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S. 1932 (109th): Deficit Reduction Act of 2005

The text of the bill below is as of Nov 3, 2005 (Passed the Senate).

Source: GPO

109th CONGRESS *********** THIS BILL HAS BEEN CONVERTED TO XML USING THE CONVERSION PROGRAM & HAS NOT BEEN PROOFREAD ******************

1st Session

S. 1932

IN THE SENATE OF THE UNITED STATES

AN ACT

To provide for reconciliation pursuant to section 202(a) of the concurrent resolution on the budget for fiscal year 2006 (H. Con. Res. 95).

1.

Short title

This Act may be cited as the Deficit Reduction Omnibus Reconciliation Act of 2005.

2.

Table of Contents

The table of contents for this Act is as follows:

Sec. 1. Short title

Sec. 2. Table of Contents

TITLE I—COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

Sec. 1001. Short title

Subtitle A—Commodity Programs

Sec. 1101. Reduction of commodity program payments

Sec. 1102. Forfeiture penalty for nonrecourse sugar loans

Sec. 1103. Cotton competitiveness provisions

Sec. 1104. National dairy market loss payments

Sec. 1105. Advance direct payments

Subtitle B—Conservation

Sec. 1201. Conservation reserve program

Sec. 1202. Conservation security program

Sec. 1203. Environmental quality incentives program

Subtitle C—Miscellaneous

Sec. 1301. Initiative for future agriculture and food systems

TITLE II—COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

Subtitle A—Merger of the Deposit Insurance Funds

Sec. 2001. Short title

Sec. 2002. Definitions

Sec. 2003. Merger of BIF and SAIF

Sec. 2004. Establishment of the Deposit Insurance Fund

Sec. 2005. Technical and conforming amendments to the Federal Deposit Insurance Act

Sec. 2006. Other technical and conforming amendments

Sec. 2007. Effective date

Subtitle B—Deposit Insurance Modernization and Improvement

Sec. 2011. Short title

Sec. 2012. Changes to Federal deposit insurance coverage

Sec. 2013. Designated reserve ratio

Sec. 2014. Assessment credits and dividends

Sec. 2015. Assessments-related records retention and statute of limitations

Sec. 2016. Increase in fees for late assessment payments

Sec. 2017. Regulations required

Sec. 2018. Studies of potential changes to the Federal deposit insurance system

Sec. 2019. Effective date

Subtitle C—FHA Asset Disposition

Sec. 2021. Short title

Sec. 2022. Definitions

Sec. 2023. Appropriated funds requirement for below market sales

Sec. 2024. Up-front grants

Sec. 2025. Authorization of appropriations

Subtitle D—Adaptive Housing Assistance

Sec. 2031. Short title

Sec. 2032. Adoptive housing assistance for disabled veterans residing temporarily in housing owned by a family member

Sec. 2033. GAO reports

TITLE III—COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

Sec. 3001. Short title

Sec. 3002. Analog spectrum recovery; hard deadline

Sec. 3003. Auction of recovered spectrum

Sec. 3004. Supplemental license fees

Sec. 3005. Digital Transition and Public Safety Fund

Sec. 3005A. Communication system grants

Sec. 3006. Essential air service program

TITLE IV—ENERGY AND NATURAL RESOURCES

Sec. 4001. Oil and gas leasing program

TITLE V—COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

Sec. 5001. Technical corrections to SAFETEA–LU

TITLE VI—COMMITTEE ON FINANCE

Sec. 6000. Amendments to Social Security Act

Subtitle A—Medicaid

Chapter 1—Payment For Prescription Drugs Under Medicaid

Sec. 6001. Pharmacy reimbursement

Sec. 6002. Increase in rebates for covered outpatient drugs

Sec. 6003. Improved regulation of authorized generic drugs

Sec. 6004. Collection of rebates for certain physician administered drugs

Chapter 2—Long-Term Care Under Medicaid

Sec. 6011. Reform of Medicaid asset transfer rules

Sec. 6012. State long-term care partnerships

Chapter 3—Eliminating Fraud, Waste, and Abuse in Medicaid

Sec. 6021. Enhancing third party recovery

Sec. 6022. Limitation on use of contingency fee arrangements

Sec. 6023. Encouraging the enactment of State False Claims Acts

Sec. 6024. Employee education about False Claims Recovery

Sec. 6025. Prohibition on restocking and double billing of prescription drugs

Sec. 6026. Medicaid Integrity Program

Chapter 4—State Financing Under Medicaid

Sec. 6031. Reforms of targeted case management

Sec. 6032. Temporary Federal matching payments for Federal assistance

Sec. 6033. Managed care organization provider tax reform

Sec. 6034. Inclusion of podiatrists as physicians

Sec. 6035. DSH allotment for the District of Columbia

Sec. 6036. Demonstration project regarding Medicaid reimbursement for stabilization of emergency medical conditions by non-publicly owned or operated institutions for mental diseases

Sec. 6037. Limitation on severe reduction in the Medicaid FMAP for fiscal year 2006

Sec. 6038. Extension of prescription drug rebates to enrollees in Medicaid managed care organizations

Sec. 6039. Extension of the Medicare Part A and B payment holiday

Sec. 6039A. Sense of the Senate

Sec. 6039B. Authority to continue providing certain adult day health care services or medical adult day care services

Sec. 6039C. Demonstration project regarding Medicaid coverage of low-income HIV-infected individuals

Sec. 6039D. Additional increase in rebate for single source and innovator multiple source drugs

Chapter 5—Improving the Medicaid and State Children’s Health Insurance Programs

SUBCHAPTER A—FAMILY OPPORTUNITY ACT

Sec. 6041. Short title of subchapter

Sec. 6042. Opportunity for families of disabled children to purchase Medicaid coverage for such children

Sec. 6043. Demonstration projects regarding home and community-based alternatives to psychiatric residential treatment facilities for children

Sec. 6044. Development and support of family-to-family health information centers

Sec. 6045. Restoration of Medicaid eligibility for certain SSI beneficiaries

SUBCHAPTER B—STATE CHILDREN’S HEALTH INSURANCE PROGRAM

Sec. 6051. Rules for availability, redistribution, and extended availability of allotments for fiscal years 2003, 2004, and 2005

Sec. 6052. Authority to use up to 10 percent of fiscal year 2006 and 2007 allotments for outreach

Sec. 6053. Prohibition against covering nonpregnant childless adults with SCHIP funds

Sec. 6054. Continued authority for qualifying States to use certain funds for Medicaid expenditures

Sec. 6055. Grants to promote innovative outreach and enrollment under Medicaid and SCHIP

SUBCHAPTER C—MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION

Sec. 6061. Money Follows the Person Rebalancing Demonstration

Chapter 6—Option for Hurricane Katrina Disaster States To Delay Application

Sec. 6071. Option for Hurricane Katrina disaster States to delay application

Subtitle B—Medicare

Sec. 6101. Improvements to the Medicare-dependent hospital (MDH) program

Sec. 6102. Reduction in payments to skilled nursing facilities for bad debt

Sec. 6103. Two-year extension of the 50 percent compliance threshold used to determine whether a hospital or unit of a hospital is an inpatient rehabilitation facility under the Medicare program

Sec. 6104. Prohibition on physician self referrals to physician owned, limited service hospitals

Sec. 6105. Minimum update for physicians’ services for 2006

Sec. 6106. One-year extension of hold harmless provisions for small rural hospitals and sole community hospitals under the prospective payment system for hospital outpatient department services

Sec. 6107. Update to the composite rate component of the basic case-mix adjusted prospective payment system for dialysis services

Sec. 6108. One-year extension of moratorium on therapy caps

Sec. 6109. Transfer of title of certain DME to patient after 13-month rental

Sec. 6110. Establishment of Medicare value-based purchasing programs

Sec. 6111. Phase-out of risk adjustment budget neutrality in determining the amount of payments to Medicare Advantage organizations

Sec. 6112. Elimination of Medicare Advantage regional plan stabilization fund

Sec. 6113. Rural PACE provider grant program

Sec. 6114. Waiver of part B late enrollment penalty for certain international volunteers

Sec. 6115. Delivery of services at federally qualified health centers

Sec. 6116. Technical correction regarding purchase agreements for power-driven wheelchairs

Sec. 6117. Medicare coverage of ultrasound screening for abdominal aortic aneurysms; national educational and information campaign

Sec. 6118. Improving patient access to, and utilization of, colorectal cancer screening under medicare

Sec. 6119. Coverage of marriage and family therapist services and mental health counselor services under part b of the medicare program

Sec. 6120. Quality measurement systems amendments

TITLE VII—COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

Subtitle A—Education Provisions

Chapter 1—Education

Sec. 7101. Provisional grant assistance program

Sec. 7102. National smart grants

Sec. 7103. Loan limits

Sec. 7104. Plus loan interest rates and zero special allowance payment

Sec. 7105. Reduction of lender insurance reimbursement rates

Sec. 7106. Guaranty agency origination fee

Sec. 7107. Deferment of student loans for military service

Sec. 7108. Recovery through consolidation

Sec. 7109. Single holder rule

Sec. 7110. Default reduction program

Sec. 7111. Requirements for disbursements of student loans

Sec. 7112. Special insurance and reinsurance rules

Sec. 7113. School as lender moratorium

Sec. 7114. Permanent reduction of special allowance payments for loans from the proceeds of tax exempt issues

Sec. 7115. Special allowances

Sec. 7116. Origination fee

Sec. 7117. Income contingent repayment for public sector employees

Sec. 7118. Family contribution for dependent students

Sec. 7119. Family contribution for independent students without dependents other than a spouse

Sec. 7120. Family contribution for independent students with dependents other than a spouse

Sec. 7121. Regulations; updated tables

Sec. 7122. Simplified need test and automatic zero improvements

Sec. 7123. Loan forgiveness for teachers

Sec. 7124. Effective date

Chapter 2—Hurricane Katrina Higher Education Recovery

Sec. 7151. Short title

Sec. 7152. Definitions

Sec. 7153. Waiver authority and modifications to certain provisions of the Higher Education Act of 1965

Sec. 7154. General waiver authority and required consultation

Sec. 7155. Notice of waivers, modifications, or extensions

Sec. 7156. Regulatory requirements inapplicable

Sec. 7157. Department of Education Inspector General audit and report

Sec. 7158. Sunset provision

Subtitle B—Pension Benefit Guaranty Corporation Premiums

Sec. 7201. Amendments to the Employee Retirement Income Security Act of 1974

Subtitle C—Higher Education Reauthorization

Chapter 1—Short Title; References; General Effective Date

Sec. 7301. Short title

Sec. 7302. References

Sec. 7303. General effective date

Chapter 2—General Provisions

Sec. 7311. Additional definitions

Sec. 7312. General definition of institution of higher education

Sec. 7313. Definition of institution of higher education for purposes of title IV programs

Sec. 7314. Protection of student speech and association rights

Sec. 7315. National advisory committee on institutional quality and integrity

Sec. 7316. Drug and alcohol abuse prevention

Sec. 7317. Prior rights and obligations

Sec. 7318. Cost of higher education

Sec. 7319. Performance-based organization for the delivery of Federal student financial assistance

Sec. 7320. Procurement flexibility

Chapter 3—Teacher Quality Enhancement

Sec. 7331. Teacher quality enhancement grants for States and partnerships

Chapter 4—Institutional Aid

Sec. 7341. Program purpose

Sec. 7342. Definitions; eligibility

Sec. 7343. American Indian tribally controlled colleges and universities

Sec. 7344. Alaska Native and Native Hawaiian-serving institutions

Sec. 7345. Native American-serving, nontribal institutions

Sec. 7346. Part B definitions

Sec. 7347. Grants to institutions

Sec. 7348. Allotments to institutions

Sec. 7349. Professional or graduate institutions

Sec. 7350. Authorization of appropriations

Sec. 7351. Technical corrections

Chapter 5—Student Assistance

SUBCHAPTER A—GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER EDUCATION

Sec. 7361. Federal Pell Grants

Sec. 7362. Federal TRIO Programs

Sec. 7363. Gaining Early Awareness and Readiness for Undergraduate Programs

Sec. 7364. Academic Achievement Incentive Scholarships

Sec. 7365. Federal Supplemental Educational Opportunity Grants

Sec. 7366. Leveraging Educational Assistance Partnership Program

Sec. 7367. Special programs for students whose families are engaged in migrant and seasonal farmwork

Sec. 7368. Robert C. Byrd Honors Scholarship Program

Sec. 7369. Child care access means parents in school

Sec. 7370. Learning anytime anywhere partnerships

SUBCHAPTER B—FEDERAL FAMILY EDUCATION LOAN PROGRAM

Sec. 7381. Extension of authorities

Sec. 7382. Federal payments to reduce student interest costs

Sec. 7383. Federal consolidation loans

Sec. 7384. Default reduction program

Sec. 7385. Requirements for disbursement of student loans

Sec. 7386. Reports to credit bureaus and institutions of higher education

Sec. 7387. Common forms and formats

Sec. 7388. Student loan information by eligible borrowers

Sec. 7389. Consumer education information

Sec. 7390. Definition of eligible lender

Sec. 7390A. Repayment by the Secretary of loans of bankrupt, deceased, or disabled borrowers; treatment of borrowers attending schools that fail to provide a refund, attending closed schools, or falsely certified as eligible to borrow

SUBCHAPTER C—FEDERAL WORK-STUDY PROGRAMS

Sec. 7391. Authorization of appropriations

Sec. 7392. Allowance for books and supplies

Sec. 7393. Grants for Federal work-study programs

Sec. 7394. Job location and development programs

Sec. 7395. Work colleges

SUBCHAPTER D—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

Sec. 7401. Funds for administrative expenses

SUBCHAPTER E—FEDERAL PERKINS LOANS

Sec. 7411. Program authority

Sec. 7412. Terms of loans

Sec. 7413. Cancellation of loans for certain public service

Sec. 7414. Federal capital contribution recovery

SUBCHAPTER F—NEED ANALYSIS

Sec. 7421. Cost of attendance

Sec. 7422. Discretion of student financial aid administrators

Sec. 7423. Definitions

SUBCHAPTER G—GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE

Sec. 7431. Definitions

Sec. 7432. Compliance calendar

Sec. 7433. Forms and regulations

Sec. 7434. Student eligibility

Sec. 7435. Statute of limitations and State court judgments

Sec. 7436. Institutional refunds

Sec. 7437. Institutional and financial assistance for students

Sec. 7438. National student loan data system

Sec. 7439. Early awareness of financial aid eligibility

Sec. 7440. College access initiative

Sec. 7441. Program participation agreements

Sec. 7442. Regulatory relief and improvement

Sec. 7443. Transfer of allotments

Sec. 7444. Wage garnishment requirement

Sec. 7445. Purpose of administrative payments

Sec. 7446. Advisory committee on student financial assistance

Sec. 7447. Regional meetings

Sec. 7448. Year 2000 requirements at the department

SUBCHAPTER H—PROGRAM INTEGRITY

Sec. 7451. Recognition of accrediting agency or association

Sec. 7452. Administrative capacity standard

Sec. 7453. Program review and data

Chapter 6—Developing Institutions

Sec. 7501. Definitions

Sec. 7502. Authorized activities

Sec. 7503. Duration of grant

Sec. 7504. Postbaccalaureate opportunities for Hispanic Americans

Sec. 7505. Applications

Sec. 7506. Cooperative arrangements

Sec. 7507. Authorization of appropriations

Chapter 7—International Education Programs

Sec. 7601. Findings

Sec. 7602. Graduate and undergraduate language and area centers and programs

Sec. 7603. Undergraduate international studies and foreign language programs

Sec. 7604. Research; studies

Sec. 7605. Technological innovation and cooperation for foreign information access

Sec. 7606. Selection of certain grant recipients

Sec. 7607. American overseas research centers

Sec. 7608. Authorization of appropriations for international and foreign language studies

Sec. 7609. Centers for international business education

Sec. 7610. Education and training programs

Sec. 7611. Authorization of appropriations for business and international education programs

Sec. 7612. Minority foreign service professional development program

Sec. 7613. Institutional development

Sec. 7614. Study abroad program

Sec. 7615. Advanced degree in international relations

Sec. 7616. Internships

Sec. 7617. Financial assistance

Sec. 7618. Report

Sec. 7619. Gifts and donations

Sec. 7620. Authorization of appropriations for the institute for international public policy

Sec. 7621. Definitions

Sec. 7622. Assessment and enforcement

Chapter 8—Graduate And Postsecondary Improvement Programs

Sec. 7701. Purpose

Sec. 7702. Allocation of Jacob K. Javits fellowships

Sec. 7703. Stipends

Sec. 7704. Authorization of appropriations for the Jacob K. Javits Fellowship Program

Sec. 7705. Institutional eligibility under the graduate assistance in areas of national need program

Sec. 7706. Awards to graduate students

Sec. 7707. Additional assistance for cost of education

Sec. 7708. Authorization of appropriations for the graduate assistance in areas of national need program

Sec. 7709. Authorization of appropriations for the Thurgood Marshall Legal Educational Opportunity Program

Sec. 7710. Fund for the improvement of postsecondary education

Sec. 7711. Special projects

Sec. 7712. Authorization of appropriations for the fund for the improvement of postsecondary education

Sec. 7713. Repeal of the urban community service program

Sec. 7714. Grants authorized for demonstration projects to ensure students with disabilities receive a quality higher education

Sec. 7715. Applications for demonstration projects to ensure students with disabilities receive a quality higher education

Sec. 7716. Authorization of appropriations for the demonstration projects to ensure students with disabilities receive a quality higher education

Chapter 9—Miscellaneous

Sec. 7801. Miscellaneous

Chapter 10—Amendments to Other Laws

SUBCHAPTER A—EDUCATION OF THE DEAF ACT OF 1986

Sec. 7901. Laurent Clerc National Deaf Education Center

Sec. 7902. Agreement with Gallaudet University

Sec. 7903. Agreement for the National Technical Institute for the Deaf

Sec. 7904. Cultural experiences grants

Sec. 7905. Audit

Sec. 7906. Reports

Sec. 7907. Monitoring, evaluation, and reporting

Sec. 7908. Liaison for educational programs

Sec. 7909. Federal endowment programs for Gallaudet University and the National Technical Institute for the Deaf

Sec. 7910. Oversight and effect of agreements

Sec. 7911. International students

Sec. 7912. Research priorities

Sec. 7913. Authorization of appropriations

SUBCHAPTER B—UNITED STATES INSTITUTE OF PEACE ACT

Sec. 7921. United States Institute of Peace Act

SUBCHAPTER C—THE HIGHER EDUCATION AMENDMENTS OF 1998

Sec. 7931. Repeals

Sec. 7932. Grants to States for workplace and community transition training for incarcerated youth offenders

SUBCHAPTER D—INDIAN EDUCATION

Part I—Tribal Colleges and Universities

Sec. 7941. Reauthorization of the Tribally Controlled College or University Assistance Act of 1978

Part II—Navajo Higher Education

Sec. 7945. Short title

Sec. 7946. Reauthorization of Navajo Community College Act

Subtitle D—Hurricane Relief

Sec. 7947. Findings

Sec. 7948. Immediate aid to restart school operations

Sec. 7949. Hold harmless for local educational agencies serving major disaster areas

Sec. 7950. Teacher and paraprofessional reciprocity; delay

Sec. 7951. Assistance for homeless youth

Sec. 7952. Temporary emergency impact aid for displaced students

Sec. 7953. Origination fees for student loans

Sec. 7954. Authorization and appropriation of funds

Sec. 7955. Sunset provision

TITLE VIII—COMMITTEE ON THE JUDICIARY

Sec. 8001. Recapture of unused visa numbers

Sec. 8002. Fees with respect to immigration services for intracompany transferees

Sec. 8003. Justice programs

Sec. 8004. Copyright program

DIVISION A—AMTRAK REAUTHORIZATION

Sec. 1. Short title

Sec. 2. Amendment of Title 49, United States Code

TITLE I—AUTHORIZATIONS

Sec. 101. Authorization for Amtrak capital and operating expenses and State capital grants

Sec. 102. Authorization for the Federal Railroad Administration

Sec. 103. Repayment of long-term debt and capital leases

Sec. 104. Excess railroad retirement

Sec. 105. Other authorizations

TITLE II—AMTRAK REFORM AND OPERATIONAL IMPROVEMENTS

Sec. 201. National railroad passenger transportation system defined

Sec. 202. Amtrak board of directors

Sec. 203. Establishment of improved financial accounting system

Sec. 204. Development of 5-year financial plan

Sec. 205. Establishment of grant process

Sec. 206. State-supported routes

Sec. 207. Independent auditor to establish methodologies for Amtrak route and service planning decisions

Sec. 208. Metrics and standards

Sec. 209. Passenger train performance

Sec. 210. Long distance routes

Sec. 211. Alternate passenger rail service program

Sec. 212. Employee transition assistance

Sec. 213. Northeast corridor state-of-good-repair plan

Sec. 214. Northeast corridor infrastructure and operations improvements

Sec. 215. Restructuring long-term debt and capital leases

Sec. 216. Study of compliance requirements at existing intercity rail stations

Sec. 217. Incentive pay

Sec. 218. Access to Amtrak equipment and services

Sec. 219. General Amtrak provisions

Sec. 220. Private sector funding of passenger trains

Sec. 221. On-board service improvements

Sec. 222. Amtrak management accountability

TITLE III—INTERCITY PASSENGER RAIL POLICY

Sec. 301. Capital assistance for intercity passenger rail service

Sec. 302. State rail plans

Sec. 303. Next generation corridor train equipment pool

Sec. 304. Federal rail policy

Sec. 305. Rail cooperation research program

TITLE IV—PASSENGER RAIL SECURITY AND SAFETY

Sec. 401. Systemwide Amtrak security upgrades

Sec. 402. Fire and life-safety improvements

Sec. 403. Amtrak plan to assist families of passengers involved in rail passenger accidents

Sec. 404. Northern border rail passenger report

Sec. 405. Passenger, baggage, and cargo screening

I

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

1001.

Short title

This title may be cited as the Agricultural Reconciliation Act of 2005.

A

Commodity Programs

1101.

Reduction of commodity Program payments

(a)

In General

Subtitle F of title I of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7991 et seq.) is amended by adding at the end the following:

1619.

Reduction of commodity Program payments

(a)

Definition of Commodity Program Payments

In this section, the term commodity program payments means—

(1)

direct payments;

(2)

counter-cyclical payments; and

(3)

payments and benefits associated with the loan program, including gains from the forfeiture of any commodity pledged as collateral for loans and gains from in-kind payments described in section 166 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7286), as determined by the Secretary.

(b)

Reduction

(1)

In general

Notwithstanding any other provision of this title, for each of the 2006 through 2010 crop years for wheat, corn, grain sorghum, barley, oats, upland cotton, extra long staple cotton, rice, soybeans, other oilseeds, wool, mohair, honey, dry peas, lentils, small chickpeas, unshorn pelts, silage, hay, and peanuts, the Secretary shall reduce the total amount of commodity program payments received by the producers on a farm for those commodities for that crop year by an amount equal to 2.5 percent of that amount.

(2)

Milk

During the period beginning on October 1, 2005, and ending on September 30, 2007, the Secretary shall reduce the total amount of payments received by producers pursuant to section 1502 by an amount equal to 2.5 percent of that amount.

.

(b)

Commodities

(1)

In general

Title I of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7901 et seq.), including each amendment made by that title, is amended by striking 2007 each place it appears (other than in sections 1104(f), 1304(g), and 1307(a)(6) and amendments made by this title) and inserting 2011.

(2)

Cotton

Sections 1204(e)(1) and 1208(a) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7934(e)(1), 7938(a)) are amended by striking 2008 each place it appears and inserting 2012.

1102.

Forfeiture penalty for nonrecourse sugar loans

Section 156 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7272) is amended—

(1)

by redesignating subsections (h), (i), and (j) as subsections (i), (j), and (k), respectively; and

(2)

by inserting after subsection (g) the following:

(h)

Forfeiture Penalty

(1)

In general

In the case of each of the 2006 through 2010 crops of sugar beets and sugarcane, a penalty shall be assessed on the forfeiture of any sugar pledged as collateral for a nonrecourse loan under this section.

(2)

Amount

The penalty for sugarcane and sugar beets under this subsection shall be 1.2 percent of the loan rate established for sugarcane and sugar beets under subsections (a) and (b), respectively.

(3)

Effect of forfeiture

Any payments owed producers by a processor that forfeits any sugar pledged as collateral for a nonrecourse loan shall be reduced in proportion to the loan forfeiture penalty incurred by the processor.

(4)

Crops

This subsection shall apply only to the 2006 through 2010 crops of sugar beets and sugarcane.

.

1103.

Cotton competitiveness provisions

(a)

In General

Section 1207 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7937) is amended—

(1)

by striking the section heading and inserting the following: upland cotton import quotas.;

(2)

by striking subsection (a);

(3)

by redesignating subsections (b) and (c) as subsections (a) and (b), respectively;

(4)

in subsection (a) (as so redesignated)—

(A)

in paragraph (1)—

(i)

in subparagraph (B), by striking , adjusted for the value of any certificate issued under subsection (a),; and

(ii)

in subparagraph (C), by striking , for the value of any certificates issued under subsection (a); and

(B)

in paragraph (4), by striking subsection (c) and inserting subsection (b); and

(5)

in subsection (b)(2) (as so redesignated), by striking subsection (b) and inserting subsection (a).

(b)

FAIR

Section 136 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7236) is repealed.

(c)

Effective Date

The amendments made by this section take effect on August 1, 2006.

1104.

National dairy market loss payments

(a)

Amount

Section 1502(c) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7982(c)) is amended by striking paragraph (3) and inserting the following:

(3)
(A)

during the period beginning on the first day of the month the producers on a dairy farm enter into a contract under this section and ending on September 30, 2005, 45 percent; and

(B)

during the period beginning on October 1, 2005, and ending on September 30, 2007, 34 percent.

.

(b)

Duration

Section 1502 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7982) is amended by striking 2005 each place it appears in subsections (f) and (g)(1) and inserting 2007.

(c)

Conforming Amendments

Section 1502 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7982) is amended—

(1)

in subsection (g)(1), by striking and subsection (h); and

(2)

by striking subsection (h).

1105.

Advance direct payments

(a)

In General

Section 1103(d)(2) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7913(d)(2)) is amended in the first sentence by striking 2007 crops years and inserting 2005 crop years, up to 40 percent of the direct payment for a covered commodity for the 2006 crop year, and up to 29 percent of the direct payment for a covered commodity for any of the 2007 through 2011 crop years,.

(b)

Peanuts

Section 1303(e)(2) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7953(e)(2)) is amended in the first sentence by striking 2007 crops years and inserting 2005 crop years, up to 40 percent of the direct payment for the 2006 crop year, and up to 29 percent of the direct payment for any of the 2007 through 2011 crop years,.

B

Conservation

1201.

Conservation Reserve Program

(a)

In General

Section 1231 of the Food Security Act of 1985 (16 U.S.C. 3831) is amended—

(1)

in subsection (a), by striking 2007 and inserting 2011;

(2)

in subsection (d), by striking up and all that follows through years and inserting in the conservation reserve at any 1 time 36,400,000 acres during the 2002 through 2010 calendar years and 38,300,000 acres in the 2011 calendar year; and

(3)

in subsection (h)(1)(A), by striking 2007 and inserting 2011.

(b)

Funding

Section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended—

(1)

in the matter before paragraph (1), by striking For and inserting Except as otherwise provided in this subsection, for; and

(2)

in paragraph (1), by striking The conservation and inserting For fiscal years 2002 through 2011, the conservation.

(c)

Implementation

In implementing the amendments made by this section, the Secretary of Agriculture shall achieve the new maximum acreage enrollment limit not later than 2 years after the date of enactment of this Act without affecting conservation reserve existing contracts.

1202.

Conservation security Program

(a)

In General

Section 1238A(a) of the Food Security Act of 1985 (16 U.S.C. 3838a(a)) is amended by striking 2007 and inserting 2011.

(b)

Funding

Section 1241(a)(3) of the Food Security Act of 1985 (16 U.S.C. 3841(a)(3)) is amended by striking “not more than $6,037,000,000” and all that follows through “2014.” and inserting the following: “not more than—

(A)

$1,954,000,000 for the period of fiscal years 2006 through 2010; and

(B)

$5,200,000,000 for the period of fiscal years 2006 through 2015.

.

1203.

Environmental quality incentives Program

(a)

In General

Section 1240B(a)(1) of the Food Security Act of 1985 (16 U.S.C. 3839aa–2(a)(1)) is amended by striking 2007 and inserting 2011.

(b)

Limitation on Payments

Section 1240G of the Food Security Act of 1985 (16 U.S.C. 3839aa–7) is amended by striking 2007 and inserting 2011.

(c)

Funding

Section 1241(a)(6) of the Food Security Act of 1985 (16 U.S.C. 3841(a)(6)) is amended by striking subparagraphs (D) and (E) and inserting the following:

(D)

$1,017,000,000 in fiscal year 2005;

(E)

$1,185,000,000 in fiscal year 2006;

(F)

$1,270,000,000 in each of fiscal years 2007 through 2010; and

(G)

$1,300,000,000 in fiscal year 2011.

.

C

Miscellaneous

1301.

Initiative for future agriculture and food systems

(a)

In General

Section 401(b)(3) of the Agricultural Research, Extension, and Education Reform Act of 1998 (7 U.S.C. 7621(b)(3)) is amended—

(1)

in subparagraph (C), by striking $160,000,000; and and inserting $104,000,000;;

(2)

by redesignating subparagraph (D) as subparagraph (E);

(3)

by inserting after subparagraph (C) the following:

(D)

on October 1, 2006, and each October 1 thereafter through October 1, 2009, $130,000,000; and

; and

(4)

in subparagraph (E) (as so redesignated), by striking 2006 and inserting 2010.

(b)

Effective Date

The amendments made by subsection (a) take effect on October 1, 2005.

II

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

A

Merger of the Deposit Insurance Funds

2001.

Short title

This subtitle may be cited as the Safe and Fair Deposit Insurance Act of 2005.

2002.

Definitions

In this subtitle—

(1)

the term Administration means the National Credit Union Administration;

(2)

the term Board means the Board of Directors of the Federal Deposit Insurance Corporation (other than in connection with the National Credit Union Administration Board);

(3)

the term Corporation means the Federal Deposit Insurance Corporation;

(4)

the term designated reserve ratio means the reserve ratio designated by the Board under section 7(b)(3) of the Federal Deposit Insurance Act, as amended by this subtitle;

(5)

the terms Fund and Deposit Insurance Fund mean the Deposit Insurance Fund established under section 11(a)(4) of the Federal Deposit Insurance Act, as amended by this subtitle;

(6)

the terms depository institution and insured depository institution have the same meanings as in section 3 of the Federal Deposit Insurance Act; and

(7)

the term reserve ratio means the ratio of the fund balance of the Deposit Insurance Fund to aggregate estimated insured deposits held in all insured depository institutions.

2003.

Merger of BIF and SAIF

(a)

In General

(1)

Merger

The Bank Insurance Fund and the Savings Association Insurance Fund shall be merged into the Deposit Insurance Fund.

(2)

Disposition of assets and liabilities

All assets and liabilities of the Bank Insurance Fund and the Savings Association Insurance Fund shall be transferred to the Deposit Insurance Fund.

(3)

No separate existence

The separate existence of the Bank Insurance Fund and the Savings Association Insurance Fund shall cease on the effective date of the merger thereof under this section.

(b)

Repeal of Outdated Merger Provision

Section 2704 of the Deposit Insurance Funds Act of 1996 (12 U.S.C. 1821 note) is repealed.

2004.

Establishment of the Deposit Insurance Fund

(a)

In General

Section 11(a)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is amended—

(1)

by redesignating subparagraph (B) as subparagraph (C);

(2)

by striking subparagraph (A) and inserting the following:

(A)

Establishment

There is established the Deposit Insurance Fund, which the Corporation shall—

(i)

maintain and administer;

(ii)

use to carry out its insurance purposes, in the manner provided by this subsection; and

(iii)

invest in accordance with section 13(a).

(B)

Uses

The Deposit Insurance Fund shall be available to the Corporation for use with respect to Deposit Insurance Fund members.

;

(3)

by striking (4) General provisions relating to funds.— and inserting the following:

(4)

Establishment of the deposit insurance fund

;

(4)

in subparagraph (C), as redesignated by paragraph (1) of this subsection, by striking Bank Insurance Fund and the Savings Association Insurance Fund and inserting Deposit Insurance Fund; and

(5)

by adding at the end the following:

(D)

Deposits

All amounts assessed against insured depository institutions by the Corporation shall be deposited in the Deposit Insurance Fund.

.

(b)

Merger-Related Amendments to the Federal Deposit Insurance Act

(1)

Definitions

Section 3(y) of the Federal Deposit Insurance Act (12 U.S.C. 1813(y)) is amended to read as follows:

(y)

Definitions Relating to the Deposit Insurance Fund

(1)

Deposit insurance fund

The terms Deposit Insurance Fund and Fund mean the fund established under section 11(a)(4).

.

(2)

Assessments

Section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817) is amended—

(A)

by striking subsection (l);

(B)

by redesignating subsections (m) and (n) as subsections (l) and (m), respectively; and

(C)

in subsection (b), by striking paragraph (2) and inserting the following:

(2)

Assessments

(A)

In general

Each insured depository institution shall pay assessments to the Corporation in such amounts and at such time or times as the Board of Directors may require.

(B)

Factors to be considered

In setting assessments for insured depository institutions, the Board of Directors shall consider—

(i)

the estimated operating expenses of the Deposit Insurance Fund;

(ii)

the estimated case resolution expenditures and income of the Deposit Insurance Fund;

(iii)

the projected effects of assessments on the earnings and capital of insured depository institutions;

(iv)

the need to maintain a risk-based assessment system under paragraph (1); and

(v)

any other factors that the Board of Directors may determine to be appropriate.

(C)

Notice of assessments

The Corporation shall notify each insured depository institution of assessments charged to that institution.

(D)

Newly insured institutions

To facilitate the administration of this section, the Board of Directors may waive the requirements of subsection (c)(1) and subparagraph (A) of this paragraph for any assessment period in which a depository institution becomes insured.

.

(3)

Repeal of separate funds provisions

Section 11(a) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is amended—

(A)

by striking paragraphs (5), (6), and (7); and

(B)

by redesignating paragraph (8) as paragraph (5).

2005.

Technical and conforming amendments to the Federal Deposit Insurance Act

(a)

In General

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended—

(1)

in section 3(a)(1) (12 U.S.C. 1813(a)(1)), by striking subparagraph (B) and inserting the following:

(B)

includes any former savings association.

;

(2)

in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by striking the Bank Insurance Fund or the Savings Association Insurance Fund; and inserting the Deposit Insurance Fund,;

(3)

in section 5(c)(4), by striking deposit insurance fund and inserting Deposit Insurance Fund;

(4)

in section 5(d) (12 U.S.C. 1815(d)), by striking paragraphs (2) and (3);

(5)

in section 5(d)(1) (12 U.S.C. 1815(d)(1))—

(A)

in subparagraph (A), by striking reserve ratios in the Bank Insurance Fund and the Savings Association Insurance Fund as required by section 7 and inserting the reserve ratio of the Deposit Insurance Fund;

(B)

by striking subparagraph (B) and inserting the following:

(2)

Fee credited to the deposit insurance fund

The fee paid by the depository institution under paragraph (1) shall be credited to the Deposit Insurance Fund.

;

(C)

by striking Uninsured institutions.— and all that follows through general.— and inserting Uninsured institutions.—; and

(D)

by redesignating subparagraph (C) as paragraph (3) and moving the margin 2 ems to the left;

(6)

in section 5(e) (12 U.S.C. 1815(e))—

(A)

in paragraph (5)(A), by striking Bank Insurance Fund or the Savings Association Insurance Fund and inserting Deposit Insurance Fund;

(B)

by striking paragraph (6); and

(C)

by redesignating paragraphs (7), (8), and (9) as paragraphs (6), (7), and (8), respectively;

(7)

in section 6(5) (12 U.S.C. 1816(5)), by striking Bank Insurance Fund or the Savings Association Insurance Fund and inserting Deposit Insurance Fund;

(8)

in section 7(a)(3) (12 U.S.C. 1817(a)(3))—

(A)

by striking in July; and

(B)

by striking in January;

(9)

in section 7(b) (12 U.S.C. 1817(b))—

(A)

in paragraph (1)—

(i)

in subparagraph (B)(ii), by striking institution’s semiannual assessment and inserting assessments for that institution under subsection (b); and

(ii)

in subparagraph (C)—

(I)

by striking a depository institution’s semiannual assessment and inserting assessments for a depository institution under subsection (b); and

(II)

by striking deposit insurance fund each place that term appears and inserting Deposit Insurance Fund;

(B)

in paragraph (1)(D), by striking each deposit insurance fund and inserting the Deposit Insurance Fund;

(C)

by striking paragraph (4) and redesignating paragraphs (5) through (7) as paragraphs (4) through (6), respectively;

(D)

in paragraph (5), as so redesignated—

(i)

by striking any such assessment and inserting any such assessment is necessary;

(ii)

by striking subparagraph (B);

(iii)

in subparagraph (A)—

(I)

by striking (A) is necessary—;

(II)

by striking Bank Insurance Fund members and inserting insured depository institutions; and

(III)

by redesignating clauses (i), (ii), and (iii) as subparagraphs (A), (B), and (C), respectively, and moving the margins 2 ems to the left; and

(iv)

in subparagraph (C) (as redesignated)—

(I)

by inserting that before the Corporation; and

(II)

by striking ; and and inserting a period; and

(E)

in paragraph (6), as so redesignated, by striking semiannual assessment and inserting assessment under subsection (b);

(10)

in section 7(c) (12 U.S.C. 1817(c))—

(A)

in paragraph (1), by striking institution’s semiannual assessment and inserting assessments for that institution under subsection (b);

(B)

by striking paragraphs (2) and (3); and

(C)

by redesignating paragraph (4) as paragraph (2);

(11)

in section 7(j)(7)(F) (12 U.S.C. 1817(j)(7)(F)), by striking Bank Insurance Fund or the Savings Association Insurance Fund and inserting Deposit Insurance Fund;

(12)

in section 8 (12 U.S.C. 1818)—

(A)

in subsection (p), by striking semiannual;

(B)

in subsection (q), by striking semiannual and inserting assessment; and

(C)

in subsection (t)(2)(C), by striking deposit insurance fund and inserting Deposit Insurance Fund;

(13)

in section 11 (12 U.S.C. 1821), by striking deposit insurance fund each place that term appears and inserting Deposit Insurance Fund;

(14)

in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by striking , except that— and all that follows through the end of the paragraph and inserting a period;

(15)

in section 11(i)(3) (12 U.S.C. 1821(i)(3))—

(A)

by striking subparagraph (B);

(B)

by redesignating subparagraph (C) as subparagraph (B); and

(C)

in subparagraph (B) (as redesignated), by striking subparagraphs (A) and (B) and inserting subparagraph (A);

(16)

in section 11(p)(2)(B) (12 U.S.C. 1821(p)(2)(B)), by striking institution, any and inserting institution, the;

(17)

in section 12(f)(4)(E)(iv) (12 U.S.C. 1822(f)(4)(E)(iv)), by striking Federal deposit insurance funds and inserting the Deposit Insurance Fund, or any predecessor deposit insurance fund;

(18)

in section 13 (12 U.S.C. 1823)—

(A)

by striking deposit insurance fund each place that term appears and inserting Deposit Insurance Fund;

(B)

in subsection (a)(1), by striking Bank Insurance Fund, the Savings Association Insurance Fund, and inserting Deposit Insurance Fund;

(C)

in subsection (c)(4)(E)—

(i)

in the subparagraph heading, by striking funds and inserting fund; and

(ii)

in clause (i), by striking any insurance fund and inserting the Deposit Insurance Fund;

(D)

in subsection (c)(4)(G)(ii)—

(i)

by striking appropriate insurance fund and inserting Deposit Insurance Fund;

(ii)

by striking the members of the insurance fund (of which such institution is a member) and inserting insured depository institutions;

(iii)

by striking each member’s and inserting each insured depository institution’s;

(iv)

by striking the member’s each place that term appears and inserting the institution’s; and

(v)

in subclause (II), by striking semiannual and inserting applicable assessment;

(E)

in subsection (c), by striking paragraph (11);

(F)

in subsection (h), by striking Bank Insurance Fund and inserting Deposit Insurance Fund;

(G)

in subsection (k)(4)(B)(i), by striking Savings Association Insurance Fund member and inserting savings association; and

(H)

in subsection (k)(5)—

(i)

in subparagraph (A), by striking Savings Association Insurance Fund members and inserting savings associations;

(ii)

by striking member’s each place that term appears and inserting savings association’s; and

(iii)

by striking member each place that term appears and inserting savings association;

(19)

in section 14(a) (12 U.S.C. 1824(a)), in the 5th sentence—

(A)

by striking Bank Insurance Fund or the Savings Association Insurance Fund and inserting Deposit Insurance Fund; and

(B)

by striking each such fund and inserting the Deposit Insurance Fund;

(20)

in section 14(b) (12 U.S.C. 1824(b)), by striking Bank Insurance Fund or Savings Association Insurance Fund and inserting Deposit Insurance Fund;

(21)

in section 14(c) (12 U.S.C. 1824(c))—

(A)

in paragraph (2)(A), by striking (7) and inserting (6); and

(B)

by striking paragraph (3);

(22)

in section 14(d) (12 U.S.C. 1824(d))—

(A)

by striking Bank Insurance Fund member each place that term appears and inserting insured depository institution;

(B)

by striking Bank Insurance Fund members each place that term appears and inserting insured depository institutions;

(C)

by striking Bank Insurance Fund each place that term appears (other than in connection with a reference to a Bank Insurance Fund member or members) and inserting Deposit Insurance Fund;

(D)

by striking the subsection heading and inserting the following:

(d)

Borrowing for the Deposit Insurance Fund From Insured Depository Institutions

;

(E)

in paragraph (3), in the paragraph heading, by striking bif and inserting the deposit insurance fund; and

(F)

in paragraph (5), in the paragraph heading, by striking bif members and inserting insured depository institutions;

(23)

in section 14 (12 U.S.C. 1824), by adding at the end the following:

(e)

Borrowing for the Deposit Insurance Fund From Federal Home Loan Banks

(1)

In general

The Corporation may borrow from the Federal home loan banks, with the concurrence of the Federal Housing Finance Board, such funds as the Corporation considers necessary for the use of the Deposit Insurance Fund.

(2)

Terms and conditions

Any loan from any Federal home loan bank under paragraph (1) to the Deposit Insurance Fund shall—

(A)

bear a rate of interest of not less than the current marginal cost of funds to that bank, taking into account the maturities involved;

(B)

be adequately secured, as determined by the Federal Housing Finance Board; and

(C)

be a direct liability of the Deposit Insurance Fund.

;

(24)

in section 15(c)(5) (12 U.S.C. 1825(c)(5))—

(A)

by striking the Bank Insurance Fund or Savings Association Insurance Fund, respectively each place that term appears and inserting the Deposit Insurance Fund; and

(B)

in subparagraph (B), by striking the Bank Insurance Fund or the Savings Association Insurance Fund, respectively and inserting the Deposit Insurance Fund;

(25)

in section 17(a) (12 U.S.C. 1827(a))—

(A)

in the subsection heading, by striking BIF, SAIF, and inserting the Deposit Insurance Fund; and

(B)

in paragraph (1)—

(i)

by striking the Bank Insurance Fund, the Savings Association Insurance Fund, each place that term appears and inserting the Deposit Insurance Fund; and

(ii)

in subparagraph (D), by striking each insurance fund and inserting the Fund;

(26)

in section 17(d) (12 U.S.C. 1827(d)), by striking , the Bank Insurance Fund, the Savings Association Insurance Fund, each place that term appears and inserting the Deposit Insurance Fund;

(27)

in section 18(m) (12 U.S.C. 1828(m))—

(A)

in paragraph (2), in the matter preceding subparagraph (A), by striking the colon and inserting a dash;

(B)

in paragraph (3)(A)—

(i)

by striking poses a serious threat to the Savings Association Insurance Fund and inserting of an insured savings association poses a serious threat to the Deposit Insurance Fund; and

(ii)

by striking Savings Association Insurance Fund member and inserting insured savings association; and

(C)

in paragraph (3)(C), by striking Savings Association Insurance Fund or the Bank Insurance Fund and inserting Deposit Insurance Fund;

(28)

in section 18(o) (12 U.S.C. 1828(o)), by striking deposit insurance funds and deposit insurance fund each place those terms appear and inserting Deposit Insurance Fund;

(29)

in section 18(p) (12 U.S.C. 1828(p)), by striking deposit insurance funds and inserting Deposit Insurance Fund;

(30)

in section 24 (12 U.S.C. 1831a)—

(A)

in subsections (a)(1) and (d)(1)(A), by striking appropriate deposit insurance fund each place that term appears and inserting Deposit Insurance Fund;

(B)

in subsection (e)(2)(A), by striking risk to and all that follows through the period and inserting risk to the Deposit Insurance Fund.; and

(C)

in subsections (e)(2)(B)(ii) and (f)(6)(B), by striking the insurance fund of which such bank is a member each place that term appears and inserting the Deposit Insurance Fund;

(31)

in section 28 (12 U.S.C. 1831e), by striking affected deposit insurance fund each place that term appears and inserting Deposit Insurance Fund;

(32)

by striking section 31 (12 U.S.C. 1831h);

(33)

in section 36(i)(3) (12 U.S.C. 1831m(i)(3)), by striking affected deposit insurance fund and inserting Deposit Insurance Fund;

(34)

in section 37(a)(1)(C) (12 U.S.C. 1831n(a)(1)(C)), by striking insurance funds and inserting Deposit Insurance Fund;

(35)

in section 38 (12 U.S.C. 1831o), by striking the deposit insurance fund each place that term appears and inserting the Deposit Insurance Fund;

(36)

in section 38(a) (12 U.S.C. 1831o(a)), in the subsection heading, by striking Funds and inserting Fund;

(37)

in section 38(k) (12 U.S.C. 1831o(k))—

(A)

in paragraph (1), by striking a deposit insurance fund and inserting the Deposit Insurance Fund;

(B)

in paragraph (2), by striking A deposit insurance fund and inserting The Deposit Insurance Fund; and

(C)

in paragraphs (2)(A) and (3)(B), by striking the deposit insurance fund’s outlays each place that term appears and inserting the outlays of the Deposit Insurance Fund; and

(38)

in section 38(o) (12 U.S.C. 1831o(o))—

(A)

by striking Associations.— and all that follows through Subsections (e)(2) in paragraph (2) and inserting Associations.—Subsections (e)(2);

(B)

by redesignating subparagraphs (A), (B), and (C) as paragraphs (1), (2), and (3), respectively, and moving the margins 2 ems to the left; and

(C)

in paragraph (1) (as so redesignated), by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively, and moving the margins 2 ems to the left.

(b)

Conforming Transfer of Funds

Any funds resulting from the application of section 7(d)(2) of the Federal Deposit Insurance Act prior to its repeal under subsection (a)(4) of this section shall be deposited into the general fund of the Deposit Insurance Fund established pursuant to this subtitle.

2006.

Other technical and conforming amendments

(a)

Section 5136 of the Revised Statutes

The paragraph designated the Eleventh of section 5136 of the Revised Statutes of the United States (12 U.S.C. 24) is amended in the 5th sentence, by striking affected deposit insurance fund and inserting Deposit Insurance Fund.

(b)

Investments Promoting Public Welfare; Limitations on Aggregate Investments

The 23d undesignated paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 338a) is amended in the 4th sentence, by striking affected deposit insurance fund and inserting Deposit Insurance Fund.

(c)

Advances to Critically Undercapitalized Depository Institutions

Section 10B(b)(3)(A)(ii) of the Federal Reserve Act (12 U.S.C. 347b(b)(3)(A)(ii)) is amended by striking any deposit insurance fund in and inserting the Deposit Insurance Fund of.

(d)

Amendments to the Federal Home Loan Bank Act

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended—

(1)

in section 11(k) (12 U.S.C. 1431(k))—

(A)

in the subsection heading, by striking SAIF and inserting the Deposit Insurance Fund; and

(B)

by striking Savings Association Insurance Fund each place that term appears and inserting Deposit Insurance Fund;

(2)

in section 21 (12 U.S.C. 1441)—

(A)

in subsection (f)(2), by striking , except that and all that follows through the end of the paragraph and inserting a period; and

(B)

in subsection (k), by striking paragraph (4);

(3)

in section 21A(b)(4)(B) (12 U.S.C. 1441a(b)(4)(B)), by striking affected deposit insurance fund and inserting Deposit Insurance Fund; and

(4)

in section 21B(k) (12 U.S.C. 1441b(k)) by inserting before the colon , the following definitions shall apply.

(e)

Amendments to the Home Owners’ Loan Act

The Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is amended—

(1)

in section 5 (12 U.S.C. 1464)—

(A)

in subsection (c)(6), by striking As used in this subsection— and inserting For purposes of this subsection, the following definitions shall apply:;

(B)

in subsection (o)(1), by striking that is a Bank Insurance Fund member;

(C)

in subsection (o)(2)(A), by striking a Bank Insurance Fund member until such time as it changes its status to a Savings Association Insurance Fund member and inserting insured by the Deposit Insurance Fund;

(D)

in subsection (t)(5)(D)(iii)(II), by striking affected deposit insurance fund and inserting Deposit Insurance Fund;

(E)

in subsection (t)(7)(C)(i)(I), by striking affected deposit insurance fund and inserting Deposit Insurance Fund; and

(F)

in subsection (v)(2)(A)(i), by striking the Savings Association Insurance Fund and inserting or the Deposit Insurance Fund; and

(2)

in section 10 (12 U.S.C. 1467a)—

(A)

in subsection (c)(6)(D), by striking this title and inserting this Act;

(B)

in subsection (e)(1)(B), by striking Savings Association Insurance Fund or Bank Insurance Fund and inserting Deposit Insurance Fund;

(C)

in subsection (e)(2), by striking Savings Association Insurance Fund or the Bank Insurance Fund and inserting Deposit Insurance Fund;

(D)

in subsection (e)(4)(B), by striking subsection (1) and inserting subsection (l);

(E)

in subsection (g)(3)(A), by striking (5) of this section and inserting (5) of this subsection;

(F)

in subsection (i), by redesignating paragraph (5) as paragraph (4);

(G)

in subsection (m)(3), by striking subparagraph (E), and by redesignating subparagraphs (F), (G), and (H) as subparagraphs (E), (F), and (G), respectively;

(H)

in subsection (m)(7)(A), by striking during period and inserting during the period; and

(I)

in subsection (o)(3)(D), by striking sections 5(s) and (t) of this Act and inserting subsections (s) and (t) of section 5.

(f)

Amendments to the National Housing Act

The National Housing Act (12 U.S.C. 1701 et seq.) is amended—

(1)

in section 317(b)(1)(B) (12 U.S.C. 1723i(b)(1)(B)), by striking Bank Insurance Fund for banks or through the Savings Association Insurance Fund for savings associations and inserting Deposit Insurance Fund; and

(2)

in section 536(b)(1)(B)(ii) (12 U.S.C. 1735f–14(b)(1)(B)(ii)), by striking Bank Insurance Fund for banks and through the Savings Association Insurance Fund for savings associations and inserting Deposit Insurance Fund.

(g)

Amendments to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note) is amended—

(1)

in section 951(b)(3)(B) (12 U.S.C. 1833a(b)(3)(B)), by striking Bank Insurance Fund, the Savings Association Insurance Fund, and inserting Deposit Insurance Fund (or any predecessor deposit insurance fund); and

(2)

in section 1112(c)(1)(B) (12 U.S.C. 3341(c)(1)(B)), by striking Bank Insurance Fund, the Savings Association Insurance Fund, and inserting Deposit Insurance Fund.

(h)

Amendment to the Bank Holding Company Act of 1956

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended—

(1)

in section 2(j)(2) (12 U.S.C. 1841(j)(2)), by striking Savings Association Insurance Fund and inserting Deposit Insurance Fund; and

(2)

in section 3(d)(1)(D)(iii) (12 U.S.C. 1842(d)(1)(D)(iii)), by striking appropriate deposit insurance fund and inserting Deposit Insurance Fund.

(i)

Amendments to the Gramm-Leach-Bliley Act

Section 114 of the Gramm-Leach-Bliley Act (12 U.S.C. 1828a) is amended in each of subsection (a)(1)(B), paragraphs (2)(B) and (4)(B) of subsection (b), and subsection (c)(1)(B), by striking any Federal deposit insurance fund and inserting the Deposit Insurance Fund.

2007.

Effective date

(a)

In General

Except as otherwise provided in this subtitle, this subtitle and the amendments made by this subtitle shall become effective not later than the first day of the first calendar quarter that begins more than 90 days after the date of enactment of this Act.

(b)

Earlier Implementation

(1)

Corporation determination

If the Corporation determines that merger of the deposit insurance funds should occur before the first day of the first calendar quarter as described in subsection (a), the Corporation shall—

(A)

announce such determination publicly; and

(B)

establish the effective date of the merger.

(2)

Earlier effective date

On the date established under paragraph (1)(B), this subtitle and the amendments made by this subtitle shall become effective.

B

Deposit Insurance Modernization and Improvement

2011.

Short title

This subtitle may be cited as the Deposit Insurance Reform Act of 2005.

2012.

Changes to Federal deposit insurance coverage

(a)

Insured Depository Institutions

(1)

In general

Section 11(a)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(1)) is amended—

(A)

by striking subparagraph (B) and inserting the following:

(B)

Net amount of insured deposits

The net amount of deposit insurance payable to any depositor at an insured depository institution shall not exceed the standard maximum deposit insurance amount, as determined in accordance with subparagraphs (C) through (M).

; and

(B)

by striking subparagraph (D) and inserting the following:

(D)

Coverage for certain employee benefit plan deposits

(i)

Pass-through insurance

The Corporation shall provide pass-through deposit insurance for the deposits of any employee benefit plan.

(ii)

Prohibition on acceptance of benefit plan deposits

An insured depository institution that is not well capitalized or adequately capitalized may not accept employee benefit plan deposits.

(iii)

Definitions

For purposes of this subparagraph, the following definitions shall apply:

(I)

Capital standards

The terms well capitalized and adequately capitalized have the same meanings as in section 38.

(II)

Employee benefit plan

The term employee benefit plan has the same meaning as in paragraph (5)(B)(ii), and includes any eligible deferred compensation plan described in section 457 of the Internal Revenue Code of 1986.

(III)

Pass-through deposit insurance

The term pass-through deposit insurance means, with respect to an employee benefit plan, deposit insurance coverage based on the interest of each participant, in accordance with regulations issued by the Corporation.

(E)

Standard maximum deposit insurance amount defined

For purposes of this paragraph, the term standard maximum deposit insurance amount means, until April 1, 2010, $100,000.

(F)

Determination regarding inflation adjustments

(i)

Adjustments to standard maximum deposit insurance amount

Not later than April 1, 2010, and the first day of each 5-year period thereafter, the Board of Directors shall determine whether to increase the standard maximum deposit insurance amount based on the factors set forth under subparagraph (G).

(ii)

Adjustments for certain retirement accounts

Not later than April 1, 2010, and the first day of each 5-year period thereafter, the Board of Directors shall determine whether to increase the amount of insurance available for retirement accounts under paragraph (3), based on the factors set forth under subparagraph (G).

(G)

Inflation adjustment considerations

In making any determination under subparagraph (F), the Board of Directors shall consider—

(i)

the economic conditions affecting insured depository institutions;

(ii)

the overall risk or risks to the Deposit Insurance Fund;

(iii)

a demonstrated need by depositors for the inflation adjustment increase;

(iv)

the ability of insured depository institutions to identify and obtain alternative funding sources;

(v)

the ability of insured depository institutions to meet the credit needs of their communities;

(vi)

potential problems affecting insured depository institutions generally or a specific group or type of insured depository institutions; and

(vii)

any other factors that the Board of Directors deems appropriate.

(H)

Inflation adjustment calculations for 2010

(i)

Calculation for standard maximum deposit insurance amount

The amount provided for any increase in the standard maximum deposit insurance amount shall be, as of April 1, 2010, the product of—

(I)

$100,000; and

(II)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this subparagraph, to the value of such index for December 31 of the year preceding the effective date of the Safe and Fair Deposit Insurance Act of 2005.

(ii)

Calculation for certain retirement accounts for 2010

The amount provided for any increase in the insurance for retirement accounts under paragraph (3) shall be, as of April 1, 2010, the product of—

(I)

$250,000; and

(II)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this subparagraph, to the value of such index for December 31 of the year preceding the effective date of the Safe and Fair Deposit Insurance Act of 2005.

(I)

Inflation adjustment calculations after 2010

(i)

Calculation for the standard maximum deposit insurance amount

The amount provided for any increase in the standard maximum deposit insurance amount shall be, as of the 1st day of each 5-year period beginning on April 1, 2015, the product of—

(I)

the standard maximum deposit insurance amount; and

(II)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this subparagraph, to the value of such index for December 31 of the 6 years prior to the year in which the adjustment is calculated under this subparagraph.

(ii)

Calculation for certain retirement accounts

The amount provided for any increase in the insurance for retirement accounts under paragraph (3) shall be, as of the 1st day of each 5-year period beginning on April 1, 2015, the product of—

(I)

the amount available for retirement accounts under paragraph (3), as adjusted pursuant to subparagraph (H) or this subparagraph, as appropriate; and

(II)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this subparagraph, to the value of such index for December 31 of the 6 years prior to the year in which the adjustment is calculated under this subparagraph.

(J)

Determination of no inflation increases

If the Board cannot support an increase under subparagraph (F) after consideration of the factors in subparagraph (G), no inflation adjustment shall be made until reconsideration at the beginning of the next 5-year period.

(K)

Rounding

If the amount of increase determined for any period is not a multiple of $10,000, the amount so determined shall be rounded to the nearest $10,000.

(L)

Publication

Not later than April 1, 2010, and not later than the first day of each 5-year period thereafter, the Board of Directors shall publish in the Federal Register the standard maximum deposit insurance amount and the amount of deposit insurance coverage that may be due to any depositor at any insured depository institution during the applicable 5-year period.

(M)

No inflation adjustments for public funds

Subparagraphs (E) through (L) shall not apply to any deposits of depositors described in paragraph (2), and the net amount due to any such depositor at an insured depository institution shall not exceed $100,000.

.

(2)

Deposit insurance for retirement accounts

Section 11(a)(3)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(3)(A)) is amended—

(A)

by striking $100,000 and inserting $250,000; and

(B)

by inserting before the period at the end the following: which amount shall be subject to inflation adjustments as provided in paragraph (1)..

(3)

Technical and conforming amendment relating to insurance of trust funds

Section 7(i) of the Federal Deposit Insurance Act (12 U.S.C. 1817(i)) is amended in each of paragraphs (1) and (3), by striking $100,000 each place it appears and inserting the standard maximum deposit insurance amount (as determined under section 11(a)(1)).

(4)

Other technical and conforming amendments

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended—

(A)

in section 11(m)(6) (12 U.S.C. 1821(m)(6)), by striking $100,000 and inserting the standard maximum deposit insurance amount (as determined under subsection (a)(1));

(B)

in section 18 (12 U.S.C. 1828), by striking subsection (a) and inserting the following:

(a)

Insurance Logo

(1)

Insured depository institutions

(A)

In general

Each insured depository institution shall display at each place of business maintained by that institution a sign or signs relating to the insurance of the deposits of the institution, in accordance with regulations to be prescribed by the Corporation.

(B)

Statement to be included

Each sign required under subparagraph (A) shall include a statement that insured deposits are backed by the full faith and credit of the United States Government.

(2)

Regulations

The Corporation shall prescribe regulations to carry out this subsection, including regulations governing the substance of signs required by paragraph (1) and the manner of display or use of such signs.

(3)

Penalties

For each day that an insured depository institution continues to violate this subsection or any regulation issued under this subsection, it shall be subject to a penalty of not more than $100, which the Corporation may recover for its use.

; and

(C)

in section 43(d) (12 U.S.C. 1831t(d)), by striking $100,000 and inserting the standard maximum deposit insurance amount (as determined under section 11(a)(1)).

(b)

Insured Credit Unions

(1)

In general

Section 207(k) of the Federal Credit Union Act (12 U.S.C. 1787(k)) is amended—

(A)

by striking (k)(1) and all that follows through the end of paragraph (1) and inserting the following:

(k)

Insured Amounts Payable

(1)

Net insured amount

(A)

In general

Subject to the provisions of paragraph (2), the net amount of share insurance payable to any member at an insured credit union shall not exceed the total amount of the shares or deposits in the name of the member (after deducting offsets), less any part thereof which is in excess of the standard maximum share insurance amount, as determined in accordance with this paragraph and paragraphs (5) and (6), and consistent with actions taken by the Federal Deposit Insurance Corporation under section 11(a) of the Federal Deposit Insurance Act.

(B)

Aggregation

Determination of the net amount of share insurance under subparagraph (A), shall be in accordance with such regulations as the Board may prescribe, and, in determining the amount payable to any member, there shall be added together all accounts in the credit union maintained by that member for that member’s own benefit, either in the member’s own name or in the names of others.

(C)

Authority to define the extent of coverage

The Board may define, with such classifications and exceptions as it may prescribe, the extent of the share insurance coverage provided for member accounts, including member accounts in the name of a minor, in trust, or in joint tenancy.

;

(B)

by adding at the end the following:

(4)

Coverage for certain employee benefit plan deposits

(A)

Pass-through insurance

The Administration shall provide pass-through share insurance for the deposits or shares of any employee benefit plan, subject to subparagraph (B).

(B)

Prohibition on acceptance of deposits

An insured credit union that is not well capitalized or adequately capitalized may not accept employee benefit plan deposits.

(C)

Definitions

For purposes of this paragraph, the following definitions shall apply:

(i)

Capital standards

The terms well capitalized and adequately capitalized have the same meanings as in section 216(c), as added by section 301 of the Credit Union Membership Access Act (Public Law 105–219, 112 Stat. 931).

(ii)

Employee benefit plan

The term employee benefit plan

(I)

has the same meaning as in section 3(3) of the Employee Retirement Income Security Act of 1974;

(II)

includes any plan described in section 401(d) of the Internal Revenue Code of 1986; and

(III)

includes any eligible deferred compensation plan described in section 457 of the Internal Revenue Code of 1986.

(iii)

Pass-through share insurance

The term pass-through share insurance means, with respect to an employee benefit plan, insurance coverage based on the interest of each participant, in accordance with regulations issued by the Corporation.

(5)

Standard maximum share insurance amount defined

For purposes of this subsection, the term standard maximum share insurance amount means, until April 1, 2010, $100,000.

(6)

Determinations regarding inflation adjustments

(A)

Adjustments to standard maximum share insurance amount

Not later than April 1, 2010, and the first day of each 5-year period thereafter, the Board shall determine whether to increase the standard maximum share insurance amount based on the factors set forth under paragraph (7).

(B)

Adjustment for certain retirement accounts

Not later than April 1, 2010, and the first day of each 5-year period thereafter, the Board shall determine whether to increase the amount of insurance available for retirement accounts under paragraph (3), based on the factors set forth under paragraph (7).

(7)

Inflation adjustment considerations

In making any determination under paragraph (6), the Board shall consider—

(A)

the economic conditions affecting insured credit unions;

(B)

the overall risk or risks to the National Credit Union Share Insurance Fund;

(C)

a demonstrated need by members for the inflation adjustment increase;

(D)

the ability of insured credit unions to identify and obtain alternative funding sources;

(E)

the ability of insured credit unions to meet the credit needs of their communities;

(F)

potential problems affecting insured credit unions generally or a specific group or type of insured credit unions; and

(G)

any other factors that the Board deems appropriate.

(8)

Inflation adjustment calculations for 2010

(A)

Calculation for standard maximum share insurance amount

The amount provided for any increase in the standard maximum share insurance amount shall be, as of April 1, 2010, the product of—

(i)

$100,000; and

(ii)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this paragraph, to the value of such index for December 31 of the year preceding the effective date of the Safe and Fair Deposit Insurance Act of 2005.

(B)

Calculation for certain retirement accounts for 2010

The amount provided for any increase in the insurance for retirement accounts under paragraph (3) shall be, as of April 1, 2010, the product of—

(i)

$250,000; and

(ii)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this paragraph, to the value of such index for December 31 of the year preceding the effective date of the Safe and Fair Deposit Insurance Act of 2005.

(9)

Inflation adjustment calculations after 2010

(A)

Calculation for the standard maximum share insurance amount

The amount provided for any increase in the standard maximum share insurance amount shall be, as of the 1st day of each 5-year period beginning on April 1, 2015, the product of—

(i)

the standard maximum share insurance amount; and

(ii)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this paragraph, to the value of such index for December 31 of the 6 years prior to the year in which the adjustment is calculated under this paragraph.

(B)

Calculation for certain retirement accounts

The amount provided for any increase in the insurance for retirement accounts under paragraph (3) shall be, as of the 1st day of each 5-year period beginning on April 1, 2015, the product of—

(i)

the amount available for retirement accounts under paragraph (3), as adjusted pursuant to paragraph (8) or this paragraph, as appropriate; and

(ii)

the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published by the Department of Commerce, for December 31 of the year preceding the year in which the adjustment is calculated under this paragraph, to the value of such index for December 31 of the 6 years prior to the year in which the adjustment is calculated under this paragraph.

(10)

Determination of no inflation increase

If the Board cannot support an increase under paragraph (6) after consideration of the factors in paragraph (7), no inflation adjustment shall be made until reconsideration at the beginning of the next 5-year period.

(11)

Rounding

If the amount of increase determined for any period is not a multiple of $10,000, the amount so determined shall be rounded to the nearest $10,000.

(12)

Publication

Not later than April 1, 2010, and not later than the first day of each 5-year period thereafter, the Board shall publish in the Federal Register the standard maximum share insurance amount and the amount of share insurance coverage that may be due to any depositor at any insured credit union during the applicable 5-year period.

(13)

No inflation adjustments for public funds

Paragraphs (5) through (12) shall not apply to any deposits of depositors described in paragraph (2), and the net amount due to any such depositor at an insured credit union shall not exceed $100,000.

; and

(C)

in paragraph (3), by striking $100,000 per account and inserting the following: $250,000 per account, which amount shall be subject to inflation adjustments as provided in paragraphs (6) through (12)..

(2)

Technical amendment

Section 202(h) of the Federal Credit Union Act (12 U.S.C. 1782(h)) is amended by striking 207(c)(1) and inserting 207(k).

(c)

Effective Date

Except as otherwise specifically provided in this section or the amendments made by this section, this section and such amendments shall become effective on the effective date of the regulations required under section 2017(a)(2), relating to the implementation of deposit insurance changes under this section.

2013.

Designated Reserve ratio

(a)

Repeal of Recapitalization Schedule

(1)

In general

Section 7(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(3)) is amended to read as follows:

(3)

Designated reserve ratio

(A)

Action by the board

(i)

In general

Before the beginning of each calendar year, the Board of Directors shall, subject to clause (ii)—

(I)

designate the reserve ratio applicable to the Deposit Insurance Fund for that year; and

(II)

publish the reserve ratio so designated.

(ii)

Rulemaking

Any change to the designated reserve ratio for any calendar year shall be made pursuant to section 553 of title 5, United States Code.

(B)

Range

The reserve ratio designated by the Board of Directors for any year—

(i)

may not exceed 1.50 percent; and

(ii)

may not be less than 1.15 percent.

(C)

Factors

In designating a reserve ratio for any year, the Board of Directors shall—

(i)

take into account the risk of losses to the Deposit Insurance Fund in that year and in future years;

(ii)

take into account economic conditions generally affecting insured depository institutions, to provide for an increase in the designated reserve ratio during more favorable economic conditions and to provide for a decrease in the designated reserve ratio during less favorable economic conditions, notwithstanding the increased risks of loss that may exist during such less favorable conditions, as determined to be appropriate by the Board;

(iii)

seek to prevent sharp swings in the assessment rates for insured depository institutions; and

(iv)

take into account such other factors as the Board of Directors may determine to be appropriate, consistent with the requirements of this subparagraph.

.

(2)

Technical and conforming amendments

Section 3(y) of the Federal Deposit Insurance Act (12 U.S.C. 1813), as amended by this title, is amended by adding at the end the following:

(2)

Reserve ratio

The term reserve ratio means the ratio of the fund balance of the Deposit Insurance Fund to aggregate estimated insured deposits held in all insured depository institutions.

(3)

Designated reserve ratio

The term designated reserve ratio means the reserve ratio designated by the Board of Directors under section 7(b)(3).

.

(3)

Effective date

Subject to paragraph (4), and except as otherwise provided, this subsection and the amendments made by this subsection shall become effective on the effective date of the regulations required under section 2017(a)(1), relating to designation of the reserve ratio by the Board.

(4)

Designation of initial reserve ratio for deposit insurance fund

During the period beginning on the effective date of the merger of the deposit insurance funds under section 2003, and ending on the effective date of final regulations designating the reserve ratio, as required by section 2017(a)(1), the designated reserve ratio of the Deposit Insurance Fund shall continue to be determined pursuant to section 7(b)(2)(A)(iv), as in effect on the day before the effective date of the merger under section 2003.

(b)

Requirements Applicable to Any Modification of the Risk-Based Assessment System

Section 7(b)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)) is amended by adding at the end the following:

(E)

Requirements applicable to any modification of the risk-based assessment system

(i)

In general

In revising or modifying the risk-based assessment system at any time after the date of enactment of the Deposit Insurance Reform Act of 2005, the Board of Directors—

(I)

may not make any change to the information collected from or required to be retained by insured depository institutions solely for purposes of the assessment risk classification, as defined by regulations of the Board, if the change would result in the imposition of an overall greater regulatory or reporting burden on insured depository institutions than was the case before that date of enactment; and

(II)

may implement any such revision or modification in final form only after notice and opportunity for comment.

(ii)

Rule of construction

An increase in an assessment rate or a revision of the assessment base shall not be considered to be a revision or modification resulting in greater regulatory or reporting burden for purposes of this subparagraph.

.

2014.

Assessment credits and dividends

(a)

In General

Section 7(e)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(e)(2)) is amended to read as follows:

(2)

One-time credit based on total assessment base at year-end 1996

(A)

In general

The Board of Directors shall, by regulation, provide for a credit to each insured depository institution that was in existence on December 31, 1996, and that had paid a deposit insurance assessment prior to that date (or a successor insured depository institution), based on the assessment base of the institution on that date, as compared to the combined aggregate assessment base of all such institutions, taking into account such factors as the Board may determine to be appropriate.

(B)

Credit limit

The aggregate amount of credits available under subparagraph (A) to all insured depository institutions that are eligible for the credit shall not exceed the amount that the Corporation could collect if it imposed an assessment of 9 basis points on the combined assessment base of the Bank Insurance Fund and the Savings Association Insurance Fund as of December 31, 2001.

(C)

Definition of successor

The Corporation shall define the term successor for purposes of this paragraph, by regulation, and may consider, among other factors and as the Board may deem appropriate, whether and to what extent, if any, an insured depository institution that acquires deposits from another insured depository institution may deemed to be a successor.

(D)

Application of credits

The amount of a credit to any insured depository institution under this paragraph may be applied by the Corporation to those portions of the assessments under subsection (b) applicable to that institution which become due for assessment periods beginning after the effective date of regulations required by subparagraph (A).

.

(b)

Amendments to Section 7

Section 7(e) of the Federal Deposit Insurance Act (12 U.S.C. 1817(e)) is amended by adding at the end the following new paragraphs:

(3)

Dividends

(A)

Reserve ratio in excess of 1.50 percent of estimated insured deposits

The Corporation shall provide cash dividends to insured depository institutions in accordance with this paragraph if the reserve ratio of the Deposit Insurance Fund exceeds the maximum amount established under subsection (b)(3)(B)(i), to the extent of that excess amount.

(B)

Amount equal to or in excess of 1.40 percent of estimated insured deposits and not more than 1.50 percent

The Corporation shall provide cash dividends to insured depository institutions in accordance with this paragraph if the reserve ratio of the Deposit Insurance Fund equals or exceeds 1.40 and is not more than 1.50 percent, and that amount shall equal 50 percent of the amount in excess of the amount required to maintain the reserve ratio at 1.40 percent of the estimated insured deposits.

(C)

Factors for consideration for allocation of dividends

In implementing the provisions of this paragraph, and in accordance with its regulations, the Corporation shall consider—

(i)

the ratio of the assessment base of an insured depository institution (including any predecessor institution) on December 31, 1996, to the assessment base of all eligible insured depository institutions on such date;

(ii)

the total amount of assessments paid on or after January 1, 1997, by an insured depository institution (including any predecessor institution) to the Deposit Insurance Fund (and any predecessor deposit insurance fund);

(iii)

that portion of assessments paid by an insured depository institution (including any predecessor institution) that reflects higher levels of risk assumed by such institution; and

(iv)

such other factors as the Corporation determines appropriate.

(D)

Limitation

The Board of Directors may suspend or limit dividends paid under subparagraph (B) if the Board determines in writing that—

(i)

a significant risk of losses to the Deposit Insurance Fund exists over the next one-year period; and

(ii)

it is likely that such losses will be sufficiently high as to justify a finding by the Board that the reserve ratio should temporarily be allowed—

(I)

to grow without requiring dividends under subparagraph (B); or

(II)

to exceed the maximum amount established under subsection (b)(3)(B)(i).

(E)

Considerations

In making a determination under subparagraph (D), the Board shall consider—

(i)

national and regional conditions and their impact on insured depository institutions;

(ii)

potential problems affecting insured depository institutions or a specific group or type of depository institution;

(iii)

the degree to which the contingent liability of the Corporation for anticipated failures of insured institutions adequately addresses concerns over funding levels in the Deposit Insurance Fund; and

(iv)

any other factors that the Board determines are appropriate.

(F)

Report to congress

(i)

Submission

Any determination under subparagraph (D) shall be submitted to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, not later than 270 days after making such determination.

(ii)

Content

The report submitted under clause (i) shall include—

(I)

a detailed explanation for the determination; and

(II)

a discussion of the factors required to be considered under subparagraph (E).

(G)

Review of determination

(i)

Annual review

A determination to suspend or limit dividends under subparagraph (D) shall be reviewed by the Board of Directors annually.

(ii)

Action by board

Based on each annual review under clause (i), the Board of Directors shall either renew or remove a determination to suspend or limit dividends under subparagraph (D), or shall make a new determination in accordance with this paragraph. Unless justified under the terms of the renewal or new determination, the Corporation shall be required to provide cash dividends under subparagraph (A) or (B), as appropriate.

(4)

Challenges to credit or dividend amounts

The regulations required under this subsection shall include provisions allowing an insured depository institution a reasonable opportunity to challenge administratively the amount of its credit or dividend under this subsection. The determination of the Corporation of the amount of the credit or dividend following such challenge shall be final, and not subject to judicial review.

.

(c)

Effective Date

The amendments made by this section shall become effective on the effective date of the regulations required to be issued under section 2017(a)(3), relating to implementation of the one-time assessment credit.

2015.

Assessments-related records retention and statute of limitations

(a)

Records Retention

Paragraph (5) of section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)) is amended to read as follows:

(5)

Records to be maintained by insured depository institution

Each insured depository institution shall maintain all records that the Corporation may require for verifying the correctness of the institution’s assessments until the later of—

(A)

3 years from the due date of each assessment payment; or

(B)

the date of the final determination of any dispute between the insured depository institution and the Corporation over the amount of any assessment.

.

(b)

Statute of Limitations for Assessment Actions

Subsection (g) of section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817(g)) is amended to read as follows:

(g)

Statute of Limitations for Assessment Actions

The Corporation, in any court of competent jurisdiction, shall be entitled to recover from any insured depository institution the amount of any unpaid assessment lawfully payable by such insured depository institution. Notwithstanding any other provision in Federal law, or the law of any State—

(1)

any action by an insured depository institution to recover from the Corporation the overpaid amount of any assessment shall be brought within 3 years after the date the assessment payment was due, subject to the exception in paragraph (5);

(2)

any action by the Corporation to recover from an insured depository institution the underpaid amount of any assessment shall be brought within 3 years after the date the assessment payment was due, subject to the exceptions in paragraphs (3) and (5);

(3)

if an insured depository institution has made a false or fraudulent statement with intent to evade any or all of its assessment, the Corporation shall have until 3 years after the date of discovery of the false or fraudulent statement in which to bring an action to recover the underpaid amount;

(4)

assessment deposit information contained in records no longer required to be maintained pursuant to subsection (b)(5) shall be considered conclusive and not subject to change; and

(5)

any action for the underpaid or overpaid amount of any assessment that became due prior to the effective date of this subsection shall be subject to the statute of limitations for assessments in effect at the time the assessment became due.

.

2016.

Increase in fees for late assessment payments

Subsection (h) of section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828(h)) is amended—

(1)

by striking Any insured depository institution and inserting (1) In general.—Any insured depository institution;

(2)

in paragraph (1), as redesignated, by striking penalty of not more than $100 and inserting penalty in an amount of not more than 1 percent of the amount of the assessment due; and

(3)

by inserting new paragraphs (2) and (3) as follows:

(2)

Exception for small assessment amounts

Notwithstanding paragraph (1), if the amount of the assessment for an insured depository institution is less than $10,000 at the time such institution fails or refuses to pay the assessment, such institution shall be subject to a penalty of not more than $100 for each day that such violation continues.

(3)

Authority to modify or remit penalty

The Corporation, in the sole discretion of the Corporation, may compromise, modify, or remit any penalty which the Corporation may assess or has already assessed under paragraph (1) or (2) upon a finding that good cause prevented the timely payment of an assessment.

.

2017.

Regulations required

(a)

In General

Not later than 270 days after the date of enactment of this Act, the Board shall issue final regulations, in accordance with section 553 of chapter 5 of title 5, United States Code—

(1)

designating the reserve ratio for the Deposit Insurance Fund, in accordance with section 7(b)(3) of the Federal Deposit Insurance Act, as amended by section 2013 of this subtitle, which regulations shall become effective not later than 90 days after the date of their publication in final form;

(2)

implementing changes in deposit insurance coverage in accordance with the amendments made by section 2012, which regulations shall become effective not later than 90 days after the date of their publication in final form;

(3)

implementing the one-time assessment credit to certain insured depository institutions in accordance with section 7(e)(2) of the Federal Deposit Insurance Act, as amended by section 2014 of this subtitle;

(4)

establishing the qualifications and procedures under which the Corporation may provide dividends under section 7(e)(3) of the Federal Deposit Insurance Act, as amended by section 2014 of this subtitle; and

(5)

providing for assessments under section 7 of the Federal Deposit Insurance Act, as amended by this subtitle, which regulations shall become effective on the effective date of the regulations required by paragraph (3).

(b)

Savings Clause

(1)

In general

(A)

Continuation of existing assessment regulations

Nothing in this title or the amendments made by this title shall be construed to affect the authority of the Corporation with regard to the setting or collection of deposit insurance assessments pursuant to any regulations in effect prior to the effective date of any regulations required under subsection (a).

(B)

Treatment of dif members under existing regulations

Assessment regulations in effect prior to the date of enactment of this title shall be read as applying to members of the Deposit Insurance Fund rather than members of the Bank Insurance Fund or Savings Association Insurance Fund, effective on or after the date on which merger of the deposit insurance funds becomes effective under title I.

(2)

Setting assessments

Clause (i) of section 7(b)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)) is amended by striking necessary— and all that follows through the period at the end and inserting necessary..

2018.

Studies of potential changes to the Federal deposit insurance system

(a)

Study and Report by FDIC and NCUA

(1)

Study

The Board of Directors of the Federal Deposit Insurance Corporation and the National Credit Union Administration Board shall each conduct a study of—

(A)

the feasibility of increasing the limit on deposit insurance for deposits of municipalities and other units of general local government, and the potential benefits and the potential adverse consequences that may result from any such increase; and

(B)

the feasibility of establishing a voluntary deposit insurance system for deposits in excess of the maximum amount of deposit insurance for any depositor, and the potential benefits and the potential adverse consequences that may result from the establishment of any such system.

(2)

Report

Not later than 1 year after the date of enactment of this title, the Board of Directors of the Federal Deposit Insurance Corporation and the National Credit Union Administration Board shall each submit a report to the Congress on the study required under paragraph (1), containing the findings and conclusions of the reporting agency, together with such recommendations for legislative or administrative changes as the agency may determine to be appropriate.

(b)

Study and Report Regarding Appropriate Reserve Ratio

(1)

Study

The Corporation shall conduct a study on the feasibility of using alternatives to estimated insured deposits in calculating the reserve ratio of the Deposit Insurance Fund.

(2)

Report

Not later than 1 year after the date of enactment of this title, the Board shall submit a report to Congress on the results of the study required under paragraph (1), together with such recommendations for legislative or administrative actions as may be determined to be appropriate.

2019.

Effective date

Except as otherwise specifically provided in this subtitle, this subtitle and the amendments made by this subtitle shall become effective on the date of enactment of this Act.

C

FHA Asset Disposition

2021.

Short title

This subtitle may be cited as the FHA Asset Disposition Act of 2005.

2022.

Definitions

For purposes of this subtitle—

(1)

the term affordability requirement means any requirement or restriction imposed by the Secretary, at the time of sale, on any multifamily real property or multifamily loan, including a use restriction, rent restriction, or rehabilitation requirement;

(2)

the term discount sale means the sale of multifamily real property in a transaction, including a negotiated sale, in which the sale price is—

(A)

lower than the property market value; and

(B)

set outside of a competitive bidding process that has no affordability requirements;

(3)

the term discount loan sale means the sale of a multifamily loan in a transaction, including a negotiated sale, in which the sale price is lower than the loan market value and is set outside of a competitive bidding process that has no affordability requirements;

(4)

the term loan market value means the value of a multifamily loan, without taking into account any affordability requirements;

(5)

the term multifamily real property means any rental or cooperative housing project of 5 or more units owned by the Secretary that prior to acquisition by the Secretary was security for a loan or loans insured under title II of the National Housing Act;

(6)

the term multifamily loan means a loan held by the Secretary and secured by a multifamily rental or cooperative housing project of 5 or more units that was formerly insured under title II of the National Housing Act;

(7)

the term property market value means the value of any multifamily real property for its current use, without taking into account any affordability requirements; and

(8)

the term Secretary means the Secretary of Housing and Urban Development.

2023.

Appropriated funds requirement for below market sales

(a)

Dispositions by Secretary

Notwithstanding any other provision of law, other than any statutory affordability requirement for the elderly and disabled, disposition by the Secretary of any multifamily real property through a discount sale under section 207(l) or 246 of the National Housing Act, section 203 of the Housing and Community Development Amendments of 1978, or section 204 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, shall be subject to the availability of appropriations to the extent that the property value exceeds the sale proceeds. If the multifamily real property is sold for an amount equal to or greater than the property market value, the transaction is not subject to the availability of appropriations.

(b)

Discount Loan Sales

Notwithstanding any other provision of law, and in accordance with the Credit Reform Act of 1990, a discount loan sale under 207(k) of the National Housing Act, section 203(k) of the Housing and Community Development Amendments of 1978, or section 204(a) of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, shall be subject to the availability of appropriations, to the extent that the loan value exceeds the sale proceeds. If the multifamily loan is sold for an amount equal to or greater than the loan market value, then the transaction is not subject to the availability of appropriations.

(c)

Limitation

This section shall not apply to any transaction that formally commences during the 1-year period preceding the date of enactment of this Act.

2024.

Up-front grants

(a)

VA–HUD

Section 204(a) of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–11a(a)) is amended by adding at the end the following: A grant provided under this subsection shall be available only to the extent that appropriations are made in advance for such purpose, and shall not be derived from the General Insurance Fund..

(b)

Other Grant Authority

Section 203(f) of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z–11(f)) is amended—

(1)

by striking paragraph (4); and

(2)

by redesignating paragraphs (5) through (9) as paragraphs (4) through (8), respectively.

(c)

Limitation

The amendments made by this section shall not apply to any grant in connection with any transaction that formally commences during the 1-year period preceding the date of enactment of this Act.

2025.

Authorization of appropriations

There are authorized to be appropriated for fiscal year 2006, $100,000,000 to carry out this subtitle.

D

Adaptive Housing Assistance

2031.

Short title

This subtitle may be cited as the Specially Adapted Housing Grants Improvements Act of 2005.

2032.

Adaptive housing assistance for disabled veterans residing temporarily in housing owned by a family member

(a)

Assistance Authorized

Chapter 21 of title 38, United States Code, is amended by inserting after section 2102 the following new section:

2102A.

Assistance for veterans residing temporarily in housing owned by a family member

(a)

Assistance Authorized

If a disabled veteran described in subsection (a)(2) or (b)(2) of section 2101 of this title resides, but does not intend to permanently reside, in a residence owned by a member of such veteran’s family, the Secretary may assist the veteran in acquiring such adaptations to such residence as are determined by the Secretary to be reasonably necessary because of the veteran’s disability.

(b)

Limitation on Amount of Assistance

Subject to section 2102(d) of this title, the assistance authorized under subsection (a) may not exceed—

(1)

$10,000, in the case of a veteran described in section 2101(a)(2) of this title; or

(2)

$2,000, in the case of a veteran described in section 2101(b)(2) of this title.

(c)

Limitation on Number of Residences Subject to Assistance

A veteran eligible for assistance authorized under subsection (a) may only be provided such assistance with respect to 1 residence.

(d)

Regulations

Assistance under this section shall be provided in accordance with such regulations as the Secretary may prescribe.

(e)

Termination of Authority

The authority to provide assistance under subsection (a) shall expire at the end of the 5-year period beginning on the date of enactment of the Specially Adapted Housing Grants Improvements Act of 2005.

.

(b)

Limitations on Adaptive Housing Assistance

Section 2102 of such title is amended—

(1)

in subsection (a), by striking The assistance authorized by section 2101(a) and all that follows through any one case— and inserting Subject to subsection (d), the assistance authorized under section 2101(a) of this title shall be afforded under 1 of the following plans, at the election of the veteran—;

(2)

by amending subsection (b) to read as follows:

(b)

Subject to subsection (d), and except as provided in section 2104(b) of this title, the assistance authorized by section 2101(b) of this title may not exceed the actual cost, or in the case of a veteran acquiring a residence already adapted with special features, the fair market value, of the adaptations determined by the Secretary under such section 2101(b) to be reasonably necessary.

; and

(3)

by adding at the end the following new subsection:

(d)
(1)

The aggregate amount of assistance available to a veteran under sections 2101(a) and 2102A of this title shall be limited to $50,000.

(2)

The aggregate amount of assistance available to a veteran under sections 2101(b) and 2102A of this title shall be limited to the lesser of—

(A)

the sum of the cost or fair market value described in section 2102(b) of this title and the actual cost of acquiring the adaptations described in subsection (a); and

(B)

$10,000.

(3)

No veteran may receive more than 3 grants of assistance under this chapter.

.

(c)

Clerical Amendment

The table of sections at the beginning of such chapter of such title is amended by inserting after the item relating to section 2102 the following:

2102A. Assistance for veterans residing temporarily in housing owned by family member

.

2033.

GAO reports

(a)

Interim Report

Not later than 3 years after the date of enactment of this Act, the Comptroller General of the United States shall submit to Congress an interim report on the implementation of section 2102A of title 38, United States Code (as added by section 2(a)), by the Department of Veterans Affairs.

(b)

Final Report

Not later than 5 years after the date of enactment of this Act, the Comptroller General of the United States shall submit to Congress a final report on the implementation of such section 2102A by the Department of Veterans Affairs.

III

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

3001.

Short title

This title may be cited as the Digital Transition and Public Safety Act of 2005..

3002.

Analog spectrum recovery; hard deadline

Section 309(j)(14) of the Communications Act of 1934 (47 U.S.C. 309(j)(14)) is amended—

(1)

by striking December 31, 2006. in subparagraph (A) and inserting April 7, 2009.;

(2)

by striking subparagraph (B);

(3)

by striking or (B) in subparagraph (C)(i)(I);

(4)

by striking (C)(i), in subparagraph (D) and inserting (B)(i),; and

(5)

by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

3003.

Auction of recovered spectrum

(a)

Auction: Date, Applicable Requirements

Section 309(j)(15)(C) of the Communications Act of 1934 (47 U.S.C. 309(j)(15)(C)) is amended by adding at the end the following:

(v)

Additional deadlines for recovered analog spectrum

Notwithstanding subparagraph (B), the Commission shall—

(I)

conduct the auction of the licenses for recovered analog spectrum commencing January 28, 2008;

(II)

not later than 60 days after the end of the pleading cycle for long-form applications for such auction established pursuant to part 1 of title 47, Code of Federal Regulations, grant or deny such long-form applications and issue the licenses for such recovered analog spectrum to each successful bidder whose long-form application is granted; and

(III)

collect and deposit the proceeds of such auction in the Digital Transition and Public Safety Fund established by section 3005 of the Digital Transition and Public Safety Act of 2005.

(vi)

Recovered analog spectrum

For purposes of this subparagraph, the term recovered analog spectrum means spectrum reclaimed from the analog television service under paragraph (14), except—

(I)

spectrum required by section 337 to be made available for public safety services; and

(II)

spectrum auctioned prior to the date of enactment of the Digital Transition and Public Safety Act of 2005.

.

(b)

Extension of Auction Authority

Paragraph (11) of section 309(j) of the Communications Act of 1934 (47 U.S.C. 309(j)(11)) is amended by striking September 30, 2007. and inserting September 30, 2009..

3004.

Supplemental license fees

In addition to any fees assessed under the Communications Act of 1934 (47 U.S.C. 151 et seq.), the Commission shall assess extraordinary fees for licenses in the aggregate amount of $10,000,000, which shall be deposited in the Treasury during fiscal year 2006 as offsetting receipts.

3005.

Digital Transition and Public Safety Fund

(a)

Establishment

There is established in the Treasury of the United States a fund called the Digital Transition and Public Safety Fund.

(b)

Deposit of Auction Proceeds

The Commission shall deposit the proceeds of the auction authorized by section 309(j)(15)(C)(v) of the Communications Act of 1934 (47 U.S.C. 309(j)(15)(C)(v)) in the Fund as required by item (III) of that section.

(c)

Payments Authorized

The Secretary of Commerce or the Secretary’s designee shall make payments from the Fund in the following amounts, for the following programs, and in the following order:

(1)

Not to exceed $3,000,000,000 for a program to assist consumers in the purchase of converter boxes that convert a digital television signal to an analog television signal, and any amounts unexpended or unobligated at the conclusion of the program shall be used for the program described in paragraph (3).

(2)

Not to exceed $200,000,000 for a program to convert low-power television stations and television translator stations from analog to digital, and any amounts unexpended or unobligated at the conclusion of the program shall be used for the program described in paragraph (3).

(3)

Not to exceed $1,250,000,000 for a program to facilitate emergency communications, of which $1,000,000,000 shall be used for an interoperability fund and $250,000,000 shall be used to implement a national alert system, of which $50,000,000 shall be used for tsunami warning and coastal vulnerability programs.

(4)

Not to exceed $250,000,000 for a program to implement the ENHANCE 911 Act of 2004 (47 U.S.C. 942 note).

(5)

Not to exceed $200,000,000 for a program to provide assistance to coastal States and Indian tribes affected by hurricanes and other coastal disasters.

(d)

Transfer of Amount to Treasury

On October 2, 2009, Secretary shall transfer $5,000,000,000 from the Fund to the general fund of the Treasury.

(e)

Obligation Time Period

Any amounts that are to be paid from the Fund under subsection (c) shall be obligated no later than September 14, 2010. The Secretary may not obligate any amounts from the Fund until the proceeds of the auction authorized by section 309(j)(15)(C)(v) are actually deposited by the Commission pursuant to subsection (b). Any amount in the Fund that is not obligated under subsection (c) by that date shall be transferred to the general fund of the Treasury.

(f)

Use of Excess Proceeds

Any proceeds of the auction authorized by section 309(j)(15)(C)(v) of the Communications Act of 1934, as added by section 3003 of this Act, that exceed the sum of the payments made from the Fund under subsection (c), the transfer from the Fund under subsection (d), and any amount made available under section 3006 (referred to in this subsection as excess proceeds), shall be distributed as follows:

(1)

The first $1,000,000,000 of excess proceeds shall be transferred to and deposited in the general fund of the Treasury as miscellaneous receipts.

(2)

After the transfer under paragraph (1), the next $500,000,000 of excess proceeds shall be transferred to the interoperability fund described in subsection (c)(3).

(3)

After the transfers under paragraphs (1) and (2), the next $1,200,000,000 of excess proceeds shall be transferred to the assistance program described in subsection (c)(5).

(4)

After the transfers under paragraphs (1) through (3), any remaining excess proceeds shall be transferred to and deposited in the general fund of the Treasury as miscellaneous receipts.

3005A.

Communication system grants

(a)

Definitions

In this section—

(1)

the term demonstration project means the demonstration project established under subsection (b)(1);

(2)

the term Department means the Department of Homeland Security;

(3)

the term emergency response provider has the meaning given that term in section 2(6) the Homeland Security Act of 2002 (6 U.S.C. 101(6)); and

(4)

the term Secretary means the Secretary of Homeland Security.

(b)

In General

(1)

Establishment

There is established in the Department an International Border Community Interoperable Communications Demonstration Project.

(2)

Minimum number of communities

The Secretary shall select not fewer than 2 communities to participate in a demonstration project.

(3)

Location of communities

Not fewer than 1 of the communities selected under paragraph (2) shall be located on the northern border of the United States and not fewer than 1 of the communities selected under paragraph (2) shall be located on the southern border of the United States.

(c)

Project Requirements

The demonstration projects shall—

(1)

address the interoperable communications needs of police officers, firefighters, emergency medical technicians, National Guard, and other emergency response providers;

(2)

foster interoperable communications—

(A)

among Federal, State, local, and tribal government agencies in the United States involved in preventing or responding to terrorist attacks or other catastrophic events; and

(B)

with similar agencies in Canada and Mexico;

(3)

identify common international cross-border frequencies for communications equipment, including radio or computer messaging equipment;

(4)

foster the standardization of interoperable communications equipment;

(5)

identify solutions that will facilitate communications interoperability across national borders expeditiously;

(6)

ensure that emergency response providers can communicate with each another and the public at disaster sites or in the event of a terrorist attack or other catastrophic event;

(7)

provide training and equipment to enable emergency response providers to deal with threats and contingencies in a variety of environments; and

(8)

identify and secure appropriate joint-use equipment to ensure communications access.

(d)

Distribution of Funds

(1)

In general

The Secretary shall distribute funds under this section to each community participating in a demonstration project through the State, or States, in which each community is located.

(2)

Other participants

Not later than 60 days after receiving funds under paragraph (1), a State receiving funds under this section shall make the funds available to the local governments and emergency response providers participating in a demonstration project selected by the Secretary.

(e)

Funding

Amounts made available from the interoperability fund under section 3005(c)(3) shall be available to carry out this section without appropriation.

(f)

Reporting

Not later than December 31, 2005, and each year thereafter in which funds are appropriated for a demonstration project, the Secretary shall provide to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Homeland Security of the House of Representatives a report on the demonstration projects under this section.

3006.

Essential air service Program

(a)

In General

If the amount appropriated to carry out the essential air service program under subchapter II of chapter 417 of title 49, United States Code, equals or exceeds $110,000,000 for fiscal year 2006, 2007, 2008, 2009, or 2010, then the Secretary of Commerce shall make $15,000,000 available from the Digital Transition and Public Safety Fund available to the Secretary of Transportation for use in carrying out the essential air service program for that fiscal year.

(b)

Application with Other Funds

Amounts made available under subsection (a) for any fiscal year shall be in addition to any amounts—

(1)

appropriated for that fiscal year; or

(2)

derived from fees collected pursuant to section 45301(a)(1) of title 49, United States Code, that are made available for obligation and expenditure to carry out the essential air service program for that fiscal year.

IV

ENERGY AND NATURAL RESOURCES

4001.

Oil and gas leasing Program

(a)

Definitions

In this section:

(1)

Coastal plain

The term Coastal Plain means the area identified as the Coastal Plain on the map prepared by the United States Geological Survey, entitled Arctic National Wildlife Refuge 1002 Coastal Plain Area, dated September 2005, and on file with the United States Geological Survey.

(2)

Secretary

The term Secretary means the Secretary of the Interior, acting through the Bureau of Land Management.

(b)

Program

(1)

In general

Congress—

(A)

authorizes the leasing, development, production, and transportation of oil and gas in and from the Coastal Plain; and

(B)

directs the Secretary to take such actions as are necessary to—

(i)

establish and implement an environmentally sound competitive oil and gas leasing program to carry out the activities authorized under subparagraph (A); and

(ii)

conduct 2 lease sales before October 1, 2010.

(2)

Administration

The Secretary shall administer this section through regulations, lease terms, conditions, restrictions, prohibitions, stipulations, and other provisions that ensure the oil and gas exploration, development, production, and transportation activities on the Coastal Plain are carried out in a manner that will ensure the receipt of fair market value by the public for the mineral resources to be leased.

(c)

Lease Sales Before Fiscal Year 2011

(1)

In general

In order to enable the Secretary to hold 2 lease sales before October 1, 2010, this subsection shall apply with respect to the oil and gas leasing program established by the Secretary pursuant to this section.

(2)

Purposes

For purposes of the National Wildlife Refuge System Administration Act of 1966 (16 U.S.C. 668dd et seq.) and amendments made by that Act, the oil and gas leasing program and activities authorized by this section in the Coastal Plain are deemed to be compatible with the purposes for which the Arctic National Wildlife Refuge was established, and no further findings or decisions are required to implement this determination of compatibility.

(3)

Prelease activities

The Final Legislative Environmental Impact Statement on the Coastal Plain dated April 1987 and prepared pursuant to section 1002 of the Alaska National Interest Lands Conservation Act (16 U.S.C. 3142) and section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) is deemed to satisfy the requirements under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) that apply with respect to prelease activities, including actions authorized to be taken by the Secretary to develop and promulgate regulations for the establishment of the leasing program authorized by this section before the conduct of the first lease sale.

(4)

Preferred action

(A)

Nonleasing alternatives

With respect to any environmental impact statement prepared by the Secretary under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) with respect to any lease sale conducted under the leasing program authorized by this section, the Secretary is not required to identify nonleasing alternative courses of action or to analyze the environmental effects of those courses of action.

(B)

Leasing alternatives

The Secretary shall only identify a preferred action for leasing and a single leasing alternative, and analyze the environmental effects and potential mitigation measures for the preferred action and leasing alternative.

(C)

Deadline

The identification and related analyses required by subparagraph (B) shall be completed within 18 months after the date of enactment of this Act.

(D)

Public comments

The Secretary shall only consider public comments that are filed within 30 days after publication of an environmental analysis.

(E)

Compliance

Compliance with this paragraph satisfies all requirements of section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) for the analysis and consideration of the environmental effects of proposed leasing under this section.

(5)

Expedited judicial review

(A)

Venue; deadline

Any complaint seeking judicial review of this section or any action of the Secretary under this section shall be filed in the United States Court of Appeals for the District of Columbia—

(i)

within the 90-day period beginning on the date of the action being challenged; or

(ii)

in the case of a complaint based solely on grounds arising after that period, within 90 days after the complainant knew or reasonably should have known of the grounds for the complaint.

(B)

Scope

Judicial review of a decision of the Secretary to conduct a lease sale under this section (including the environmental analysis of the decision) shall be—

(i)

limited to whether the Secretary has complied with this section; and

(ii)

based on the administrative record of that decision.

(d)

Receipts

Notwithstanding any other provision of law, of the amount of adjusted bonus, rental, and royalty receipts derived from oil and gas leasing and operations authorized under this section—

(1)

50 percent shall be paid to the State of Alaska; and

(2)

the balance shall be deposited into the Treasury as miscellaneous receipts.

(e)

Rights-of-Way

For purposes of section 1102(4)(A) of the Alaska National Interest Lands Conservation Act (16 U.S.C. 3162(4)(A)), any rights-of-way or easements across the Coastal Plain for the exploration, development, production, or transportation of oil and gas shall be considered to be established incident to the management of the Coastal Plain under this section.

(f)

Maximum Surface Acreage

In administering this section, the Secretary shall ensure that the maximum quantity of surface acreage covered by production and support facilities (including airstrips and any area covered by gravel berms or piers for support of pipelines) does not exceed 2,000 acres on the Coastal Plain.

(g)

Prohibition on Exports

An oil or gas lease issued under this title shall prohibit the exportation of oil or gas produced under the lease.

V

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

5001.

Technical corrections to safetea–lu

(a)
(1)

Notwithstanding any other provision of law, the amount of $639,000,000 described in section 1102(b)(10) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (119 Stat. 1144), shall be considered to be—

(A)

for fiscal year 2006 only, $631,000,000; and

(B)

for fiscal year 2007 only, $647,000,000.

(2)

Notwithstanding any other provision of law, the amount of $2,639,000,000 described in section 1102(c)(6) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (119 Stat. 1144), shall be considered to be—

(A)

for fiscal year 2006 only, $2,631,000,000; and

(B)

for fiscal year 2007 only, $2,647,000,000.

(b)

Section 4409 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (119 Stat. 1144) is amended—

(1)

by striking Section and inserting the following:

(a)

In General

Section

; and

(2)

by adding at the end the following:

(b)

Effective Date

The amendments made by this section shall take effect on December 31, 2008.

.

VI

COMMITTEE ON FINANCE

6000.

Amendments to Social Security Act

(a)

Amendments to Social Security Act

Except as otherwise specifically provided, whenever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act.

(b)

References to the Secretary

In this title, the term Secretary means the Secretary of Health and Human Services.

A

Medicaid

1

PAYMENT FOR PRESCRIPTION DRUGS UNDER MEDICAID

6001.

Pharmacy reimbursement

(a)

Definition of Average Manufacturer Price

(1)

In general

Section 1927(k)(1) (42 U.S.C. 1396r–8(k)(1)) is amended—

(A)

in the paragraph heading, by striking price and inserting price; weighted average manufacturer price;

(B)

by striking The term and inserting the following:

(A)

In general

The term

; and

(C)

by adding at the end the following:

(B)

Calculation requirements

For purposes of subparagraph (A), the average manufacturer price shall be calculated according to the following:

(i)

Sales exempted from computation

Without regard to—

(I)

sales exempt from inclusion in the determination of best price under subsection (c)(1)(C)(i);

(II)

such other sales as the Secretary identifies as sales to an entity that are merely nominal in amount under subsection (c)(1)(C)(ii)(III); and

(III)

bona fide service fees (as defined in subparagraph (E)) that are paid by a manufacturer to an entity, that represent fair market value for a bona fide service, and that are not passed on in whole or in part to a client or customer of an entity.

(ii)

Sale price net of discounts

By including the following:

(I)

Cash discounts and volume discounts.

(II)

Free goods that are contingent upon any purchase requirement or agreement.

(III)

Sales at a nominal price that are contingent upon any purchase requirement or agreement.

(IV)

Chargebacks, rebates provided to a pharmacy (including a mail order pharmacy but excluding a pharmacy benefit manager), or any other direct or indirect discounts.

(V)

Any other price concessions, which may be based on recommendations of the Inspector General of the Department of Health and Human Services, that would result in a reduction of the cost to the purchaser, but only if the Secretary provides notice of the Secretary’s intent to include such price concessions in accordance with section 553 of title 5, United States Code.

(C)

Weighted average manufacturer price

The term weighted average manufacturer price means, with respect to a rebate period and multiple source drug, the volume-weighted average of the average manufacturer prices reported under subsection (b)(3)(A)(i)(I) for all drug products described in paragraph (7)(A)(i) that are therapeutically equivalent and bioequivalent forms of the drug, determined by—

(i)

computing the sum of the products (for each National Drug Code assigned to such drug products) of—

(I)

the average manufacturer price; and

(II)

the total number of units reported sold under subsection (b)(3)(A)(i)(I); and

(ii)

dividing the sum determined under clause (i) by the sum of the total number of units under clause (i)(II) for all National Drug Codes assigned to such drug products.

(D)

Limitation on sales at a nominal price

(i)

In general

For purposes of clauses (i)(II) and (ii)(III) of subparagraph (B), only sales by a manufacturer of covered outpatient drugs that are single source drugs, innovator multiple source drugs, or authorized generic drugs at nominal prices to the following shall be considered to be sales at a nominal price or merely nominal in amount:

(I)

A covered entity described in section 340B(a)(4) of the Public Health Service Act.

(II)

An intermediate care facility for the mentally retarded.

(III)

A State-owned or operated nursing facility.

(IV)

Any other facility or entity that the Secretary determines is a safety net provider to which sales of such drugs at a nominal price would be appropriate based on the following factors:

(aa)

The type of facility.

(bb)

The services provided by the facility.

(cc)

The patient population served by the facility.

(dd)

The number of other facilities eligible to purchase at nominal prices in the same service area.

(ii)

Nonapplication

Clause (i) shall not apply with respect to sales by a manufacturer at a nominal price of covered outpatient drugs that are single source drugs, innovator multiple source drugs, or authorized generic drugs pursuant to a master agreement under section 8126 of title 38, United States Code.

(E)

Bona fide service fees

For purposes of subparagraph (B)(i)(III), the term bona fide service fees means expenses that are for an itemized service actually performed by an entity on behalf of a manufacturer that would have generally been paid for by the manufacturer at the same rate had these services been performed by another entity.

.

(2)

Conforming amendments

Section 1927(b)(3)(A)(i) (42 U.S.C. 1396r–8(b)(3)(A)(i)), as amended by section 6003(a), is amended—

(A)

in subclause (I)—

(i)

by inserting and the total number of units sold after (as defined in subsection (k)(1)); and

(ii)

by striking and at the end;

(B)

in subclause (II), by adding and at the end; and

(C)

by adding at the end the following:

(III)

information and data on any sales that were made during such period at a nominal price, including, with respect to each such sale, the purchaser, the name of the product, the amount or number of units of the product sold at a nominal price, and the nominal price paid;

.

(3)

Effective date

(A)

In general

Except as provided in subparagraph (B), the amendments made by this subsection shall take effect on January 1, 2006.

(B)

Exception

Subparagraph (D) of section 1927(k)(1) of the Social Security Act (42 U.S.C. 1396r–8(k)(1)) (as added by paragraph (1)) shall not apply with respect to a contract in effect on the date of enactment of this Act pursuant to which pharmaceutical products are or may be available at nominal prices until the expiration date of such contract, or October 1, 2006, whichever is earlier, and shall apply to sales made, and rebate periods beginning, on or after that date.

(4)

Exclusion of discounts provided to mail order and nursing facility pharmacies from the determination of average manufacturer price

(A)

In general

Section 1927(k)(1)(B)(ii)(IV) (42 U.S.C. 1396r–8(k)(1)(B)(ii)(IV)), as added by paragraph (1)(C), is amended to read as follows:

(IV)

Chargebacks, rebates provided to a pharmacy (excluding a mail order pharmacy, a pharmacy at a nursing facility or home, and a pharmacy benefit manager), or any other direct or indirect discounts.

.

(B)

Effective date

Paragraph (3) shall apply to the amendment made by subparagraph (A).

(5)

Extension of prescription drug discounts to enrollees of medicaid managed care organizations

(A)

In general

Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) is amended—

(i)

in clause (xi), by striking and at the end;

(ii)

in clause (xii), by striking the period at the end and inserting ; and; and

(iii)

by adding at the end the following:

(xiii)

such contract provides that payment for covered outpatient drugs dispensed to individuals eligible for medical assistance who are enrolled with the entity shall be subject to the same rebate agreement entered into under section 1927 as the State is subject to and that the State shall have the option of collecting rebates for the dispensing of such drugs by the entity directly from manufacturers or allowing the entity to collect such rebates from manufacturers in exchange for a reduction in the prepaid payments made to the entity for the enrollment of such individuals.

.

(B)

Conforming amendment

Section 1927(j)(1) (42 U.S.C. 1396r–8(j)91)) is amended by inserting other than for purposes of collection of rebates for the dispensing of such drugs in accordance with the provisions of a contract under section 1903(m) that meets the requirements of paragraph (2)(A)(xiii) of that section before the period.

(C)

Effective date

The amendments made by this paragraph take effect on the date of enactment of this Act and apply to rebate agreements entered into or renewed under section 1927 of the Social Security Act (42 U.S.C. 1396r–8) on or after such date.

(b)

Upper Payment Limit for Ingredient Cost of Covered Outpatient Drugs

(1)

In general

Section 1927(e) (42 U.S.C. 1396r–8(e)) is amended to read as follows:

(e)

Pharmacy Reimbursement Limits

(1)

Upper payment limit for ingredient cost of covered outpatient drugs

No Federal financial participation shall be available for payment for the ingredient cost of a covered outpatient drug that exceeds the upper payment limit for that drug established under paragraph (2).

(2)

Upper payment limit

(A)

In general

Except as provided in subparagraphs (B) and (C), the upper payment limit established under this paragraph for the ingredient cost of a—

(i)

single source drug, is 105 percent of the average manufacturer price for that drug; and

(ii)

multiple source drug, is 115 percent of the weighted average manufacturer price for that drug.

(B)

Exception for initial sales periods

(i)

In general

In the case of a covered outpatient drug during an initial sales period (not to exceed 2 calendar quarters) in which data on sales for the drug is not sufficiently available from the manufacturer to compute the average manufacturer price or the weighted average manufacturer price, the Secretary shall establish the upper payment limit for the ingredient cost of such drug to apply only during such period based on the following:

(I)

In the case of a single source drug, such upper payment limit shall be the wholesale acquisition cost for the drug.

(II)

In the case of a first noninnovator multiple source drug, such upper payment limit shall be the average manufacturer price for the single source drug that is rated as therapeutically equivalent and bioequivalent to such drug, minus 10 percent.

(III)

In the case of a subsequent noninnovator multiple source drug—

(aa)

if the Secretary has sufficient data to determine the weighted average manufacturer price for the drug, such upper payment limit shall be the weighted average manufacturer price determined for the therapeutically equivalent and bioequivalent form of the drug; and

(bb)

if the Secretary does not have sufficient data to determine the weighted average manufacturer price for the drug, such upper payment limit shall be the average manufacturer price for the single source drug that is rated as therapeutically equivalent and bioequivalent to the drug, minus 10 percent.

(ii)

Definition of wholesale acquisition cost

For purposes of clause (i), the term wholesale acquisition cost means, with respect to a drug or biological, the manufacturer’s list price for the drug or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates, or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of drug or biological pricing data.

(C)

Exception for certain innovator multiple source drugs

In the case of an innovator multiple source drug that a prescribing health care provider determines is necessary for treatment of a condition and that a noninnovator multiple source drug would not be as effective for the individual or would have adverse effects for the individual or both, and for which the provider obtains prior authorization in accordance with a program described in subsection (d)(5), the upper payment limit for the innovator multiple source drug shall be 105 percent of the average manufacturer price for such drug.

(D)

Updates; availability of data

(i)

Frequency of determination

The Secretary shall update the upper payment limits applicable under this paragraph on a quarterly basis, taking into account the most recent data collected for purposes of determining such limits and the Food and Drug Administration’s most recent publication of Approved Drug Products with Therapeutic Equivalence Evaluations.

(ii)

Collection of data

(I)

In general

Beginning on January 1, 2006, the Secretary shall collect data with respect to the average manufacturer prices and volume of sales of covered outpatient drugs (or, in the case of covered outpatient drugs that are first marketed after such date, beginning with the first quarter during which the drugs are first marketed).

(II)

Data reported for purposes of determining weighted average manufacturer price

Insofar as there is a lag in the reporting of the information on rebates and chargebacks so that adequate data are not available on a timely basis to update the weighted average manufacturer price for a multiple source drug, the manufacturer of such drug shall apply a methodology based on a 12-month rolling average for the manufacturer to estimate costs attributable to rebates and charge backs for such drug. For years after 2006, the Secretary shall establish a uniform methodology to estimate and apply such costs.

(iii)

Availability of data to states

Notwithstanding subsection (b)(3)(D), beginning with the first quarter of fiscal year 2006 for which data is available, and for each fiscal year quarter thereafter, the Secretary shall make available to States the most recently reported average manufacturer prices for single source drugs and weighted average manufacturer prices for multiple source drugs.

(E)

Authority to enter contracts

The Secretary may enter into contracts with appropriate entities to determine average manufacturer prices, volume, and other data necessary to calculate the upper payment limit for a covered outpatient drug established under this subsection and to calculate that payment limit.

(3)

State use of price data

(A)

Distribution of data

The Secretary shall devise and implement a means for electronic distribution of the most recently calculated weighted average manufacturer price and the average manufacturer price for all covered outpatient drugs to each State agency designated under section 1902(a)(5) with responsibility for the administration or supervision of the administration of the State plan under this title.

(B)

Authority to establish payment rates based on data

A State may use the price data received in accordance with subparagraph (A) in establishing payment rates for the ingredient costs and dispensing fees for covered outpatient drugs dispensed to individuals eligible for medical assistance under this title.

(4)

Reasonable dispensing fees required

(A)

In general

A State which provides medical assistance for covered outpatient drugs shall pay a dispensing fee for each covered outpatient drug for which Federal financial participation is available in accordance with this section in accordance with the following:

(i)

The dispensing fee for a noninnovator multiple source drug shall be greater than the dispensing fee for an innovator multiple source drug that is rated as therapeutically equivalent and bioequivalent to such drug.

(ii)

In establishing such dispensing fees, the State takes into consideration such requirements as the Secretary shall, by regulation, establish, and which shall include consideration of the following:

(I)

Any reasonable costs associated with a pharmacist’s time in checking for information about an individual’s coverage or performing quality assurance activities.

(II)

Costs associated with—

(aa)

the measurement or mixing of a covered outpatient drug;

(bb)

filling the container for the drug;

(cc)

physically providing the completed prescription to an individual enrolled in the program under this title;

(dd)

delivery;

(ee)

special packaging;

(ff)

overhead related to maintaining the facility and equipment necessary to operate the pharmacy, including the salaries of pharmacists and other pharmacy workers;

(gg)

geographic factors that impact operational costs;

(hh)

patient counseling; and

(ii)

the dispensing of drugs requiring specialty pharmacy care management services (as determined by the Secretary in accordance with subparagraph (B)).

(B)

Determination of drugs requiring specialty pharmacy care management services

(i)

In general

Not later than 15 months after the date of enactment of the Deficit Reduction Omnibus Reconciliation Act of 2005, the Secretary shall establish a list of covered outpatient drugs which require specialty pharmacy care management services that includes only those drugs for which the Secretary determines that access by individuals eligible for medical assistance under this title would be seriously impaired without the provision of specialty pharmacy care management services.

(ii)

Specialty pharmacy care management services defined

For purposes of this paragraph, the term specialty pharmacy care management services means services provided in connection with the dispensing or administration of a covered outpatient drug which the Secretary determines requires—

(I)

significant caregiver and provider contact and education regarding the relevant disease state, prevention, treatment, drug indications, benefits, risks, complications, use, pharmacy counseling, and explanation of existing provider guidelines;

(II)

patient compliance services, including coordination of provider visits with drug delivery, compliance with a drug dosing regimen, mailing or telephone call reminders, compiling compliance data, and assisting providers in developing compliance programs; or

(III)

tracking services, including developing referral processes with providers, screening referrals, and tracking patient weight for dosing requirements.

(iii)

Quarterly updates

The Secretary shall update the list of covered outpatient drugs requiring specialty pharmacy management services on a quarterly basis.

(5)

Rules applicable to critical access retail pharmacies

(A)

Reimbursement limits

Notwithstanding paragraph (2)(A), in the case of a critical access retail pharmacy (as defined in subparagraph (C)), the upper payment limit—

(i)

for the ingredient cost of a single source drug, is the lesser of—

(I)

108 percent of the average manufacturer price for the drug; or

(II)

the wholesale acquisition cost for the drug; and

(ii)

for the ingredient cost of a multiple source drug, is the lesser of—

(II)

140 percent of the weighted average manufacturer price for the drug; or

(II)

the wholesale acquisition cost for the drug.

(B)

Application of other provisions

The preceding provisions of this subsection shall apply with respect to reimbursement to a critical access retail pharmacy in the same manner as such provisions apply to reimbursement to other retail pharmacies except that, in establishing the dispensing fee for a critical access pharmacy the Secretary, in addition to the factors required under paragraph (4), shall include consideration of the costs associated with operating a critical access retail pharmacy.

(C)

Critical access retail pharmacy defined

For purposes of subparagraph (A), the term critical access retail pharmacy means an retail pharmacy that is not within a 20-mile radius of another retail pharmacy.

.

(2)

Increase in basic rebate for single source drugs and innovator multiple source drugs

Section 1927(c)(1)(B)(i)(VI) (42 U.S.C. 1396r–8(c)(1)(B)(i)(VI), as added by section 6002(a)(3), is amended by striking 17 and inserting 18.1.

(3)

Conforming amendments

(A)

Section 1927(b)(3)(D)(i) (42 U.S.C. 1396r–8(b)(3)(D)(i)) is amended by inserting (including with respect to the determination of weighted average manufacturer prices under subsection (e)(2) and the distribution of weighted average manufacturer prices and average manufacturer prices for covered outpatient drugs to States under subsection (e)(3)) after this section.

(B)

Section 1903(i)(10) (42 U.S.C. 1396b(i)(10)) is amended—

(i)

in subparagraph (A), by striking and at the end;

(ii)

in subparagraph (B), by striking or at the end and inserting and; and

(iii)

by adding at the end the following:

(C)

with respect to any amount expended for the ingredient cost of a covered outpatient drug that exceeds the upper payment limit for that drug established under section 1927(e); or

.

(4)

Effective date

The amendments made by this subsection take effect with respect to a State on the later of—

(A)

January 1, 2007; or

(B)

the date that is 6 months after the close of the first regular session of the State legislature that begins after the date of enactment of this Act.

(c)

Interim Upper Payment Limit

(1)

In general

With respect to a State program under title XIX of the Social Security Act, during the period that begins on January 1, 2006, and ends on the effective date applicable to such State under subsection (b)(3), the Secretary shall—

(A)

apply the Federal upper payment limit established under section 447.332(b) of title 42, Code of Federal Regulations to the State by substituting 125 percent for 150 percent; and

(B)

in the case of covered outpatient drugs under title XIX of such Act that are marketed as of July 1, 2005, and are subject to Federal upper payment limits that apply under section 447.332 of title 42, Code of Federal Regulations, use average wholesale prices, direct prices, and wholesale acquisition costs for such drugs that do not exceed such prices and costs as of such date to determine the Federal upper payment limits that apply under section 447.332 of title 42, Code of Federal Regulations to such drugs during such period.

(2)

Application to new drugs

Paragraph (1)(A) shall apply to a covered outpatient drug under title XIX of the Social Security Act that is first marketed after July 1, 2005, but before January 1, 2007, and is subject to the Federal upper payment limit established under section 447.332(b) of title 42, Code of Federal Regulations.

6002.

Increase in rebates for covered outpatient drugs

(a)

Increase in Basic Rebate for Single Source Drugs and Innovator Multiple Source Drugs

Section 1927(c)(1)(B)(i) (42 U.S.C. 1396r–8(c)(1)(B)(i)) is amended—

(1)

in subclause (IV), by striking and after the semicolon;

(2)

in subclause (V)—

(A)

by inserting and before January 1, 2006, after 1995,; and

(B)

by striking the period and inserting ; and; and

(3)

by adding at the end the following:

(VI)

after December 31, 2005, is 17 percent.

.

(b)

Increase in Rebate for Other Drugs

Section 1927(c)(3)(B) (42 U.S.C. 1396r–8(c)(3)(B)) is amended—

(1)

in clause (i), by striking and at the end;

(2)

in clause (ii)—

(A)

by inserting and before January 1, 2006, after December 31, 1993,; and

(B)

by striking the period at the end and inserting ; and; and

(3)

by adding at the end the following:

(iii)

after December 31, 2005, is 17 percent.

.

6003.

Improved regulation of authorized generic drugs

(a)

Inclusion With Other Reported Average Manufacturer and Best Prices

Section 1927(b)(3)(A) (42 U.S.C. 1396r–8(b)(3)(A)) is amended—

(1)

by striking clause (i) and inserting the following:

(i)

not later than 30 days after the last day of each rebate period under the agreement—

(I)

on the average manufacturer price (as defined in subsection (k)(1)) for each covered outpatient drug for the rebate period under the agreement (including for each such drug that is an authorized generic drug or is any other drug sold under a new drug application approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act); and

(II)

for each single source drug, innovator multiple source drug, authorized generic drug, and any other drug sold under a new drug application approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act, on the manufacturer’s best price (as defined in subsection (c)(1)(C)) for such drug for the rebate period under the agreement;

; and

(2)

in clause (ii), by inserting (including for such drugs that are authorized generic drugs or are any other drugs sold under a new drug application approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act) after drugs.

(b)

Conforming Amendments

Section 1927 of such Act (42 U.S.C. 1396r–8) is amended—

(1)

in subsection (c)(1)(C)—

(A)

in clause (i), in the matter preceding subclause (I), by striking or innovator multiple source drug of a manufacturer and inserting , innovator multiple source drug, or authorized generic drug of a manufacturer, or any other drug of a manufacturer that is sold under a new drug application approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act; and

(B)

in clause (ii)—

(i)

in subclause (II), by striking and at the end;

(ii)

in subclause (III), by striking the period at the end and inserting ; and; and

(iii)

by adding at the end the following:

(IV)

in the case of a manufacturer that approves, allows, or otherwise permits an authorized generic drug or any other drug of the manufacturer to be sold under a new drug application approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act, shall be inclusive of the lowest price for such authorized generic or other drug available from the manufacturer during the rebate period to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity within the United States, excluding those prices described in subclauses (I) through (IV) of clause (i).

; and

(2)

in subsection (k)—

(A)

in paragraph (1), as amended by section 6001(a)(1)(B), by adding at the end the following:

(F)

Inclusion of authorized generic drugs

In the case of a manufacturer that approves, allows, or otherwise permits an authorized generic drug or any other drug of the manufacturer to be sold under a new drug application approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act, such term shall be inclusive of the average price paid for such authorized generic or other drug.

; and

(B)

by adding at the end the following:

(10)

Authorized generic drug

The term authorized generic drug means a listed drug (as that term is used in section 505(j) of the Federal Food, Drug, and Cosmetic Act) that—

(A)

has been approved under section 505(c) of such Act; and

(B)

is marketed, sold, or distributed directly or indirectly to the retail class of trade under a different labeling, packaging (other than repackaging as the listed drug in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trade mark than the listed drug.

.

(c)

Effective Date

The amendments made by this section take effect on January 1, 2006.

6004.

Collection of rebates for certain physician administered drugs

(a)

In General

Section 1927(a) (42 U.S.C. 1396r–8(a)) is amended by adding at the end the following:

(7)

Requirement for submission of utilization data for certain physician-administered drugs

In order for payment to be available under section 1903(a) for a covered outpatient drug that is physician administered (as determined by the Secretary), and that is administered on or after January 1, 2006, the State shall provide for the submission of such utilization data and coding (including both J-codes and National Drug Code numbers) for each such drug as the Secretary may specify as necessary in order to secure rebates for payments made under this title.

.

(b)

Limitation on Payment

Section 1903(i)(10) (42 U.S.C. 1396b(i)(10)), as amended by section 6001(b)(2)(B), is amended—

(1)

in subparagraph (B), by striking and at the end;

(2)

in subparagraph (C), by striking ; or at the end and inserting , and; and

(3)

by adding at the end the following:

(D)

with respect to covered outpatient drugs described in section 1927(a)(7), unless information with respect to utilization data and coding on such drugs is submitted in accordance with that section; or

.

2

LONG-TERM CARE UNDER MEDICAID

6011.

Reform of Medicaid asset transfer rules

(a)

Requirement To Impose Partial Months of Ineligibility

Section 1917(c)(1)(E) (42 U.S.C. 1396p(c)(1)(E)) is amended by adding at the end the following:

(iv)

A State shall not round down, or otherwise disregard any fractional period of ineligibility determined under clause (i) or (ii) with respect to the disposal of assets.

.

(b)

Authority for States To Accumulate Multiple Transfers Into 1 Penalty Period

Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)) is amended by adding at the end the following:

(F)

Notwithstanding the preceding provisions of this paragraph, in the case of an individual (or individual’s spouse) who disposes of multiple assets in more than 1 month for less than fair market value on or after the applicable look-back date specified in subparagraph (B), a State may determine the period of ineligibility applicable to such individual under this paragraph by—

(i)

treating the total, cumulative uncompensated value of all assets transferred by the individual (or individual’s spouse) during all months on or after the look-back date specified in subparagraph (B) as 1 transfer for purposes of clause (i) or (ii) (as the case may be) of subparagraph (E); and

(ii)

beginning such period on the earliest date which would apply under subparagraph (D) to any of such transfers.

.

(c)

Inclusion of Transfer of Certain Notes and Loans Assets

Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by subsection (b), is amended by adding at the end the following:

(G)

For purposes of this paragraph with respect to a transfer of assets, the term assets includes funds used to purchase a promissory note, loan, or mortgage unless such note, loan, or mortgage—

(i)

has a repayment term that is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration);

(ii)

provides for payments to be made in equal amounts during the term of the loan, with no deferral and no balloon payments made; and

(iii)

prohibits the cancellation of the balance upon the death of the lender.

In the case of a promissory note, loan, or mortgage that does not satisfy the requirements of clauses (i) through (iii), the value of such note, loan, or mortgage shall be the outstanding balance due as of the date of the individual’s application for medical assistance for services described in subparagraph (C).

.

(d)

Treatment of Annuities

(1)

Inclusion of transfers to purchase balloon annuities

Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by subsection (c), is amended by adding at the end the following:

(H)

For purposes of this paragraph with respect to a transfer of assets, the term assets includes an annuity purchased by or on behalf of an annuitant who has applied for medical assistance with respect to nursing facility services or other long-term care services under this title unless—

(i)

the annuity is—

(I)

an annuity described in subsection (b) or (q) of section 408 of the Internal Revenue Code of 1986; or

(II)

purchased with proceeds from—

(aa)

an account or trust described in subsection (a), (c), (p) of section 408 of such Code;

(bb)

a simplified employee pension (within the meaning of section 408(k) of such Code); or

(cc)

a Roth IRA described in section 408A of such Code; or

(ii)

the annuity—

(I)

is irrevocable and nonassignable;

(II)

is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration); and

(III)

provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made.

.

(2)

Requirement for state to be named as a remainder beneficiary

Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by paragraph (1), is amended by adding at the end the following:

(I)

For purposes of this paragraph, the purchase of an annuity shall be treated as the disposal of an asset for less than fair market value unless the State is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant under this title or is named as such a beneficiary in the second position after the community spouse and such spouse does not dispose of any such remainder for less than fair market value.

.

(3)

Inclusion of certain annuities in an estate

Section 1917(b)(4) (42 U.S.C. 1396p(b)(4)) is amended—

(A)

in subparagraph (A), by striking and at the end;

(B)

in subparagraph (B), by striking the period at the end and inserting ; and; and

(C)

by adding at the end the following:

(C)

shall include an annuity unless the annuity was purchased from a financial institution or other business that sells annuities in the State as part of its regular business.

.

(e)

Inclusion of Transfers To Purchase Life Estates

Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by subsection (d)(2), is amended by adding at the end the following:

(J)

For purposes of this paragraph with respect to a transfer of assets, the term assets includes the purchase of a life estate interest in another individual’s home unless the purchaser resides in the home for a period of at least 1 year after the date of the purchase.

(f)

Protection Against Undue Hardship

Section 1917(c) (42 U.S.C. 1396p(c)) is amended by adding at the end the following:

(6)

For purposes of paragraph (2)(D) and subsection (d)(5), the procedures established by the State in accordance with standards specified by the Secretary shall provide for—

(A)

notice, before application of the provisions of paragraph (1) or subsection (d), to an individual who is an applicant for medical assistance under this title who would be subject to such a penalty under such provisions that an undue hardship exception exists;

(B)

a timely process before the imposition of a penalty for determining whether an undue hardship waiver will be granted for the individual;

(C)

a process under which an adverse determination can be appealed; and

(D)

application of criteria that specifies that an undue hardship exists when application of the provisions of paragraph (1) or subsection (d) would deprive the individual of medical care such that the individual’s health or life would be endangered or when the application of such provisions would deprive the individual of food, clothing, shelter, or other necessities of life.

.

(g)

Effective Dates

(1)

In general

Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply to payments under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) for calendar quarters beginning on or after the date of enactment of this Act, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date.

(2)

Exceptions

The amendments made by this section shall not apply—

(A)

to medical assistance provided for services furnished before the date of enactment;

(B)

with respect to assets disposed of on or before the date of enactment of this Act; or

(C)

with respect to trusts established on or before the date of enactment of this Act.

(3)

Extension of effective date for state law amendment

In the case of a State plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) which the Secretary of Health and Human Services determines requires State legislation in order for the plan to meet the additional requirements imposed by the amendments made by a provision of this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of the session is considered to be a separate regular session of the State legislature.

6012.

State Long-Term care partnerships

(a)

Expansion of State Long-Term Care Partnerships

(1)

In general

Section 1917(b)(1)(C)(ii) (42 U.S.C. 1396p(b)(1)(C)(ii)) is amended to read as follows:

(ii)

Clause (i) shall not apply in the case of an individual who received medical assistance under—

(I)

a Qualified State Long-Term Care Insurance Partnership (as defined in paragraph (5)); or

(II)

under a State plan of a State which—

(aa)

had a State plan amendment approved as of May 14, 1993, which provided for the disregard of any assets or resources to the extent that payments are made under a long-term care insurance policy or because an individual has received (or is entitled to receive) benefits under a long-term care insurance policy; and

(bb)

has a State plan amendment which satisfies the requirements of subparagraphs (B) through (G) of paragraph (5) in the case of any long-term care insurance policy sold under such plan amendment on or after the date that is 2 years after the date of enactment of such paragraph.

For purposes of this clause and paragraphs (5) and (6), the term long-term care insurance policy includes a certificate issued under a group insurance contract.

.

(2)

Satisfaction of minimum federal standards, tax qualifications, inflation protection, and other requirements for long-term care insurance partnerships

Section 1917(b) (42 U.S.C. 1396p(b)) is amended by inserting at the end the following:

(5)

The term Qualified State Long-Term Care Insurance Partnership means a program offered in a State with an approved State plan amendment that provides for the following:

(A)

Subject to the limit specified in subparagraph (D), the disregard of any assets or resources in an amount equal to the amount of payments made to, or on behalf of, an individual who is a beneficiary under any long-term care insurance policy sold under such plan amendment.

(B)

A requirement that the State will treat benefits paid under any long-term care insurance policy sold under a plan amendment of another State that maintains a Qualified Long-Term Care Insurance Partnership or is described in subsection (b)(1)(C)(ii)(II) the same as the State treats benefits paid under such a policy sold under the State’s plan amendment.

(C)

A requirement that any long-term care insurance policy sold under such plan amendment—

(i)

be a qualified long-term care insurance contract within the meaning of section 7702B(b) of the Internal Revenue Code of 1986; and

(ii)

meet the requirements described in paragraph (6).

(D)

A requirement that any such policy sold under the State plan amendment shall provide for—

(i)

compound annual inflation protection of at least 5 percent; and

(ii)

asset protection that does not exceed $250,000.

The dollar amount specified in the preceding sentence shall be increased, beginning with 2007, from year to year based on the percentage increase in the medical care expenditure category of the Consumer Price Index for All Urban Consumers (United States city average), published by the Bureau of Labor Statistics, rounded to the nearest $100.
(E)

A requirement that an insurer may rescind a long-term care insurance policy sold under such State plan amendment that has been in effect for at least 2 years or deny an otherwise valid long-term care insurance claim under such a policy only upon a showing of misrepresentation that is material to the acceptance of coverage, pertains to the claim made, and could not have been known by the insurer at the time the policy was sold.

(F)

A requirement that any individual who sells such a policy receive training, and demonstrate evidence of an understanding of, the policy and how the policy relates to other public and private coverage of long-term care.

(G)

A requirement that the issuer of any such policy report—

(i)

to the Secretary, such information or data as the Secretary may require; and

(ii)

to the State, the information or data reported to the Secretary (if any), the information or data required under the minimum reporting requirements developed under section 6012(b)(2)(B) of the Deficit Reduction Omnibus Reconciliation Act of 2005, and such additional information or data as the State may require.

For purposes of applying this paragraph, if a long-term care insurance policy is exchanged for another such policy, the date coverage became effective under the first policy shall determine when coverage first becomes effective.
(6)
(A)

For purposes of subparagraph (C)(ii) of paragraph (5), the requirements of this paragraph are met if a long-term care insurance policy sold under a plan amendment described in that paragraph meets—

(i)

Model regulation

The following requirements of the model regulation:

(I)

Section 6A (relating to guaranteed renewal or noncancellability), other than paragraph (5) thereof, and the requirements of section 6B of the model Act relating to such section 6A.

(II)

Section 6B (relating to prohibitions on limitations and exclusions) other than paragraph (7) thereof.

(III)

Section 6C (relating to extension of benefits).

(IV)

Section 6D (relating to continuation or conversion of coverage).

(V)

Section 6E (relating to discontinuance and replacement of policies).

(VI)

Section 7 (relating to unintentional lapse).

(VII)

Section 8 (relating to disclosure), other than sections 8F, 8G, 8H, and 8I thereof.

(VIII)

Section 9 (relating to required disclosure of rating practices to consumer).

(IX)

Section 11 (relating to prohibitions against post-claims underwriting).

(X)

Section 12 (relating to minimum standards).

(XI)

Section 14 (relating to application forms and replacement coverage).

(XII)

Section 15 (relating to reporting requirements).

(XIII)

Section 22 (relating to filing requirements for marketing).

(XIV)

Section 23 (relating to standards for marketing), including inaccurate completion of medical histories, other than paragraphs (1), (6), and (9) of section 23C.

(XV)

Section 25 (relating to prohibition against preexisting conditions and probationary periods in replacement policies or certificates).

(XVI)

The provisions of section 26 relating to contingent nonforfeiture benefits, if the policyholder declines the offer of a nonforfeiture provision described in paragraph (4).

(XVII)

Section 29 (relating to standard format outline of coverage).

(XVIII)

Section 30 (relating to requirement to deliver shopper’s guide).

(ii)

Model act

The following requirements of the model Act:

(I)

Section 6C (relating to preexisting conditions).

(II)

Section 6D (relating to prior hospitalization).

(III)

The provisions of section 8 relating to contingent nonforfeiture benefits.

(IV)

Section 6F (relating to right to return).

(V)

Section 6G (relating to outline of coverage).

(VI)

Section 6H (relating to requirements for certificates under group plans).

(VII)

Section 6J (relating to policy summary).

(VIII)

Section 6K (relating to monthly reports on accelerated death benefits).

(B)

Definitions

For purposes of this paragraph—

(i)

Model provisions

The terms model regulation and model Act mean the long-term care insurance model regulation, and the long-term care insurance model Act, respectively, promulgated by the National Association of Insurance Commissioners (as adopted as of October 2000).

(ii)

Coordination

Any provision of the model regulation or model Act listed under clause (i) or (ii) of subparagraph (A) shall be treated as including any other provision of such regulation or Act necessary to implement the provision.

(iii)

Determination

For purposes of this paragraph, the determination of whether any requirement of a model regulation or the model Act has been met shall be made by the Secretary.

.

(3)

Effective date

The amendments made by this subsection take effect on October 1, 2007, and apply to long-term care insurance policies sold on or after that date.

(b)

Development of Uniform Standards and Recommendations

(1)

In general

Not later than 1 year after the date of enactment of this Act, the Secretary, in consultation with the National Association of Insurance Commissioners, issuers of long-term care insurance policies, States with experience with long-term care insurance partnership plans, other States, and representatives of consumers of long-term care insurance policies shall develop the uniform standards described in paragraph (2) and submit recommendations to Congress with respect to the issues identified in paragraph (3).

(2)

Uniform standards

The uniform standards described in this paragraph are the following:

(A)

Reciprocity

Standards for ensuring that long-term care insurance policies issued under a State long-term care insurance partnership under section 1917(b)(1)(C)(ii) of the Social Security Act (42 U.S.C. 1396p(b)(1)(C)(ii)) (as amended by subsection (a)) are portable to other States with such a partnership.

(B)

Minimum reporting requirements

Standards for minimum reporting requirements for issuers of long-term care insurance policies under such State long-term care insurance partnerships that shall specify the data and information that each such issuer shall report to the State with which it has such a partnership. The requirements developed in accordance with this subparagraph shall specify the type and format of the data and information to be reported and the frequency with which such reports are to be made.

(C)

Suitability

Suitability standards for determining whether a long-term care insurance policy is appropriate for the needs of an applicant, based on guidance of the National Association of Insurance Commissioners regarding suitability.

(3)

Recommendations

The recommendations described in this paragraph are the following:

(A)

Incontestability

Recommendations regarding whether the requirements relating to incontestability for long-term care insurance policies sold under a State long-term care insurance partnership program under section 1917(b)(1)(C)(ii) of the Social Security Act should be modified based on guidance of the National Association of Insurance Commissioners regarding incontestability.

(B)

Nonforfeiture

Recommendations regarding whether requirements relating to nonforfeiture for issuers of long-term care insurance policies under a State long-term care insurance partnership program under section 1917(b)(1)(C)(ii) of such Act should be modified to reflect changes in an insured’s financial circumstances.

(C)

Independent certification for benefits assessment

Recommendations regarding whether uniform standards for requiring benefits assessment evaluations to be conducted by independent entities should be established for issuers of long-term care insurance policies under such a State partnership program and, if so, what such standards should be.

(D)

Rating requirements

Recommendations regarding whether uniform standards for the establishment of, and annual increases in, premiums for long-term care insurance policies sold under such a State partnership program should be established and, if so, what such standards should be.

(E)

Dispute resolution

Recommendations regarding whether uniform standards are needed to ensure fair adjudication of coverage disputes under long-term care insurance policies sold under such a State partnership program and the delivery of the benefits promised under such policies.

(4)

State reporting requirements

Nothing in paragraph (2)(B) shall be construed as prohibiting a State from requiring an issuer of a long-term care insurance policy sold in the State (regardless of whether the policy is issued under a State long-term care insurance partnership under section 1917(b)(1)(C)(ii) of the Social Security Act) to require the issuer to report information or data to the State that is in addition to the information or data required under the minimum reporting requirements developed under that paragraph.

(c)

Annual Reports to Congress

The Secretary of Health and Human Services shall annually report to Congress on the long-term care insurance partnerships established in accordance with section 1917(b)(1)(C)(ii) of the Social Security Act (42 U.S.C. 1396p(b)(1)(C)(ii)) (as amended by subsection (a)(1)). Such reports shall include analyses of the extent to which such partnerships expand or limit access of individuals to long-term care and the impact of such partnerships on Federal and State expenditures under the Medicare and Medicaid programs.

3

ELIMINATING FRAUD, WASTE, AND ABUSE IN MEDICAID

6021.

Enhancing third party recovery

(a)

Clarification of Right of Recovery Against Any Third Party Legally Responsible for Payment of a Claim for a Health Care Item or Service

Section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended—

(1)

in subparagraph (A), in the matter preceding clause (i)—

(A)

by inserting , including self-insured plans after health insurers; and

(B)

by striking and health maintenance organizations and inserting health maintenance organizations, pharmacy benefit managers, or other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service; and

(2)

in subparagraph (G)—

(A)

by inserting a self-insured plan, after 1974,; and

(B)

by striking and a health maintenance organization and inserting a health maintenance organization, a pharmacy benefit manager, or other party that is, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service.

(b)

Requirement for Third Parties To Provide the State With Coverage Eligibility and Claims Data

Section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended—

(1)

in subparagraph (G), by striking and at the end;

(2)

in subparagraph (H), by adding and after the semicolon at the end; and

(3)

by inserting after subparagraph (H), the following:

(I)

that the State shall provide assurances satisfactory to the Secretary that the State has in effect laws requiring health insurers, including self-insured plans, group health plans (as defined in section 607(1) of the Employee Retirement Income Security Act of 1974), service benefit plans, health maintenance organizations, pharmacy benefit managers, or other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service, as a condition of doing business in the State, to—

(i)

provide eligibility and claims payment data with respect to an individual who is eligible for, or is provided, medical assistance under the State plan, upon the request of the State;

(ii)

accept the subrogation of the State to any right of an individual or other entity to payment from the party for an item or service for which payment has been made under the State plan;

(iii)

respond to any inquiry by the State regarding a claim for payment for any health care item or service submitted not later than 3 years after the date of the provision of such health care item or service; and

(iv)

agree not to deny a claim submitted by the State solely on the basis of the date of submission of the claim;

.

(c)

Effective date

Except as provided in section 6026(e), the amendments made by this section take effect on January 1, 2006.

6022.

Limitation on use of contingency fee arrangements

(a)

In General

Section 1903(i) (42 U.S.C. 1396b(i)), as amended by section 104(b) of the QI, TMA, and Abstinence Programs Extension and Hurricane Katrina Unemployment Relief Act of 2005 (Public Law 109–91), is amended—

(1)

in paragraph (19), by adding or at the end;

(2)

by striking the period at the end of paragraph (21) and inserting ; or; and

(3)

by inserting after paragraph (21), the following:

(22)

with respect to any amount expended in connection with a contract or agreement (other than a risk contract under section 1903(m)) between the State agency under section 1902(a)(5) (or any State or local agency designated by such agency to administer any portion of the State plan under this title) and a consultant or other contractor if the terms of compensation for the consultant or other contractor do not meet the standards established by the Inspector General of the Department of Health and Human Services under section 6022(b) of the Deficit Reduction Omnibus Reconciliation Act of 2005.

.

(b)

Contingency Fee Arrangement Standards

Not later than 6 months after the date of enactment of this Act, the Inspector General of the Department of Health and Human Services shall issue standards for the terms of compensation of consultants and other individuals or entities contracting with State agencies (or their designees) administering State Medicaid plans under title XIX of the Social Security Act that ensure prudent purchasing and program integrity with respect to Federal funds. The Inspector General shall annually review and, as necessary, revise such standards to promptly address new compensation arrangements that may present a risk to program integrity under such title.

(c)

Effective Date

Except as provided in section 6026(e), the amendments made by subsection (a) take effect on January 1, 2007.

6023.

Encouraging the enactment of State False Claims Acts

(a)

In General

Title XIX (42 U.S.C. 1396 et seq.) is amended by inserting after section 1908A the following:

1909.

State False Claims Act requirements for increased State share of recoveries

(a)

In General

Notwithstanding section 1905(b), if a State has in effect a law relating to false or fraudulent claims that meets the requirements of subsection (b), the Federal medical assistance percentage with respect to any amounts recovered under a State action brought under such law, shall be decreased by 10 percentage points.

(b)

Requirements

For purposes of subsection (a), the requirements of this subsection are that the Inspector General of the Department of Health and Human Services, in consultation with the Attorney General, determines that the State has in effect a law that meets the following requirements:

(1)

The law establishes liability to the State for false or fraudulent claims described in section 3729 of title 31, United States Code, with respect to any expenditure described in section 1903(a).

(2)

The law contains provisions that are at least as effective in rewarding and facilitating qui tam actions for false or fraudulent claims as those described in sections 3730 through 3732 of title 31, United States Code.

(3)

The law contains a requirement for filing an action under seal for 60 days with review by the State Attorney General.

(4)

The law contains a civil penalty that is not less than the amount of the civil penalty authorized under section 3729 of title 31, United States Code.

(5)

The law contains provisions that are designed to prevent a windfall recovery for a qui tam relator in the event that the relator files a Federal and State action for the same false or fraudulent claim.

(c)

Deemed Compliance

A State that, as of January 1, 2007, has a law in effect that meets the requirements of subsection (b) shall be deemed to be in compliance with such requirements for so long as the law continues to meet such requirements.

(d)

No Preclusion of Broader Laws

Nothing in this section shall be construed as prohibiting a State that has in effect a law that establishes liability to the State for false or fraudulent claims described in section 3729 of title 31, United States Code, with respect to programs in addition to the State program under this title, or with respect to expenditures in addition to expenditures described in section 1903(a), from being considered to be in compliance with the requirements of subsection (a) so long as the law meets such requirements.

.

(b)

Effective Date

Except as provided in section 6026(e), the amendments made by this section take effect on January 1, 2007.

6024.

Employee education about False Claims Recovery

(a)

In General

Section 1902(a) (42 U.S.C. 1396a(a)) is amended—

(1)

in paragraph (66), by striking and at the end;

(2)

in paragraph (67) by striking the period at the end and inserting ; and; and

(3)

by inserting after paragraph (67) the following:

(68)

provide that any entity that receives or makes annual payments under the State plan of at least $1,000,000, as a condition of receiving such payments, shall—

(A)

establish written policies, procedures, and protocols for training of all employees of the entity (including management), and of any contractor or agent of the entity, that includes a detailed discussion of the False Claims Act established under sections 3729 through 3733 of title 31, United States Code, administrative remedies for false claims and statements established under chapter 38 of title 31, United States Code, any State laws pertaining to civil or criminal penalties for false claims and statements, and whistleblower protections under such laws, with respect to the role of such laws in preventing and detecting fraud, waste, and abuse in Federal health care programs (as defined in section 1128B(f));

(B)

include as part of such written policies, procedures, and protocols, detailed provisions and training regarding the entity’s policies and procedures for detecting and preventing fraud, waste, and abuse;

(C)

include in any employee handbook for the entity, a specific discussion of the laws described in subparagraph (A), the rights of employees to be protected as whistleblowers, and the entity’s policies and procedures for detecting and preventing fraud, waste, and abuse; and

(D)

require mandatory training for all employees of the entity and of any contractor or agent of the entity, at the time of hiring, with respect to the laws described in subparagraph (A) (including the whistleblower protections under such laws) and the entity’s policies and procedures for detecting fraud, waste, and abuse.

.

(b)

Effective Date

Except as provided in section 6026(e), the amendments made by subsection (a) take effect on January 1, 2007.

6025.

Prohibition on restocking and double billing of prescription drugs

(a)

In General

Section 1903(i)(10) (42 U.S.C. 1396b(i)), as amended by section 6004(b), is amended—

(1)

in subparagraph (C), by striking and at the end;

(2)

in subparagraph (D), by striking ; or at the end and inserting , and; and

(3)

by adding at the end the following:

(E)

with respect to any amount expended for reimbursement to a pharmacy under this title for the ingredient cost of a covered outpatient drug for which the pharmacy has already received payment under this title (other than with respect to a reasonable restocking fee for such drug); or

.

(b)

Effective Date

The amendments made by subsection (a) take effect on the first day of the first fiscal year quarter that begins after the date of enactment of this Act.

6026.

Medicaid Integrity Program

(a)

Establishment of Medicaid Integrity Program; Medicaid CFO; Medicaid Program Integrity Oversight Board

Title XIX (42 U.S.C. 1396 et seq.) is amended—

(1)

by redesignating section 1936 as section 1938; and

(2)

by inserting after section 1935 the following:

1936.

Medicaid Integrity Program

(a)

In General

There is hereby established the Medicaid Integrity Program (in this section referred to as the Program) under which the Secretary shall promote the integrity of the program under this title by entering into contracts in accordance with this section with eligible entities to carry out the activities described in subsection (b).

(b)

Activities Described

Activities described in this subsection are as follows:

(1)

Review of the actions of individuals or entities furnishing items or services (whether on a fee-for-service, risk, or other basis) for which payment may be made under a State plan approved under this title (or under any waiver of such plan approved under section 1115) to determine whether fraud, waste, or abuse has occurred, is likely to occur, or whether such actions have any potential for resulting in an expenditure of funds under this title in a manner which is not intended under the provisions of this title.

(2)

Audit of claims for payment for items or services furnished, or administrative services rendered, under a State plan under this title, including—

(A)

cost reports;

(B)

consulting contracts; and

(C)

risk contracts under section 1903(m).

(3)

Identification and recovery of overpayments to individuals or entities receiving Federal funds under this title.

(4)

Education of providers of services, managed care entities, beneficiaries, and other individuals with respect to payment integrity and benefit quality assurance issues.

(c)

Eligible Entity and Contracting Requirements

(1)

In general

An entity is eligible to enter into a contract under the Program to carry out any of the activities described in subsection (b) if the entity satisfies the requirements of paragraphs (2) and (3).

(2)

Eligibility Requirements

The requirements of this paragraph are the following:

(A)

The entity has demonstrated capability to carry out the activities described in subsection (b).

(B)

In carrying out such activities, the entity agrees to cooperate with the Inspector General of the Department of Health and Human Services, the Attorney General, and other law enforcement agencies, as appropriate, in the investigation and deterrence of fraud and abuse in relation to this title and in other cases arising out of such activities.

(C)

The entity complies with such conflict of interest standards as are generally applicable to Federal acquisition and procurement.

(D)

The entity meets such other requirements as the Secretary may impose.

(3)

Contracting Requirements

The entity has contracted with the Secretary in accordance with such procedures as the Secretary shall by regulation establish, except that such procedures shall include the following:

(A)

Procedures for identifying, evaluating, and resolving organizational conflicts of interest that are generally applicable to Federal acquisition and procurement.

(B)

Competitive procedures to be used—

(i)

when entering into new contracts under this section;

(ii)

when entering into contracts that may result in the elimination of responsibilities under section 202(b) of the Health Insurance Portability and Accountability Act of 1996; and

(iii)

at any other time considered appropriate by the Secretary.

(C)

Procedures under which a contract under this section may be renewed without regard to any provision of law requiring competition if the contractor has met or exceeded the performance requirements established in the current contract.

The Secretary may enter into such contracts without regard to final rules having been promulgated.
(4)

Limitation on contractor liability

The Secretary shall by regulation provide for the limitation of a contractor’s liability for actions taken to carry out a contract under the Program, and such regulation shall, to the extent the Secretary finds appropriate, employ the same or comparable standards and other substantive and procedural provisions as are contained in section 1157.

(d)

Comprehensive Plan for Program Integrity

(1)

5-year plan

With respect to the 5 fiscal year period beginning with fiscal year 2006, and each such 5-fiscal year period that begins thereafter, the Secretary shall establish a comprehensive plan for ensuring the integrity of the program established under this title by combatting fraud, waste, and abuse.

(2)

Consultation

Each 5-fiscal year plan established under paragraph (1) shall be developed by the Secretary in consultation with the Attorney General, the Director of the Federal Bureau of Investigation, the Comptroller General of the United States, the Inspector General of the Department of Health and Human Services, and State officials with responsibility for controlling provider fraud and abuse under State plans under this title.

(e)

Appropriation

(1)

In general

Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to carry out the Medicaid Integrity Program under this section, without further appropriation—

(A)

for fiscal year 2006, $50,000,000;

(B)

for each of fiscal years 2007 and 2008, $49,000,000;

(C)

for each of fiscal years 2009 and 2010, $74,000,000; and

(D)

for fiscal year 2011 and each fiscal year thereafter, $75,000,000.

(2)

Availability

Amounts appropriated pursuant to paragraph (1) shall remain available until expended.

(3)

Annual report

Not later than 180 days after the end of each fiscal year (beginning with fiscal year 2006), the Secretary shall submit a report to Congress which identifies—

(A)

the use of funds appropriated pursuant to paragraph (1); and

(B)

the effectiveness of the use of such funds.

.

1937.

Medicaid Chief Financial Officer; Medicaid Program Integrity Oversight Board

(a)

Establishment of Medicaid CFO

(1)

In general

There is established in the Centers for Medicare & Medicaid Services within the Office of Financial Management the position of Medicaid Chief Financial Officer. The Medicaid Chief Financial Officer shall be appointed by, and report directly to, the Administrator of such Centers. The Medicaid Chief Financial Officer may be removed only for cause.

(2)

Duties and authority

The duties and authority of the Medicaid Chief Financial Officer with respect to the management and expenditure of Federal funds under this title shall be comparable to the duties and authority of other Chief Financial Officers with respect to the management and expenditure of Federal funds under Federal health care programs (as defined in section 1128B(f)).

(b)

Program Integrity Oversight Board

The Secretary shall establish a Medicaid Program Integrity Oversight Board. The duties and authority of the Medicaid Program Integrity Oversight Board shall be comparable to the duties and authority of other oversight boards established for purposes of Federal health care programs (as so defined) and shall include responsibility for identifying vulnerabilities in the State programs established under this title and developing strategies for minimizing integrity risks to such programs.

.

(b)

State Requirement To Cooperate With Integrity Program Efforts

Section 1902(a) (42 U.S.C. 1396a(a)), as amended by section 6024(a), is amended—

(1)

in paragraph (67), by striking and at the end;

(2)

in paragraph (68), by striking the period at the end and inserting ; and; and

(3)

by inserting after paragraph (68), the following:

(69)

provide that the State must comply with any requirements determined by the Secretary to be necessary for carrying out the Medicaid Integrity Program established under section 1936, or the duties of the Medicaid Chief Financial Officer and the Medicaid Program Integrity Oversight Board established under section 1937.

.

(c)

Increased Funding for Medicaid Fraud and Abuse Control Activities

(1)

In general

Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Office of the Inspector General of the Department of Health and Human Services, without further appropriation, $25,000,000 for each of fiscal years 2006 through 2010, for activities of such Office with respect to the Medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

(2)

Availability; amounts in addition to other amounts appropriated for such activities

Amounts appropriated pursuant to paragraph (1) shall—

(A)

remain available until expended; and

(B)

be in addition to any other amounts appropriated or made available to the Office of the Inspector General of the Department of Health and Human Services for activities of such Office with respect to the Medicaid program.

(3)

Annual report

Not later than 180 days after the end of each fiscal year (beginning with fiscal year 2006), the Inspector General of the Department of Health and Human Services shall submit a report to Congress which identifies—

(A)

the use of funds appropriated pursuant to paragraph (1); and

(B)

the effectiveness of the use of such funds.

(d)

Increase in CMS Staffing Devoted To Ensuring Medicaid Program Integrity

The Secretary shall significantly increase the number of full-time equivalent employees whose duties consist solely of ensuring the integrity of the Medicaid program established under title XIX of the Social Security Act by providing effective support and assistance to States to combat provider fraud and abuse.

(e)

Delayed Effective Date for Chapter

in the case of a State plan under title XIX of the Social Security Act which the Secretary determines requires State legislation in order for the plan to meet the additional requirements imposed by the amendments made by a provision of this chapter, the State plan shall not be regarded as failing to comply with the requirements of such Act solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of the session shall be considered to be a separate regular session of the State legislature.

4

STATE FINANCING UNDER MEDICAID

6031.

Reforms of targeted case management

(a)

In General

Section 1915(g) (42 U.S.C. 1396n(g)(2)) is amended by striking paragraph (2) and inserting the following:

(2)

For purposes of this subsection:

(A)
(i)

The term case management services means services which will assist individuals eligible under the plan in gaining access to needed medical, social, educational, and other services.

(ii)

Such term includes the following:

(I)

Assessment of an eligible individual to determine service needs, including activities that focus on needs identification, to determine the need for any medical, educational, social, or other services. Such assessment activities include the following:

(aa)

Taking client history.

(bb)

Identifying the needs of the individual, and completing related documentation.

(cc)

Gathering information from other sources such as family members, medical providers, social workers, and educators, if necessary, to form a complete assessment of the eligible individual.

(II)

Development of a specific care plan based on the information collected through an assessment, that specifies the goals and actions to address the medical, social, educational, and other services needed by the eligible individual, including activities such as ensuring the active participation of the eligible individual and working with the individual (or the individual’s authorized health care decision maker) and others to develop such goals and identify a course of action to respond to the assessed needs of the eligible individual.

(III)

Referral and related activities to help an individual obtain needed services, including activities that help link eligible individuals with medical, social, educational providers or other programs and services that are capable of providing needed services, such as making referrals to providers for needed services and scheduling appointments for the individual.

(IV)

Monitoring and followup activities, including activities and contacts that are necessary to ensure the care plan is effectively implemented and adequately addressing the needs of the eligible individual, and which may be with the individual, family members, providers, or other entities and conducted as frequently as necessary to help determine such matters as—

(aa)

whether services are being furnished in accordance with an individual’s care plan;

(bb)

whether the services in the care plan are adequate; and

(cc)

whether there are changes in the needs or status of the eligible individual, and if so, making necessary adjustments in the care plan and service arrangements with providers.

(iii)

Such term does not include the direct delivery of an underlying medical, educational, social, or other service to which an eligible individual has been referred, including, with respect to the direct delivery of foster care services, services such as (but not limited to) the following:

(I)

Research gathering and completion of documentation required by the foster care program.

(II)

Assessing adoption placements.

(III)

Recruiting or interviewing potential foster care parents.

(IV)

Serving legal papers.

(V)

Home investigations.

(VI)

Providing transportation.

(VII)

Administering foster care subsidies.

(VIII)

Making placement arrangements.

(B)

The term targeted case management services are case management services that are furnished without regard to the requirements of section 1902(a)(1) and section 1902(a)(10)(B) to specific classes of individuals or to individuals who reside in specified areas.

(3)

With respect to contacts with individuals who are not eligible for medical assistance under the State plan or, in the case of targeted case management services, individuals who are eligible for such assistance but are not part of the target population specified in the State plan, such contacts—

(A)

are considered an allowable case management activity, when the purpose of the contact is directly related to the management of the eligible individual’s care; and

(B)

are not considered an allowable case management activity if such contacts relate directly to the identification and management of the noneligible or nontargeted individual’s needs and care.

(4)
(A)

In accordance with section 1902(a)(25), Federal financial participation only is available under this title for case management services or targeted case management services if there are no other third parties liable to pay for such services, including as reimbursement under a medical, social, educational, or other program.

(B)

A State shall allocate the costs of any part of such services which are reimbursable under another federally funded program in accordance with OMB Circular A–87 (or any related or successor guidance or regulations regarding allocation of costs among federally funded programs) under an approved cost allocation program.

.

(b)

Effective Date

The amendment made by subsection (a) shall take effect on January 1, 2006.

6032.

Temporary Federal matching payments for Federal assistance

(a)

100 Percent Federal Matching Payments for Medical Assistance Provided to Specified Individuals

(1)

In general

Notwithstanding section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b)), for items and services furnished during the period that begins on August 28, 2005, and ends on May 15, 2006, the Federal medical assistance percentage for providing medical assistance for such items and services under a State Medicaid plan to a specified individual (as defined in subsection (b)), and for costs directly attributable to all administrative activities that relate to the provision of such medical assistance, shall be 100 percent.

(2)

Application to child health assistance

Notwithstanding section 2105(b) of the Social Security Act (42 U.S.C. 1397ee(b)), for items and services furnished during the period described in paragraph (1), the Federal matching rate for providing child health assistance for such items and services under a State child health plan to a specified individual (as so defined), and for costs directly attributable to all administrative activities that relate to the provision of such child health assistance, shall be 100 percent.

(b)

Specified Individual

(1)

In general

For purposes of subsection (a), the term specified individual means an individual who, on any day during the week preceding August 28, 2005, had a primary residence in a Louisiana parish described in paragraph (2), a Mississippi county described in paragraph (3), or an Alabama county described in paragraph (4).

(2)

Louisiana parishes described

For purposes of paragraph (1), the Louisiana parishes described in this paragraph are the following:

(A)

Acadia.

(B)

Ascension.

(C)

Assumption.

(D)

Calcasieu.

(E)

Cameron.

(F)

East Baton Rouge.

(G)

East Feliciana.

(H)

Iberia.

(I)

Iberville.

(J)

Jefferson.

(K)

Jefferson Davis.

(L)

Lafayette.

(M)

Lafourche.

(N)

Livingston.

(O)

Orleans.

(P)

Pointe Coupee.

(Q)

Plaquemines.

(R)

St. Bernard.

(S)

St. Charles.

(T)

St. Helena.

(U)

St. James.

(V)

St. John.

(W)

St. Mary.

(X)

St. Martin.

(Y)

St. Tammany.

(Z)

Tangipahoa.

(AA)

Terrebonne.

(BB)

Vermilion.

(CC)

Washington.

(DD)

West Baton Rouge.

(EE)

West Feliciana.

(3)

Mississippi counties described

For purposes of paragraph (1), the Mississippi counties described in this paragraph are the following:

(A)

Adams.

(B)

Amite.

(C)

Attala.

(D)

Clairborne.

(E)

Choctaw.

(F)

Clarke.

(G)

Copiah.

(H)

Covington.

(I)

Forrest.

(J)

Franklin.

(K)

George.

(L)

Greene.

(M)

Hancock.

(N)

Harrison.

(O)

Hinds.

(P)

Jackson.

(Q)

Jasper.

(R)

Jefferson.

(S)

Jefferson Davis.

(T)

Jones.

(U)

Kemper.

(V)

Lamar.

(W)

Lauderdale.

(X)

Lawrence.

(Y)

Leake.

(Z)

Lincoln.

(AA)

Lowndes.

(BB)

Madison.

(CC)

Marion.

(DD)

Neshoba.

(EE)

Newton.

(FF)

Noxubee.

(GG)

Oktibbeha.

(HH)

Pearl River.

(II)

Perry.

(JJ)

Pike.

(KK)

Rankin.

(LL)

Scott.

(MM)

Simpson.

(NN)

Smith.

(OO)

Stone.

(PP)

Walthall.

(QQ)

Warren.

(RR)

Wayne.

(SS)

Wilkinson.

(TT)

Winston.

(UU)

Yazoo.

(4)

Alabama counties described

For purposes of paragraph (1) the Alabama counties described in this paragraph are the following:

(A)

Baldwin.

(B)

Choctaw.

(C)

Clarke.

(D)

Greene.

(E)

Hale.

(F)

Marengo.

(G)

Mobile.

(H)

Pickens.

(I)

Sumter.

(J)

Tuscaloosa.

(K)

Washington.

(c)

FMAP Adjustment

Notwithstanding the first sentence of section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b)), if, for purposes of titles XIX and XXI of the Social Security Act (42 U.S.C. 1396 et seq., 1397aa et seq.), the Federal medical assistance percentage determined for Alaska for fiscal year 2006 or fiscal year 2007 is less than the Federal medical assistance percentage determined for Alaska for fiscal year 2005, the Federal medical assistance percentage determined for Alaska for fiscal year 2005 shall be substituted for the Federal medical assistance percentage otherwise determined for Alaska for fiscal year 2006 or fiscal year 2007, as the case may be.

6033.

Managed care organization provider tax reform

(a)

In General

Section 1903(w)(7)(A)(viii) (42 U.S.C. 1396b(w)(7)(A)(viii)) is amended to read as follows:

(viii)

Services of managed care organizations (including health maintenance organizations, preferred provider organizations, and such other similar organizations as the Secretary may specify by regulation).

.

(b)

Effective Date

(1)

In general

Except as provided in paragraph (2), the amendment made by subsection (a) shall take effect on January 1, 2006.

(2)

Nonapplication

The amendment made by subsection (a) shall not apply in the case of a State that, as of December 31, 2005, has in effect a tax imposed on the class of health care items and services described in section 1903(w)(7)(A)(viii) of the Social Security Act (42 U.S.C. 1396b(w)(7)(A)(viii)) (as in effect before the date of enactment of this Act).

6034.

Inclusion of podiatrists as physicians

(a)

In General

Section 1905(a)(5)(A) (42 U.S.C. 1396d(a)(5)(A)) is amended by striking section 1861(r)(1) and inserting paragraphs (1) and (3) of section 1861(r).

(b)

Effective Date

The amendment made by subsection (a) shall apply to services furnished on or after January 1, 2006.

6035.

DSH allotment for the District of Columbia

(a)

In General

The table in section 1923(f)(2) (42 U.S.C. 1396r–4(f)(2)) is amended under each of the columns for FY 00, FY 01, and FY 02, in the entry for the District of Columbia, by striking 32 and inserting 49.

(b)

Effective Date

The amendments made by subsection (a) shall take effect as if enacted on October 1, 2005 and shall apply to expenditures made on or after that date.

6036.

Demonstration project regarding Medicaid reimbursement for stabilization of emergency medical conditions by non-publicly owned or operated institutions for mental diseases

(a)

Authority To Conduct Demonstration Project

The Secretary shall establish a demonstration project under which an eligible State (as defined in subsection (b)) shall provide reimbursement under the State medicaid plan to an institution for mental diseases that is not publicly owned or operated and that is subject to the requirements of section 1867 of the Social Security Act (42 U.S.C, 1395dd) for the provision of medical assistance available under such plan to an individual who—

(1)

has attained age 21, but has not attained age 65;

(2)

is eligible for medical assistance under such plan; and

(3)

requires such medical assistance to stabilize an emergency medical condition.

(b)

Eligible State Defined

(1)

Application

Upon approval of an application submitted by a State described in paragraph (2), the State shall be an eligible State for purposes of conducting a demonstration project under this section.

(2)

State described

A State described in this paragraph is each of the following:

(A)

Arizona.

(B)

Arkansas.

(C)

Louisiana.

(D)

Maine.

(E)

North Dakota.

(F)

Wyoming.

(G)

Four other States selected by the Secretary to provide geographic diversity on the basis of the application to conduct a demonstration project under this section submitted by such States.

(c)

Length of Demonstration Project

The demonstration project established under this section shall be conducted for a period of 3 consecutive years.

(d)

Limitations on Federal Funding

(1)

Appropriation

(A)

In general

Out of any funds in the Treasury not otherwise appropriated, there is appropriated to carry out this section, $30,000,000 for fiscal year 2006.

(B)

Budget authority

Subparagraph (A) constitutes budget authority in advance of appropriations Act and represents the obligation of the Federal Government to provide for the payment of the amounts appropriated under that subparagraph.

(2)

3-year availability

Funds appropriated under paragraph (1) shall remain available for obligation through December 31, 2008.

(3)

Limitation on payments

In no case may—

(A)

the aggregate amount of payments made by the Secretary to eligible States under this section exceed $30,000,000; or

(B)

payments be provided by the Secretary under this section after December 31, 2008.

(4)

Funds allocated to states

The Secretary shall allocate funds to eligible States based on their applications and the availability of funds.

(5)

Payments to states

The Secretary shall pay to each eligible State, from its allocation under paragraph (4), an amount each quarter equal to the Federal medical assistance percentage of expenditures in the quarter for medical assistance described in subsection (a).

(e)

Reports

(1)

Annual progress reports

The Secretary shall submit annual reports to Congress on the progress of the demonstration project conducted under this section.

(2)

Final report and recommendation

Not later than March 31, 2009, the Secretary shall submit to Congress a final report on the demonstration project conducted under this section that shall include the following:

(A)

A determination as to whether the demonstration project resulted in increased access to inpatient mental health services under the medicaid program.

(B)

An analysis regarding whether the demonstration project produced a significant reduction in the use of higher cost emergency room visits for individuals eligible for medical assistance under the medicaid program.

(C)

An assessment of the impact of the demonstration project on the costs related to the provision of inpatient psychiatric care and services under the medicaid program.

(D)

A recommendation regarding whether the demonstration project should be continued after December 31, 2008, and expanded on a national basis.

(f)

Waiver Authority

(1)

In general

The Secretary shall waive the limitation of subdivision (B) following paragraph (28) of section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) (relating to limitations on payments for care or services for individuals under 65 years of age who are patients in an institution for mental diseases) for purposes of carrying out the demonstration project under this section.

(2)

Limited other waiver authority

The Secretary may waive other requirements of titles XI and XIX of the Social Security Act (including the requirements of sections 1902(a)(1) (relating to statewideness) and 1902(a)(10)(B) (relating to comparability)) only to extent necessary to carry out the demonstration project under this section.

(g)

Definitions

In this section:

(1)

Emergency medical condition

The term emergency medical condition has the meaning given that term in section 1867(e)(1) of the Social Security Act (42 U.S.C. 1395dd(e)(1)).

(2)

Federal medical assistance percentage

The term Federal medical assistance percentage has the meaning given that term with respect to a State in section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b)).

(3)

Institution for mental diseases

The term institution for mental diseases has the meaning given that term in section 1905(i) of the Social Security Act (42 U.S.C. 1396d(i)).

(4)

Medical assistance

The term medical assistance has the meaning given that term in section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)).

(5)

Stabilize

The term stabilize has the meaning given that term in section 1867(e)(3)(A) of the Social Security Act (42 U.S..C 1395dd(e)(3)(A)).

(6)

State

The term State has the meaning given that term for purposes of title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

6037.

Limitation on severe reduction in the Medicaid FMAP for fiscal year 2006

(a)

Limitation on Reduction

In no case shall the FMAP for a State for fiscal year 2006 be less than the greater of the following:

(1)

2005 fmap decreased by the applicable percentage points

The FMAP determined for the State for fiscal year 2005, decreased by—

(A)

0.1 percentage points in the case of Delaware and Michigan;

(B)

0.3 percentage points in the case of Kentucky; and

(C)

0.5 percentage points in the case of any other State.

(2)

Computation without retroactive application of rebenchmarked per capita income

The FMAP that would have been determined for the State for fiscal year 2006 if the per capita incomes for 2001 and 2002 that was used to determine the FMAP for the State for fiscal year 2005 were used.

(b)

Scope of Application

The FMAP applicable to a State for fiscal year 2006 after the application of subsection (a) shall apply only for purposes of titles XIX and XXI of the Social Security Act (including for purposes of making disproportionate share hospital payments described in section 1923 of such Act (42 U.S.C. 1396r–4) and payments under such titles that are based on the enhanced FMAP described in section 2105(b) of such Act (42 U.S.C. 1397ee(b))) and shall not apply with respect to payments under title IV of such Act (42 U.S.C. 601 et seq.).

(c)

Definitions

In this section:

(1)

FMAP

The term FMAP means the Federal medical assistance percentage, as defined in section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b)).

(2)

State

The term State has the meaning given such term for purposes of title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

(d)

Repeal

Effective as of October 1, 2006, this section is repealed and shall not apply to any fiscal year after fiscal year 2006.

6038.

Extension of prescription drug rebates to enrollees in Medicaid managed care organizations

(a)

In General

Section 1927(j)(1) (42 U.S.C. 1396r–8(j)(1)) is amended by striking “dispensed” and all that follows through the period and inserting “are not subject to the requirements of this section if such drugs are—

(A)

dispensed by health maintenance organizations that contract under section 1903(m); and

(B)

subject to discounts under section 340B of the Public Health Service Act (42 U.S.C. 256b).

.

(b)

Effective Date

The amendment made by subsection (a) shall take effect on the date of enactment of this Act and apply to rebate agreements entered into or renewed under section 1927 of the Social Security Act (42 U.S.C. 1396r–8) on or after such date.

6039.

Extension of the Medicare Part A and B payment holiday

Section 6112(b)(1) of this Act is amended by striking September 22, 2006 and inserting September 21, 2006.

6039A.

Sense of the Senate

(a)

Findings

The Senate makes the following findings:

(1)

On October 26, 2005, the Committee on Ways and Means of the United States House of Representatives approved a budget reconciliation package that would significantly reduce the Federal Government’s funding used to pay for the child support program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) and would restrict the ability of States to use Federal child support incentive payments for child support program expenditures that are eligible for Federal matching payments.

(2)

The child support program enforces the responsibility of non-custodial parents to support their children. The program is jointly funded by Federal, State and local governments.

(3)

The Office of Management and Budget gave the child support program a 90 percent rating under the Program Assessment Rating Tool (PART), making it the highest performing social services program.

(4)

The President’s 2006 budget cites the child support program as one of the highest rated block/formula grants of all reviewed programs government-wide. This high rating is due to its strong mission, effective management, and demonstration of measurable progress toward meeting annual and long term performance measures.

(5)

In 2004, the child support program spent $5,300,000,000 to collect $21,900,000,000 in support payments. Public investment in the child support program provides more than a four-fold return, collecting $4.38 in child support for every Federal and State dollar that the program spends.

(6)

In 2004, 17,300,000 children, or 60 percent of all children living apart from a parent, received child support services through the program. The percentage is higher for poor children—84 percent of poor children living apart from their parent receive child support services through the program. Families assisted by the child support program generally have low or moderate incomes.

(7)

Children who receive child support from their parents do better in school than those that do not receive support payments. Older children with child support payments are more likely to finish high school and attend college.

(8)

The child support program directly decreases the costs of other public assistance programs by increasing family self-sufficiency. The more effective the child support program in a State, the higher the savings in public assistance costs.

(9)

Child support helps lift more than 1,000,000 Americans out of poverty each year.

(10)

Families that are former recipients of assistance under the temporary assistance for needy families program (TANF) have seen the greatest increase in child support payments. Collections for these families increased 94 percent between 1999 and 2004, even though the number of former TANF families did not increase during this period.

(11)

Families that receive child support are more likely to find and hold jobs, and less likely to be poor than comparable families without child support.

(12)

The child support program saved costs in the TANF, Medicaid, Food Stamps, Supplemental Security Income, and subsidized housing programs.

(13)

The Congressional Budget Office estimates that the funding cuts proposed by the Committee on Ways and Means of the House of Representatives would reduce child support collections by nearly $7,900,000,000 in the next 5 years and $24,100,000,000 in the next 10 years.

(14)

That National Governor’s Association has stated that such cuts are unduly burdensome and will force States to reevaluate several services that make the child support program so effective.

(15)

The Federal Government has a moral responsibility to ensure that parents who do not live with their children meet their financial support obligations for those children.

(b)

Sense of the Senate

It is the sense of the Senate that the Senate will not accept any reduction in funding for the child support program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.), or any restrictions on the ability of States to use Federal child support incentive payments for child support program expenditures that are eligible for Federal matching payments, during this Congress.

6039B.

Authority to continue providing certain adult day health care services or medical adult day care services

The Secretary shall not—

(1)

withhold, suspend, disallow, or otherwise deny Federal financial participation under section 1903(a) of the Social Security Act (42 U.S.C. 1396b(a)) for adult day health care services or medical adult day care services, as defined under a State medicaid plan approved on or before 1982, if such services are provided consistent with such definition and the requirements of such plan; or

(2)

withdraw Federal approval of any such State plan or part thereof regarding the provision of such services.

6039C.

Demonstration project regarding Medicaid coverage of Low-Income HIV-infected individuals

(a)

Requirement To Conduct Demonstration Project

(1)

In general

The Secretary shall establish a demonstration project under which a State may apply under section 1115 of the Social Security Act (42 U.S.C. 1315) to provide medical assistance under a State medicaid program to HIV-infected individuals described in subsection (b) in accordance with the provisions of this section.

(2)

Limitation on number of approved applications

The Secretary shall only approve as many State applications to provide medical assistance in accordance with this section as will not exceed the limitation on aggregate payments under subsection (d)(2)(A).

(3)

Authority to waive restrictions on payments to territories

The Secretary shall waive the limitations on payment under subsections (f) and (g) of section 1108 of the Social Security Act (42 U.S.C. 1308) in the case of a State that is subject to such limitations and submits an approved application to provide medical assistance in accordance with this section.

(b)

HIV-Infected Individuals Described

For purposes of subsection (a), HIV-infected individuals described in this subsection are individuals who are not described in section 1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i))—

(1)

who have HIV infection;

(2)

whose income (as determined under the State Medicaid plan with respect to disabled individuals) does not exceed 200 percent of the poverty line (as defined in section 2110(c)(5) of the Social Security Act (42 U.S.C. 1397jj(c)(5)); and

(3)

whose resources (as determined under the State Medicaid plan with respect to disabled individuals) do not exceed the maximum amount of resources a disabled individual described in section 1902(a)(10)(A)(i) of such Act may have and obtain medical assistance under such plan.

(c)

Length of Period for Provision of Medical Assistance

A State shall not be approved to provide medical assistance to an HIV-infected individual in accordance with the demonstration project established under this section for a period of more than 5 consecutive years.

(d)

Limitations on Federal Funding

(1)

Appropriation

(A)

In general

Out of any funds in the Treasury not otherwise appropriated, there is appropriated to carry out this section, $450,000,000 for the period of fiscal years 2006 through 2010.

(B)

Budget authority

Subparagraph (A) constitutes budget authority in advance of appropriations Act and represents the obligation of the Federal Government to provide for the payment of the amounts appropriated under that subparagraph.

(2)

Limitation on payments

In no case may—

(A)

the aggregate amount of payments made by the Secretary to eligible States under this section exceed $450,000,000; or

(B)

payments be provided by the Secretary under this section after September 30, 2010.

(3)

Funds allocated to states

The Secretary shall allocate funds to States with approved applications under this section based on their applications and the availability of funds.

(4)

Payments to states

The Secretary shall pay to each State, from its allocation under paragraph (3), an amount each quarter equal to the enhanced Federal medical assistance percentage described in section 2105(b) of the Social Security Act (42 U.S.C. 1397ee(b)) of expenditures in the quarter for medical assistance provided to HIV-infected individuals who are eligible for such assistance under a State Medicaid program in accordance with the demonstration project established under this section.

(e)

Evaluation and Report

(1)

Evaluation

The Secretary shall conduct an evaluation of the demonstration project established under this section. Such evaluation shall include an analysis of the cost-effectiveness of the project and the impact of the project on the Medicare, Medicaid, and Supplemental Security Income programs established under titles XVIII, XIX, and XVI, respectively, of the Social Security Act (42 U.S.C. 1395 et seq., 1396 et seq., 1381 et seq.).

(2)

Report to congress

Not later than December 31, 2010, the Secretary shall submit a report to Congress on the results of the evaluation of the demonstration project established under this section.

(f)

Effective Date

This section shall take effect on January 1, 2006.

6039D.

Additional increase in rebate for single source and innovator multiple source drugs

Section 1927(c)(1)(B)(i)(VI) (42 U.S.C. 1396r–8(c)(1)(B)(i)(VI)), as added by section 6002(a)(3), is amended by striking 17 and inserting 17.8.

5

IMPROVING THE MEDICAID AND STATE CHILDREN’S HEALTH INSURANCE PROGRAMS

A

Family Opportunity Act

6041.

Short title of subchapter

This subchapter may be cited as the Family Opportunity Act of 2005 or the Dylan Lee James Act.

6042.

Opportunity for families of disabled children to purchase Medicaid coverage for Such children

(a)

State Option To Allow Families of Disabled Children To Purchase Medicaid Coverage for Such Children

(1)

In general

Section 1902 (42 U.S.C. 1396a) is amended—

(A)

in subsection (a)(10)(A)(ii)—

(i)

by striking or at the end of subclause (XVII);

(ii)

by adding or at the end of subclause (XVIII); and

(iii)

by adding at the end the following new subclause:

(XIX)

who are disabled children described in subsection (cc)(1);

; and

(B)

by adding at the end the following new subsection:

(cc)
(1)

Individuals described in this paragraph are individuals—

(A)

who are children who have not attained 19 years of age and are born—

(i)

on or after January 1, 2002 (or, at the option of a State, on or after an earlier date), in the case of the second, third, and fourth quarters of fiscal year 2008;

(ii)

on or after October 1, 1996 (or, at the option of a State, on or after an earlier date), in the case of each quarter of fiscal year 2009; and

(iii)

after October 1, 1990, in the case of each quarter of fiscal year 2010 and each quarter of any fiscal year thereafter;

(B)

who would be considered disabled under section 1614(a)(3)(C) but for having earnings or deemed income or resources (as determined under title XVI for children) that exceed the requirements for receipt of supplemental security income benefits; and

(C)

whose family income does not exceed such income level as the State establishes and does not exceed—

(i)

300 percent of the poverty line (as defined in section 2110(c)(5)) applicable to a family of the size involved; or

(ii)

such higher percent of such poverty line as a State may establish, except that—

(I)

any medical assistance provided to an individual whose family income exceeds 300 percent of such poverty line may only be provided with State funds; and

(II)

no Federal financial participation shall be provided under section 1903(a) for any medical assistance provided to such an individual.

.

(2)

Interaction with employer-sponsored family coverage

Section 1902(cc) (42 U.S.C. 1396a(cc)), as added by paragraph (1)(B), is amended by adding at the end the following new paragraph:

(2)
(A)

If an employer of a parent of an individual described in paragraph (1) offers family coverage under a group health plan (as defined in section 2791(a) of the Public Health Service Act), the State shall—

(i)

require such parent to apply for, enroll in, and pay premiums for such coverage as a condition of such parent’s child being or remaining eligible for medical assistance under subsection (a)(10)(A)(ii)(XIX) if the parent is determined eligible for such coverage and the employer contributes at least 50 percent of the total cost of annual premiums for such coverage; and

(ii)

if such coverage is obtained—

(I)

subject to paragraph (2) of section 1916(h), reduce the premium imposed by the State under that section in an amount that reasonably reflects the premium contribution made by the parent for private coverage on behalf of a child with a disability; and

(II)

treat such coverage as a third party liability under subsection (a)(25).

(B)

In the case of a parent to which subparagraph (A) applies, a State, subject to paragraph (1)(C)(ii), may provide for payment of any portion of the annual premium for such family coverage that the parent is required to pay. Any payments made by the State under this subparagraph shall be considered, for purposes of section 1903(a), to be payments for medical assistance.

.

(b)

State Option To Impose Income-Related Premiums

Section 1916 (42 U.S.C. 1396o) is amended—

(1)

in subsection (a), by striking subsection (g) and inserting subsections (g) and (h); and

(2)

by adding at the end the following new subsection:

(h)
(1)

With respect to disabled children provided medical assistance under section 1902(a)(10)(A)(ii)(XIX), subject to paragraph (2), a State may (in a uniform manner for such children) require the families of such children to pay monthly premiums set on a sliding scale based on family income.

(2)

A premium requirement imposed under paragraph (1) may only apply to the extent that—

(A)

in the case of a disabled child described in that paragraph whose family income—

(i)

does not exceed 200 percent of the poverty line, the aggregate amount of such premium and any premium that the parent is required to pay for family coverage under section 1902(cc)(2)(A)(i) and other cost-sharing charges do not exceed 5 percent of the family’s income; and

(ii)

exceeds 200, but does not exceed 300, percent of the poverty line, the aggregate amount of such premium and any premium that the parent is required to pay for family coverage under section 1902(cc)(2)(A)(i) and other cost-sharing charges do not exceed 7.5 percent of the family’s income; and

(B)

the requirement is imposed consistent with section 1902(cc)(2)(A)(ii)(I).

(3)

A State shall not require prepayment of a premium imposed pursuant to paragraph (1) and shall not terminate eligibility of a child under section 1902(a)(10)(A)(ii)(XIX) for medical assistance under this title on the basis of failure to pay any such premium until such failure continues for a period of at least 60 days from the date on which the premium became past due. The State may waive payment of any such premium in any case where the State determines that requiring such payment would create an undue hardship.

.

(c)

Conforming Amendments

(1)

Section 1903(f)(4) (42 U.S.C. 1396b(f)(4)) is amended in the matter preceding subparagraph (A), by inserting 1902(a)(10)(A)(ii)(XIX), after 1902(a)(10)(A)(ii)(XVIII),.

(2)

Section 1905(u)(2)(B) (42 U.S.C. 1396d(u)(2)(B)) is amended by adding at the end the following sentence: Such term excludes any child eligible for medical assistance only by reason of section 1902(a)(10)(A)(ii)(XIX)..

(d)

Effective Date

The amendments made by this section shall apply to medical assistance for items and services furnished on or after January 1, 2008.

6043.

Demonstration projects regarding home and community-based alternatives to psychiatric residential treatment facilities for children

(a)

In General

The Secretary is authorized to conduct, during each of fiscal years 2007 through 2011, demonstration projects (each in the section referred to as a demonstration project) in accordance with this section under which up to 10 States (as defined for purposes of title XIX of the Social Security Act) are awarded grants, on a competitive basis, to test the effectiveness in improving or maintaining a child’s functional level and cost-effectiveness of providing coverage of home and community-based alternatives to psychiatric residential treatment for children enrolled in the Medicaid program under title XIX of such Act.

(b)

Application of Terms and Conditions

(1)

In general

Subject to the provisions of this section, for the purposes of the demonstration projects, and only with respect to children enrolled under such demonstration projects, a psychiatric residential treatment facility (as defined in section 483.352 of title 42 of the Code of Federal Regulations) shall be deemed to be a facility specified in section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)), and to be included in each reference in such section 1915(c) to hospitals, nursing facilities, and intermediate care facilities for the mentally retarded.

(2)

State option to assure continuity of medicaid coverage

Upon the termination of a demonstration project under this section, the State that conducted the project may elect, only with respect to a child who is enrolled in such project on the termination date, to continue to provide medical assistance for coverage of home and community-based alternatives to psychiatric residential treatment for the child in accordance with section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)), as modified through the application of paragraph (1). Expenditures incurred for providing such medical assistance shall be treated as a home and community-based waiver program under section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)) for purposes of payment under section 1903 of such Act (42 U.S.C. 1396b).

(c)

Terms of Demonstration Projects

(1)

In general

Except as otherwise provided in this section, a demonstration project shall be subject to the same terms and conditions as apply to a waiver under section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)), including the waiver of certain requirements under the first sentence of paragraph (3) of such section but not applying the second sentence of such paragraph.

(2)

Budget neutrality

In conducting the demonstration projects under this section, the Secretary shall ensure that the aggregate payments made by the Secretary under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) do not exceed the amount which the Secretary estimates would have been paid under that title if the demonstration projects under this section had not been implemented.

(3)

Evaluation

The application for a demonstration project shall include an assurance to provide for such interim and final evaluations of the demonstration project by independent third parties, and for such interim and final reports to the Secretary, as the Secretary may require.

(d)

Payments to States; Limitations to Scope and Funding

(1)

In general

Subject to paragraph (2), a demonstration project approved by the Secretary under this section shall be treated as a home and community-based waiver program under section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)) for purposes of payment under section 1903 of such Act (42 U.S.C. 1396b).

(2)

Limitation

In no case may the amount of payments made by the Secretary under this section for State demonstration projects for a fiscal year exceed the amount available under subsection (f)(2)(A) for such fiscal year.

(e)

Secretary’s Evaluation and Report

The Secretary shall conduct an interim and final evaluation of State demonstration projects under this section and shall report to the President and Congress the conclusions of such evaluations within 12 months of completing such evaluations.

(f)

Funding

(1)

In general

For the purpose of carrying out this section, there are appropriated, from amounts in the Treasury not otherwise appropriated, for fiscal years 2007 through 2011, a total of $218,000,000, of which—

(A)

the amount specified in paragraph (2) shall be available for each of fiscal years 2007 through 2011; and

(B)

a total of $1,000,000 shall be available to the Secretary for the evaluations and report under subsection (e).

(2)

Fiscal year limit

(A)

In general

For purposes of paragraph (1), the amount specified in this paragraph for a fiscal year is the amount specified in subparagraph (B) for the fiscal year plus the difference, if any, between the total amount available under this paragraph for prior fiscal years and the total amount previously expended under paragraph (1)(A) for such prior fiscal years.

(B)

Fiscal year amounts

The amount specified in this subparagraph for—

(i)

fiscal year 2007 is $21,000,000;

(ii)

fiscal year 2008 is $37,000,000;

(iii)

fiscal year 2009 is $49,000,000;

(iv)

fiscal year 2010 is $53,000,000; and

(v)

fiscal year 2011 is $57,000,000.

6044.

Development and support of family-to-family health information Centers

Section 501 (42 U.S.C. 701) is amended by adding at the end the following new subsection:

(c)
(1)
(A)

For the purpose of enabling the Secretary (through grants, contracts, or otherwise) to provide for special projects of regional and national significance for the development and support of family-to-family health information centers described in paragraph (2)—

(i)

there is appropriated to the Secretary, out of any money in the Treasury not otherwise appropriated—

(I)

$3,000,000 for fiscal year 2007;

(II)

$4,000,000 for fiscal year 2008; and

(III)

$5,000,000 for fiscal year 2009; and

(ii)

there is authorized to be appropriated to the Secretary, $5,000,000 for each of fiscal years 2010 and 2011.

(B)

Funds appropriated or authorized to be appropriated under subparagraph (A) shall—

(i)

be in addition to amounts appropriated under subsection (a) and retained under section 502(a)(1) for the purpose of carrying out activities described in subsection (a)(2); and

(ii)

remain available until expended.

(2)

The family-to-family health information centers described in this paragraph are centers that—

(A)

assist families of children with disabilities or special health care needs to make informed choices about health care in order to promote good treatment decisions, cost-effectiveness, and improved health outcomes for such children;

(B)

provide information regarding the health care needs of, and resources available for, such children;

(C)

identify successful health delivery models for such children;

(D)

develop with representatives of health care providers, managed care organizations, health care purchasers, and appropriate State agencies, a model for collaboration between families of such children and health professionals;

(E)

provide training and guidance regarding caring for such children;

(F)

conduct outreach activities to the families of such children, health professionals, schools, and other appropriate entities and individuals; and

(G)

are staffed—

(i)

by such families who have expertise in Federal and State public and private health care systems; and

(ii)

by health professionals.

(3)

The Secretary shall develop family-to-family health information centers described in paragraph (2) in accordance with the following:

(A)

With respect to fiscal year 2007, such centers shall be developed in not less than 25 States.

(B)

With respect to fiscal year 2008, such centers shall be developed in not less than 40 States.

(C)

With respect to fiscal year 2009 and each fiscal year thereafter, such centers shall be developed in all States.

(4)

The provisions of this title that are applicable to the funds made available to the Secretary under section 502(a)(1) apply in the same manner to funds made available to the Secretary under paragraph (1)(A).

(5)

For purposes of this subsection, the term State means each of the 50 States and the District of Columbia.

.

6045.

Restoration of Medicaid eligibility for certain SSI beneficiaries

(a)

In General

Section 1902(a)(10)(A)(i)(II) (42 U.S.C. 1396a(a)(10)(A)(i)(II)) is amended—

(1)

by inserting (aa) after (II);

(2)

by striking ) and and inserting and;

(3)

by striking section or who are and inserting section), (bb) who are; and

(4)

by inserting before the comma at the end the following: , or (cc) who are under 21 years of age and with respect to whom supplemental security income benefits would be paid under title XVI if subparagraphs (A) and (B) of section 1611(c)(7) were applied without regard to the phrase the first day of the month following.

(b)

Effective Date

The amendments made by subsection (a) shall apply to medical assistance for items and services furnished on or after the date that is 1 year after the date of enactment of this Act.

B

State Children’s Health Insurance Program

6051.

Rules for availability, redistribution, and extended availability of allotments for fiscal years 2003, 2004, and 2005

(a)

In General

Section 2104 (42 U.S.C. 1397dd) is amended—

(1)

by amending subsection (e) to read as follows:

(e)

Availability of Amounts Allotted

(1)

In general

Except as provided in paragraph (2), amounts allotted to a State pursuant to this section—

(A)

for each of fiscal years 1998 through 2003, and for fiscal year 2006 and each fiscal year thereafter, shall remain available for expenditure by the State through the end of the second succeeding fiscal year; and

(B)

for each of fiscal years 2004 and 2005, shall remain available for expenditure by the State during the initial availability period (as defined in paragraph (3)(A)).

(2)

Availability of reallotments, redistributed amounts, and extended availability

(A)

In general

Amounts reallotted to a State under subsection (f) shall be available for expenditure by the State through the end of the fiscal year in which they are reallotted.

(B)

Availability of redistributed funds and extended availability

Amounts redistributed to a State under subsection (i)(3) or (j)(3) and unused allotments of a State extended under subsection (i)(4) or (j)(4) are available for expenditure by the State during the redistribution/extension period (as defined in paragraph (3)(B)).

(3)

Periods defined

For purposes of this section:

(A)

Initial availability period

The term initial availability period means, with respect to allotments for a fiscal year, the 2-fiscal year period beginning with that fiscal year.

(B)

Redistribution/extension period

The term redistribution/extension period means, with respect to allotments for a fiscal year, the second year following that fiscal year.

; and

(2)

by adding at the end the following new subsections:

(h)

Rule for Redistribution of Fiscal Year 2003 Allotments

(1)

Computation of unexpended allotments for fiscal year 2003

The Secretary shall determine—

(A)

the amount of each State’s allotment under this section for fiscal year 2003 that was not expended by the end of fiscal year 2005; and

(B)

the total of the unexpended allotments determined under subparagraph (A).

(2)

Determination of initial projected shortfalls for fiscal year 2006

For each State that receives an allotment for fiscal year 2006 under subsection (b), the Secretary shall determine the following:

(A)

Fiscal year 2005 carryover

The amount of the State’s allotment for 2005 that was not expended in fiscal year 2005.

(B)

Projected expenditures for fiscal year 2006

The estimated expenditures for the State as would be reported as quarterly expenditures under section 2105(a) for quarters in fiscal year 2006.

(C)

Initial projected shortfall for fiscal year 2006

The amount, if any, by which the projected expenditures determined under subparagraph (B) for the State for quarters in fiscal year 2006 exceeds the sum of the following:

(i)

Fiscal year 2005 carryover

The amount determined under subparagraph (A) for the State.

(ii)

Fiscal year 2006 allotment

The amount of the State’s allotment for fiscal year 2006.

(D)

State’s proportion of aggregate shortfall

For each State for which there is an excess determined under subparagraph (C), the ratio of—

(i)

the amount of such excess; to

(ii)

the total of such excesses determined for all States with such an excess.

(3)

Redistribution of unexpended allotments for fiscal year 2003

From the total of the unexpended allotments for fiscal year 2003 determined under paragraph (1)(B) the Secretary shall redistribute under subsection (f) the following:

(A)

States other than territories

There shall be redistributed to each State for which there is an excess determined under paragraph (2)(C) an amount equal to the product of the following:

(i)

State redistribution pool

The amount determined under paragraph (1)(B), reduced by the total amount redistributed under subparagraph (B).

(ii)

State’s shortfall proportion

The ratio described in paragraph (2)(D) for that State.

(B)

Territories

There shall be redistributed to each commonwealth or territory described in subsection (c)(3) an amount equal to the product of the following:

(i)

Territorial redistribution pool

1.05 percent of the amount determined under paragraph (1)(B).

(ii)

Territorial proportion

The ratio of—

(I)

the allotment for fiscal year 2003 for such commonwealth or territory under subsection (c), to

(II)

the total of all such allotments for such fiscal year for such commonwealths or territories under such subsection.

(4)

Determination of amounts

For purposes of calculating the amounts described in—

(A)

paragraphs (1) and (2)(A), the Secretary shall use the amounts reported by the States not later than November 30, 2005, on Form CMS–64 or Form CMS–21, as the case may be, as approved by the Secretary; and

(B)

paragraph (2)(B), the Secretary shall use the amounts reported by the States not later than September 30, 2005, on Form CMS–37 or Form CMS–21B, as the case may be, as approved by the Secretary.

(i)

Redistribution and Extension of Availability of Unused Allotments for Fiscal Year 2004

Notwithstanding subsection (f):

(1)

Computation of unexpended allotments for fiscal year 2004

(A)

In general

The Secretary shall determine with respect to each State that receives an allotment for fiscal year 2004 under subsection (b)—

(i)

the amount of the State’s allotment for such fiscal year that was not expended by the end of fiscal year 2005; and

(ii)

the total of the unexpended allotments determined under clause (i).

(B)

Reduction of unexpended allotment by net fiscal year 2006 shortfall

(i)

In general

In the case of a State described in clause (ii), the Secretary shall reduce, but not below 0, the amount determined for the State under subparagraph (A)(i) (relating to the State’s unexpended allotment for fiscal year 2004) by the amount of the allotment of the State for which availability is extended under paragraph (4)(A).

(ii)

State described

A State described in this clause is a State that meets the following requirements:

(I)

Fully spent fiscal year 2003 allotment

The State’s allotment under this section for fiscal year 2003 was fully expended by the end of fiscal year 2005.

(II)

Did not fully expend fiscal year 2004 allotment by end of fiscal year 2005

The State’s allotment under this section for fiscal year 2004 was not fully expended by the end of fiscal year 2005.

(III)

Projected fiscal year 2006 shortfall

The State has an excess determined under subsection (h)(2)(C) (relating to initial projected fiscal year 2006 shortfall).

(C)

Totals and ratios

The Secretary shall determine the following:

(i)

Redistribution pool

A redistribution pool equal to the total of the amounts determined under subparagraph (A)(i), as reduced (if applicable) under subparagraph (B)(i).

(ii)

State proportion toward redistribution pool

For each State in which the amount determined under subparagraph (A)(i) (as reduced, if applicable, under subparagraph (B)(i)) exceeds 0, the ratio of—

(I)

such amount (as so reduced) for the State; to

(II)

the total determined under clause (i).

(D)

Amount of unexpended fiscal year 2004 allotment applied to redistributions

For each State described in subparagraph (C)(ii), the Secretary shall determine a redistribution/reduction amount equal to the product of the following:

(i)

Total amount redistributed

The total amount redistributed under paragraph (3).

(ii)

State’s proportion of unexpended allotments

The ratio for the State determined under subparagraph (C)(ii).

(2)

Determination of net projected shortfalls for fiscal year 2006

For each State that has an excess determined under subsection (h)(2)(C) (relating to initial projected fiscal year 2006 shortfall), the Secretary shall determine an amount equal to the amount determined under such subsection, reduced by the sum of—

(A)

the amount redistributed to the State under subsection (h)(3)(A), and

(B)

the amount of funds of the State for which availability is extended under paragraph (4)(A).

(3)

Redistribution from redistribution pool

From the redistribution pool determined under paragraph (1)(C)(i)—

(A)

States other than territories

There shall be redistributed to each State which has a net projected shortfall under paragraph (2) an amount determined under such paragraph for the State.

(B)

Territories

There shall be redistributed to each commonwealth or territory described in subsection (c)(3) an amount equal to the product of the following:

(i)

Territorial redistribution pool

1.05 percent of the amount of such unexpended allotments determined under paragraph (1)(A)(ii).

(ii)

Territorial proportion

The ratio of—

(I)

the allotment under subsection (c) for such commonwealth or territory for fiscal year 2004, to

(II)

the total of all such allotments for such commonwealths and territories.

(4)

Extended availability of remaining unexpended allotments

(A)

To meet net shortfall for fiscal year 2006

In the case of a State described in paragraph (1)(B)(ii), the Secretary shall extend the availability of funds from the State’s allotment for fiscal year 2004 to the extent that—

(i)

the amount determined under subsection (h)(2)(C) (relating to initial shortfall for fiscal year 2006), exceeds

(ii)

the amount redistributed to the State under subsection (h)(3)(A).

(B)

Other extensions

The Secretary shall extend the availability of funds from allotments for fiscal year 2004 for each State which has an unexpended allotment for fiscal year 2004 determined under paragraph (1)(A) (as reduced, if applicable, under paragraph (1)(B)) by an amount equal to the amount (if any) by which—

(i)

the amount of such unexpended allotment (as so reduced) for the State, exceeds

(ii)

the redistribution/reduction amount determined under paragraph (1)(D) for the State (relating to the portion of the unexpended allotment applied to redistributions).

(5)

Determination of amounts

For purposes of calculating the amounts described in—

(A)

paragraph (1)(A)(i), the Secretary shall use the amounts reported by the States not later than November 30, 2005, on Form CMS–64 or Form CMS–21, as the case may be, as approved by the Secretary; and

(B)

paragraph (1)(B)(i), the Secretary shall use the amounts reported by the States not later than September 30, 2005, on Form CMS–37 or Form CMS–21B, as the case may be, as approved by the Secretary.

(j)

Redistribution and Extension of Availability of Unused Allotments for Fiscal Year 2005

Notwithstanding subsection (f):

(1)

Computation of unexpended allotments for fiscal year 2005

(A)

In general

The Secretary shall determine with respect to each State that receives an allotment for fiscal year 2005 under subsection (b)—

(i)

the amount of the State’s allotment for fiscal year 2005 that was not expended by the end of fiscal year 2006; and

(ii)

the total of the unexpended allotments determined under clause (i).

(B)

Reduction of unexpended allotment by net fiscal year 2007 shortfall

(i)

In general

In the case of a State described in clause (ii), the Secretary shall reduce, but not below 0, the amount determined for the State under subparagraph (A)(i) (relating to the State’s unexpended allotment for fiscal year 2005) by the amount of the allotment of the State for which availability is extended under paragraph (4)(A).

(ii)

State described

A State described in this clause is a State that meets the following requirements:

(I)

Did not fully expend fiscal year 2005 allotment by end of fiscal year 2006

The State’s allotment under this section for fiscal year 2005 was not fully expended by the end of fiscal year 2006.

(II)

Projected shortfall for fiscal year 2007

The State has an excess determined under paragraph (2)(C) for fiscal year 2007 (relating to initial projected fiscal year 2007 shortfall).

(C)

Totals and ratios

The Secretary shall determine the following:

(i)

Redistribution pool

A redistribution pool equal to the total of the amounts determined under subparagraph (A)(i), as reduced (if applicable) under subparagraph (B)(i).

(ii)

State proportion toward redistribution pool

For each State in which the amount determined under subparagraph (A)(i) (as reduced, if applicable, under subparagraph (B)(i)) exceeds 0, the ratio of—

(I)

such amount (as so reduced) for the State; to

(II)

the total determined under clause (i).

(D)

Amount of unexpended fiscal year 2005 allotment applied to redistributions

For each State described in subparagraph (C)(ii), the Secretary shall determine a redistribution/reduction amount equal to the product of the following:

(i)

Total amount redistributed

The total amount redistributed under paragraph (3).

(ii)

State’s proportion of unexpended allotments

The ratio for the State determined under subparagraph (C)(ii).

(2)

Determination of initial projected shortfalls for fiscal year 2007

For each State that receives an allotment for fiscal year 2007 under subsection (b), the Secretary shall determine the following:

(A)

Fiscal year 2006 carryover

The amount of the State’s allotment for fiscal year 2006 that was not expended in fiscal year 2006.

(B)

Projected expenditures for fiscal year 2007

The estimated expenditures for the State as would be reported as quarterly expenditures under section 2105(a) for quarters in fiscal year 2007.

(C)

Initial projected shortfall for fiscal year 2007

The amount, if any, by which the projected expenditures determined under subparagraph (B) for the State for quarters in fiscal year 2007 exceeds the sum of the following:

(i)

Fiscal year 2006 carryover

The amount determined under subparagraph (A) for the State.

(ii)

Fiscal year 2007 allotment

The amount of the State’s allotment for fiscal year 2007.

(D)

Determination of net projected shortfalls for fiscal year 2007

For each State that has an excess determined under subparagraph (C), the Secretary shall determine an amount equal to the amount determined under such subparagraph, reduced by the amount of funds (if any) of the State for which availability is extended under paragraph (4)(A).

(E)

State’s proportion of net aggregate shortfall

For each State for which there is a net excess determined under subparagraph (D), the ratio of—

(i)

the amount of such net excess; to

(ii)

the total of such net excesses.

(3)

Redistribution from redistribution pool

From the redistribution pool determined under paragraph (1)(C)(i)—

(A)

States other than territories

There shall be redistributed to each State for which there is a net projected shortfall under paragraph (2)(D) an amount equal the lesser of the following:

(i)

Net fiscal year 2007 shortfall

The amount of the net excess described in paragraph (2)(D) for the State.

(ii)

Portion of unexpended funds available

The product of the following:

(I)

State redistribution pool

The amount determined under paragraph (1)(C)(i), reduced by the total amount redistributed under subparagraph (B).

(II)

State’s shortfall proportion

The ratio described in paragraph (2)(E) for that State.

(B)

Territories

There shall be redistributed to each commonwealth or territory described in subsection (c)(3) an amount equal to the product of the following:

(i)

Territorial redistribution pool

1.05 percent of the total amount of unexpended allotments determined under paragraph (1)(A)(ii).

(ii)

Territorial proportion

The ratio of—

(I)

the allotment under subsection (c) for such commonwealth or territory for fiscal year 2005, to

(II)

the total of all such allotments for such commonwealths and territories.

(4)

Extended availability of remaining unexpended allotments

(A)

To meet initial projected shortfall for fiscal year 2007

In the case of a State that is described in paragraph (1)(B)(ii), the Secretary shall extend the availability of funds from the State’s allotment for fiscal year 2005 to the extent of the amount described in paragraph (2)(C).

(B)

Other extensions

If the redistribution pool amount determined under paragraph (1)(C)(i) exceeds the total amount redistributed under paragraph (3), the Secretary shall extend the availability of funds from allotments for fiscal year 2005 for each State which has an unexpended allotment for that fiscal year determined under paragraph (1)(A) (as reduced, if applicable, under paragraph (1)(B)) by an amount equal to the amount (if any) by which—

(i)

the amount of the unexpended allotment (as so reduced) for the State, exceeds

(ii)

the redistribution/reduction amount determined under paragraph (1)(D) for the State (relating to the portion of the unexpended allotment applied to redistributions).

(5)

Determination of amounts

For purposes of calculating the amounts described in—

(A)

paragraph (1)(A), the Secretary shall use the amounts reported by the States not later than November 30, 2006, on Form CMS–64 or Form CMS–21, as the case may be, as approved by the Secretary; or

(B)

paragraph (2), the Secretary shall use the amounts reported by the States not later than September 30, 2006, on Form CMS–37 or Form CMS–21B, as the case may be, as approved by the Secretary.

.

(b)

Use of Redistributed Funds for Child Health Assistance for Targeted Low-Income Children

Section 2105(a) (42 U.S.C. 1397ee(a)) is amended—

(1)

in paragraph (1), in the matter preceding subparagraph (A), by inserting or paragraph (3) after subparagraph (B); and

(2)

by adding at the end the following:

(3)

Use of redistributed funds for child health assistance for targeted low-income children

For purposes of paragraph (1), the expenditures described in this paragraph are expenditures that are not expenditures for child health assistance for targeted low-income children, but only if such expenditures are from any amounts redistributed under subparagraphs (A) or (B) of subsection (h)(3), (i)(3), or (j)(3) of section 2104.

.

6052.

Authority to use up to 10 percent of fiscal year 2006 and 2007 allotments for outreach

Section 2105(c)(2) (42 U.S.C. 1397ee(c)(2)) is amended by adding at the end the following:

(C)

Use of up to 10 percent of 2006 and 2007 allotments for outreach activities

Notwithstanding subparagraph (A), a State may use up to 10 percent of the allotment for the State for fiscal year 2006 and for fiscal year 2007 for expenditures incurred during the respective fiscal year for outreach activities as provided in section 2102(c)(1) under the plan.

.

6053.

Prohibition against covering nonpregnant childless adults with SCHIP funds

(a)

Prohibition on Use of SCHIP Funds

Section 2107 (42 U.S.C. 1397gg) is amended by adding at the end the following:

(f)

Limitation of Waiver Authority

Notwithstanding subsection (e)(2)(A) and section 1115(a), on and after the date of enactment of this subsection, the Secretary may not approve a waiver, experimental, pilot, or demonstration project that would allow funds made available under this title to be used to provide child health assistance or other health benefits coverage to a nonpregnant childless adult. For purposes of the preceding sentence, a caretaker relative (as such term is defined for purposes of carrying out section 1931) shall not be considered a childless adult.

.

(b)

Conforming Amendments

Section 2105(c)(1) (42 U.S.C. 1397ee(c)(1)) is amended—

(1)

by inserting and may not include coverage of a nonpregnant childless adult after section 2101); and

(2)

by adding at the end the following: For purposes of the preceding sentence, a caretaker relative (as such term is defined for purposes of carrying out section 1931) shall not be considered a childless adult..

(c)

Rule of Construction

Nothing in this section or the amendments made by this section shall be construed to—

(1)

authorize the waiver of any provision of title XIX or XXI of the Social Security Act (42 U.S.C. 1396 et seq., 1397aa et seq.) that is not otherwise authorized to be waived under such titles or under title XI of such Act (42 U.S.C. 1301 et seq.) as of the date of enactment of this Act;

(2)

imply congressional approval of any waiver, experimental, pilot, or demonstration project affecting funds made available under the State children’s health insurance program under title XXI of the Social Security Act (42 U.S.C. 1397aa et. seq.) or any amendment to such a waiver or project that has been approved as of such date of enactment; or

(3)

apply to any waiver, experimental, pilot, or demonstration project that would allow funds made available under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.) to be used to provide child health assistance or other health benefits coverage to a nonpregnant childless adult that is approved before the date of enactment of this Act or to any extension, renewal, or amendment of such a waiver or project that is approved on or after such date of enactment.

6054.

Continued authority for qualifying States to use certain funds for Medicaid expenditures

(a)

In General

Section 2105(g)(1)(A) (42 U.S.C. 1397ee(g)(1)(A)) is amended by striking or 2001 and inserting 2001, 2004, or 2005.

(b)

Effective Date

The amendment made by subsection (a) shall apply to expenditures made under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) on or after October 1, 2005.

6055.

Grants to promote innovative outreach and enrollment under Medicaid and SCHIP

Title XXI (42 U.S.C. 1397aa et seq.) is amended by adding at the end the following:

2111.

Expanded outreach activities

(a)

Grants To Conduct Innovative Outreach and Enrollment Efforts

(1)

In general

The Secretary shall award grants to eligible entities to—

(A)

conduct innovative outreach and enrollment efforts that are designed to increase the enrollment and participation of eligible children under this title and title XIX; and

(B)

promote understanding of the importance of health insurance coverage for prenatal care and children.

(2)

Performance bonuses

The Secretary may reserve a portion of the funds appropriated under subsection (g) for a fiscal year for the purpose of awarding performance bonuses during the succeeding fiscal year to eligible entities that meet enrollment goals or other criteria established by the Secretary.

(b)

Priority for Award of Grants

(1)

In general

In making grants under subsection (a)(1), the Secretary shall give priority to—

(A)

eligible entities that propose to target geographic areas with high rates of—

(i)

eligible but unenrolled children, including such children who reside in rural areas; or

(ii)

racial and ethnic minorities and health disparity populations, including those proposals that address cultural and linguistic barriers to enrollment; and

(B)

eligible entities that plan to engage in outreach efforts with respect to individuals described in subparagraph (A) and that are—

(i)

Federal health safety net organizations; or

(ii)

faith-based organizations or consortia.

(2)

10 percent set aside for outreach to indian children

An amount equal to 10 percent of the funds appropriated under subsection (g) for a fiscal year shall be used by the Secretary to award grants to Indian Health Service providers and urban Indian organizations receiving funds under title V of the Indian Health Care Improvement Act (25 U.S.C. 1651 et seq.) for outreach to, and enrollment of, children who are Indians.

(c)

Application

An eligible entity that desires to receive a grant under subsection (a)(1) shall submit an application to the Secretary in such form and manner, and containing such information, as the Secretary may decide. Such application shall include—

(1)

quality and outcomes performance measures to evaluate the effectiveness of activities funded by a grant awarded under this section to ensure that the activities are meeting their goals; and

(2)

an assurance that the entity shall—

(A)

conduct an assessment of the effectiveness of such activities against such performance measures; and

(B)

cooperate with the collection and reporting of enrollment data and other information determined as a result of conducting such assessments to the Secretary, in such form and manner as the Secretary shall require.

(d)

Dissemination of Enrollment Data and Information Determined From Effectiveness Assessments; Annual Report

The Secretary shall—

(1)

disseminate to eligible entities and make publicly available the enrollment data and information collected and reported in accordance with subsection (c)(2)(B); and

(2)

submit an annual report to Congress on the outreach activities funded by grants awarded under this section.

(e)

Supplement, Not Supplant

Federal funds awarded under this section shall be used to supplement, not supplant, non-Federal funds that are otherwise available for activities funded under this section.

(f)

Definitions

In this section:

(1)

Eligible entity

The term eligible entity means any of the following:

(A)

A State or local government.

(B)

A Federal health safety net organization.

(C)

A national, local, or community-based public or nonprofit private organization.

(D)

A faith-based organization or consortia, to the extent that a grant awarded to such an entity is consistent with the requirements of section 1955 of the Public Health Service Act (42 U.S.C. 300x–65) relating to a grant award to non-governmental entities.

(E)

An elementary or secondary school.

(2)

Federal health safety net organization

The term Federal health safety net organization means—

(A)

an Indian tribe, tribal organization, or an urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act (25 U.S.C. 1651 et seq.), or an Indian Health Service provider;

(B)

a Federally-qualified health center (as defined in section 1905(l)(2)(B));

(C)

a hospital defined as a disproportionate share hospital for purposes of section 1923;

(D)

a covered entity described in section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 256b(a)(4)); and

(E)

any other entity or a consortium that serves children under a federally-funded program, including the special supplemental nutrition program for women, infants, and children (WIC) established under section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786), the head start and early head start programs under the Head Start Act (42 U.S.C. 9801 et seq.), the school lunch program established under the Richard B. Russell National School Lunch Act, and an elementary or secondary school.

(3)

Indians; indian tribe; tribal organization; urban indian organization

The terms Indian, Indian tribe, tribal organization, and urban Indian organization have the meanings given such terms in section 4 of the Indian Health Care Improvement Act (25 U.S.C. 1603).

(g)

Appropriation

There is appropriated, out of any money in the Treasury not otherwise appropriated, $25,000,000 for fiscal year 2007 for the purpose of awarding grants under this section. Amounts appropriated and paid under the authority of this section shall—

(1)

be in addition to amounts appropriated under section 2104 and paid to States in accordance with section 2105; and

(2)

not be subject to the limitation on expenditures described in section 2105(c)(2)(A).

.

C

Money Follows the Person Rebalancing Demonstration

6061.

Money Follows the Person Rebalancing Demonstration

(a)

Program Purpose and Authority

The Secretary is authorized to award, on a competitive basis, grants to States in accordance with this section for demonstration projects (each in this section referred to as an MFP demonstration project) designed to achieve the following objectives with respect to institutional and home and community-based long-term care services under State Medicaid programs:

(1)

Rebalancing

Increase the use of home and community-based, rather than institutional, long-term care services.

(2)

Money follows the person

Eliminate barriers or mechanisms, whether in the State law, the State Medicaid plan, the State budget, or otherwise, that prevent or restrict the flexible use of Medicaid funds to enable Medicaid-eligible individuals to receive support for appropriate and necessary long-term services in the settings of their choice.

(3)

Continuity of service

Increase the ability of the State Medicaid program to assure continued provision of home and community-based long-term care services to eligible individuals who choose to transition from an institutional to a community setting.

(4)

Quality assurance and quality improvement

Ensure that procedures are in place (at least comparable to those required under the qualified HCB program) to provide quality assurance for eligible individuals receiving Medicaid home and community-based long-term care services and to provide for continuous quality improvement in such services.

(b)

Definitions

For purposes of this section:

(1)

Home and community-based long-term care services

The term home and community-based long-term care services means, with respect to a State Medicaid program, home and community-based services (including home health and personal care services) that are provided under the State’s qualified HCB program or that could be provided under such a program but are otherwise provided under the Medicaid program.

(2)

Eligible individual

The term eligible individual means, with respect to an MFP demonstration project of a State, an individual in the State—

(A)

who, immediately before beginning participation in the MFP demonstration project—

(i)

resides (and has resided, for a period of not less than 6 months or for such longer minimum period, not to exceed 2 years, as may be specified by the State) in an inpatient facility;

(ii)

is receiving Medicaid benefits for inpatient services furnished by such inpatient facility; and

(iii)

with respect to whom a determination has been made that, but for the provision of home and community-based long-term care services, the individual would continue to require the level of care provided in an inpatient facility; and

(B)

who resides in a qualified residence beginning on the initial date of participation in the demonstration project.

(3)

Inpatient facility

The term inpatient facility means a hospital, nursing facility, or intermediate care facility for the mentally retarded. Such term includes an institution for mental diseases, but only, with respect to a State, to the extent medical assistance is available under the State Medicaid plan for services provided by such institution.

(4)

Medicaid

The term Medicaid means, with respect to a State, the State program under title XIX of the Social Security Act (including any waiver or demonstration under such title or under section 1115 of such Act relating to such title).

(5)

Qualified hcb program

The term qualified HCB program means a program providing home and community-based long-term care services operating under Medicaid, whether or not operating under waiver authority.

(6)

Qualified residence

The term qualified residence means, with respect to an eligible individual—

(A)

a home owned or leased by the individual or the individual’s family member;

(B)

an apartment with an individual lease, with lockable access and egress, and which includes living, sleeping, bathing, and cooking areas over which the individual or the individual’s family has domain and control; and

(C)

a residence, in a community-based residential setting, in which no more than 4 unrelated individuals reside.

(7)

Qualified expenditures

The term qualified expenditures means expenditures by the State under its MFP demonstration project for home and community-based long-term care services for an eligible individual participating in the MFP demonstration project, but only with respect to services furnished during the 12-month period beginning on the date the individual is discharged from an inpatient facility referred to in paragraph (2)(A)(i).

(8)

Self-directed services

The term self-directed means, with respect to home and community-based long-term care services for an eligible individual, such services for the individual which are planned and purchased under the direction and control of such individual or the individual’s authorized representative (as defined by the Secretary), including the amount, duration, scope, provider, and location of such services, under the State Medicaid program consistent with the following requirements:

(A)

Assessment

There is an assessment of the needs, capabilities, and preferences of the individual with respect to such services.

(B)

Service plan

Based on such assessment, there is developed jointly with such individual or the individual’s authorized representative a plan for such services for such individual that is approved by the State and that—

(i)

specifies those services, if any, which the individual or the individual’s authorized representative would be responsible for directing;

(ii)

identifies the methods by which the individual or the individual’s authorized representative or an agency designated by an individual or representative will select, manage, and dismiss providers of such services;

(iii)

specifies the role of family members and others whose participation is sought by the individual or the individual’s authorized representative with respect to such services;

(iv)

is developed through a person-centered process that—

(I)

is directed by the individual or the individual’s authorized representative;

(II)

builds upon the individual’s capacity to engage in activities that promote community life and that respects the individual’s preferences, choices, and abilities; and

(III)

involves families, friends, and professionals as desired or required by the individual or the individual’s authorized representative;

(v)

includes appropriate risk management techniques that recognize the roles and sharing of responsibilities in obtaining services in a self-directed manner and assure the appropriateness of such plan based upon the resources and capabilities of the individual or the individual’s authorized representative; and

(vi)

may include an individualized budget which identifies the dollar value of the services and supports under the control and direction of the individual or the individual’s authorized representative.

(C)

Budget Process

With respect to individualized budgets described in subparagraph (B)(vi), the State application under subsection (c)—

(i)

describes the method for calculating the dollar values in such budgets based on reliable costs and service utilization;

(ii)

defines a process for making adjustments in such dollar values to reflect changes in individual assessments and service plans; and

(iii)

provides a procedure to evaluate expenditures under such budgets.

(9)

State

The term State has the meaning given such term for purposes of title XIX of the Social Security Act.

(c)

State Application

A State seeking approval of an MFP demonstration project shall submit to the Secretary, at such time and in such format as the Secretary requires, an application meeting the following requirements and containing such additional information, provisions, and assurances, as the Secretary may require:

(1)

Assurance of a public development process

The application contains an assurance that the State has engaged, and will continue to engage, in a public process for the design, development, and evaluation of the MFP demonstration project that allows for input from eligible individuals, the families of such individuals, authorized representatives of such individuals, providers, and other interested parties.

(2)

Operation in connection with qualified hcb program to assure continuity of services

The State will conduct the MFP demonstration project for eligible individuals in conjunction with the operation of a qualified HCB program that is in operation (or approved) in the State for such individuals in a manner that assures continuity of Medicaid coverage for such individuals so long as such individuals continue to be eligible for medical assistance.

(3)

Demonstration project period

The application shall specify the period of the MFP demonstration project, which shall include at least 2 consecutive fiscal years in the 5-fiscal-year period beginning with fiscal year 2009.

(4)

Service area

The application shall specify the service area or areas of the MFP demonstration project, which may be a statewide area or one or more geographic areas of the State.

(5)

Targeted groups and numbers of individuals served

The application shall specify—

(A)

the target groups of eligible individuals to be assisted to transition from an inpatient facility to a qualified residence during each fiscal year of the MFP demonstration project;

(B)

the projected numbers of eligible individuals in each targeted group of eligible individuals to be so assisted during each such year; and

(C)

the estimated total annual qualified expenditures for each fiscal year of the MFP demonstration project.

(6)

Individual choice, continuity of care

The application shall contain assurances that—

(A)

each eligible individual or the individual’s authorized representative will be provided the opportunity to make an informed choice regarding whether to participate in the MFP demonstration project;

(B)

each eligible individual or the individual’s authorized representative will choose the qualified residence in which the individual will reside and the setting in which the individual will receive home and community-based long-term care services;

(C)

the State will continue to make available, so long as the State operates its qualified HCB program consistent with applicable requirements, home and community-based long-term care services to each individual who completes participation in the MFP demonstration project for as long as the individual remains eligible for medical assistance for such services under such qualified HCB program (including meeting a requirement relating to requiring a level of care provided in an inpatient facility and continuing to require such services).

(7)

Rebalancing

The application shall—

(A)

provide such information as the Secretary may require concerning the dollar amounts of State Medicaid expenditures for the fiscal year, immediately preceding the first fiscal year of the State’s MFP demonstration project, for long-term care services and the percentage of such expenditures that were for institutional long-term care services or were for home and community-based long-term care services;

(B)
(i)

specify the methods to be used by the State to increase, for each fiscal year during the MFP demonstration project, the dollar amount of such total expenditures for home and community-based long-term care services and the percentage of such total expenditures for long-term care services that are for home and community-based long-term care services; and

(ii)

describe the extent to which the MFP demonstration project will contribute to accomplishment of objectives described in subsection (a).

(8)

Money follows the person

The application shall describe the methods to be used by the State to eliminate any legal, budgetary, or other barriers to flexibility in the availability of Medicaid funds to pay for long-term care services for eligible individuals participating in the project in the appropriate settings of their choice, including costs to transition from an institutional setting to a qualified residence.

(9)

Maintenance of effort and cost-effectiveness

The application shall contain or be accompanied by such information and assurances as may be required to satisfy the Secretary that—

(A)

total expenditures under the State Medicaid program for home and community-based long-term care services will not be less for any fiscal year during the MFP demonstration project than for the greater of such expenditures for—

(i)

fiscal year 2005; or

(ii)

any succeeding fiscal year before the first year of the MFP demonstration project; and

(B)

in the case of a qualified HCB program operating under a waiver under subsection (c) or (d) of section 1915 of the Social Security Act (42 U.S.C. 1396n), but for the amount awarded under a grant under this section, the State program would continue to meet the cost-effectiveness requirements of subsection (c)(2)(D) of such section or comparable requirements under subsection (d)(5) of such section, respectively.

(10)

Waiver requests

The application shall contain or be accompanied by requests for any modification or adjustment of waivers of Medicaid requirements described in subsection (d)(3), including adjustments to the maximum numbers of individuals included and package of benefits, including one-time transitional services, provided.

(11)

Quality assurance and quality improvement

The application shall include—

(A)

a plan satisfactory to the Secretary for quality assurance and quality improvement for home and community-based long-term care services under the State Medicaid program, including a plan to assure the health and welfare of individuals participating in the MFP demonstration project; and

(B)

an assurance that the State will cooperate in carrying out activities under subsection (f) to develop and implement continuous quality assurance and quality improvement systems for home and community-based long-term care services.

(12)

Optional program for self-directed services

If the State elects to provide for any home and community-based long-term care services as self-directed services (as defined in subsection (b)(8)) under the MFP demonstration project, the application shall provide the following:

(A)

Meeting requirements

A description of how the project will meet the applicable requirements of such subsection for the provision of self-directed services.

(B)

Voluntary election

A description of how eligible individuals will be provided with the opportunity to make an informed election to receive self-directed services under the project and after the end of the project.

(C)

State support in service plan development

Satisfactory assurances that the State will provide support to eligible individuals who self-direct in developing and implementing their service plans.

(D)

Oversight of receipt of services

Satisfactory assurances that the State will provide oversight of eligible individual’s receipt of such self-directed services, including steps to assure the quality of services provided and that the provision of such services are consistent with the service plan under such subsection.

Nothing in this section shall be construed as requiring a State to make an election under the project to provide for home and community-based long-term care services as self-directed services, or as requiring an individual to elect to receive self-directed services under the project.
(13)

Reports and evaluation

The application shall provide that—

(A)

the State will furnish to the Secretary such reports concerning the MFP demonstration project, on such timetable, in such uniform format, and containing such information as the Secretary may require, as will allow for reliable comparisons of MFP demonstration projects across States; and

(B)

the State will participate in and cooperate with the evaluation of the MFP demonstration project.

(d)

Secretary’s Award of Competitive Grants

(1)

In general

The Secretary shall award grants under this section on a competitive basis to States selected from among those with applications meeting the requirements of subsection (c), in accordance with the provisions of this subsection.

(2)

Selection and modification of state applications

In selecting State applications for the awarding of such a grant, the Secretary—

(A)

shall take into consideration the manner in which, and extent to which, the State proposes to achieve the objectives specified in subsection (a);

(B)

shall seek to achieve an appropriate national balance in the numbers of eligible individuals, within different target groups of eligible individuals, who are assisted to transition to qualified residences under MFP demonstration projects, and in the geographic distribution of States operating MFP demonstration projects;

(C)

shall give preference to State applications proposing—

(i)

to provide transition assistance to eligible individuals within multiple target groups; and

(ii)

to provide eligible individuals with the opportunity to receive home and community-based long-term care services as self-directed services, as defined in subsection (b)(8); and

(D)

shall take such objectives into consideration in setting the annual amounts of State grant awards under this section.

(3)

Waiver authority

The Secretary is authorized to waive the following provisions of title XIX of the Social Security Act, to the extent necessary to enable a State initiative to meet the requirements and accomplish the purposes of this section:

(A)

Statewideness

Section 1902(a)(1), in order to permit implementation of a State initiative in a selected area or areas of the State.

(B)

Comparability

Section 1902(a)(10)(B), in order to permit a State initiative to assist a selected category or categories of individuals described in subsection (b)(2)(A).

(C)

Income and resources eligibility

Section 1902(a)(10)(C)(i)(III), in order to permit a State to apply institutional eligibility rules to individuals transitioning to community-based care.

(D)

Provider agreements

Section 1902(a)(27), in order to permit a State to implement self-directed services in a cost-effective manner.

(4)

Conditional approval of outyear grant

In awarding grants under this section, the Secretary shall condition the grant for the second and any subsequent fiscal years of the grant period on the following:

(A)

Numerical benchmarks

The State must demonstrate to the satisfaction of the Secretary that it is meeting numerical benchmarks specified in the grant agreement for—

(i)

increasing State Medicaid support for home and community-based long-term care services under subsection (c)(5); and

(ii)

numbers of eligible individuals assisted to transition to qualified residences.

(B)

Quality of care

The State must demonstrate to the satisfaction of the Secretary that it is meeting the requirements under subsection (c)(11) to assure the health and welfare of MFP demonstration project participants.

(e)

Payments to States; Carryover of Unused Grant Amounts

(1)

Payments

For each calendar quarter in a fiscal year during the period a State is awarded a grant under subsection (d), the Secretary shall pay to the State from its grant award for such fiscal year an amount equal to the lesser of—

(A)

90 percent of the amount of qualified expenditures made during such quarter; or

(B)

the total amount remaining in such grant award for such fiscal year (taking into account the application of paragraph (2)).

(2)

Carryover of unused amounts

Any portion of a State grant award for a fiscal year under this section remaining at the end of such fiscal year shall remain available to the State for the next 4 fiscal years, subject to paragraph (3).

(3)

Reawarding of certain unused amounts

In the case of a State that the Secretary determines pursuant to subsection (d)(4) has failed to meet the conditions for continuation of a MFP demonstration project under this section in a succeeding year or years, the Secretary shall rescind the grant awards for such succeeding year or years, together with any unspent portion of an award for prior years, and shall add such amounts to the appropriation for the immediately succeeding fiscal year for grants under this section.

(4)

Preventing duplication of payment

The payment under a MFP demonstration project with respect to qualified expenditures shall be in lieu of any payment with respect to such expenditures that could otherwise be paid under Medicaid, including under section 1903(a) of the Social Security Act. Nothing in the previous sentence shall be construed as preventing the payment under Medicaid for such expenditures in a grant year after amounts available to pay for such expenditures under the MFP demonstration project have been exhausted.

(f)

Quality Assurance and Improvement; Technical Assistance; Oversight

(1)

In general

The Secretary, either directly or by grant or contract, shall provide for technical assistance to, and oversight of, States for purposes of upgrading quality assurance and quality improvement systems under Medicaid home and community-based waivers, including—

(A)

dissemination of information on promising practices;

(B)

guidance on system design elements addressing the unique needs of participating beneficiaries;

(C)

ongoing consultation on quality, including assistance in developing necessary tools, resources, and monitoring systems; and

(D)

guidance on remedying programmatic and systemic problems.

(2)

Funding

From the amounts appropriated under subsection (h)(1) for the portion of fiscal year 2009 that begins on January 1, 2009, and ends on September 30, 2009, and for fiscal year 2010, not more than $2,400,000 shall be available to the Secretary to carry out this subsection during the period that begins on January 1, 2009, and ends on September 30, 2013.

(g)

Research and Evaluation

(1)

In general

The Secretary, directly or through grant or contract, shall provide for research on, and a national evaluation of, the program under this section, including assistance to the Secretary in preparing the final report required under paragraph (2). The evaluation shall include an analysis of projected and actual savings related to the transition of individuals to qualified residences in each State conducting an MFP demonstration project.

(2)

Final report

The Secretary shall make a final report to the President and Congress, not later than September 30, 2013, reflecting the evaluation described in paragraph (1) and providing findings and conclusions on the conduct and effectiveness of MFP demonstration projects.

(3)

Funding

From the amounts appropriated under subsection (h)(1) for each of fiscal years 2010 through 2013, not more than $1,100,000 per year shall be available to the Secretary to carry out this subsection.

(h)

Appropriations

(1)

In general

There are appropriated, from any funds in the Treasury not otherwise appropriated, for grants to carry out this section—

(A)

$250,000,000 for the portion of fiscal year 2009 beginning on January 1, 2009, and ending on September 30, 2009;

(B)

$300,000,000 for fiscal year 2010;

(C)

$350,000,000 for fiscal year 2011;

(D)

$400,000,000 for fiscal year 2012; and

(E)

$450,000,000 for fiscal year 2013.

(2)

Availability

Amounts made available under paragraph (1) for a fiscal year shall remain available for the awarding of grants to States by not later than September 30, 2013.

6

OPTION FOR HURRICANE KATRINA DISASTER STATES TO DELAY APPLICATION

6071.

Option for Hurricane Katrina disaster States to delay application

Notwithstanding any provision of this subtitle, or any amendment made by this subtitle, the State of Louisiana, Mississippi, or Alabama may elect to not have the provisions of this subtitle, or of any amendment made by this subtitle, apply with respect to the State during any period for which a major disaster declared in accordance with section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) with respect to a parish, in the case of Louisiana, or a county, in the case of Mississippi or Alabama, as a result of Hurricane Katrina is in effect.

B

Medicare

6101.

Improvements to the Medicare-dependent hospital (mdh) Program

(a)

5-Year Extension

(1)

Extension of Payment Methodology

Section 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is amended—

(A)

in clause (i), by striking October 1, 2006 and inserting October 1, 2011; and

(B)

in clause (ii)(II)—

(i)

by striking October 1, 2006 and inserting October 1, 2011; and

(ii)

by inserting or for discharges in the fiscal year after for the cost reporting period.

(2)

Conforming amendments

(A)

Extension of target amount

Section 1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)) is amended—

(i)

in the matter preceding clause (i)—

(I)

by striking beginning and inserting occurring; and

(II)

by striking October 1, 2006 and inserting October 1, 2011; and

(ii)

in clause (iv), by striking through fiscal year 2005 and inserting through fiscal year 2011.

(B)

Permitting hospitals to decline reclassification

Section 13501(e)(2) of the Omnibus Budget Reconciliation Act of 1993 (42 U.S.C. 1395ww note) is amended by striking through fiscal year 2005 and inserting through fiscal year 2011.

(b)

Option to Use of 2002 as Base Year

Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)) is amended—

(1)

in subparagraph (D), by inserting subject to subparagraph (K), after (d)(5)(G)),; and

(2)

by adding at the end the following new subparagraph:

(K)
(i)

With respect to discharges occurring on or after October 1, 2006, in the case of a medicare-dependent, small rural hospital, for purposes of applying subparagraph (D)—

(I)

there shall be substituted for the base cost reporting period described in subparagraph (D)(i) the 12-month cost reporting period beginning during fiscal year 2002; and

(II)

any reference in such subparagraph to the first cost reporting period described in such subparagraph is deemed a reference to the first cost reporting period beginning on or after October 1, 2006.

(ii)

This subparagraph shall only apply to a hospital if the substitution described in clause (i)(I) results in an increase in the target amount under subparagraph (D) for the hospital.

.

(c)

Enhanced Payment for Amount by Which the Target Exceeds the PPS Rate

Section 1886(d)(5)(G)(ii)(II) (42 U.S.C. 1395ww(d)(5)(G)(iv)(II)) is amended by inserting (or 75 percent in the case of discharges occurring on or after October 1, 2006) after 50 percent.

(d)

Enhanced Disproportionate Share Hospital (DSH) Treatment for Medicare Dependent Hospitals

Section 1886(d)(5)(F)(xiv)(II) (42 U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended by inserting or, in the case of discharges occurring on or after October 1, 2006, as a medicare-dependent, small rural hospital under subparagraph (G)(iv) before the period at the end.

6102.

Reduction in payments to skilled nursing facilities for bad debt

(a)

In General

Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at the end the following new subparagraph:

(V)

In determining such reasonable costs for skilled nursing facilities with respect to services furnished on or after October 1, 2005, the amount of bad debts otherwise treated as allowed costs which are attributable to the deductibles and coinsurance amounts under this title shall be reduced by 30 percent of such amount otherwise allowable.

.

(b)

Technical Amendment

Section 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amended by striking section 1833(t)(5)(B) and inserting section 1833(t)(8)(B).

6103.

Two-year extension of the 50 percent compliance threshold used to determine whether a hospital or unit of a hospital is an Inpatient Rehabilitation Facility under the Medicare Program

(a)

Extension

(1)

In general

Effective as if enacted on June 30, 2005, notwithstanding section 412.23(b)(2) of title 42, Code of Federal Regulations, during the period beginning on July 1, 2005, and ending on June 30, 2007, the Secretary of Health and Human Services shall not—

(A)

require a compliance rate, pursuant to the criterion (commonly known as the 75 percent rule) that is used to determine whether a hospital or unit of a hospital is an inpatient rehabilitation facility (as defined in the rule published in the Federal Register on May 7, 2004, entitled Medicare Program; Final Rule; Changes to the Criteria for Being Classified as an Inpatient Rehabilitation Facility (69 Fed. Reg. 25752)), that is greater than the 50 percent compliance threshold that became effective on July 1, 2004; or

(B)

change the designation of an inpatient rehabilitation facility that is in compliance with such 50 percent threshold.

(2)

Retroactive Status as an Inpatient Rehabilitation Facility; Payments; Expedited Review

The Secretary of Health and Human Services shall establish procedures for—

(A)

making any necessary retroactive adjustment to restore the status of a facility as an inpatient rehabilitation facility as a result of subsection (a); and

(B)

making any necessary payments to inpatient rehabilitation facilities based on such adjustment for discharges occurring on or after July 1, 2005, and before the date of enactment of this Act.

(b)

Special Rule

In the case of a hospital or unit of a hospital that failed to meet the 50 percent compliance threshold described in subsection (a)(1)(A) with respect to the first cost reporting period of the hospital or unit that began on or after July 1, 2004, the following rules shall apply:

(1)

Such hospital or unit shall be deemed to meet such 50 percent threshold for purposes of subsection (a).

(2)

The Secretary shall examine all the claims of the hospital or unit under title XVIII of the Social Security Act submitted during the 6-month period beginning after the end of such first cost reporting period.

(3)

If the Secretary determines after such review that the hospital or unit is still not in compliance with such 50 percent compliance threshold—

(A)

the deemed status of the hospital or unit under paragraph (1) shall be revoked retroactive to the beginning of such 6-month period; and

(B)

the Secretary shall provide for the collection of any necessary overpayments by reason of the revocation under subparagraph (A).

(c)

Study and Report by the HHS Inspector General

(1)

Study

(A)

In general

The Inspector General of the Department of Health and Human Services shall conduct a study of hospitals and units of hospitals that—

(i)

are designated as inpatient rehabilitation facilities under title XVIII of the Social Security Act; and

(ii)

would not be so designated if this section had not been enacted because the hospital or unit has a compliance rate that is greater than the 50 percent compliance threshold described in subsection (a)(1)(A) but is less than the 60 percent compliance threshold that would have become effective on July 1, 2005, but for this section.

(B)

Requirement

In conducting the study under subparagraph (A), the Inspector General shall analyze the types of patients the hospitals and units are treating and issues relating to the medical conditions of such patients that do not meet the medical requirements for determining compliance with such threshold.

(2)

Report

Not later than January 1, 2007, the Inspector General shall submit to Congress and the Secretary a report on the study conducted under paragraph (1), together with such recommendations as the Inspector General determines appropriate.

(d)

Rehabilitation Advisory Council

(1)

Establishment

The Secretary shall establish an advisory council to be known as the Rehabilitation Advisory Council.

(2)

Membership

The membership of the Rehabilitation Advisory Council shall include—

(A)

physicians;

(B)

Medicare beneficiaries;

(C)

representatives of inpatient rehabilitation facilities; and

(D)

representatives of other entities and practitioners that provide rehabilitative care in settings other than in such facilities, such as skilled nursing facilities.

(3)

Duties

(A)

Advice and recommendations

The Rehabilitation Advisory Council shall provide advice and recommendations to Congress and the Secretary concerning the coverage of rehabilitation services under the Medicare program, including the appropriate medical criteria for determining the appropriateness of inpatient rehabilitation facility admissions.

(B)

Periodic reports

The Rehabilitation Advisory Council shall provide Congress and the Secretary with periodic reports that summarize—

(i)

the Council’s activities; and

(ii)

any recommendations for legislation or administrative action the Council considers to be appropriate.

(4)

Termination

The Rehabilitation Advisory Council shall terminate on September 30, 2010.

6104.

Prohibition on physician self referrals to physician owned, limited service hospitals

(a)

Prohibition

Section 1877(d) (42 U.S.C. 1395nn(d)) is amended in each of paragraphs (2)(B) and (3)(B) by striking effective for the 18-month period beginning on the date of enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and inserting on and after December 8, 2003.

(b)

Revisions to the Requirements To Qualify for the Exception to the Definition of Specialty Hospital

Section 1877(h)(7)(B) (42 U.S.C. 1395nn(h)(7)(B)) is amended—

(1)

by redesignating clauses (iii), (iv), and (v) as clauses (vi), (vii), and (viii), respectively;

(2)

by inserting after clause (ii) the following new clauses:

(iii)

for which the percent of investment in the hospital by physician investors at any time on or after June 8, 2005, is no greater than the percent of such investment by physician investors as of such date;

(iv)

for which the percent of investment in the hospital by any physician investor at any time on or after June 8, 2005, is no greater than the percent of such investment by such physician as of such date;

(v)

for which the number of operating rooms at the hospital at any time on or after June 8, 2005, is no greater than the number of such rooms as of such date;

; and

(3)

by striking clause (vii), as so redesignated, and inserting the following:

(vii)

for which—

(I)

during the period beginning on December 8, 2003, and ending on June 7, 2005, any increase in the number of beds occurs only in the facilities on the main campus of the hospital and does not exceed 50 percent of the number of beds in the hospital as of November 18, 2003, or 5 beds, whichever is greater; and

(II)

the number of beds at the hospital at any time on or after June 8, 2005, is no greater than the number of such beds as of such date; and

.

(c)

Effective Date

The amendments made by this section shall take effect on June 8, 2005.

6105.

Minimum update for physicians’ services for 2006

(a)

Minimum Update for 2006

Section 1848(d) (42 U.S.C. 1395w–4(d)), as amended by section 6110(c), is amended by adding at the end the following new paragraph:

(7)

Update for 2006

The update to the single conversion factor established in paragraph (1)(C) for 2006 shall be not less than 1 percent.

.

(b)

Conforming Amendment

Section 1848(d)(4)(B) (42 U.S.C. 1395w–4(d)(4)(B)) is amended, in the matter preceding clause (i), by striking paragraph (5) and inserting paragraphs (5) and (7).

(c)

Not Treated as Change in Law and Regulation in Sustainable Growth Rate Determination

The amendments made by this section shall not be treated as a change in law for purposes of applying section 1848(f)(2)(D) of the Social Security Act (42 U.S.C. 1395w–4(f)(2)(D)).

6106.

One-year extension of hold harmless provisions for small rural hospitals and sole community hospitals under the prospective payment system for hospital outpatient Department services

Section 1833(t)(7)(D)(i) (42 U.S.C. 1395l(t)(7)(D)(i)) is amended by striking January 1, 2006 and inserting January 1, 2007.

6107.

Update to the composite rate component of the basic case-mix adjusted prospective payment system for dialysis services

Section 1881(b)(12) (42 U.S.C. 1395rr(b)(12)) is amended—

(1)

in subparagraph (F), in the flush matter at the end, by striking Nothing and inserting Except as provided in subparagraph (G), nothing;

(2)

by redesignating subparagraph (G) as subparagraph (H); and

(3)

by inserting after subparagraph (F) the following new subparagraph:

(G)

The Secretary shall increase the amount of the composite rate component of the basic case-mix adjusted system under subparagraph (B) for dialysis services furnished on or after January 1, 2006, by 1.6 percent above the amount of such composite rate component for such services furnished on December 31, 2005.

.

6108.

One-year extension of moratorium on therapy caps

Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by striking and 2005 and inserting 2005, and 2006.

6109.

Transfer of title of certain DME to patient after 13-MONTH rental

(a)

In General

Section 1834(a)(7)(A) (42 U.S.C. 1395m(a)(7)(A)) is amended to read as follows:

(A)

Payment

In the case of an item of durable medical equipment not described in paragraphs (2) through (6), the following rules shall apply:

(i)

Rental

(I)

In general

Payment for the item shall be made on a monthly basis for the rental of the item during the period of medical need (but payments under this clause may not extend over a period of continuous use (as determined by the Secretary) of longer than 13 months).

(II)

Payment amount

Subject to subparagraph (B), the amount recognized for the item—

(aa)

for each of the first 3 months of such period is 10 percent of the purchase price recognized under paragraph (8) with respect to the item; and

(bb)

for each of the remaining months of such period is 7.5 percent of such purchase price.

(ii)

Ownership after rental

(I)

Transfer of title

On the first day that begins after the 13th continuous month during which payment is made for the rental of an item under clause (i), the supplier of the item shall transfer title to the item to the individual.

(II)

Maintenance and servicing

After the supplier transfers title to the item under subclause (I), maintenance and servicing payments shall, if the Secretary determines such payments are reasonable and necessary, be made (for parts and labor not covered by the supplier’s or manufacturer’s warranty, as determined by the Secretary to be appropriate for the particular type of durable medical equipment), and such payments shall be in an amount determined to be appropriate by the Secretary.

.

(b)

Effective Date

The amendment made by subsection (a) shall apply to items furnished for which the first rental month occurs on or after January 1, 2006.

6110.

Establishment of Medicare Value-Based purchasing programs

(a)

In General

Title XVIII (42 U.S.C. 1395 et seq.) is amended—

(1)

by redesignating part E as part F; and

(2)

by inserting after part D the following new part:

E

Value-Based Purchasing

1860E–1.

Quality measurement systems for Value-Based purchasing programs

(a)

Establishment

(1)

In general

The Secretary shall develop quality measurement systems in accordance with subsections (b), (c), (d), and (e), for purposes of providing value-based payments to—

(A)

hospitals pursuant to section 1860E–2;

(B)

physicians and practitioners pursuant to section 1860E–3;

(C)

plans pursuant to section 1860E–4;

(D)

end stage renal disease providers and facilities pursuant to section 1860E–5; and

(E)

home health agencies pursuant to section 1860E–6.

(2)

Quality

The systems developed under paragraph (1) shall measure the quality of the care furnished by the provider involved.

(3)

High quality health care defined

In this part, the term high quality health care means health care that is safe, effective, patient-centered, timely, equitable, efficient, necessary, and appropriate.

(b)

Requirements for Systems

Under each quality measurement system described in subsection (a)(1), the Secretary shall do the following:

(1)

Measures

(A)

In general

Subject to subparagraph (B), the Secretary shall select measures of quality to be used by the Secretary under each system.

(B)

Requirements

In selecting the measures to be used under each system pursuant to subparagraph (A), the Secretary shall, to the extent feasible and practicable, ensure that—

(i)

such measures are evidence-based, reliable and valid, actionable, and reasonable to collect and report;

(ii)

measures of process, structure, outcomes, and beneficiary experience of care are included;

(iii)

except for the system that is used to provide value-based payments to physicians and practitioners under section 1860E–3, measures of efficiency (where efficiency is improved quality care through the effective use of resources) are included;

(iv)

measures of overuse and underuse of health care items and services are included;

(v)
(I)

at least 1 measure of health information technology infrastructure that enables the provision of high quality health care and facilitates the exchange of health information, such as the use of 1 or more elements of a qualified health information system (as defined in subparagraph (E)), is included during the first year each system is implemented; and

(II)

additional measures of health information technology infrastructure are included in subsequent years;

(vi)

in the case of the system that is used to provide value-based payments to hospitals under section 1860E–2, by not later than January 1, 2008, at least 5 measures that take into account the unique characteristics of small hospitals located in rural areas and frontier areas are included; and

(vii)

measures that assess the quality of care furnished to frail individuals over the age of 75 and to individuals with multiple complex chronic conditions are included.

(C)

Requirement for collection of data on a measure for 1 year prior to use under the systems

Data on any measure selected by the Secretary under subparagraph (A) must be collected by the Secretary for at least a 12-month period before such measure may be used to determine whether a provider receives a value-based payment under a program described in subsection (a)(1).

(D)

Authority to vary measures

The Secretary may vary the measures selected under subparagraph (A) by the entity or individual involved based on factors such as the type of, the size of, and the scope and volume of services provided by, the entity or individual. If the Secretary varies the measures for providers under the preceding sentence, the Secretary shall ensure that such measures are aligned to promote coordinated quality of care across provider settings.

(E)

Qualified health information system defined

For purposes of subparagraph (B)(iv)(I), the term qualified health information system means a computerized system (including hardware, software, and training) that—

(i)

protects the privacy and security of health information and properly encrypts such health information;

(ii)

maintains and provides access to patients’ health records in an electronic format;

(iii)

incorporates decision support software to reduce medical errors and enhance health care quality;

(iv)

is consistent with data standards and certification processes recommended by the Secretary;

(v)

allows for the reporting of quality measures; and

(vi)

includes other features determined appropriate by the Secretary.

(2)

Weights of measures

The Secretary shall assign weights to the measures used by the Secretary under each system. If the Secretary determines appropriate, in assigning the weights under the preceding sentence, some measures may be weighted more heavily than other measures.

(3)

Risk adjustment

The Secretary shall establish procedures, as appropriate, to control for differences in beneficiary health status and beneficiary characteristics. To the extent feasible, such procedures may be based on existing models for controlling for such differences.

(4)

Maintenance

(A)

In general

The Secretary shall, as determined appropriate, but not more often than once each 12-month period, review and revise each system, including through—

(i)

the refinement of measures under the systems and the retirement of existing outdated measures under the system;

(ii)

the refinement of the weights assigned to measures under the system; and

(iii)

the refinement of the risk adjustment procedures established pursuant to paragraph (3) under the system.

(B)

Revision shall allow for comparison of data

Each revision under subparagraph (A) of a quality measurement system shall allow for the comparison of data from one year to the next for purposes of providing value-based payments under the programs described in subsection (a)(1).

(5)

Use of most recent quality data

(A)

In general

Except as provided in subparagraph (B), the Secretary shall use the most recent quality data with respect to the provider involved that is available to the Secretary.

(B)

Insufficient data due to low volume

If the Secretary determines that there is insufficient data with respect to a measure or measures because of a low number of services provided, the Secretary may aggregate data across more than 1 fiscal or calendar year, as the case may be.

(c)

Requirements for Developing and Reviewing and Revising the Systems

In developing and reviewing and revising each quality measurement system under this section, the Secretary shall—

(1)

consult with, and take into account the recommendations of, the entity that the Secretary has an arrangement with under subsection (e);

(2)

consult with provider-based groups, clinical specialty societies, and certification boards;

(3)

take into account existing quality measurement systems that have been developed through a rigorous process of validation and with the involvement of entities and persons described in subsection (e)(2)(B); and

(4)

take into account—

(A)

each of the reports by the Medicare Payment Advisory Commission that are required under section 1860E–3(a)(1);

(B)

the results of appropriate studies, reports, and demonstration programs; and

(C)

the report by the Institute of Medicine of the National Academy of Sciences under section 238(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108–173).

(d)

Requirements for Implementing the Systems

In implementing each quality measurement system under this section, the Secretary shall consult with entities—

(1)

that have joined together to develop strategies for quality measurement and reporting, including the feasibility of collecting and reporting meaningful data on quality measures; and

(2)

that involve representatives of health care providers, health plans, consumers, employers, purchasers, quality experts, government agencies, and other individuals and groups that are interested in quality of care.

(e)

Arrangement With an Entity To Provide Advice and Recommendations

(1)

Arrangement

On and after July 1, 2006, the Secretary shall have in place an arrangement with an entity that meets the requirements described in paragraph (2) under which such entity provides the Secretary with advice on, and recommendations with respect to, the development and review and revision of the quality measurement systems under this section, including the assigning of weights to the measures under subsection (b)(2).

(2)

Requirements described

The requirements described in this paragraph are the following:

(A)

The entity is a private nonprofit entity governed by an executive director and a board.

(B)

The members of the entity include representatives of—

(i)
(I)

health plans and providers receiving reimbursement under this title for the provision of items and services, including health plans and providers with experience in the care of the frail elderly and individuals with multiple complex chronic conditions; or

(II)

groups representing such health plans and providers;

(ii)

groups representing individuals receiving benefits under this title;

(iii)

purchasers and employers or groups representing purchasers or employers;

(iv)

organizations that focus on quality improvement as well as the measurement and reporting of quality measures;

(v)

organizations that certify and license such providers;

(vi)

State government health programs;

(vii)

persons skilled in the conduct and interpretation of biomedical, health services, and health economics research and with expertise in outcomes and effectiveness research and technology assessment; and

(viii)

persons or entities involved in the development and establishment of standards and certification for health information technology systems and clinical data.

(C)

The membership of the entity is representative of individuals with experience with—

(i)

urban health care issues;

(ii)

safety net health care issues; and

(iii)

rural and frontier health care issues.

(D)

The entity does not charge a fee for membership for participation in the work of the entity related to the arrangement with the Secretary under paragraph (1). If the entity does require a fee for membership for participation in other functions of the entity, there shall be no linkage between such fee and participation in the work of the entity related to such arrangement with the Secretary.

(E)

The entity—

(i)

permits members described in subparagraph (B) to vote on matters of the entity related to the arrangement with the Secretary under paragraph (1); and

(ii)

ensures that such members have an equal vote on such matters.

(F)

With respect to matters related to the arrangement with the Secretary under paragraph (1), the entity conducts its business in an open and transparent manner and provides the opportunity for public comment.

(G)

The entity operates as a voluntary consensus standards setting organization as defined for purposes of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (Public Law 104–113) and Office of Management and Budget Revised Circular A–119 (published in the Federal Register on February 10, 1998).

(3)

Authorization of appropriations

For the purpose of carrying out the provisions of this subsection, there are authorized to be appropriated—

(A)

for each of the fiscal years 2006 and 2007, $3,000,000; and

(B)

for fiscal year 2008 and each subsequent fiscal year, an amount equal to the sum of—

(i)

$3,000,000; and

(ii)

such amount multiplied by the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with June of the calendar year in which such fiscal year begins exceeds such average for the 12-month period ending with June 2006.

1860E–2.

PPS hospital Value-Based purchasing Program

(a)

Program

(1)

In general

The Secretary shall establish a program under which value-based payments are provided each fiscal year to hospitals that demonstrate the provision of high quality health care to individuals who are entitled to benefits under part A and are inpatients of the hospital.

(2)

Program to begin in fiscal year 2007

The Secretary shall establish the program under this section so that value-based payments described in subsection (b) are made with respect to fiscal year 2007 and each subsequent fiscal year.

(3)

Applicability of program to hospitals

For purposes of this section, the term hospital means a subsection (d) hospital (as defined in section 1886(d)(1)(B)).

(b)

Value-Based Payments

(1)

In general

Subject to paragraph (4), the Secretary shall make a value-based payment to a hospital with respect to a fiscal year if the Secretary determines that the quality of the care provided in that year to individuals who are entitled to benefits under part A and are inpatients of the hospital—

(A)

has substantially improved (as determined by the Secretary) over the prior year; or

(B)

exceeds a threshold established by the Secretary.

(2)

Use of system

In determining which hospitals qualify for a value-based payment under paragraph (1), the Secretary shall use the quality measurement system developed for this section pursuant to section 1860E–1(a).

(3)

Determination of amount of award and allocation of awards

(A)

In general

The Secretary shall determine—

(i)

the amount of a value-based payment under paragraph (1) provided to a hospital; and

(ii)

subject to subparagraph (B), the allocation of the total amount available under subsection (d) for value-based payments for any fiscal year between payments with respect to hospitals that meet the requirement under subparagraph (A) of paragraph (1) and hospitals that meet the requirement under subparagraph (B) of such paragraph.

(B)

Requirements regarding the amount of funding available for value-based payments for hospitals exceeding a threshold

The Secretary shall ensure that—

(i)

a majority of the total amount available under subsection (d) for value-based payments for any fiscal year is provided to hospitals that are receiving such payments because they meet the requirement under paragraph (1)(B); and

(ii)

with respect to fiscal year 2008 and each subsequent fiscal year, the percentage of the total amount available under subsection (d) for value-based payments for any fiscal year that is used to make payments to hospitals that meet such requirement is greater than such percentage in the previous fiscal year.

(4)

Requirements

(A)

Required submission of data

In order for a hospital to be eligible for a value-based payment for a fiscal year, the hospital must have complied with the requirements under section 1886(b)(3)(B)(viii)(II) with respect to that fiscal year.

(B)

Attestation regarding data

In order for a hospital to be eligible for a value-based payment for a fiscal year, the hospital must have provided the Secretary (under procedures established by the Secretary) with an attestation that the data submitted under section 1886(b)(3)(B)(viii)(II) for the fiscal year is complete and accurate.

(5)

Total amount of value-based payments equal to total amount of available funding

The Secretary shall establish payment amounts under paragraph (3)(A) so that, as estimated by the Secretary, the total amount of value-based payments made in a fiscal year under paragraph (1) is equal to the total amount available under subsection (d) for such payments for the year.

(6)

Payment methods and timing of payments

(A)

In general

Subject to subparagraph (B), the payment of value-based payments under paragraph (1) shall be based on such a method as the Secretary determines appropriate.

(B)

Timing

The Secretary shall ensure that value-based payments under paragraph (1) with respect to a fiscal year are made by not later than the close of the following fiscal year.

(c)

Description of How Hospitals Would Have Fared Under Program

Not later than January 1, 2007, the Secretary shall provide each hospital with a description of the Secretary’s estimate of how payments to the hospital under this title would have been affected with respect to items and services furnished during a period, as determined by the Secretary, if the program under this section (and the amendments made by paragraphs (1) and (2) of section 6110(b) of the Deficit Reduction Omnibus Reconciliation Act of 2005) had been in effect with respect to that period.

(d)

Funding

(1)

Amount

The amount available for value-based payments under this section with respect to a fiscal year shall be equal to the amount of the reduction in expenditures under the Federal Hospital Insurance Trust Fund under section 1817 in the year as a result of the amendments made by section 6110(b)(2) of the Deficit Reduction Omnibus Reconciliation Act of 2005, as estimated by the Secretary.

(2)

Payments from trust fund

Payments to hospitals under this section shall be made from the Federal Hospital Insurance Trust Fund.

1860E–3.

Physician and practitioner Value-Based purchasing Program

(a)

Program

(1)

In general

The Secretary shall establish a program under which value-based payments are provided each year to physicians and practitioners that demonstrate the provision of high quality health care to individuals enrolled under part B and the Medicare Payment Advisory Commission shall (A) conduct a study, and submit to Congress and the Secretary an initial report by not later than March 1, 2008, and a final report by not later than June 1, 2012, on how the Medicare value-based purchasing programs under this part will impact Medicare beneficiaries, Medicare providers, and Medicare financing, including how such programs will impact the access of such beneficiaries to items and services under this title, the volume and utilization of such items and services, and low-volume providers; and (B) conduct a study, and submit to Congress and the Secretary a report by not later than March 1, 2007, on the advisability and feasibility of establishing a value-based purchasing program under the this title for critical access hospitals (as defined in section 1861(mm)(1)); and (C) conduct a study, and submit to Congress and the Secretary a report by not later than June 1, 2007, on the advisability and feasibility of including renal dialysis facilities described in subsection (a)(3)(A) of section 1860E–5 in the value-based purchasing program under such section 1860E–5 or establishing a value-based purchasing program under this title for such facilities; (D) taking into account the results to date of the demonstration of bundled case-mix adjusted payment system for ESRD services under section 623(e) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, conduct a study, and submit to Congress and the Secretary a report by not later than June 1, 2008, on the implementation of the ESRD provider and facility value-based purchasing program under section 1860E–5, including issues for the Secretary to consider in operating the ESRD provider and facility value-based purchasing program and recommendations on such issues; and (E) conduct a study, and submit to Congress and the Secretary a report by not later than June 1, 2007, on the advisability and feasibility of establishing a value-based purchasing program under this title for skilled nursing facilities (as defined in section 1819(a)).

(2)

Program to begin in 2009

The Secretary shall establish the program under this section so that value-based payments described in subsection (b) are made with respect to 2009 and each subsequent year.

(3)

Definition of physician and practitioner

In this section:

(A)

Physician

The term physician has the meaning given that term in section 1861(r).

(B)

Practitioner

The term practitioner means—

(i)

a practitioner described in section 1842(b)(18)(C);

(ii)

a physical therapist (as described in section 1861(p));

(iii)

an occupational therapist (as so described); and

(iv)

a qualified speech-language pathologist (as defined in section 1861(ll)(3)(A)).

(4)

Identification of physicians and practitioners

For purposes of applying this section and paragraphs (4)(G) and (6) of section 1848(d), the Secretary shall establish procedures for the identification of physicians and practitioners, such as through physician or practitioner billing units or other units, provider identification numbers, taxpayer identification numbers, the National Provider Identifier, and unique physician identifier numbers.

(b)

Value-Based Payments

(1)

In general

Subject to paragraph (4), the Secretary shall make a value-based payment to a physician or a practitioner with respect to a year if the Secretary determines that both the quality of the care and the efficiency of the care provided in that year by the physician or practitioner to individuals enrolled under part B—

(A)

has substantially improved (as determined by the Secretary) over the prior year; or

(B)

exceeds a threshold established by the Secretary.

(2)

Use of systems and data

(A)

In general

In determining which physicians and practitioners qualify for a value-based payment under paragraph (1), the Secretary shall use—

(i)

the quality measurement system developed for this section pursuant to section 1860E–1(a) with respect to the quality of the care provided by the physician or practitioner; and

(ii)

the comparative utilization system developed under subsection (c) with respect to the efficiency and appropriateness of such care.

(3)

Determination of amount of award and allocation of awards

(A)

In general

The Secretary shall determine—

(i)

the amount of a value-based payment under paragraph (1) provided to a physician or a practitioner; and

(ii)

subject to subparagraph (B), the allocation of the total amount available under subsection (e) for value-based payments for any year between payments with respect to physicians and practitioners that meet the requirement under subparagraph (A) of paragraph (1) and physicians and practitioners that meet the requirement under subparagraph (B) of such paragraph.

(B)

Requirements regarding the amount of funding available for value-based payments for physicians and practitioners exceeding a threshold

The Secretary shall ensure that—

(i)

a majority of the total amount available under subsection (e) for value-based payments for any year is provided to physicians and practitioners that are receiving such payments because they meet the requirement under paragraph (1)(B); and

(ii)

with respect to 2010 and each subsequent year, the percentage of the total amount available under subsection (e) for value-based payments for any year that is used to make payments to physicians and practitioners that meet such requirement is greater than such percentage in the previous year.

(4)

Requirements

(A)

Required submission of data

In order for a physician or a practitioner to be eligible for a value-based payment for a year, the physician or practitioner must have complied with the requirements under section 1848(d)(6)(B)(ii) with respect to that year.

(B)

Attestation regarding data

In order for a physician or a practitioner to be eligible for a value-based payment for a year, the physician or practitioner must have provided the Secretary (under procedures established by the Secretary) with an attestation that the data submitted under section 1848(d)(6)(B)(ii) with respect to that year is complete and accurate.

(5)

Total amount of value-based payments equal to total amount of available funding

The Secretary shall establish payment amounts under paragraph (3)(A) so that, as estimated by the Secretary, the total amount of value-based payments made in a year under paragraph (1) is equal to the total amount available under subsection (e) for such payments for the year.

(6)

Payment methods and timing of payments

(A)

In general

Subject to subparagraph (B), the payment of value-based payments under paragraph (1) shall be based on such a method as the Secretary determines appropriate.

(B)

Timing

The Secretary shall ensure that value-based payments under paragraph (1) with respect to a year are made by not later than December 31 of the subsequent year.

(c)

Comparative Utilization System

(1)

Development

The Secretary, in consultation with relevant stakeholders, shall develop a comparative utilization system for purposes of providing value-based payments under subsection (b).

(2)

Measures of efficiency and appropriateness of care

The comparative utilization system developed under paragraph (1) shall measure the efficiency and appropriateness of the care provided by a physician or practitioner.

(3)

Requirements for system

Under the comparative utilization system described in paragraph (1), the Secretary shall do the following:

(A)

Measures

The Secretary shall select measures of efficiency appropriateness to be used by the Secretary under the system. The Secretary may vary the measures selected under the preceding sentence by the type or specialty of the physician or practitioner. If the Secretary varies the measures for providers under the preceding sentence, the Secretary shall ensure that such measures are aligned to promote coordinated quality of care across provider settings.

(B)

Use of claims data for utilization patterns

(i)

Review of claims data

The Secretary shall review claims data with respect to services furnished or ordered by physicians and practitioners.

(ii)

Use of most recent claims data

The Secretary shall use the most recent claims data with respect to the physician or practitioner that is available to the Secretary.