall recompute and 17 apply the final Medicare hospice wage index for fiscal year 18 2009 as if there had been no reduction in the budget neu19 trality adjustment factor. 20 (b) NON-APPLICATION OF PHASED-OUT INDIRECT 21 MEDICAL EDUCATION (IME) ADJUSTMENT FACTOR FOR 22 FISCAL YEAR 2009.— 23 (1) IN GENERAL.—Section 412.322 of title 42, 24 Code of Federal Regulations, shall be applied with 25 out regard to paragraph (c) of such section, and the f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 326 1 Secretary of Health and Human Services shall re 2 compute payments for discharges occurring on or 3 after October 1, 2008, as if such paragraph had 4 never been in effect. 5 (2) NO EFFECT ON SUBSEQUENT YEARS.— 6 Nothing in paragraph (1) shall be construed as hav7 ing any effect on the application of paragraph (d) of 8 section 412.322 of title 42, Code of Federal Regula9 tions. 10 (c) FUNDING FOR IMPLEMENTATION.—In addition to 11 funds otherwise available, for purposes of implementing 12 the provisions of subsections (a) and (b), including costs 13 incurred in reprocessing claims in carrying out such provi14 sions, the Secretary of Health and Human Services shall 15 provide for the transfer from the Federal Hospital Insur16 ance Trust Fund established under section 1817 of the 17 Social Security Act (42 U.S.C. 1395i) to the Centers for 18 Medicare & Medicaid Services Program Management Ac19 count of $2,000,000 for fiscal year 2009. 20 SEC. 4502. LONG-TERM CARE HOSPITAL TECHNICAL COR21 RECTIONS. 22 (a) PAYMENT.—Subsection (c) of section 114 of the 23 Medicare, Medicaid, and SCHIP Extension Act of 2007 24 (Public Law 110–173) is amended— 25 (1) in paragraph (1)— f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 327 1 (A) by amending the heading to read as 2 follows: ‘‘DELAY IN APPLICATION OF 25 PER 3 CENT PATIENT THRESHOLD PAYMENT ADJUST 4 MENT’’; 5 (B) by striking ‘‘the date of the enactment 6 of this Act’’ and inserting ‘‘July 1, 2007,’’; and 7 (C) in subparagraph (A), by inserting ‘‘or 8 to a long-term care hospital, or satellite facility, 9 that as of December 29, 2007, was co-located 10 with an entity that is a provider-based, off-cam11 pus location of a subsection (d) hospital which 12 did not provide services payable under section 13 1886(d) of the Social Security Act at the off14 campus location’’ after ‘‘freestanding long-term 15 care hospitals’’; and 16 (2) in paragraph (2)— 17 (A) in subparagraph (B)(ii), by inserting 18 ‘‘or that is described in section 412.22(h)(3)(i) 19 of such title’’ before the period; and 20 (B) in subparagraph (C), by striking ‘‘the 21 date of the enactment of this Act’’ and insert 22 ing ‘‘October 1, 2007 (or July 1, 2007, in the 23 case of a satellite facility described in section 24 412.22(h)(3)(i) of title 42, Code of Federal 25 Regulations)’’. f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.) F:\M11\RANGEL\RANGEL_046.XML 328 1 (b) MORATORIUM.—Subsection (d)(3)(A) of such sec2 tion is amended by striking ‘‘if the hospital or facility’’ 3 and inserting ‘‘if the hospital or facility obtained a certifi4 cate of need for an increase in beds that is in a State 5 for which such certificate of need is required and that was 6 issued on or after April 1, 2005, and before December 7 29, 2007, or if the hospital or facility’’. 8 (c) EFFECTIVE DATE.—The amendments made by 9 this section shall be effective and apply as if included in 10 the enactment of the Medicare, Medicaid, and SCHIP Ex11 tension Act of 2007 (Public Law 110–173). f:\VHLC\011609\011609.139.xml (420713|1) January 16, 2009 (3:31 p.m.)