[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1932 Enrolled Bill (ENR)]
S.1932
One Hundred Ninth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the third day of January, two thousand and six
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).
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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This Act may be cited as the ``Deficit Reduction Act of 2005''.

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This title may be cited as the ``Agricultural Reconciliation Act of
2005''.
Subtitle A--Commodity Programs

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TITLE I

-AGRICULTURE PROVISIONS

(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 new paragraph:
``(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;
``(B) during the period beginning on October 1, 2005, and
ending on August 31, 2007, 34 percent; and
``(C) during the period beginning on September 1, 2007, 0
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).

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(a) Covered Commodities.--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 crop 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 22 percent of the direct
payment for a covered commodity for the 2007 crop year,''.
(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 crop years'' and inserting ``2005 crop
years, up to 40 percent of the direct payment for the 2006 crop year,
and up to 22 percent of the direct payment for the 2007 crop year,''.

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(a) Repeal of Authority To Issue Cotton User Marketing
Certificates.--Section 1207 of the Farm Security and Rural Investment
Act of 2002 (7 U.S.C. 7937) is amended--
(1) by striking subsection (a); and
(2) in subsection (b)(1)--
(A) in subparagraph (B), by striking ``, adjusted for the
value of any certificate issued under subsection (a),''; and
(B) in subparagraph (C), by striking ``, for the value of
any certificates issued under subsection (a)''.
(b) Effective Date.--The amendments made by this section take
effect on August 1, 2006.
Subtitle B--Conservation

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The authority to obligate funds previously made available under
section 14(h)(1) of the Watershed Protection and Flood Prevention Act
(16 U.S.C. 1012(h)(1)) for a fiscal year and unobligated as of October
1, 2006, is hereby cancelled effective on that date.

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(a) Extension.--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) $5,650,000,000 for the period of fiscal years 2006
through 2015.''.

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(a) Extension.--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 ``2010''.
(b) Limitation on Payments.--Section 1240G of the Food Security Act
of 1985 (16 U.S.C. 3839aa-7) is amended by striking ``the period of
fiscal years 2002 through 2007'' and inserting ``any six-year period''.
(c) Funding.--Section 1241(a)(6) of the Food Security Act of 1985
(16 U.S.C. 3841(a)(6)) is amended--
(1) by striking ``and'' at the end of subparagraph (D); and
(2) by striking subparagraph (E) and inserting the following
new subparagraphs:
``(E) $1,270,000,000 in each of fiscal years 2007 through
2009; and
``(F) $1,300,000,000 in fiscal year 2010.''.
Subtitle C--Energy

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PROGRAM.
Section 9006(f) of the Farm Security and Rural Investment Act of
2002 (7 U.S.C. 8106(f)) is amended by striking ``2007'' and inserting
``2006 and $3,000,000 for fiscal year 2007''.
Subtitle D--Rural Development

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RURAL AREAS.
The authority to obligate funds previously made available under
section 601(j)(1) of the Rural Electrification Act of 1936 for a fiscal
year and unobligated as of October 1, 2006, is hereby cancelled
effective on that date.

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The authority to obligate funds previously made available under
section 231(b)(4) of the Agricultural Risk Protection Act of 2000
(Public Law 106-224; 7 U.S.C. 1621 note) for a fiscal year and
unobligated as of October 1, 2006, is hereby cancelled effective on
that date.

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(a) Termination of Fiscal Year 2007 and Subsequent Funding.--
Subsection (a)(1) of section 384S of the Consolidated Farm and Rural
Development Act (7 U.S.C. 2009cc-18) is amended by inserting after
``necessary'' the following: ``through fiscal year 2006''.
(b) Cancellation of Unobligated Prior-Year Funds.--The authority to
obligate funds previously made available under such section and
unobligated as of October 1, 2006, is hereby cancelled effective on
that date.

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The authority to obligate funds previously made available under
section 385E of the Consolidated Farm and Rural Development Act and
unobligated as of October 1, 2006, is hereby cancelled effective on
that date.

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(a) Termination of Fiscal Year 2007 Funding.--Subsection (c) of
section 6405 of the Farm Security and Rural Investment Act of 2002 (7
U.S.C. 2655) is amended by striking ``2007'' and inserting ``2006''.
(b) Cancellation of Unobligated Prior-Year Funds.--The authority to
obligate funds previously made available under such section for a
fiscal year and unobligated as of October 1, 2006, is hereby cancelled
effective on that date.
Subtitle E--Research

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(a) Termination of Fiscal Year 2007, 2008, and 2009 Transfers.--
Subsection (b)(3)(D) of section 401 of the Agricultural Research,
Extension, and Education Reform Act of 1998 (7 U.S.C. 7621) is amended
by striking ``2006'' and inserting ``2009''.
(b) Termination of Multi-Year Availability of Fiscal Year 2006
Funds.--Paragraph (6) of subsection (f) of such section is amended to
read as follows:
``(6) Availability of funds.--
``(A) Two-year availability.--Except as provided in
subparagraph (B), funds for grants under this section shall be
available to the Secretary for obligation for a 2-year period
beginning on the date of the transfer of the funds under
subsection (b).
``(B) Exception for fiscal year 2006 transfer.--In the case
of the funds required to be transferred by subsection
(b)(3)(C), the funds shall be available to the Secretary for
obligation for the 1-year period beginning on October 1,
2005.''
Subtitle A--FHA Asset Disposition

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For purposes of this subtitle, the following definitions shall
apply:
(1) The term ``affordability requirements'' means any
requirements or restrictions imposed by the Secretary, at the time
of sale, on a multifamily real property or a multifamily loan, such
as use restrictions, rent restrictions, and rehabilitation
requirements.
(2) The term ``discount sale'' means the sale of a multifamily
real property in a transaction, such as a negotiated sale, in which
the sale price is lower than the property market value and is 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, such as 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 a
multifamily real property for its current use, without taking into
account any affordability requirements.
(8) The term ``Secretary'' means the Secretary of Housing and
Urban Development.

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TITLE II

-HOUSING AND DEPOSIT INSURANCE PROVISIONS

(a) Discount Sales.--Notwithstanding any other provision of law,
except for affordability requirements for the elderly and disabled
required by statute, disposition by the Secretary of a multifamily real
property during fiscal years 2006 through 2010 through a discount sale
under sections 207(l) or 246 of the National Housing Act (12 U.S.C.
1713(l), 1715z-11), section 203 of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701z-11), or section 204 of
the Departments of Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z-
11a), shall be subject to the availability of appropriations to the
extent that the property market value exceeds the sale proceeds. If the
multifamily real property is sold, during such fiscal years, for an
amount equal to or greater than the property market value then 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 Federal Credit Reform Act of 1990 (2
U.S.C. 661 et seq.), a discount loan sale during fiscal years 2006
through 2010 under section 207(k) of the National Housing Act (12
U.S.C. 1713(k)), section 203(k) of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701z-11(k)), or 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)), shall be subject to the availability of
appropriations to the extent that the loan market value exceeds the
sale proceeds. If the multifamily loan is sold, during such fiscal
years, for an amount equal to or greater than the loan market value
then the transaction is not subject to the availability of
appropriations.
(c) Applicability.--This section shall not apply to any transaction
that formally commences within one year prior to the enactment of this
section.

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(a) 1997 Act.--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 new sentence: ``A grant provided under this
subsection during fiscal years 2006 through 2010 shall be available
only to the extent that appropriations are made in advance for such
purposes and shall not be derived from the General Insurance Fund.''.
(b) 1978 Act.--Section 203(f)(4) of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701z-11(f)(4)) is amended by
adding at the end the following new sentence: ``This paragraph shall be
effective during fiscal years 2006 through 2010 only to the extent that
such budget authority is made available for use under this paragraph in
advance in appropriation Acts.''.
(c) Applicability.--The amendments made by this section shall not
apply to any transaction that formally commences within one year prior
to the enactment of this section.
Subtitle B--Deposit Insurance

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

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(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.
(c) Effective Date.--This section shall take effect no later than
the first day of the first calendar quarter that begins after the end
of the 90-day period beginning on the date of the enactment of this
Act.

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(a) In General.--Section 11(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(a)(1)) is amended--
(1) by striking subparagraph (B) and inserting the following
new subparagraph:
``(B) Net amount of insured deposit.--The net amount due to
any depositor at an insured depository institution shall not
exceed the standard maximum deposit insurance amount as
determined in accordance with subparagraphs (C), (D), (E) and
(F) and paragraph (3).''; and
(2) by adding at the end the following new subparagraphs:
``(E) Standard maximum deposit insurance amount defined.--
For purposes of this Act, the term `standard maximum deposit
insurance amount' means $100,000, adjusted as provided under
subparagraph (F) after March 31, 2010.
``(F) Inflation adjustment.--
``(i) In general.--By April 1 of 2010, and the 1st day
of each subsequent 5-year period, the Board of Directors
and the National Credit Union Administration Board shall
jointly consider the factors set forth under clause (v),
and, upon determining that an inflation adjustment is
appropriate, shall jointly prescribe the amount by which
the standard maximum deposit insurance amount and the
standard maximum share insurance amount (as defined in
section 207(k) of the Federal Credit Union Act) applicable
to any depositor at an insured depository institution shall
be increased by calculating the product of--
``(I) $100,000; and
``(II) the ratio of the published annual value of
the Personal Consumption Expenditures Chain-Type Price
Index (or any successor index thereto), published by
the Department of Commerce, for the calendar year
preceding the year in which the adjustment is
calculated under this clause, to the published annual
value of such index for the calendar year preceding the
date this subparagraph takes effect under the Federal
Deposit Insurance Reform Act of 2005.
The values used in the calculation under subclause (II)
shall be, as of the date of the calculation, the values
most recently published by the Department of Commerce.
``(ii) Rounding.--If the amount determined under clause
(ii) for any period is not a multiple of $10,000, the
amount so determined shall be rounded down to the nearest
$10,000.
``(iii) Publication and report to the congress.--Not
later than April 5 of any calendar year in which an
adjustment is required to be calculated under clause (i) to
the standard maximum deposit insurance amount and the
standard maximum share insurance amount under such clause,
the Board of Directors and the National Credit Union
Administration Board shall--
``(I) publish in the Federal Register the standard
maximum deposit insurance amount, the standard maximum
share insurance amount, and the amount of coverage
under paragraph (3)(A) and section 207(k)(3) of the
Federal Credit Union Act, as so calculated; and
``(II) jointly submit a report to the Congress
containing the amounts described in subclause (I).
``(iv) 6-month implementation period.--Unless an Act of
Congress enacted before July 1 of the calendar year in
which an adjustment is required to be calculated under
clause (i) provides otherwise, the increase in the standard
maximum deposit insurance amount and the standard maximum
share insurance amount shall take effect on January 1 of
the year immediately succeeding such calendar year.
``(v) Inflation adjustment consideration.--In making
any determination under clause (i) to increase the standard
maximum deposit insurance amount and the standard maximum
share insurance amount, the Board of Directors and the
National Credit Union Administration Board shall jointly
consider--
``(I) the overall state of the Deposit Insurance
Fund and the economic conditions affecting insured
depository institutions;
``(II) potential problems affecting insured
depository institutions; or
``(III) whether the increase will cause the reserve
ratio of the fund to fall below 1.15 percent of
estimated insured deposits.''.
(b) Coverage for Certain Employee Benefit Plan Deposits.--Section
11(a)(1)(D) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(1)(D)) is amended to read as follows:
``(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.''.
(c) Increased Amount of Deposit Insurance for Certain Retirement
Accounts.--Section 11(a)(3)(A) of the Federal Deposit Insurance Act (12
U.S.C. 1821(a)(3)(A)) is amended by striking ``$100,000'' and inserting
``$250,000 (which amount shall be subject to inflation adjustments as
provided in paragraph (1)(F), except that $250,000 shall be substituted
for $100,000 wherever such term appears in such paragraph)''.
(d) Effective Date.--This section and the amendments made by this
section shall take effect on the date the final regulations required
under section 9(a)(2) take effect.

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MINIMUM ASSESSMENTS AND FREE DEPOSIT INSURANCE.
(a) Setting Assessments.--Section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) is amended--
(1) by striking subparagraphs (A) and (B) and inserting the
following new subparagraphs:
``(A) In general.--The Board of Directors shall set
assessments for insured depository institutions in such amounts
as the Board of Directors may determine to be necessary or
appropriate, subject to subparagraph (D).
``(B) Factors to be considered.--In setting assessments
under subparagraph (A), the Board of Directors shall consider
the following factors:
``(i) The estimated operating expenses of the Deposit
Insurance Fund.
``(ii) The estimated case resolution expenses and
income of the Deposit Insurance Fund.
``(iii) The projected effects of the payment of
assessments on the capital and earnings of insured
depository institutions.
``(iv) The risk factors and other factors taken into
account pursuant to paragraph (1) under the risk-based
assessment system, including the requirement under such
paragraph to maintain a risk-based system.
``(v) Any other factors the Board of Directors may
determine to be appropriate.''; and
(2) by inserting after subparagraph (C) the following new
subparagraph:
``(D) No discrimination based on size.--No insured
depository institution shall be barred from the lowest-risk
category solely because of size.''.
(b) Assessment Recordkeeping Period Shortened.--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) Depository institution required to maintain assessment-
related records.--Each insured depository institution shall
maintain all records that the Corporation may require for verifying
the correctness of any assessment on the insured depository
institution under this subsection until the later of--
``(A) the end of the 3-year period beginning on the due
date of the assessment; or
``(B) in the case of a dispute between the insured
depository institution and the Corporation with respect to such
assessment, the date of a final determination of any such
dispute.''.
(c) 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 to read as follows:
``(h) Penalty for Failure to Timely Pay Assessments.--
``(1) In general.--Subject to paragraph (3), any insured
depository institution which fails or refuses to pay any assessment
shall be subject to a penalty in an amount of not more than 1
percent of the amount of the assessment due for each day that such
violation continues.
``(2) Exception in case of dispute.--Paragraph (1) shall not
apply if--
``(A) the failure to pay an assessment is due to a dispute
between the insured depository institution and the Corporation
over the amount of such assessment; and
``(B) the insured depository institution deposits security
satisfactory to the Corporation for payment upon final
determination of the issue.
``(3) Special rule for small assessment amounts.--If the amount
of the assessment which an insured depository institution fails or
refuses to pay is less than $10,000 at the time of such failure or
refusal, the amount of any penalty to which such institution is
subject under paragraph (1) shall not exceed $100 for each day that
such violation continues.
``(4) 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) upon a finding that good cause
prevented the timely payment of an assessment.''.
(d) 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) Assessment Actions.--
``(1) In general.--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.
``(2) Statute of limitations.--The following provisions shall
apply to actions relating to assessments, notwithstanding any other
provision in Federal law, or the law of any State:
``(A) 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
subparagraph (E).
``(B) 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
subparagraphs (C) and (E).
``(C) 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.
``(D) Except as provided in subparagraph (C), assessment
deposit information contained in records no longer required to
be maintained pursuant to subsection (b)(4) shall be considered
conclusive and not subject to change.
``(E) Any action for the underpaid or overpaid amount of
any assessment that became due before the amendment to this
subsection under the Federal Deposit Insurance Reform Act of
2005 took effect shall be subject to the statute of limitations
for assessments in effect at the time the assessment became
due.''.
(e) Effective Date.--This section and the amendments made by this
section shall take effect on the date that the final regulations
required under section 9(a)(5) take effect.

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RANGE.
(a) 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) Establishment.--
``(i) In general.--Before the beginning of each
calendar year, the Board of Directors shall designate the
reserve ratio applicable with respect to the Deposit
Insurance Fund and publish the reserve ratio so designated.
``(ii) Rulemaking requirement.--Any change to the
designated reserve ratio shall be made by the Board of
Directors by regulation after notice and opportunity for
comment.
``(B) Range.--The reserve ratio designated by the Board of
Directors for any year--
``(i) may not exceed 1.5 percent of estimated insured
deposits; and
``(ii) may not be less than 1.15 percent of estimated
insured deposits.
``(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 such year and future years,
including historic experience and potential and estimated
losses from insured depository institutions;
``(ii) take into account economic conditions generally
affecting insured depository institutions so as to allow
the designated reserve ratio to increase during more
favorable economic conditions and to decrease 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 of Directors;
``(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.
``(D) Publication of proposed change in ratio.--In
soliciting comment on any proposed change in the designated
reserve ratio in accordance with subparagraph (A), the Board of
Directors shall include in the published proposal a thorough
analysis of the data and projections on which the proposal is
based.''.
(b) Effective Date.--This section and the amendments made by this
section shall take effect on the date that the final regulations
required under section 9(a)(1) take effect.

42ff2604715e9517e8b13451ae5c3f7b3d9fbe67a903774768ae65b56a3b3019

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 new
subparagraphs:
``(E) Information concerning risk of loss and economic
conditions.--
``(i) Sources of information.--For purposes of
determining risk of losses at insured depository
institutions and economic conditions generally affecting
depository institutions, the Corporation shall collect
information, as appropriate, from all sources the Board of
Directors considers appropriate, such as reports of
condition, inspection reports, and other information from
all Federal banking agencies, any information available
from State bank supervisors, State insurance and securities
regulators, the Securities and Exchange Commission
(including information described in section 35), the
Secretary of the Treasury, the Commodity Futures Trading
Commission, the Farm Credit Administration, the Federal
Trade Commission, any Federal reserve bank or Federal home
loan bank, and other regulators of financial institutions,
and any information available from credit rating entities,
and other private economic or business analysts.
``(ii) Consultation with federal banking agencies.--
``(I) In general.--Except as provided in subclause
(II), in assessing the risk of loss to the Deposit
Insurance Fund with respect to any insured depository
institution, the Corporation shall consult with the
appropriate Federal banking agency of such institution.
``(II) Treatment on aggregate basis.--In the case
of insured depository institutions that are well
capitalized (as defined in section 38) and, in the most
recent examination, were found to be well managed, the
consultation under subclause (I) concerning the
assessment of the risk of loss posed by such
institutions may be made on an aggregate basis.
``(iii) Rule of construction.--No provision of this
paragraph shall be construed as providing any new authority
for the Corporation to require submission of information by
insured depository institutions to the Corporation.
``(F) Modifications to the risk-based assessment system
allowed only after notice and comment.--In revising or
modifying the risk-based assessment system at any time after
the date of the enactment of the Federal Deposit Insurance
Reform Act of 2005, the Board of Directors may implement such
revisions or modification in final form only after notice and
opportunity for comment.''.

5cb7f41428ea7734ad71fe5848f147f4e0e982aa8d31552055dcc66b9952bfcc

(a) In General.--Subsection (e) of section 7 of the Federal Deposit
Insurance Act (12 U.S.C. 1817(e)) is amended to read as follows:
``(e) Refunds, Dividends, and Credits.--
``(1) Refunds of overpayments.--In the case of any payment of
an assessment by an insured depository institution in excess of the
amount due to the Corporation, the Corporation may--
``(A) refund the amount of the excess payment to the
insured depository institution; or
``(B) credit such excess amount toward the payment of
subsequent assessments until such credit is exhausted.
``(2) Dividends from excess amounts in deposit insurance
fund.--
``(A) Reserve ratio in excess of 1.5 percent of estimated
insured deposits.--If, at the end of a calendar year, the
reserve ratio of the Deposit Insurance Fund exceeds 1.5 percent
of estimated insured deposits, the Corporation shall declare
the amount in the Fund in excess of the amount required to
maintain the reserve ratio at 1.5 percent of estimated insured
deposits, as dividends to be paid to insured depository
institutions.
``(B) Reserve ratio equal to or in excess of 1.35 percent
of estimated insured deposits and not more than 1.5 percent.--
If, at the end of a calendar year, the reserve ratio of the
Deposit Insurance Fund equals or exceeds 1.35 percent of
estimated insured deposits and is not more than 1.5 percent of
such deposits, the Corporation shall declare the amount in the
Fund that is equal to 50 percent of the amount in excess of the
amount required to maintain the reserve ratio at 1.35 percent
of the estimated insured deposits as dividends to be paid to
insured depository institutions.
``(C) Basis for distribution of dividends.--
``(i) In general.--Solely for the purposes of dividend
distribution under this paragraph, the Corporation shall
determine each insured depository institution's relative
contribution to the Deposit Insurance Fund (or any
predecessor deposit insurance fund) for calculating such
institution's share of any dividend declared under this
paragraph, taking into account the factors described in
clause (ii).
``(ii) Factors for distribution.--In implementing this
paragraph in accordance with regulations, the Corporation
shall take into account the following factors:
``(I) The ratio of the assessment base of an
insured depository institution (including any
predecessor) on December 31, 1996, to the assessment
base of all eligible insured depository institutions on
that date.
``(II) The total amount of assessments paid on or
after January 1, 1997, by an insured depository
institution (including any predecessor) 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) that reflects higher levels of risk
assumed by such institution.
``(IV) Such other factors as the Corporation may
determine to be appropriate.
``(D) Notice and opportunity for comment.--The Corporation
shall prescribe by regulation, after notice and opportunity for
comment, the method for the calculation, declaration, and
payment of dividends under this paragraph.
``(E) 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 1-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).
``(F) Considerations.--In making a determination under
subparagraph (E), 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.
``(G) Review of determination.--
``(i) Annual review.--A determination to suspend or
limit dividends under subparagraph (E) 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 (E), 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.
``(3) One-time credit based on total assessment base at year-
end 1996.--
``(A) In general.--Before the end of the 270-day period
beginning on the date of the enactment of the Federal Deposit
Insurance Reform Act of 2005, the Board of Directors shall, by
regulation after notice and opportunity for comment, provide
for a credit to each eligible insured depository institution
(or a successor insured depository institution), based on the
assessment base of the institution on December 31, 1996, as
compared to the combined aggregate assessment base of all
eligible insured depository institutions, taking into account
such factors as the Board of Directors may determine to be
appropriate.
``(B) Credit limit.--The aggregate amount of credits
available under subparagraph (A) to all eligible insured
depository institutions shall equal the amount that the
Corporation could collect if the Corporation imposed an
assessment of 10.5 basis points on the combined assessment base
of the Bank Insurance Fund and the Savings Association
Insurance Fund as of December 31, 2001.
``(C) Eligible insured depository institution defined.--For
purposes of this paragraph, the term `eligible insured
depository institution' means any insured depository
institution that--
``(i) was in existence on December 31, 1996, and paid a
deposit insurance assessment prior to that date; or
``(ii) is a successor to any insured depository
institution described in clause (i).
``(D) Application of credits.--
``(i) In general.--Subject to clause (ii), the amount
of a credit to any eligible insured depository institution
under this paragraph shall be applied by the Corporation,
subject to subsection (b)(3)(E), to the assessments imposed
on such institution under subsection (b) that become due
for assessment periods beginning after the effective date
of regulations prescribed under subparagraph (A).
``(ii) Temporary restriction on use of credits.--The
amount of a credit to any eligible insured depository
institution under this paragraph may not be applied to more
than 90 percent of the assessments imposed on such
institution under subsection (b) that become due for
assessment periods beginning in fiscal years 2008, 2009,
and 2010.
``(iii) Regulations.--The regulations prescribed under
subparagraph (A) shall establish the qualifications and
procedures governing the application of assessment credits
pursuant to clause (i).
``(E) Limitation on amount of credit for certain depository
institutions.--In the case of an insured depository institution
that exhibits financial, operational, or compliance weaknesses
ranging from moderately severe to unsatisfactory, or is not
adequately capitalized (as defined in section 38) at the
beginning of an assessment period, the amount of any credit
allowed under this paragraph against the assessment on that
depository institution for such period may not exceed the
amount calculated by applying to that depository institution
the average assessment rate on all insured depository
institutions for such assessment period.
``(F) Successor defined.--The Corporation shall define the
term `successor' for purposes of this paragraph, by regulation,
and may consider any factors as the Board may deem appropriate.
``(4) Administrative review.--
``(A) In general.--The regulations prescribed under
paragraphs (2)(D) and (3) shall include provisions allowing an
insured depository institution a reasonable opportunity to
challenge administratively the amount of the credit or dividend
determined under paragraph (2) or (3) for such institution.
``(B) Administrative review.--Any review under subparagraph
(A) of any determination of the Corporation under paragraph (2)
or (3) shall be final and not subject to judicial review.''.
(b) Definition of Reserve Ratio.--Section 3(y) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(y)) (as amended by section
2105(b) of this subtitle) is amended by adding at the end the following
new paragraph:
``(3) Reserve ratio.--The term `reserve ratio', when used with
regard to the Deposit Insurance Fund other than in connection with
a reference to the designated reserve ratio, means the ratio of the
net worth of the Deposit Insurance Fund to the value of the
aggregate estimated insured deposits.''.

8fd50abf4182829afc5ea591edc1f91d12d72b0b3ee911503d023e8c735fbbc4

Section 7(b)(3) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(3)) (as amended by section 2105(a) of this subtitle) is amended
by adding at the end the following new subparagraph:
``(E) DIF restoration plans.--
``(i) In general.--Whenever--
``(I) the Corporation projects that the reserve
ratio of the Deposit Insurance Fund will, within 6
months of such determination, fall below the minimum
amount specified in subparagraph (B)(ii) for the
designated reserve ratio; or
``(II) the reserve ratio of the Deposit Insurance
Fund actually falls below the minimum amount specified
in subparagraph (B)(ii) for the designated reserve
ratio without any determination under subclause (I)
having been made,
the Corporation shall establish and implement a Deposit
Insurance Fund restoration plan within 90 days that meets
the requirements of clause (ii) and such other conditions
as the Corporation determines to be appropriate.
``(ii) Requirements of restoration plan.--A Deposit
Insurance Fund restoration plan meets the requirements of
this clause if the plan provides that the reserve ratio of
the Fund will meet or exceed the minimum amount specified
in subparagraph (B)(ii) for the designated reserve ratio
before the end of the 5-year period beginning upon the
implementation of the plan (or such longer period as the
Corporation may determine to be necessary due to
extraordinary circumstances).
``(iii) Restriction on assessment credits.--As part of
any restoration plan under this subparagraph, the
Corporation may elect to restrict the application of
assessment credits provided under subsection (e)(3) for any
period that the plan is in effect.
``(iv) Limitation on restriction.--Notwithstanding
clause (iii), while any restoration plan under this
subparagraph is in effect, the Corporation shall apply
credits provided to an insured depository institution under
subsection (e)(3) against any assessment imposed on the
institution for any assessment period in an amount equal to
the lesser of--
``(I) the amount of the assessment; or
``(II) the amount equal to 3 basis points of the
institution's assessment base.
``(v) Transparency.--Not more than 30 days after the
Corporation establishes and implements a restoration plan
under clause (i), the Corporation shall publish in the
Federal Register a detailed analysis of the factors
considered and the basis for the actions taken with regard
to the plan.''.

3fcf2c2db5e56f797113fe641d5548a95686e305d791954b64e3501a8de3b184

(a) In General.--Not later than 270 days after the date of the
enactment of this Act, the Board of Directors of the Federal Deposit
Insurance Corporation shall prescribe final regulations, after notice
and opportunity for comment--
(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 2105 of this subtitle);
(2) implementing increases in deposit insurance coverage in
accordance with the amendments made by section 2103 of this
subtitle;
(3) implementing the dividend requirement under section 7(e)(2)
of the Federal Deposit Insurance Act (as amended by section 2107 of
this subtitle);
(4) implementing the 1-time assessment credit to certain
insured depository institutions in accordance with section 7(e)(3)
of the Federal Deposit Insurance Act, as amended by section 2107 of
this subtitle, including the qualifications and procedures under
which the Corporation would apply assessment credits; and
(5) providing for assessments under section 7(b) of the Federal
Deposit Insurance Act, as amended by this subtitle.
(b) Transition Provisions.--
(1) Continuation of existing assessment regulations.--No
provision of this subtitle or any amendment made by this subtitle
shall be construed as affecting the authority of the Corporation to
set or collect deposit insurance assessments pursuant to any
regulations in effect before the effective date of the final
regulations prescribed under subsection (a).
(2) Treatment of dif members under existing regulations.--As of
the date of the merger of the Bank Insurance Fund and the Savings
Association Insurance Fund pursuant to section 2102, the assessment
regulations in effect immediately before the date of the enactment
of this Act shall continue to apply to all members of the Deposit
Insurance Fund, until such regulations are modified by the
Corporation, notwithstanding that such regulations may refer to
``Bank Insurance Fund members'' or ``Savings Association Insurance
Fund members''.

df32a6fd3f468a8c07e46dea67083ce7fb431d5f9b18a266eb19572de4b0d355

(a) Short Title.--This title may be cited as the ``Digital
Television Transition and Public Safety Act of 2005''.
(b) Definition.--As used in this Act, the term ``Assistant
Secretary'' means the Assistant Secretary for Communications and
Information of the Department of Commerce.

1365d96fdac44c66f38aa67a7d573e6c0f25fa4b8152fa5d1b5ff73909f501c5

TITLE III

-DIGITAL TELEVISION TRANSITION AND PUBLIC SAFETY

(a) Amendments.--Section 309(j)(14) of the Communications Act of
1934 (47 U.S.C. 309(j)(14)) is amended--
(1) in subparagraph (A)--
(A) by inserting ``full-power'' before ``television
broadcast license''; and
(B) by striking ``December 31, 2006'' and inserting
``February 17, 2009'';
(2) by striking subparagraph (B);
(3) in subparagraph (C)(i)(I), by striking ``or (B)'';
(4) in subparagraph (D), by striking ``subparagraph (C)(i)''
and inserting ``subparagraph (B)(i)''; and
(5) by redesignating subparagraphs (C) and (D) as subparagraphs
(B) and (C), respectively.
(b) Terminations of Analog Licenses and Broadcasting.--The Federal
Communications Commission shall take such actions as are necessary--
(1) to terminate all licenses for full-power television
stations in the analog television service, and to require the
cessation of broadcasting by full-power stations in the analog
television service, by February 18, 2009; and
(2) to require by February 18, 2009, that all broadcasting by
Class A stations, whether in the analog television service or
digital television service, and all broadcasting by full-power
stations in the digital television service, occur only on channels
between channels 2 and 36, inclusive, or 38 and 51, inclusive
(between frequencies 54 and 698 megahertz, inclusive).
(c) Conforming Amendments.--
(1) Section 337(e) of the Communications Act of 1934 (47 U.S.C.
337(e)) is amended--
(A) in paragraph (1)--
(i) by striking ``channels 60 to 69'' and inserting
``channels 52 to 69'';
(ii) by striking ``person who'' and inserting ``full-
power television station licensee that'';
(iii) by striking ``746 and 806 megahertz'' and
inserting ``698 and 806 megahertz''; and
(iv) by striking ``the date on which the digital
television service transition period terminates, as
determined by the Commission'' and inserting ``February 17,
2009'';
(B) in paragraph (2), by striking ``746 megahertz'' and
inserting ``698 megahertz''.

c105b36ed488c76801ed16dda5968cdb7def92f402eae7af1ab89467c1bfeda4

(a) Deadline for Auction.--Section 309(j) of the Communications Act
of 1934 (47 U.S.C. 309(j)) is amended--
(1) by redesignating the second paragraph (15) of such section
(as added by section 203(b) of the Commercial Spectrum Enhancement
Act (Public Law 108-494; 118 Stat. 3993)), as paragraph (16) of
such section; and
(2) in the first paragraph (15) of such section (as added by
section 3(a) of the Auction Reform Act of 2002 (Public Law 107-195;
116 Stat. 716)), by adding at the end of subparagraph (C) the
following new clauses:
``(v) Additional deadlines for recovered analog
spectrum.--Notwithstanding subparagraph (B), the Commission
shall conduct the auction of the licenses for recovered
analog spectrum by commencing the bidding not later than
January 28, 2008, and shall deposit the proceeds of such
auction in accordance with paragraph (8)(E)(ii) not later
than June 30, 2008.
``(vi) Recovered analog spectrum.--For purposes of
clause (v), the term `recovered analog spectrum' means the
spectrum between channels 52 and 69, inclusive (between
frequencies 698 and 806 megahertz, inclusive) reclaimed
from analog television service broadcasting under paragraph
(14), other than--
``(I) the spectrum required by section 337 to be
made available for public safety services; and
``(II) the spectrum auctioned prior to the date of
enactment of the Digital Television Transition and
Public Safety Act of 2005.''.
(b) Extension of Auction Authority.--Section 309(j)(11) of such Act
(47 U.S.C. 309(j)(11)) is amended by striking ``2007'' and inserting
``2011''.

6f5d9e4e26fd336bed154a1f60c9525dd51e3bd7ba6e59f3c909e6ab4bf0dca1

Section 309(j)(8) of the Communications Act of 1934 (47 U.S.C.
309(j)(8)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B) or
subparagraph (D)'' and inserting ``subparagraphs (B), (D), and
(E)'';
(2) in subparagraph (C)(i), by inserting before the semicolon
at the end the following: ``, except as otherwise provided in
subparagraph (E)(ii)''; and
(3) by adding at the end the following new subparagraph:
``(E) Transfer of receipts.--
``(i) Establishment of fund.--There is established in
the Treasury of the United States a fund to be known as the
Digital Television Transition and Public Safety Fund.
``(ii) Proceeds for funds.--Notwithstanding
subparagraph (A), the proceeds (including deposits and
upfront payments from successful bidders) from the use of a
competitive bidding system under this subsection with
respect to recovered analog spectrum shall be deposited in
the Digital Television Transition and Public Safety Fund.
``(iii) Transfer of amount to treasury.--On September
30, 2009, the Secretary shall transfer $7,363,000,000 from
the Digital Television Transition and Public Safety Fund to
the general fund of the Treasury.
``(iv) Recovered analog spectrum.--For purposes of
clause (i), the term `recovered analog spectrum' has the
meaning provided in paragraph (15)(C)(vi).''.

cf49f9cf9d6c1f98a471549311d64a067d3741bd38d43d0c88be5808b1de0804

(a) Creation of Program.--The Assistant Secretary shall--
(1) implement and administer a program through which households
in the United States may obtain coupons that can be applied toward
the purchase of digital-to-analog converter boxes; and
(2) make payments of not to exceed $990,000,000, in the
aggregate, through fiscal year 2009 to carry out that program from
the Digital Television Transition and Public Safety Fund
established under section 309(j)(8)(E) of the Communications Act of
1934 (47 U.S.C. 309(j)(8)(E)).
(b) Credit.--The Assistant Secretary may borrow from the Treasury
beginning on October 1, 2006, such sums as may be necessary, but not to
exceed $1,500,000,000, to implement this section. The Assistant
Secretary shall reimburse the Treasury, without interest, as funds are
deposited into the Digital Television Transition and Public Safety
Fund.
(c) Program Specifications.--
(1) Limitations.--
(A) Two-per-household maximum.--A household may obtain
coupons by making a request as required by the regulations
under this section between January 1, 2008, and March 31, 2009,
inclusive. The Assistant Secretary shall ensure that each
requesting household receives, via the United States Postal
Service, no more than two coupons.
(B) No combinations of coupons.--Two coupons may not be
used in combination toward the purchase of a single digital-to-
analog converter box.
(C) Duration.--All coupons shall expire 3 months after
issuance.
(2) Distribution of coupons.--The Assistant Secretary shall
expend not more than $100,000,000 on administrative expenses and
shall ensure that the sum of--
(A) all administrative expenses for the program, including
not more than $5,000,000 for consumer education concerning the
digital television transition and the availability of the
digital-to-analog converter box program; and
(B) the total maximum value of all the coupons redeemed,
and issued but not expired, does not exceed $990,000,000.
(3) Use of additional amount.--If the Assistant Secretary
transmits to the Committee on Energy and Commerce of the House of
Representatives and Committee on Commerce, Science, and
Transportation of the Senate a statement certifying that the sum
permitted to be expended under paragraph (2) will be insufficient
to fulfill the requests for coupons from eligible households--
(A) paragraph (2) shall be applied--
(i) by substituting ``$160,000,000'' for
``$100,000,000''; and
(ii) by substituting ``$1,500,000,000'' for
``$990,000,000'';
(B) subsection (a)(2) shall be applied by substituting
``$1,500,000,000'' for ``$990,000,000''; and
(C) the additional amount permitted to be expended shall be
available 60 days after the Assistant Secretary sends such
statement.
(4) Coupon value.--The value of each coupon shall be $40.
(d) Definition of Digital-to-Analog Converter Box.--For purposes of
this section, the term ``digital-to-analog converter box'' means a
stand-alone device that does not contain features or functions except
those necessary to enable a consumer to convert any channel broadcast
in the digital television service into a format that the consumer can
display on television receivers designed to receive and display signals
only in the analog television service, but may also include a remote
control device.

7c3650aad2587b128eee9f78ff6929e164bcc11b7a7f78e96db7a59878362f8e

(a) Creation of Program.--The Assistant Secretary, in consultation
with the Secretary of the Department of Homeland Security--
(1) may take such administrative action as is necessary to
establish and implement a grant program to assist public safety
agencies in the acquisition of, deployment of, or training for the
use of interoperable communications systems that utilize, or enable
interoperability with communications systems that can utilize,
reallocated public safety spectrum for radio communication; and
(2) shall make payments of not to exceed $1,000,000,000, in the
aggregate, through fiscal year 2010 to carry out that program from
the Digital Television Transition and Public Safety Fund
established under section 309(j)(8)(E) of the Communications Act of
1934 (47 U.S.C. 309(j)(8)(E)).
(b) Credit.--The Assistant Secretary may borrow from the Treasury
beginning on October 1, 2006, such sums as may be necessary, but not to
exceed $1,000,000,000, to implement this section. The Assistant
Secretary shall reimburse the Treasury, without interest, as funds are
deposited into the Digital Television Transition and Public Safety
Fund.
(c) Condition of Grants.--In order to obtain a grant under the
grant program, a public safety agency shall agree to provide, from non-
Federal sources, not less than 20 percent of the costs of acquiring and
deploying the interoperable communications systems funded under the
grant program.
(d) Definitions.--For purposes of this section:
(1) Public safety agency.--The term ``public safety agency''
means any State, local, or tribal government entity, or
nongovernmental organization authorized by such entity, whose sole
or principal purpose is to protect the safety of life, health, or
property.
(2) Interoperable communications systems.--The term
``interoperable communications systems'' means communications
systems which enable public safety agencies to share information
amongst local, State, Federal, and tribal public safety agencies in
the same area via voice or data signals.
(3) Reallocated public safety spectrum.--The term ``reallocated
public safety spectrum'' means the bands of spectrum located at
764-776 megahertz and 794-806 megahertz, inclusive.

698293f537dee68bc36db682d52373acb976a8df6b84b9bb591ffb954cf88bda

(a) Funds Available.--From the Digital Television Transition and
Public Safety Fund established under section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)) the Assistant
Secretary shall make payments of not to exceed $30,000,000, in the
aggregate, which shall be available to carry out this section for
fiscal years 2007 through 2008. The Assistant Secretary may borrow from
the Treasury beginning October 1, 2006, such sums as may be necessary
not to exceed $30,000,000 to implement and administer the program in
accordance with this section. The Assistant Secretary shall reimburse
the Treasury, without interest, as funds are deposited into the Digital
Television Transition and Public Safety Fund.
(b) Use of Funds.--The sums available under subsection (a) shall be
made available by the Assistant Secretary by grant to be used to
reimburse the Metropolitan Television Alliance for costs incurred in
the design and deployment of a temporary digital television broadcast
system to ensure that, until a permanent facility atop the Freedom
Tower is constructed, the members of the Metropolitan Television
Alliance can provide the New York City area with an adequate digital
television signal as determined by the Federal Communications
Commission.
(c) Definitions.--For purposes of this section:
(1) Metropolitan television alliance.--The term ``Metropolitan
Television Alliance'' means the organization formed by New York
City television broadcast station licensees to locate new shared
facilities as a result of the attacks on September 11, 2001 and the
loss of use of shared facilities that housed broadcast equipment.
(2) New york city area.--The term ``New York City area'' means
the five counties comprising New York City and counties of northern
New Jersey in immediate proximity to New York City (Bergen, Essex,
Union, and Hudson Counties).

59a1e03f44ce096489abdfea7205cd206301c9daeb400de9da9dce2f91b049cf

CONVERSION.
(a) Creation of Program.--The Assistant Secretary shall make
payments of not to exceed $10,000,000, in the aggregate, during the
fiscal year 2008 and 2009 period from the Digital Television Transition
and Public Safety Fund established under section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)) to implement and
administer a program through which each eligible low-power television
station may receive compensation toward the cost of the purchase of a
digital-to-analog conversion device that enables it to convert the
incoming digital signal of its corresponding full-power television
station to analog format for transmission on the low-power television
station's analog channel. An eligible low-power television station may
receive such compensation only if it submits a request for such
compensation on or before February 17, 2009. Priority compensation
shall be given to eligible low-power television stations in which the
license is held by a non-profit corporation and eligible low-power
television stations that serve rural areas of fewer than 10,000
viewers.
(b) Credit.--The Assistant Secretary may borrow from the Treasury
beginning October 1, 2006, such sums as may be necessary, but not to
exceed $10,000,000, to implement this section. The Assistant Secretary
shall reimburse the Treasury, without interest, as funds are deposited
into the Digital Television Transition and Public Safety Fund.
(c) Eligible Stations.--For purposes of this section, the term
``eligible low-power television station'' means a low-power television
broadcast station, Class A television station, television translator
station, or television booster station--
(1) that is itself broadcasting exclusively in analog format;
and
(2) that has not purchased a digital-to-analog conversion
device prior to the date of enactment of the Digital Television
Transition and Public Safety Act of 2005.

bd80f1abdab51174bfb97a2a9f5c573284160a0330fa200a314a81c02acf6b68

(a) Establishment.--The Assistant Secretary shall make payments of
not to exceed $65,000,000, in the aggregate, during fiscal year 2009
from the Digital Television Transition and Public Safety Fund
established under section 309(j)(8)(E) of the Communications Act of
1934 (47 U.S.C. 309(j)(8)(E)) to implement and administer a program
through which each licensee of an eligible low-power television station
may receive reimbursement for equipment to upgrade low-power television
stations from analog to digital in eligible rural communities, as that
term is defined in section 610(b)(2) of the Rural Electrification Act
of 1937 (7 U.S.C. 950bb(b)(2)). Such reimbursements shall be issued to
eligible stations no earlier than October 1, 2010. Priority
reimbursements shall be given to eligible low-power television stations
in which the license is held by a non-profit corporation and eligible
low-power television stations that serve rural areas of fewer than
10,000 viewers.
(b) Eligible Stations.--For purposes of this section, the term
``eligible low-power television station'' means a low-power television
broadcast station, Class A television station, television translator
station, or television booster station--
(1) that is itself broadcasting exclusively in analog format;
and
(2) that has not converted from analog to digital operations
prior to the date of enactment of the Digital Television Transition
and Public Safety Act of 2005.

0e8c6b945e4fa324a8fce76fe85401af787941943e79026488dc07f4e1738a2e

The Assistant Secretary shall make payments of not to exceed
$156,000,000, in the aggregate, during the fiscal year 2007 through
2012 period from the Digital Television Transition and Public Safety
Fund established under section 309(j)(8)(E) of the Communications Act
of 1934 (47 U.S.C. 309(j)(8)(E)) to implement a unified national alert
system capable of alerting the public, on a national, regional, or
local basis to emergency situations by using a variety of
communications technologies. The Assistant Secretary shall use
$50,000,000 of such amounts to implement a tsunami warning and coastal
vulnerability program.

060bfa791cbd318aa14db97e8fd5aa97efa65f6b3101568b0576ee0565fbdf0b

The Assistant Secretary shall make payments of not to exceed
$43,500,000, in the aggregate, from the Digital Television Transition
and Public Safety Fund established under section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)) to implement the
ENHANCE 911 Act of 2004.

363f60a2cba176818c1554239f54cec8f1d94bbfe6842cdff8a4a3690e840ee9

(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 2007 or 2008, then the Secretary of Commerce shall make
$15,000,000 available, from the Digital Television Transition and
Public Safety Fund established by section 309(j)(8)(E) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(E)), 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.
(c) Advances.--The Secretary of Transportation may borrow from the
Treasury such sums as may be necessary, but not to exceed $30,000,000
on a temporary and reimbursable basis to implement subsection (a). The
Secretary of Transportation shall reimburse the Treasury, without
interest, as funds are deposited into the Digital Television Transition
and Public Safety Fund under section 309(j)(8)(E) of the Communications
Act of 1934 (47 U.S.C. 309(j)(8)(E)) and made available to the
Secretary under subsection (a).

9aa61886681fe2d9d076fda3cdfe75fc6c86a5d12ce13b71f27a33b8e3bdf279

In addition to any fees assessed under the Communications Act of
1934 (47 U.S.C. 151 et seq.), the Federal Communications 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.

803fffc8ea5f934f8e636d5b61af286a187b5cbfea1546ab624f59430fa135c0

(a) Extension of Duties.--Section 36 of the Act entitled ``An Act
to provide revenue, equalize duties and encourage the industries of the
United States, and for other purposes'', approved August 5, 1909 (36
Stat. 111; 46 U.S.C. App. 121), is amended--
(1) by striking ``9 cents per ton'' and all that follows
through ``2002,'' the first place it appears and inserting ``4.5
cents per ton, not to exceed in the aggregate 22.5 cents per ton in
any one year, for fiscal years 2006 through 2010,''; and
(2) by striking ``27 cents per ton'' and all that follows
through ``2002,'' and inserting ``13.5 cents per ton, not to exceed
67.5 cents per ton per annum, for fiscal years 2006 through
2010,''.
(b) Conforming Amendment.--The Act entitled ``An Act concerning
tonnage duties on vessels entering otherwise than by sea'', approved
March 8, 1910 (36 Stat. 234; 46 U.S.C. App. 132), is amended by
striking ``9 cents per ton'' and all that follows through ``and 2
cents'' and inserting ``4.5 cents per ton, not to exceed in the
aggregate 22.5 cents per ton in any one year, for fiscal years 2006
through 2010, and 2 cents''.
Subtitle A--Provisions Relating to Part A

3ea6e2f61edd905a7da274356efef077147e69489f88f516c788c4e081c2c729

TITLE IV

-TRANSPORTATION PROVISIONS

(a) Submission of Hospital Data.--Section 1886(b)(3)(B) of the
Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
(1) in clause (i)--
(A) in subclause (XIX), by striking ``2007'' and inserting
``2006''; and
(B) in subclause (XX), by striking ``for fiscal year 2008
and each subsequent fiscal year,'' and inserting ``for each
subsequent fiscal year, subject to clause (viii),'';
(2) in clause (vii)--
(A) in subclause (I), by striking ``for each of fiscal
years 2005 through 2007'' and inserting ``for fiscal years 2005
and 2006''; and
(B) in subclause (II), by striking ``Each'' and inserting
``For fiscal years 2005 and 2006, each''; and
(3) by adding at the end the following new clauses:
``(viii)(I) For purposes of clause (i) for fiscal year
2007 and each subsequent fiscal year, in the case of a
subsection (d) hospital that does not submit, to the
Secretary in accordance with this clause, data required to
be submitted on measures selected under this clause with
respect to such a fiscal year, the applicable percentage
increase under clause (i) for such fiscal year shall be
reduced by 2.0 percentage points. Such reduction shall
apply only with respect to the fiscal year involved and the
Secretary shall not take into account such reduction in
computing the applicable percentage increase under clause
(i) for a subsequent fiscal year, and the Secretary and the
Medicare Payment Advisory Commission shall carry out the
requirements under section 5001(b) of the Deficit Reduction
Act of 2005.
``(II) Each subsection (d) hospital shall submit data
on measures selected under this clause to the Secretary in
a form and manner, and at a time, specified by the
Secretary for purposes of this clause.
``(III) The Secretary shall expand, beyond the measures
specified under clause (vii)(II) and consistent with the
succeeding subclauses, the set of measures that the
Secretary determines to be appropriate for the measurement
of the quality of care furnished by hospitals in inpatient
settings.
``(IV) Effective for payments beginning with fiscal
year 2007, in expanding the number of measures under
subclause (III), the Secretary shall begin to adopt the
baseline set of performance measures as set forth in the
November 2005 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.
``(V) Effective for payments beginning with fiscal year
2008, the Secretary shall add other measures that reflect
consensus among affected parties and, to the extent
feasible and practicable, shall include measures set forth
by one or more national consensus building entities.
``(VI) For purposes of this clause and clause (vii),
the Secretary may replace any measures or indicators in
appropriate cases, such as where all hospitals are
effectively in compliance or the measures or indicators
have been subsequently shown not to represent the best
clinical practice.
``(VII) The Secretary shall establish procedures for
making data submitted under this clause available to the
public. Such procedures shall ensure that a hospital has
the opportunity to review the data that are to be made
public with respect to the hospital prior to such data
being made public. The Secretary shall report quality
measures of process, structure, outcome, patients'
perspectives on care, efficiency, and costs of care that
relate to services furnished in inpatient settings in
hospitals on the Internet website of the Centers for
Medicare & Medicaid Services.''.
(b) Plan for Hospital Value Based Purchasing Program.--
(1) In general.--The Secretary of Health and Human Services
shall develop a plan to implement a value based purchasing program
for payments under the Medicare program for subsection (d)
hospitals beginning with fiscal year 2009.
(2) Details.--Such a plan shall include consideration of the
following issues:
(A) The on-going development, selection, and modification
process for measures of quality and efficiency in hospital
inpatient settings.
(B) The reporting, collection, and validation of quality
data.
(C) The structure of value based payment adjustments,
including the determination of thresholds or improvements in
quality that would substantiate a payment adjustment, the size
of such payments, and the sources of funding for the value
based payments.
(D) The disclosure of information on hospital performance.
In developing such a plan, the Secretary shall consult with
relevant affected parties and shall consider experience with such
demonstrations that are relevant to the value based purchasing
program under this subsection.
(c) Quality Adjustment in DRG Payments for Certain Hospital
Acquired Infections.--
(1) In general.--Section 1886(d)(4) of the Social Security Act
(42 U.S.C. 1395ww(d)(4)) is amended by adding at the end the
following new subparagraph:
``(D)(i) For discharges occurring on or after October 1, 2008, the
diagnosis-related group to be assigned under this paragraph for a
discharge described in clause (ii) shall be a diagnosis-related group
that does not result in higher payment based on the presence of a
secondary diagnosis code described in clause (iv).
``(ii) A discharge described in this clause is a discharge which
meets the following requirements:
``(I) The discharge includes a condition identified by a
diagnosis code selected under clause (iv) as a secondary diagnosis.
``(II) But for clause (i), the discharge would have been
classified to a diagnosis-related group that results in a higher
payment based on the presence of a secondary diagnosis code
selected under clause (iv).
``(III) At the time of admission, no code selected under clause
(iv) was present.
``(iii) As part of the information required to be reported by a
hospital with respect to a discharge of an individual in order for
payment to be made under this subsection, for discharges occurring on
or after October 1, 2007, the information shall include the secondary
diagnosis of the individual at admission.
``(iv) By not later than October 1, 2007, the Secretary shall
select diagnosis codes associated with at least two conditions, each of
which codes meets all of the following requirements (as determined by
the Secretary):
``(I) Cases described by such code have a high cost or high
volume, or both, under this title.
``(II) The code results in the assignment of a case to a
diagnosis-related group that has a higher payment when the code is
present as a secondary diagnosis.
``(III) The code describes such conditions that could
reasonably have been prevented through the application of evidence-
based guidelines.
The Secretary may from time to time revise (through addition or
deletion of codes) the diagnosis codes selected under this clause so
long as there are diagnosis codes associated with at least two
conditions selected for discharges occurring during any fiscal year.
``(v) In selecting and revising diagnosis codes under clause (iv),
the Secretary shall consult with the Centers for Disease Control and
Prevention and other appropriate entities.
``(vi) Any change resulting from the application of this
subparagraph shall not be taken into account in adjusting the weighting
factors under subparagraph (C)(i) or in applying budget neutrality
under subparagraph (C)(iii).''.
(2) No judicial review.--Section 1886(d)(7)(B) of such Act (42
U.S.C. 1395ww(d)(7)(B)) is amended by inserting before the period
the following: ``, including the selection and revision of codes
under paragraph (4)(D)''.

e72924e70b23ac851f8d5a8f457c448347cf1b7d2b1230e523aecce1ca3f94f0

TITLE V

-MEDICARE

DSH COMPUTATION.
(a) In General.--Section 1886(d)(5)(F)(vi) of the Social Security
Act (42 U.S.C. 1395ww(d)(5)(F)(vi)) is amended by adding after and
below subclause (II) the following:
``In determining under subclause (II) the number of the hospital's
patient days for such period which consist of patients who (for such
days) were eligible for medical assistance under a State plan approved
under title XIX, the Secretary may, to the extent and for the period
the Secretary determines appropriate, include patient days of patients
not so eligible but who are regarded as such because they receive
benefits under a demonstration project approved under title XI.''.
(b) Ratification and Prospective Application of Previous
Regulations.--
(1) In general.--Subject to paragraph (2), regulations
described in paragraph (3), insofar as such regulations provide for
the treatment of individuals eligible for medical assistance under
a demonstration project approved under title XI of the Social
Security Act under section 1886(d)(5)(F)(vi) of such Act, are
hereby ratified, effective as of the date of their respective
promulgations.
(2) No application to closed cost reports.--Paragraph (1) shall
not be applied in a manner that requires the reopening of any cost
reports which are closed as of the date of the enactment of this
Act.
(3) Regulations described.--For purposes of paragraph (1), the
regulations described in this paragraph are as follows:
(A) 2000 regulation.--Regulations promulgated on January
20, 2000, at 65 Federal Register 3136 et seq., including the
policy in such regulations regarding discharges occurring prior
to January 20, 2000.
(B) 2003 regulation.--Regulations promulgated on August 1,
2003, at 68 Federal Register 45345 et seq.

4092415b9e3e96201570e4c7b4018faea99ae44493d2120864070a0b6a90f57e

PROGRAM.
(a) 5-Year Extension.--
(1) Extension of Payment Methodology.--Section 1886(d)(5)(G) of
the Social Security Act (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) of
such Act (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 2002 as Base Year.--Section 1886(b)(3) of such
Act (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) of such Act (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) of such
Act (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.

8f84b9911081858e6570d4cb50927db4fe5f84e6db15b1daf62f6b323101e6de

DEBT.
(a) In General.--Section 1861(v)(1) of the Social Security Act (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 cost reporting periods beginning on or after
October 1, 2005, the amount of bad debts otherwise treated as allowed
costs which are attributable to the coinsurance amounts under this
title for individuals who are entitled to benefits under part A and--
``(i) are not described in section 1935(c)(6)(A)(ii) shall be
reduced by 30 percent of such amount otherwise allowable; and
``(ii) are described in such section shall not be reduced.''.
(b) Technical Amendment.--Section 1861(v)(1)(T) of such Act (42
U.S.C. 1395x(v)(1)(T)) is amended by striking ``section 1833(t)(5)(B)''
and inserting ``section 1833(t)(8)(B)''.

5905844b91df7757a64c9f5745b6146135d9e5c3f33763155612a043ae8867bd

CLASSIFICATION CRITERIA.
(a) In General.--Notwithstanding section 412.23(b)(2) of title 42,
Code of Federal Regulations, the Secretary of Health and Human Services
shall apply the applicable percent specified in subsection (b) in the
classification criterion used under the IRF regulation (as defined in
subsection (c)) to determine whether a hospital or unit of a hospital
is an inpatient rehabilitation facility under the Medicare program
under title XVIII of the Social Security Act.
(b) Applicable Percent.--For purposes of subsection (a), the
applicable percent specified in this subsection for cost reporting
periods--
(1) beginning during the 12-month period beginning on July 1,
2006, is 60 percent;
(2) beginning during the 12-month period beginning on July 1,
2007, is 65 percent; and
(3) beginning on or after July 1, 2008, is 75 percent.
(c) IRF Regulation.--For purposes of subsection (a), the term ``IRF
regulation'' means 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).

759481058b1ec3064510928e6de4ae080f1c9b7acd50f3afc6975a2c1eb7725c

INVESTMENT IN SPECIALTY HOSPITALS.
(a) Development.--
(1) In general.--The Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') shall develop a
strategic and implementing plan to address issues described in
paragraph (2) regarding physician investment in specialty hospitals
(as defined in section 1877(h)(7)(A) of the Social Security Act (42
U.S.C. 1395nn(h)(7)(A)).
(2) Issues described.--The issues described in this paragraph
are the following:
(A) Proportionality of investment return.
(B) Bona fide investment.
(C) Annual disclosure of investment information.
(D) The provision by specialty hospitals of--
(i) care to patients who are eligible for medical
assistance under a State plan approved under title XIX of
the Social Security Act, including patients not so eligible
but who are regarded as such because they receive benefits
under a demonstration project approved under title XI of
such Act; and
(ii) charity care.
(E) Appropriate enforcement.
(b) Reports.--
(1) Interim report.--Not later than 3 months after the date of
the enactment of this Act, the Secretary shall submit an interim
report to the appropriate committees of jurisdiction of Congress on
the status of the development of the plan under subsection (a).
(2) Final report.--Not later than six months after the date of
the enactment of this Act, the Secretary shall submit a final
report to the appropriate committees of jurisdiction of Congress on
the plan developed under subsection (a) together with
recommendations for such legislation and administrative actions as
the Secretary considers appropriate.
(c) Continuation of Suspension on Enrollment.--
(1) In general.--Subject to paragraph (2), the Secretary shall
continue the suspension on enrollment of new specialty hospitals
(as so defined) under title XVIII of the Social Security Act until
the earlier of--
(A) the date that the Secretary submits the final report
under subsection (b)(2); or
(B) the date that is six months after the date of the
enactment of this Act.
(2) Extension of suspension.--If the Secretary fails to submit
the final report described in subsection (b)(2) by the date
required under such subsection, the Secretary shall--
(A) extend the suspension on enrollment under paragraph (1)
for an additional two months; and
(B) provide a certification to the appropriate committees
of jurisdiction of Congress of such failure.
(d) Waiver.--In developing the plan and report required under this
section, the Secretary may waive such requirements of section 553 of
title 5, United States Code, as the Secretary determines necessary.
(e) Funding.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Secretary for fiscal year
2006, $2,000,000 to carry out this section.

73d1cd875288848a0cf7487d5e9a79d033d894540142d33468d866b2ec9bc9f6

ARRANGEMENTS.
(a) Establishment.--The Secretary shall establish under this
section a qualified gainsharing demonstration program under which the
Secretary shall approve demonstration projects by not later than
November 1, 2006, to test and evaluate methodologies and arrangements
between hospitals and physicians designed to govern the utilization of
inpatient hospital resources and physician work to improve the quality
and efficiency of care provided to Medicare beneficiaries and to
develop improved operational and financial hospital performance with
sharing of remuneration as specified in the project. Such projects
shall be operational by not later than January 1, 2007.
(b) Requirements Described.--A demonstration project under this
section shall meet the following requirements for purposes of
maintaining or improving quality while achieving cost savings:
(1) Arrangement for remuneration as share of savings.--The
demonstration project shall involve an arrangement between a
hospital and a physician under which the hospital provides
remuneration to the physician that represents solely a share of the
savings incurred directly as a result of collaborative efforts
between the hospital and the physician.
(2) Written plan agreement.--The demonstration project shall be
conducted pursuant to a written agreement that--
(A) is submitted to the Secretary prior to implementation
of the project; and
(B) includes a plan outlining how the project will achieve
improvements in quality and efficiency.
(3) Patient notification.--The demonstration project shall
include a notification process to inform patients who are treated
in a hospital participating in the project of the participation of
the hospital in such project.
(4) Monitoring quality and efficiency of care.--The
demonstration project shall provide measures to ensure that the
quality and efficiency of care provided to patients who are treated
in a hospital participating in the demonstration project is
continuously monitored to ensure that such quality and efficiency
is maintained or improved.
(5) Independent review.--The demonstration project shall
certify, prior to implementation, that the elements of the
demonstration project are reviewed by an organization that is not
affiliated with the hospital or the physician participating in the
project.
(6) Referral limitations.--The demonstration project shall not
be structured in such a manner as to reward any physician
participating in the project on the basis of the volume or value of
referrals to the hospital by the physician.
(c) Waiver of Certain Restrictions.--
(1) In general.--An incentive payment made by a hospital to a
physician under and in accordance with a demonstration project
shall not constitute--
(A) remuneration for purposes of section 1128B of the
Social Security Act (42 U.S.C. 1320a-7b);
(B) a payment intended to induce a physician to reduce or
limit services to a patient entitled to benefits under Medicare
or a State plan approved under title XIX of such Act in
violation of section 1128A of such Act (42 U.S.C. 1320a-7a); or
(C) a financial relationship for purposes of section 1877
of such Act (42 U.S.C. 1395nn).
(2) Protection for existing arrangements.--In no case shall the
failure to comply with the requirements described in paragraph (1)
affect a finding made by the Inspector General of the Department of
Health and Human Services prior to the date of the enactment of
this Act that an arrangement between a hospital and a physician
does not violate paragraph (1) or (2) of section 1128A(a) of the
Social Security Act (42 U.S.C. 1320a-7(a)).
(d) Program Administration.--
(1) Solicitation of applications.--By not later than 90 days
after the date of the enactment of this Act, the Secretary shall
solicit applications for approval of a demonstration project, in
such form and manner, and at such time specified by the Secretary.
(2) Number of projects approved.--The Secretary shall approve
not more than 6 demonstration projects, at least 2 of which shall
be located in a rural area.
(3) Duration.--The qualified gainsharing demonstration program
under this section shall be conducted for the period beginning on
January 1, 2007, and ending on December 31, 2009.
(e) Reports.--
(1) Initial report.--By not later than December 1, 2006, the
Secretary shall submit to Congress a report on the number of
demonstration projects that will be conducted under this section.
(2) Project update.--By not later than December 1, 2007, the
Secretary shall submit to Congress a report on the details of such
projects (including the project improvements towards quality and
efficiency described in subsection (b)(2)(B)).
(3) Quality improvement and savings.--By not later than
December 1, 2008, the Secretary shall submit to Congress a report
on quality improvement and savings achieved as a result of the
qualified gainsharing demonstration program established under
subsection (a).
(4) Final report.--By not later than May 1, 2010, the Secretary
shall submit to Congress a final report on the information
described in paragraph (3).
(f) Funding.--
(1) In general.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Secretary for fiscal
year 2006 $6,000,000, to carry out this section.
(2) Availability.--Funds appropriated under paragraph (1) shall
remain available for expenditure through fiscal year 2010.
(g) Definitions.--For purposes of this section:
(1) Demonstration project.--The term ``demonstration project''
means a project implemented under the qualified gainsharing
demonstration program established under subsection (a).
(2) Hospital.--The term ``hospital'' means a hospital that
receives payment under section 1886(d) of the Social Security Act
(42 U.S.C. 1395ww(d)), and does not include a critical access
hospital (as defined in section 1861(mm) of such Act (42 U.S.C.
1395x(mm))).
(3) Medicare.--The term ``Medicare'' means the programs under
title XVIII of the Social Security Act.
(4) Physician.--The term ``physician'' means, with respect to a
demonstration project, a physician described in paragraph (1) or
(3) of section 1861(r) of the Social Security Act (42 U.S.C.
1395x(r)) who is licensed as such a physician in the area in which
the project is located and meets requirements to provide services
for which benefits are provided under Medicare. Such term shall be
deemed to include a practitioner described in section
1842(e)(18)(C) of such Act (42 U.S.C. 1395u(e)(18)(C)).
(5) Secretary.--The term ``Secretary'' means the Secretary of
Health and Human Services.

9820f80f8df98508c947e2a655e298dc76d73944348f649d067bb41a902abf89

(a) Establishment.--
(1) In general.--By not later than January 1, 2008, the
Secretary of Health and Human Services (in this section referred to
as the ``Secretary'') shall establish a demonstration program for
purposes of understanding costs and outcomes across different post-
acute care sites. Under such program, with respect to diagnoses
specified by the Secretary, an individual who receives treatment
from a provider for such a diagnosis shall receive a single
comprehensive assessment on the date of discharge from a subsection
(d) hospital (as defined in section 1886(d)(1)(B) of the Social
Security Act (42 U.S.C. 1395ww(d)(1)(B))) of the needs of the
patient and the clinical characteristics of the diagnosis to
determine the appropriate placement of such patient in a post-acute
care site. The Secretary shall use a standardized patient
assessment instrument across all post-acute care sites to measure
functional status and other factors during the treatment and at
discharge from each provider. Participants in the program shall
provide information on the fixed and variable costs for each
individual. An additional comprehensive assessment shall be
provided at the end of the episode of care.
(2) Number of sites.--The Secretary shall conduct the
demonstration program under this section with sufficient numbers to
determine statistically reliable results.
(3) Duration.--The Secretary shall conduct the demonstration
program under this section for a 3-year period.
(b) Waiver Authority.--The Secretary may waive such requirements of
titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.;
42 U.S.C. 1395 et seq.) as may be necessary for the purpose of carrying
out the demonstration program under this section.
(c) Report.--Not later than 6 months after the completion of the
demonstration program under this section, the Secretary shall submit to
Congress a report on such program, that includes the results of the
program and recommendations for such legislation and administrative
action as the Secretary determines to be appropriate.
(d) Funding.--The Secretary shall provide for the transfer from the
Federal Hospital Insurance Trust Fund established under section 1817 of
the Social Security Act (42 U.S.C. 1395i), $6,000,000 for the costs of
carrying out the demonstration program under this section.
Subtitle B--Provisions Relating to Part B
CHAPTER 1--PAYMENT PROVISIONS

1ca515b8511309e9aa4193f534dfe08b16f3b0a1d002e73d930daeac5471fe45

(DME).
(a) DME.--
(1) In general.--Section 1834(a)(7)(A) of the Social Security
Act (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.--Except as provided in clause
(iii), 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, 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, for each of the remaining
months of such period, is 7.5 percent of such purchase
price.
``(ii) Ownership after rental.--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.
``(iii) Purchase agreement option for power-driven
wheelchairs.--In the case of a power-driven wheelchair, at
the time the supplier furnishes the item, the supplier
shall offer the individual the option to purchase the item,
and payment for such item shall be made on a lump-sum basis
if the individual exercises such option.
``(iv) Maintenance and servicing.--After the supplier
transfers title to the item under clause (ii) or in the
case of a power-driven wheelchair for which a purchase
agreement has been entered into under clause (iii),
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.''.
(2) Effective date.--The amendment made by paragraph (1) shall
apply to items furnished for which the first rental month occurs on
or after January 1, 2006.
(b) Oxygen Equipment.--
(1) In general.--Section 1834(a)(5) of such Act (42 U.S.C.
1395m(a)(5)) is amended--
(A) in subparagraph (A), by striking ``and (E)'' and
inserting ``(E), and (F)''; and
(B) by adding at the end the following new subparagraph:
``(F) Ownership of Equipment.--
``(i) In general.--Payment for oxygen equipment
(including portable oxygen equipment) under this paragraph
may not extend over a period of continuous use (as
determined by the Secretary) of longer than 36 months.
``(ii) Ownership.--
``(I) Transfer of title.--On the first day that
begins after the 36th continuous month during which
payment is made for the equipment under this paragraph,
the supplier of the equipment shall transfer title to
the equipment to the individual.
``(II) Payments for oxygen and maintenance and
servicing.--After the supplier transfers title to the
equipment under subclause (I)--
``(aa) payments for oxygen shall continue to be
made in the amount recognized for oxygen under
paragraph (9) for the period of medical need; and
``(bb) 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 equipment), and
such payments shall be in an amount determined to
be appropriate by the Secretary.''.
(2) Effective date.--
(A) In general.--The amendments made by paragraph (1) shall
take effect on January 1, 2006.
(B) Application to certain individuals.--In the case of an
individual receiving oxygen equipment on December 31, 2005, for
which payment is made under section 1834(a) of the Social
Security Act (42 U.S.C. 1395m(a)), the 36-month period
described in paragraph (5)(F)(i) of such section, as added by
paragraph (1), shall begin on January 1, 2006.

8988cbbc5a01f967324bfe1023dd9b7f52938e62bec3a7c9e90a1709e4739b7e

(a) Multiple Procedure Payment Reduction for Imaging Exempted From
Budget Neutrality.--Section 1848(c)(2)(B) of the Social Security Act
(42 U.S.C. 1395w-4(c)(2)(B)) is amended--
(1) in clause (ii)(II), by striking ``clause (iv)'' and
inserting ``clauses (iv) and (v)'';
(2) in clause (iv) in the heading, by inserting ``of certain
additional expenditures'' after ``Exemption''; and
(3) by adding at the end the following new clause:
``(v) Exemption of certain reduced expenditures from
budget-neutrality calculation.--The following reduced
expenditures, as estimated by the Secretary, shall not be
taken into account in applying clause (ii)(II):
``(I) Reduced payment for multiple imaging
procedures.--Effective for fee schedules established
beginning with 2007, reduced expenditures attributable
to the multiple procedure payment reduction for imaging
under the final rule published by the Secretary in the
Federal Register on November 21, 2005 (42 CFR 405, et
al.) insofar as it relates to the physician fee
schedules for 2006 and 2007.''.
(b) Reduction in Physician Fee Schedule to OPD Payment Amount for
Imaging Services.--Section 1848 of such Act (42 U.S.C. 1395w-4) is
amended--
(1) in subsection (b), by adding at the end the following new
paragraph:
``(4) Special rule for imaging services.--
``(A) In general.--In the case of imaging services
described in subparagraph (B) furnished on or after January 1,
2007, if--
``(i) the technical component (including the technical
component portion of a global fee) of the service
established for a year under the fee schedule described in
paragraph (1) without application of the geographic
adjustment factor described in paragraph (1)(C), exceeds
``(ii) the Medicare OPD fee schedule amount established
under the prospective payment system for hospital
outpatient department services under paragraph (3)(D) of
section 1833(t) for such service for such year, determined
without regard to geographic adjustment under paragraph
(2)(D) of such section,
the Secretary shall substitute the amount described in clause
(ii), adjusted by the geographic adjustment factor described in
paragraph (1)(C), for the fee schedule amount for such
technical component for such year.
``(B) Imaging services described.--For purposes of
subparagraph (A), imaging services described in this
subparagraph are imaging and computer-assisted imaging
services, including X-ray, ultrasound (including
echocardiography), nuclear medicine (including positron
emission tomography), magnetic resonance imaging, computed
tomography, and fluoroscopy, but excluding diagnostic and
screening mammography.''; and
(2) in subsection (c)(2)(B)(v), as added by subsection (a)(3),
by adding at the end the following new subclause:
``(II) OPD payment cap for imaging services.--
Effective for fee schedules established beginning with
2007, reduced expenditures attributable to subsection
(b)(4).''.

a438740c9202b51cb5218ab51802ce66cbdb49c9d8280c0b3d74edb08f85a8fd

CENTERS.
Section 1833(i)(2) of the Social Security Act (42 U.S.C.
1395l(i)(2)) is amended--
(1) in subparagraph (A), by inserting ``subject to subparagraph
(E),'' after ``subparagraph (D),'';
(2) in subparagraph (D)(ii), by inserting before the period at
the end the following: ``and taking into account reduced
expenditures that would apply if subparagraph (E) were to continue
to apply, as estimated by the Secretary''; and
(3) by adding at the end the following new subparagraph:
``(E) With respect to surgical procedures furnished on or after
January 1, 2007, and before the effective date of the implementation of
a revised payment system under subparagraph (D), if--
``(i) the standard overhead amount under subparagraph (A) for a
facility service for such procedure, without the application of any
geographic adjustment, exceeds
``(ii) the Medicare OPD fee schedule amount established under
the prospective payment system for hospital outpatient department
services under paragraph (3)(D) of section 1833(t) for such service
for such year, determined without regard to geographic adjustment
under paragraph (2)(D) of such section,
the Secretary shall substitute under subparagraph (A) the amount
described in clause (ii) for the standard overhead amount for such
service referred to in clause (i).''.

dc1f7de187d2c42b14fa06c652e9752277771c5b1233afa6420cefbeda7e083f

(a) Update for 2006.--Section 1848(d) of the Social Security Act
(42 U.S.C. 1395w-4(d)) is amended--
(1) in paragraph (4)(B), in the matter preceding clause (i), by
striking ``paragraph (5)'' and inserting ``paragraphs (5) and
(6)''; and
(2) by adding at the end the following new paragraph:
``(6) Update for 2006.--The update to the single conversion
factor established in paragraph (1)(C) for 2006 shall be 0
percent.''.
(b) Not Treated as Change in Law and Regulation in Sustainable
Growth Rate Determination.--The amendments made by subsection (a) 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)).
(c) MedPAC Report.--
(1) In general.--By not later than March 1, 2007, the Medicare
Payment Advisory Commission shall submit a report to Congress on
mechanisms that could be used to replace the sustainable growth
rate system under section 1848(f) of the Social Security Act (42
U.S.C. 1395w-4(f)).
(2) Requirements.--The report required under paragraph (1)
shall--
(A) identify and examine alternative methods for assessing
volume growth;
(B) review options to control the volume of physicians'
services under the Medicare program while maintaining access to
such services by Medicare beneficiaries;
(C) examine the application of volume controls under the
Medicare physician fee schedule under section 1848 of the
Social Security Act (42 U.S.C. 1395w-4);
(D) identify levels of application of volume controls, such
as group practice, hospital medical staff, type of service,
geographic area, and outliers;
(E) examine the administrative feasibility of implementing
the options reviewed under subparagraph (B), including the
availability of data and time lags;
(F) examine the extent to which the alternative methods
identified and examined under subparagraph (A) should be
specified in such section 1848; and
(G) identify the appropriate level of discretion for the
Secretary of Health and Human Services to change payment rates
under the Medicare physician fee schedule or otherwise take
steps that affect physician behavior.
Such report shall include such recommendations on alternative
mechanisms to replace the sustainable growth rate system as the
Medicare Payment Advisory Commission determines appropriate.
(3) Funding.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Medicare Payment
Advisory Commission $550,000, to carry out this subsection.

cb95bc39e4ae5471798b35566b0b67b91bdcab068929d0ac409597d78fb0e5c9

RURAL HOSPITALS UNDER THE PROSPECTIVE PAYMENT SYSTEM FOR
HOSPITAL OUTPATIENT DEPARTMENT SERVICES.
Section 1833(t)(7)(D)(i) of the Social Security Act (42 U.S.C.
1395l(t)(7)(D)(i)) is amended--
(1) by inserting ``(I)'' before ``In the case''; and
(2) by adding at the end the following new subclause:
``(II) In the case of a hospital located in a rural
area and that has not more than 100 beds and that is not a
sole community hospital (as defined in section
1886(d)(5)(D)(iii)), for covered OPD services furnished on
or after January 1, 2006, and before January 1, 2009, for
which the PPS amount is less than the pre-BBA amount, the
amount of payment under this subsection shall be increased
by the applicable percentage of the amount of such
difference. For purposes of the previous sentence, with
respect to covered OPD services furnished during 2006,
2007, or 2008, the applicable percentage shall be 95
percent, 90 percent, and 85 percent, respectively.''.

c38464af56ca01556e5be7261cdf439e0d70c54faa63ea26ec333822b3ab2305

ADJUSTED PROSPECTIVE PAYMENT SYSTEM FOR DIALYSIS
SERVICES.
Section 1881(b)(12) of the Social Security Act (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.''.

30a974a00c5bb7a9dfea6b9d2b0bd3f790f80ba41948aa66016c0d2d614fc762

(a) Exception to Caps for 2006.--
(1) In general.--Section 1833(g) of the Social Security Act (42
U.S.C. 1395l(g)) is amended--
(A) in each of paragraphs (1) and (3), by striking
``paragraph (4)'' and inserting ``paragraphs (4) and (5)''; and
(B) by adding at the end the following new paragraph:
``(5) With respect to expenses incurred during 2006 for services,
the Secretary shall implement a process under which an individual
enrolled under this part may, upon request of the individual or a
person on behalf of the individual, obtain an exception from the
uniform dollar limitation specified in paragraph (2), for services
described in paragraphs (1) and (3) if the provision of such services
is determined to be medically necessary. Under such process, if the
Secretary does not make a decision on such a request for an exception
within 10 business days of the date of the Secretary's receipt of the
request, the Secretary shall be deemed to have found the services to be
medically necessary.''.
(2) Timely implementation.--The Secretary of Health and Human
Services shall waive such provisions of law and regulation
(including those described in section 110(c) of Public Law 108-173)
as are necessary to implement the amendments made by paragraph (1)
on a timely basis and, notwithstanding any other provision of law,
may implement such amendments by program instruction or otherwise.
There shall be no administrative or judicial review under section
1869 or section 1878 of the Social Security Act (42 U.S.C. 1395ff
and 1395oo), or otherwise of the process (including the
establishment of the process) under section 1833(g)(5) of such Act,
as added by paragraph (1).
(b) Implementation of Clinically Appropriate Code Edits In Order To
Identify and Eliminate Improper Payments for Therapy Services.--By not
later than July 1, 2006, the Secretary of Health and Human Services
shall implement clinically appropriate code edits with respect to
payments under part B of title XVIII of the Social Security Act for
physical therapy services, occupational therapy services, and speech-
language pathology services in order to identify and eliminate improper
payments for such services, including edits of clinically illogical
combinations of procedure codes and other edits to control
inappropriate billings.
CHAPTER 2--MISCELLANEOUS

03a5df4e6ecf816c7b0dd6de5aac309d5e98b18612971d2e086942b50aa9dd14

PART B PREMIUM SUBSIDY.
Section 1839(i)(3)(B) of the Social Security Act (42 U.S.C.
1395r(i)(3)(B)) is amended--
(1) in the heading, by striking ``5-year'' and inserting ``3-
year'';
(2) in the matter preceding clause (i), by striking ``2011''
and inserting ``2009'';
(3) in clause (i), by striking ``20 percent'' and inserting
``33 percent'';
(4) in clause (ii), by striking ``40 percent'' and inserting
``67 percent''; and
(5) by striking clauses (iii) and (iv).

d30ab969c4f98fc092026a2d604519fe9f6a24d44993b5300ccd907b46a5e2c5

AORTIC ANEURYSMS.
(a) In General.--Section 1861 of the Social Security Act (42 U.S.C.
1395x) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraph (Y);
(B) by adding ``and'' at the end of subparagraph (Z) and
moving such subparagraph 2 ems to the left; and
(C) by adding at the end the following new subparagraph:
``(AA) ultrasound screening for abdominal aortic aneurysm (as
defined in subsection (bbb)) for an individual--
``(i) who receives a referral for such an ultrasound
screening as a result of an initial preventive physical
examination (as defined in section 1861(ww)(1));
``(ii) who has not been previously furnished such an
ultrasound screening under this title; and
``(iii) who--
``(I) has a family history of abdominal aortic
aneurysm; or
``(II) manifests risk factors included in a beneficiary
category recommended for screening by the United States
Preventive Services Task Force regarding abdominal aortic
aneurysms;''; and
(2) by adding at the end the following new subsection:
``Ultrasound Screening for Abdominal Aortic Aneurysm
``(bbb) The term `ultrasound screening for abdominal aortic
aneurysm' means--
``(1) a procedure using sound waves (or such other procedures
using alternative technologies, of commensurate accuracy and cost,
that the Secretary may specify) provided for the early detection of
abdominal aortic aneurysm; and
``(2) includes a physician's interpretation of the results of
the procedure.''.
(b) Inclusion of Ultrasound Screening for Abdominal Aortic Aneurysm
in Initial Preventive Physical Examination.--Section 1861(ww)(2) of
such Act (42 U.S.C. 1395x(ww)(2)) is amended by adding at the end the
following new subparagraph:
``(L) Ultrasound screening for abdominal aortic aneurysm as
defined in section 1861(bbb).''.
(c) Payment for Ultrasound Screening for Abdominal Aortic
Aneurysm.--Section 1848(j)(3) of such Act (42 U.S.C. 1395w-4(j)(3)) is
amended by inserting ``(2)(AA),'' after ``(2)(W),''.
(d) Frequency.--Section 1862(a)(1) of such Act (42 U.S.C.
1395y(a)(1)) is amended--
(1) by striking ``and'' at the end of subparagraph (L);
(2) by striking the semicolon at the end of subparagraph (M)
and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(N) in the case of ultrasound screening for abdominal aortic
aneurysm which is performed more frequently than is provided for
under section 1861(s)(2)(AA);''.
(e) Non-Application of Part B Deductible.--Section 1833(b) of such
Act (42 U.S.C. 1395l(b)) is amended in the first sentence--
(1) by striking ``and'' before ``(6)''; and
(2) by inserting ``, and (7) such deductible shall not apply
with respect to ultrasound screening for abdominal aortic aneurysm
(as defined in section 1861(bbb))'' before the period at the end.
(f) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 2007.

858638c824c10b760d4608d74c7d3f66e74247c686880346e74d7d8c42e6e7ad

CANCER SCREENING.
(a) Non-Application of Deductible for Colorectal Cancer Screening
Tests.--Section 1833(b) of the Social Security Act (42 U.S.C.
1395l(b)), as amended by section 5112(e), is amended in the first
sentence--
(1) by striking ``and'' before ``(7)''; and
(2) by inserting ``, and (8) such deductible shall not apply
with respect to colorectal cancer screening tests (as described in
section 1861(pp)(1))'' before the period at the end.
(b) Conforming Amendments.--Paragraphs (2)(C)(ii) and (3)(C)(ii) of
section 1834(d) of such Act (42 U.S.C. 1395m(d)) are each amended--
(1) by striking ``deductible and'' in the heading; and
(2) in subclause (I), by striking ``deductible or'' each place
it appears.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 2007.

36d4a3427e1996a65780084b1b2773ee30228a487d3efdb2d2f98f0189a44411

(a) Coverage.--
(1) In general.--Section 1861(aa)(3) of the Social Security Act
(42 U.S.C. 1395x(aa)(3)) is amended--
(A) in subparagraph (A), by striking ``, and'' and
inserting ``and services described in subsections (qq) and
(vv); and'';
(B) in subparagraph (B), by striking ``sections 329, 330,
and 340'' and inserting ``section 330''; and
(C) in the flush matter at the end, by inserting ``by the
center or by a health care professional under contract with the
center'' after ``outpatient of a Federally qualified health
center''.
(2) Consolidated billing.--The first sentence of section
1842(b)(6)(F) of such Act (42 U.S.C. 1395u(b)(6)(F)) is amended--
(A) by striking ``and (G)'' and inserting ``(G)''; and
(B) by inserting before the period at the end the
following: ``, and (H) in the case of services described in
section 1861(aa)(3) that are furnished by a health care
professional under contract with a Federally qualified health
center, payment shall be made to the center''.
(b) Technical Corrections.--Clauses (i) and (ii)(II) of section
1861(aa)(4)(A) of such Act (42 U.S.C. 1395x(aa)(4)(A)) are each amended
by striking ``(other than subsection (h))''.
(c) Effective Dates.--The amendments made by this section shall
apply to services furnished on or after January 1, 2006.

4a6db0d8db8d16967c6fa1c31bde78abcc1f5f98c978fd499903c34efc0076a9

INTERNATIONAL VOLUNTEERS.
(a) In General.--
(1) Waiver of penalty.--Section 1839(b) of the Social Security
Act (42 U.S.C. 1395r(b)) is amended in the second sentence by
inserting the following before the period at the end: ``or months
for which the individual can demonstrate that the individual was an
individual described in section 1837(k)(3)''.
(2) Special enrollment period.--
(A) In general.--Section 1837 of such Act (42 U.S.C. 1395p)
is amended by adding at the end the following new subsection:
``(k)(1) In the case of an individual who--
``(A) at the time the individual first satisfies paragraph (1)
or (2) of section 1836, is described in paragraph (3), and has
elected not to enroll (or to be deemed enrolled) under this section
during the individual's initial enrollment period; or
``(B) has terminated enrollment under this section during a
month in which the individual is described in paragraph (3),
there shall be a special enrollment period described in paragraph (2).
``(2) The special enrollment period described in this paragraph is
the 6-month period beginning on the first day of the month which
includes the date that the individual is no longer described in
paragraph (3).
``(3) For purposes of paragraph (1), an individual described in
this paragraph is an individual who--
``(A) is serving as a volunteer outside of the United States
through a program--
``(i) that covers at least a 12-month period; and
``(ii) that is sponsored by an organization described in
section 501(c)(3) of the Internal Revenue Code of 1986 and
exempt from taxation under section 501(a) of such Code; and
``(B) demonstrates health insurance coverage while serving in
the program.''.
(B) Coverage period.--Section 1838 of such Act (42 U.S.C.
1395q) is amended by adding at the end the following new
subsection:
``(f) Notwithstanding subsection (a), in the case of an individual
who enrolls during a special enrollment period pursuant to section
1837(k), the coverage period shall begin on the first day of the month
following the month in which the individual so enrolls.''.
(b) Effective Date.--The amendment made by subsection (a)(1) shall
apply to months beginning with January 2007 and the amendments made by
subsection (a)(2) shall take effect on January 1, 2007.
Subtitle C--Provisions Relating to Parts A and B

5f1497657089003b88fb5d92bf0c2a57371c57f120ceb9195ca5fdd190f9f5ae

(a) 2006 Update.--Section 1895(b)(3)(B)(ii) of the Social Security
Act (42 U.S.C. 1395fff(b)(3)(B)(ii)) is amended--
(1) in subclause (III), by striking ``each of 2005 and 2006''
and inserting ``all of 2005'';
(2) by striking ``or'' at the end of subclause (III);
(3) in subclause (IV), by striking ``2007 and'' and by
redesignating such subclause as subclause (V); and
(4) by inserting after subclause (III) the following new
subclause:
``(IV) 2006, 0 percent; and''.
(b) Applying Rural Add-On Policy for 2006.--Section 421(a) of
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Public Law 108-173; 117 Stat. 2283) is amended by inserting ``and
episodes and visits beginning on or after January 1, 2006, and before
January 1, 2007,'' after ``April 1, 2005,''.
(c) Home Health Care Quality Improvement.--Section 1895(b)(3)(B) of
the Social Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amended--
(1) in clause (ii)(V), as redesignated by subsection (a)(3), by
inserting ``subject to clause (v),'' after ``subsequent year,'';
and
(2) by adding at the end the following new clause:
``(v) Adjustment if quality data not submitted.--
``(I) Adjustment.--For purposes of clause (ii)(V),
for 2007 and each subsequent year, in the case of a
home health agency that does not submit data to the
Secretary in accordance with subclause (II) with
respect to such a year, the home health market basket
percentage increase applicable under such clause for
such year shall be reduced by 2 percentage points. Such
reduction shall apply only with respect to the year
involved, and the Secretary shall not take into account
such reduction in computing the prospective payment
amount under this section for a subsequent year, and
the Medicare Payment Advisory Commission shall carry
out the requirements under section 5201(d) of the
Deficit Reduction Act of 2005.
``(II) Submission of quality data.--For 2007 and
each subsequent year, each home health agency shall
submit to the Secretary such data that the Secretary
determines are appropriate for the measurement of
health care quality. Such data shall be submitted in a
form and manner, and at a time, specified by the
Secretary for purposes of this clause.
``(III) Public availability of data submitted.--The
Secretary shall establish procedures for making data
submitted under subclause (II) available to the public.
Such procedures shall ensure that a home health agency
has the opportunity to review the data that is to be
made public with respect to the agency prior to such
data being made public.''.
(d) MedPAC Report on Value Based Purchasing.--
(1) In general.--Not later than June 1, 2007, the Medicare
Payment Advisory Commission shall submit to Congress a report that
includes recommendations on a detailed structure of value based
payment adjustments for home health services under the Medicare
program under title XVIII of the Social Security Act. Such report
shall include recommendations concerning the determination of
thresholds, the size of such payments, sources of funds, and the
relationship of payments for improvement and attainment of quality.
(2) Funding.--Out of any funds in the Treasury not otherwise
appropriated, there are appropriated to the Medicare Payment
Advisory Commission $550,000, to carry out this subsection.

6466de7fc32e8ec3ca92e56a3abc53af8cda2ad0e7ab3e79471f28724d02cdf6

NOT SUBMITTED ELECTRONICALLY.
(a) Revision.--
(1) Part a.--Section 1816(c)(3)(B)(ii) of the Social Security
Act (42 U.S.C. 1395h(c)(3)(B)(ii)) is amended by striking ``26
days'' and inserting ``28 days''.
(2) Part b.--Section 1842(c)(3)(B)(ii) of such Act (42 U.S.C.
1395u(c)(3)(B)(ii)) is amended by striking ``26 days'' and
inserting ``28 days''.
(b) Effective Date.--The amendments made by this section shall
apply to claims submitted on or after January 1, 2006.

c1d4d644fef30ad058b4bc9dd5ed823b2ccbba3cc165710b394dffd4ec6186a7

Notwithstanding sections 1816(c) and 1842(c)(2) of the Social
Security Act or any other provision of law--
(1) any payment from the Federal Hospital Insurance Trust Fund
under section 1817 of the Social Security Act (42 U.S.C. 1395i) or
from the Federal Supplementary Medical Insurance Trust Fund under
section 1841 of such Act (42 U.S.C. 1395t) for claims submitted
under part A or B of title XVIII of such Act for items and services
furnished under such part A or B, respectively, that would
otherwise be payable during the period beginning on September 22,
2006, and ending on September 30, 2006, shall be paid on the first
business day of October 2006; and
(2) no interest or late penalty shall be paid to an entity or
individual for any delay in a payment by reason of the application
of paragraph (1).

82254a09952a102700cb0a78332e5d5e7b44815664b524b31ea4c109ca1808a3

Section 1817(k)(4) of the Social Security Act (42 U.S.C.
1395i(k)(4)) is amended--
(1) in subparagraph (B), by striking ``The amount'' and
inserting ``Subject to subparagraph (C), the amount''; and
(2) by adding at the end the following new subparagraph:
``(C) Adjustments.--The amount appropriated under
subparagraph (A) for a fiscal year is increased as follows:
``(i) For fiscal year 2006, $100,000,000.''.
Subtitle D--Provisions Relating to Part C

4c970e160c2b6ae9e4bf8bcb11e34ca3e2fc42d9ce4431023518bfbac3fc1992

DETERMINING THE AMOUNT OF PAYMENTS TO MEDICARE ADVANTAGE
ORGANIZATIONS.
(a) In General.--Section 1853 of the Social Security Act (42 U.S.C.
1395w-23) is amended--
(1) in subsection (j)(1)--
(A) in subparagraph (A)--
(i) by inserting ``(or, beginning with 2007, \1/12\ of
the applicable amount determined under subsection (k)(1))''
after ``1853(c)(1)''; and
(ii) by inserting ``(for years before 2007)'' after
``adjusted as appropriate'';
(B) in subparagraph (B), by inserting ``(for years before
2007)'' after ``adjusted as appropriate''; and
(2) by adding at the end the following new subsection:
``(k) Determination of Applicable Amount for Purposes of
Calculating the Benchmark Amounts.--
``(1) Applicable amount defined.--For purposes of subsection
(j), subject to paragraph (2), the term `applicable amount' means
for an area--
``(A) for 2007--
``(i) if such year is not specified under subsection
(c)(1)(D)(ii), an amount equal to the amount specified in
subsection (c)(1)(C) for the area for 2006--
``(I) first adjusted by the rescaling factor for
2006 for the area (as made available by the Secretary
in the announcement of the rates on April 4, 2005,
under subsection (b)(1), but excluding any national
adjustment factors for coding intensity and risk
adjustment budget neutrality that were included in such
factor); and
``(II) then increased by the national per capita MA
growth percentage, described in subsection (c)(6) for
2007, but not taking into account any adjustment under
subparagraph (C) of such subsection for a year before
2004;
``(ii) if such year is specified under subsection
(c)(1)(D)(ii), an amount equal to the greater of--
``(I) the amount determined under clause (i) for
the area for the year; or
``(II) the amount specified in subsection (c)(1)(D)
for the area for the year; and
``(B) for a subsequent year--
``(i) if such year is not specified under subsection
(c)(1)(D)(ii), an amount equal to the amount determined
under this paragraph for the area for the previous year
(determined without regard to paragraph (2)), increased by
the national per capita MA growth percentage, described in
subsection (c)(6) for that succeeding year, but not taking
into account any adjustment under subparagraph (C) of such
subsection for a year before 2004; and
``(ii) if such year is specified under subsection
(c)(1)(D)(ii), an amount equal to the greater of--
``(I) the amount determined under clause (i) for
the area for the year; or
``(II) the amount specified in subsection (c)(1)(D)
for the area for the year.
``(2) Phase-out of budget neutrality factor.--
``(A) In general.--Except as provided in subparagraph (D),
in the case of 2007 through 2010, the applicable amount
determined under paragraph (1) shall be multiplied by a factor
equal to 1 plus the product of--
``(i) the percent determined under subparagraph (B) for
the year; and
``(ii) the applicable phase-out factor for the year
under subparagraph (C).
``(B) Percent determined.--
``(i) In general.--For purposes of subparagraph (A)(i),
subject to clause (iv), the percent determined under this
subparagraph for a year is a percent equal to a fraction
the numerator of which is described in clause (ii) and the
denominator of which is described in clause (iii).
``(ii) Numerator based on difference between
demographic rate and risk rate.--
``(I) In general.--The numerator described in this
clause is an amount equal to the amount by which the
demographic rate described in subclause (II) exceeds
the risk rate described in subclause (III).
``(II) Demographic rate.--The demographic rate
described in this subclause is the Secretary's estimate
of the total payments that would have been made under
this part in the year if all the monthly payment
amounts for all MA plans were equal to \1/12\ of the
annual MA capitation rate under subsection (c)(1) for
the area and year, adjusted pursuant to subsection
(a)(1)(C).
``(III) Risk rate.--The risk rate described in this
subclause is the Secretary's estimate of the total
payments that would have been made under this part in
the year if all the monthly payment amounts for all MA
plans were equal to the amount described in subsection
(j)(1)(A) (determined as if this paragraph had not
applied) under subsection (j) for the area and year,
adjusted pursuant to subsection (a)(1)(C).
``(iii) Denominator based on risk rate.--The
denominator described in this clause is equal to the total
amount estimated for the year under clause (ii)(III).
``(iv) Requirements.--In estimating the amounts under
the previous clauses, the Secretary shall--
``(I) use a complete set of the most recent and
representative Medicare Advantage risk scores under
subsection (a)(3) that are available from the risk
adjustment model announced for the year;
``(II) adjust the risk scores to reflect changes in
treatment and coding practices in the fee-for-service
sector;
``(III) adjust the risk scores for differences in
coding patterns between Medicare Advantage plans and
providers under the original Medicare fee-for-service
program under parts A and B to the extent that the
Secretary has identified such differences, as required
in subsection (a)(1)(C);
``(IV) as necessary, adjust the risk scores for
late data submitted by Medicare Advantage
organizations;
``(V) as necessary, adjust the risk scores for
lagged cohorts; and
``(VI) as necessary, adjust the risk scores for
changes in enrollment in Medicare Advantage plans
during the year.
``(v) Authority.--In computing such amounts the
Secretary may take into account the estimated health risk
of enrollees in preferred provider organization plans
(including MA regional plans) for the year.
``(C) Applicable phase-out factor.--For purposes of
subparagraph (A)(ii), the term `applicable phase-out factor'
means--
``(i) for 2007, 0.55;
``(ii) for 2008, 0.40;
``(iii) for 2009, 0.25; and
``(iv) for 2010, 0.05.
``(D) Termination of application.--Subparagraph (A) shall
not apply in a year if the amount estimated under subparagraph
(B)(ii)(III) for the year is equal to or greater than the
amount estimated under subparagraph (B)(ii)(II) for the year.
``(3) No revision in percent.--
``(A) In general.--The Secretary may not make any
adjustment to the percent determined under paragraph (2)(B) for
any year.
``(B) Rule of construction.--Nothing in this subsection
shall be construed to limit the authority of the Secretary to
make adjustments to the applicable amounts determined under
paragraph (1) as appropriate for purposes of updating data or
for purposes of adopting an improved risk adjustment
methodology.''.
(b) Refinements to Health Status Adjustment.--Section 1853(a)(1)(C)
of such Act (42 U.S.C. 1395w-23) is amended--
(1) by designating the matter after the heading as a clause (i)
with the following heading: ``In general.--'' and indenting
appropriately; and
(2) by adding at the end the following:
``(ii) Application during phase-out of budget
neutrality factor.--For 2006 through 2010:
``(I) In applying the adjustment under clause (i)
for health status to payment amounts, the Secretary
shall ensure that such adjustment reflects changes in
treatment and coding practices in the fee-for-service
sector and reflects differences in coding patterns
between Medicare Advantage plans and providers under
part A and B to the extent that the Secretary has
identified such differences.
``(II) In order to ensure payment accuracy, the
Secretary shall conduct an analysis of the differences
described in subclause (I). The Secretary shall
complete such analysis by a date necessary to ensure
that the results of such analysis are incorporated into
the risk scores only for 2008, 2009, and 2010. In
conducting such analysis, the Secretary shall use data
submitted with respect to 2004 and subsequent years, as
available.''.

d3bbbc1c60891e13b7cbdda4b353a7990c775124873a388c3e89df0e2deaf1e1

(a) Definitions.--In this section:
(1) CMS.--The term ``CMS'' means the Centers for Medicare &
Medicaid Services.
(2) PACE program.--The term ``PACE program'' has the meaning
given that term in sections 1894(a)(2) and 1934(a)(2) of the Social
Security Act (42 U.S.C. 1395eee(a)(2); 1396u-4(a)(2)).
(3) PACE provider.--The term ``PACE provider'' has the meaning
given that term in section 1894(a)(3) or 1934(a)(3) of the Social
Security Act (42 U.S.C. 1395eee(a)(3); 1396u-4(a)(3)).
(4) Rural area.--The term ``rural area'' has the meaning given
that term in section 1886(d)(2)(D) of the Social Security Act (42
U.S.C. 1395ww(d)(2)(D)).
(5) Rural pace pilot site.--The term ``rural PACE pilot site''
means a PACE provider that has been approved to provide services in
a geographic service area that is, in whole or in part, a rural
area, and that has received a site development grant under this
section.
(6) Secretary.--The term ``Secretary'' means the Secretary of
Health and Human Services.
(b) Site Development Grants and Technical Assistance Program.--
(1) Site development grants.--
(A) In general.--The Secretary shall establish a process
and criteria to award site development grants to qualified PACE
providers that have been approved to serve a rural area.
(B) Amount per award.--A site development grant awarded
under subparagraph (A) to any individual rural PACE pilot site
shall not exceed $750,000.
(C) Number of awards.--Not more than 15 rural PACE pilot
sites shall be awarded a site development grant under
subparagraph (A).
(D) Use of funds.--Funds made available under a site
development grant awarded under subparagraph (A) may be used
for the following expenses only to the extent such expenses are
incurred in relation to establishing or delivering PACE program
services in a rural area:
(i) Feasibility analysis and planning.
(ii) Interdisciplinary team development.
(iii) Development of a provider network, including
contract development.
(iv) Development or adaptation of claims processing
systems.
(v) Preparation of special education and outreach
efforts required for the PACE program.
(vi) Development of expense reporting required for
calculation of outlier payments or reconciliation
processes.
(vii) Development of any special quality of care or
patient satisfaction data collection efforts.
(viii) Establishment of a working capital fund to
sustain fixed administrative, facility, or other fixed
costs until the provider reaches sufficient enrollment
size.
(ix) Startup and development costs incurred prior to
the approval of the rural PACE pilot site's PACE provider
application by CMS.
(x) Any other efforts determined by the rural PACE
pilot site to be critical to its successful startup, as
approved by the Secretary.
(E) Appropriation.--
(i) In general.--Out of funds in the Treasury not
otherwise appropriated, there are appropriated to the
Secretary to carry out this subsection for fiscal year
2006, $7,500,000.
(ii) Availability.--Funds appropriated under clause (i)
shall remain available for expenditure through fiscal year
2008.
(2) Technical assistance program.--The Secretary shall
establish a technical assistance program to provide--
(A) outreach and education to State agencies and provider
organizations interested in establishing PACE programs in rural
areas; and
(B) technical assistance necessary to support rural PACE
pilot sites.
(c) Cost Outlier Protection for Rural PACE Pilot Sites.--
(1) Establishment of fund for reimbursement of outlier costs.--
Notwithstanding any other provision of law, the Secretary shall
establish an outlier fund to reimburse rural PACE pilot sites for
recognized outlier costs (as defined in paragraph (3)) incurred for
eligible outlier participants (as defined in paragraph (2)) in an
amount, subject to paragraph (4), equal to 80 percent of the amount
by which the recognized outlier costs exceeds $50,000.
(2) Eligible outlier participant.--For purposes of this
subsection, the term ``eligible outlier participant'' means a PACE
program eligible individual (as defined in sections 1894(a)(5) and
1934(a)(5) of the Social Security Act (42 U.S.C. 1395eee(a)(5);
1396u-4(a)(5))) who resides in a rural area and with respect to
whom the rural PACE pilot site incurs more than $50,000 in
recognized costs in a 12-month period.
(3) Recognized outlier costs defined.--
(A) In general.--For purposes of this subsection, the term
``recognized outlier costs'' means, with respect to services
furnished to an eligible outlier participant by a rural PACE
pilot site, the least of the following (as documented by the
site to the satisfaction of the Secretary) for the provision of
inpatient and related physician and ancillary services for the
eligible outlier participant in a given 12-month period:
(i) If the services are provided under a contract
between the pilot site and the provider, the payment rate
specified under the contract.
(ii) The payment rate established under the original
Medicare fee-for-service program for such service.
(iii) The amount actually paid for the services by the
pilot site.
(B) Inclusion in only one period.--Recognized outlier costs
may not be included in more than one 12-month period.
(3) Outlier expense payment.--
(A) Payment for outlier costs.--Subject to subparagraph
(B), in the case of a rural PACE pilot site that has incurred
outlier costs for an eligible outlier participant, the rural
PACE pilot site shall receive an outlier expense payment equal
to 80 percent of such costs that exceed $50,000.
(4) Limitations.--
(A) Costs incurred per eligible outlier participant.--The
total amount of outlier expense payments made under this
subsection to a rural PACE pilot site with respect to an
eligible outlier participant for any 12-month period shall not
exceed $100,000 for the 12-month period used to calculate the
payment.
(B) Costs incurred per provider.--No rural PACE pilot site
may receive more than $500,000 in total outlier expense
payments in a 12-month period.
(C) Limitation of outlier cost reimbursement period.--A
rural PACE pilot site shall only receive outlier expense
payments under this subsection with respect to costs incurred
during the first 3 years of the site's operation.
(5) Requirement to access risk reserves prior to payment.--A
rural PACE pilot site shall access and exhaust any risk reserves
held or arranged for the provider (other than revenue or reserves
maintained to satisfy the requirements of section 460.80(c) of
title 42, Code of Federal Regulations) and any working capital
established through a site development grant awarded under
subsection (b)(1), prior to receiving any payment from the outlier
fund.
(6) Application.--In order to receive an outlier expense
payment under this subsection with respect to an eligible outlier
participant, a rural PACE pilot site shall submit an application
containing--
(A) documentation of the costs incurred with respect to the
participant;
(B) a certification that the site has complied with the
requirements under paragraph (4); and
(C) such additional information as the Secretary may
require.
(7) Appropriation.--
(A) In general.--Out of funds in the Treasury not otherwise
appropriated, there are appropriated to the Secretary to carry
out this subsection for fiscal year 2006, $10,000,000.
(B) Availability.--Funds appropriated under subparagraph
(A) shall remain available for expenditure through fiscal year
2010.
(d) Evaluation of PACE Providers Serving Rural Service Areas.--Not
later than 60 months after the date of enactment of this Act, the
Secretary shall submit a report to Congress containing an evaluation of
the experience of rural PACE pilot sites.
(e) Amounts in Addition to Payments Under Social Security Act.--Any
amounts paid under the authority of this section to a PACE provider
shall be in addition to payments made to the provider under section
1894 or 1934 of the Social Security Act (42 U.S.C. 1395eee; 1396u-4).
Subtitle A--Medicaid
CHAPTER 1--PAYMENT FOR PRESCRIPTION DRUGS

4c5681081b3f6a894825ae976ff0b3fcff5cf3f6a896fd20899520486ebf8e32

OTHER DRUG PAYMENT PROVISIONS.
(a) Modification of Federal Upper Payment Limit for Multiple Source
Drugs; Definition of Multiple Source Drugs.--Section 1927 of the Social
Security Act (42 U.S.C. 1396r-8) is amended--
(1) in subsection (e)(4)--
(A) by striking ``The Secretary'' and inserting ``Subject
to paragraph (5), the Secretary''; and
(B) by inserting ``(or, effective January 1, 2007, two or
more)'' after ``three or more'';
(2) by adding at the end of subsection (e) the following new
paragraph:
``(5) Use of amp in upper payment limits.--Effective January 1,
2007, in applying the Federal upper reimbursement limit under
paragraph (4) and section 447.332(b) of title 42 of the Code of
Federal Regulations, the Secretary shall substitute 250 percent of
the average manufacturer price (as computed without regard to
customary prompt pay discounts extended to wholesalers) for 150
percent of the published price.'';
(3) in subsection (k)(7)(A)(i), in the matter preceding
subclause (I), by striking ``are 2 or more drug products'' and
inserting ``at least 1 other drug product''; and
(4) in subclauses (I), (II), and (III) of subsection
(k)(7)(A)(i), by striking ``are'' and inserting ``is'' each place
it appears.
(b) Disclosure of Price Information to States and the Public.--
Subsection (b)(3) of such section is amended--
(1) in subparagraph (A)--
(A) in clause (i), by inserting ``month of a'' after ``last
day of each''; and
(B) by adding at the end the following: ``Beginning July 1,
2006, the Secretary shall provide on a monthly basis to States
under subparagraph (D)(iv) the most recently reported average
manufacturer prices for single source drugs and for multiple
source drugs and shall, on at least a quarterly basis, update
the information posted on the website under subparagraph
(D)(v).''; and
(2) in subparagraph (D)--
(A) by striking ``and'' at the end of clause (ii);
(B) by striking the period at the end of clause (iii) and
inserting a comma; and
(C) by inserting after clause (iii) the following new
clauses:
``(iv) to States to carry out this title, and
``(v) to the Secretary to disclose (through a website
accessible to the public) average manufacturer prices.''.
(c) Definition of Average Manufacturer Price.--
(1) Exclusion of customary prompt pay discounts extended to
wholesalers.--Subsection (k)(1) of such section is amended--
(A) by striking ``The term'' and inserting the following:
``(A) In general.--Subject to subparagraph (B), the term'';
(B) by striking ``, after deducting customary prompt pay
discounts''; and
(C) by adding at the end the following:
``(B) Exclusion of customary prompt pay discounts extended
to wholesalers.--The average manufacturer price for a covered
outpatient drug shall be determined without regard to customary
prompt pay discounts extended to wholesalers.''.
(2) Manufacturer reporting of prompt pay discounts.--Subsection
(b)(3)(A)(i) of such section is amended by inserting ``, customary
prompt pay discounts extended to wholesalers,'' after ``(k)(1))''.
(3) Requirement to promulgate regulation.--
(A) Inspector general recommendations.--Not later than June
1, 2006, the Inspector General of the Department of Health and
Human Services shall--
(i) review the requirements for, and manner in which,
average manufacturer prices are determined under section
1927 of the Social Security Act, as amended by this
section; and
(ii) shall submit to the Secretary of Health and Human
Services and Congress such recommendations for changes in
such requirements or manner as the Inspector General
determines to be appropriate.
(B) Deadline for promulgation.--Not later than July 1,
2007, the Secretary of Health and Human Services shall
promulgate a regulation that clarifies the requirements for,
and manner in which, average manufacturer prices are determined
under section 1927 of the Social Security Act, taking into
consideration the recommendations submitted to the Secretary in
accordance with subparagraph (A)(ii).
(d) Exclusion of Sales at a Nominal Price From Determination of
Best Price.--
(1) Manufacturer reporting of sales.--Subsection (b)(3)(A)(iii)
of such section is amended by inserting before the period at the
end the following: ``, and, for calendar quarters beginning on or
after January 1, 2007 and only with respect to the information
described in subclause (III), for covered outpatient drugs''.
(2) Limitation on sales at a nominal price.--Subsection (c)(1)
of such section is amended by adding at the end the following new
subparagraph:
``(D) Limitation on sales at a nominal price.--
``(i) In general.--For purposes of subparagraph
(C)(ii)(III) and subsection (b)(3)(A)(iii)(III), only sales
by a manufacturer of covered outpatient 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 factors described in clause
(ii).
``(ii) Factors.--The factors described in this clause
with respect to a facility or entity are the following:
``(I) The type of facility or entity.
``(II) The services provided by the facility or
entity.
``(III) The patient population served by the
facility or entity.
``(IV) The number of other facilities or entities
eligible to purchase at nominal prices in the same
service area.
``(iii) Nonapplication.--Clause (i) shall not apply
with respect to sales by a manufacturer at a nominal price
of covered outpatient drugs pursuant to a master agreement
under section 8126 of title 38, United States Code.''.
(e) Retail Survey Prices; State Payment and Utilization Rates; and
Performance Rankings.--Such section is further amended by inserting
after subsection (e) the following new subsection:
``(f) Survey of Retail Prices; State Payment and Utilization Rates;
and Performance Rankings.--
``(1) Survey of retail prices.--
``(A) Use of vendor.--The Secretary may contract services
for--
``(i) the determination on a monthly basis of retail
survey prices for covered outpatient drugs that represent a
nationwide average of consumer purchase prices for such
drugs, net of all discounts and rebates (to the extent any
information with respect to such discounts and rebates is
available); and
``(ii) the notification of the Secretary when a drug
product that is therapeutically and pharmaceutically
equivalent and bioequivalent becomes generally available.
``(B) Secretary response to notification of availability of
multiple source products.--If contractor notifies the Secretary
under subparagraph (A)(ii) that a drug product described in
such subparagraph has become generally available, the Secretary
shall make a determination, within 7 days after receiving such
notification, as to whether the product is now described in
subsection (e)(4).
``(C) Use of competitive bidding.--In contracting for such
services, the Secretary shall competitively bid for an outside
vendor that has a demonstrated history in--
``(i) surveying and determining, on a representative
nationwide basis, retail prices for ingredient costs of
prescription drugs;
``(ii) working with retail pharmacies, commercial
payers, and States in obtaining and disseminating such
price information; and
``(iii) collecting and reporting such price information
on at least a monthly basis.
In contracting for such services, the Secretary may waive such
provisions of the Federal Acquisition Regulation as are
necessary for the efficient implementation of this subsection,
other than provisions relating to confidentiality of
information and such other provisions as the Secretary
determines appropriate.
``(D) Additional provisions.--A contract with a vendor
under this paragraph shall include such terms and conditions as
the Secretary shall specify, including the following:
``(i) The vendor must monitor the marketplace and
report to the Secretary each time there is a new covered
outpatient drug generally available.
``(ii) The vendor must update the Secretary no less
often than monthly on the retail survey prices for covered
outpatient drugs.
``(iii) The contract shall be effective for a term of 2
years.
``(E) Availability of information to states.--Information
on retail survey prices obtained under this paragraph,
including applicable information on single source drugs, shall
be provided to States on at least a monthly basis. The
Secretary shall devise and implement a means for providing
access 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 of the
retail survey price determined under this paragraph.
``(2) Annual state report.--Each State shall annually report to
the Secretary information on--
``(A) the payment rates under the State plan under this
title for covered outpatient drugs;
``(B) the dispensing fees paid under such plan for such
drugs; and
``(C) utilization rates for noninnovator multiple source
drugs under such plan.
``(3) Annual state performance rankings.--
``(A) Comparative analysis.--The Secretary annually shall
compare, for the 50 most widely prescribed drugs identified by
the Secretary, the national retail sales price data (collected
under paragraph (1)) for such drugs with data on prices under
this title for each such drug for each State.
``(B) Availability of information.--The Secretary shall
submit to Congress and the States full information regarding
the annual rankings made under subparagraph (A).
``(4) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated to the Secretary of
Health and Human Services $5,000,000 for each of fiscal years 2006
through 2010 to carry out this subsection.''.
(f) Miscellaneous Amendments.--
(1) In general.--Sections 1927(g)(1)(B)(i)(II) and
1861(t)(2)(B)(ii)(I) of such Act are each amended by inserting
``(or its successor publications)'' after ``United States
Pharmacopoeia-Drug Information''.
(2) Paperwork reduction.--The last sentence of section
1927(g)(2)(A)(ii) of such Act (42 U.S.C. 1396r-8(g)(2)(A)(ii)) is
amended by inserting before the period at the end the following:
``, or to require verification of the offer to provide consultation
or a refusal of such offer''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
(g) Effective Date.--Except as otherwise provided, the amendments
made by this section shall take effect on January 1, 2007, without
regard to whether or not final regulations to carry out such amendments
have been promulgated by such date.

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TITLE VI

-MEDICAID AND SCHIP

PHYSICIAN ADMINISTERED DRUGS.
(a) In General.--Section 1927(a) of the Social Security Act (42
U.S.C. 1396r-8(a)) is amended by adding at the end the following new
paragraph:
``(7) Requirement for submission of utilization data for
certain physician administered drugs.--
``(A) Single source drugs.--In order for payment to be
available under section 1903(a) for a covered outpatient drug
that is a single source drug that is physician administered
under this title (as determined by the Secretary), and that is
administered on or after January 1, 2006, the State shall
provide for the collection and submission of such utilization
data and coding (such as J-codes and National Drug Code
numbers) for each such drug as the Secretary may specify as
necessary to identify the manufacturer of the drug in order to
secure rebates under this section for drugs administered for
which payment is made under this title.
``(B) Multiple source drugs.--
``(i) Identification of most frequently physician
administered multiple source drugs.--Not later than January
1, 2007, the Secretary shall publish a list of the 20
physician administered multiple source drugs that the
Secretary determines have the highest dollar volume of
physician administered drugs dispensed under this title.
The Secretary may modify such list from year to year to
reflect changes in such volume.
``(ii) Requirement.--In order for payment to be
available under section 1903(a) for a covered outpatient
drug that is a multiple source drug that is physician
administered (as determined by the Secretary), that is on
the list published under clause (i), and that is
administered on or after January 1, 2008, the State shall
provide for the submission of such utilization data and
coding (such as J-codes and National Drug Code numbers) for
each such drug as the Secretary may specify as necessary to
identify the manufacturer of the drug in order to secure
rebates under this section.
``(C) Use of ndc codes.--Not later than January 1, 2007,
the information shall be submitted under subparagraphs (A) and
(B)(ii) using National Drug Code codes unless the Secretary
specifies that an alternative coding system should be used.
``(D) Hardship waiver.--The Secretary may delay the
application of subparagraph (A) or (B)(ii), or both, in the
case of a State to prevent hardship to States which require
additional time to implement the reporting system required
under the respective subparagraph.''.
(b) Limitation on Payment.--Section 1903(i)(10) of such Act (42
U.S.C. 1396b(i)(10)), is amended--
(1) by striking ``and'' at the end of subparagraph (A);
(2) by striking ``or'' at the end of subparagraph (B) and
inserting ``and''; and
(3) by adding at the end the following new subparagraph:
``(C) with respect to covered outpatient drugs described in
section 1927(a)(7), unless information respecting utilization
data and coding on such drugs that is required to be submitted
under such section is submitted in accordance with such
section; or''.

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APPLICATION APPROVED UNDER SECTION 505(C) OF THE FEDERAL
FOOD, DRUG, AND COSMETIC ACT.
(a) Inclusion With Other Reported Average Manufacturer and Best
Prices.--Section 1927(b)(3)(A) of the Social Security Act (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 covered outpatient drugs for
the rebate period under the agreement (including for
all such drugs that are sold under a new drug
application approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act); and
``(II) for single source drugs and innovator
multiple source drugs (including all such drugs that
are 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 drugs for the rebate
period under the agreement;''; and
(2) in clause (ii), by inserting ``(including for such drugs
that are 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 inserting after ``or innovator multiple source drug of a
manufacturer'' the following: ``(including the lowest price
available to any entity for any such 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 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 drug available from
the manufacturer during the rebate period to any
manufacturer, 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), as amended by section 6001(c)(1), by
adding at the end the following:
``(C) Inclusion of section 505(c) drugs.--In the case of a
manufacturer that approves, allows, or otherwise permits any
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 drug by wholesalers for drugs
distributed to the retail pharmacy class of trade.''.
(c) Effective Date.--The amendments made by this section take
effect on January 1, 2007.

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DISCOUNT PROGRAM.
(a) In General.--Section 1927(a)(5)(B) of the Social Security Act
(42 U.S.C. 1396r-8(a)(5)(B)) is amended by inserting before the period
at the end the following: ``and a children's hospital described in
section 1886(d)(1)(B)(iii) which meets the requirements of clauses (i)
and (iii) of section 340B(b)(4)(L) of the Public Health Service Act and
which would meet the requirements of clause (ii) of such section if
that clause were applied by taking into account the percentage of care
provided by the hospital to patients eligible for medical assistance
under a State plan under this title''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to drugs purchased on or after the date of the enactment of this
Act.
CHAPTER 2--LONG-TERM CARE UNDER MEDICAID
Subchapter A--Reform of Asset Transfer Rules

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PERIOD OF INELIGIBILITY.
(a) Lengthening Look-Back Period for All Disposals to 5 Years.--
Section 1917(c)(1)(B)(i) of the Social Security Act (42 U.S.C.
1396p(c)(1)(B)(i)) is amended by inserting ``or in the case of any
other disposal of assets made on or after the date of the enactment of
the Deficit Reduction Act of 2005'' before ``, 60 months''.
(b) Change in Beginning Date for Period of Ineligibility.--Section
1917(c)(1)(D) of such Act (42 U.S.C. 1396p(c)(1)(D)) is amended--
(1) by striking ``(D) The date'' and inserting ``(D)(i) In the
case of a transfer of asset made before the date of the enactment
of the Deficit Reduction Act of 2005, the date''; and
(2) by adding at the end the following new clause:
``(ii) In the case of a transfer of asset made on or after the date
of the enactment of the Deficit Reduction Act of 2005, the date
specified in this subparagraph is the first day of a month during or
after which assets have been transferred for less than fair market
value, or the date on which the individual is eligible for medical
assistance under the State plan and would otherwise be receiving
institutional level care described in subparagraph (C) based on an
approved application for such care but for the application of the
penalty period, whichever is later, and which does not occur during any
other period of ineligibility under this subsection.''.
(c) Effective Date.--The amendments made by this section shall
apply to transfers made on or after the date of the enactment of this
Act.
(d) Availability of Hardship Waivers.--Each State shall provide for
a hardship waiver process in accordance with section 1917(c)(2)(D) of
the Social Security Act (42 U.S.C. 1396p(c)(2)(D))--
(1) under which an undue hardship exists when application of
the transfer of assets provision would deprive the individual--
(A) of medical care such that the individual's health or
life would be endangered; or
(B) of food, clothing, shelter, or other necessities of
life; and
(2) which provides for--
(A) notice to recipients that an undue hardship exception
exists;
(B) a timely process for determining whether an undue
hardship waiver will be granted; and
(C) a process under which an adverse determination can be
appealed.
(e) Additional Provisions on Hardship Waivers.--
(1) Application by facility.--Section 1917(c)(2) of the Social
Security Act (42 U.S.C. 1396p(c)(2)) is amended--
(A) by striking the semicolon at the end of subparagraph
(D) and inserting a period; and
(B) by adding after and below such subparagraph the
following:
``The procedures established under subparagraph (D) shall permit
the facility in which the institutionalized individual is residing
to file an undue hardship waiver application on behalf of the
individual with the consent of the individual or the personal
representative of the individual.''.
(2) Authority to make bed hold payments for hardship
applicants.--Such section is further amended by adding at the end
the following: ``While an application for an undue hardship waiver
is pending under subparagraph (D) in the case of an individual who
is a resident of a nursing facility, if the application meets such
criteria as the Secretary specifies, the State may provide for
payments for nursing facility services in order to hold the bed for
the individual at the facility, but not in excess of payments for
30 days.''.

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(a) In General.--Section 1917 of the Social Security Act (42 U.S.C.
1396p) is amended by redesignating subsection (e) as subsection (f) and
by inserting after subsection (d) the following new subsection:
``(e)(1) In order to meet the requirements of this section for
purposes of section 1902(a)(18), a State shall require, as a condition
for the provision of medical assistance for services described in
subsection (c)(1)(C)(i) (relating to long-term care services) for an
individual, the application of the individual for such assistance
(including any recertification of eligibility for such assistance)
shall disclose a description of any interest the individual or
community spouse has in an annuity (or similar financial instrument, as
may be specified by the Secretary), regardless of whether the annuity
is irrevocable or is treated as an asset. Such application or
recertification form shall include a statement that under paragraph (2)
the State becomes a remainder beneficiary under such an annuity or
similar financial instrument by virtue of the provision of such medical
assistance.
``(2)(A) In the case of disclosure concerning an annuity under
subsection (c)(1)(F), the State shall notify the issuer of the annuity
of the right of the State under such subsection as a preferred
remainder beneficiary in the annuity for medical assistance furnished
to the individual. Nothing in this paragraph shall be construed as
preventing such an issuer from notifying persons with any other
remainder interest of the State's remainder interest under such
subsection.
``(B) In the case of such an issuer receiving notice under
subparagraph (A), the State may require the issuer to notify the State
when there is a change in the amount of income or principal being
withdrawn from the amount that was being withdrawn at the time of the
most recent disclosure described in paragraph (1). A State shall take
such information into account in determining the amount of the State's
obligations for medical assistance or in the individual's eligibility
for such assistance.
``(3) The Secretary may provide guidance to States on categories of
transactions that may be treated as a transfer of asset for less than
fair market value.
``(4) Nothing in this subsection shall be construed as preventing a
State from denying eligibility for medical assistance for an individual
based on the income or resources derived from an annuity described in
paragraph (1).''.
(b) Requirement for State To Be Named as a Remainder Beneficiary.--
Section 1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), is amended by
adding at the end the following:
``(F) 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--
``(i) 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
``(ii) the State is named as such a beneficiary in the second
position after the community spouse or minor or disabled child and
is named in the first position if such spouse or a representative
of such child disposes of any such remainder for less than fair
market value.''.
(c) Inclusion of Transfers To Purchase Balloon Annuities.--Section
1917(c)(1) of such Act (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 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), or (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.''.
(d) Effective Date.--The amendments made by this section shall
apply to transactions (including the purchase of an annuity) occurring
on or after the date of the enactment of this Act.

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SPOUSE'S INCOME BEFORE ASSETS IN PROVIDING SUPPORT OF
COMMUNITY SPOUSE.
(a) In General.--Section 1924(d) of the Social Security Act (42
U.S.C. 1396r-5(d)) is amended by adding at the end the following new
subparagraph:
``(6) Application of `income first' rule to revision of
community spouse resource allowance.--For purposes of this
subsection and subsections (c) and (e), a State must consider that
all income of the institutionalized spouse that could be made
available to a community spouse, in accordance with the calculation
of the community spouse monthly income allowance under this
subsection, has been made available before the State allocates to
the community spouse an amount of resources adequate to provide the
difference between the minimum monthly maintenance needs allowance
and all income available to the community spouse.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to transfers and allocations made on or after the date of the
enactment of this Act by individuals who become institutionalized
spouses on or after such date.

038e371eba02784adbc7fd957ed13567d1623a95214afc75f0b3258866ec6dea

INDIVIDUALS WITH SUBSTANTIAL HOME EQUITY.
(a) In General.--Section 1917 of the Social Security Act, as
amended by section 6012(a), is further amended by redesignating
subsection (f) as subsection (g) and by inserting after subsection (e)
the following new subsection:
``(f)(1)(A) Notwithstanding any other provision of this title,
subject to subparagraphs (B) and (C) of this paragraph and paragraph
(2), in determining eligibility of an individual for medical assistance
with respect to nursing facility services or other long-term care
services, the individual shall not be eligible for such assistance if
the individual's equity interest in the individual's home exceeds
$500,000.
``(B) A State may elect, without regard to the requirements of
section 1902(a)(1) (relating to statewideness) and section
1902(a)(10)(B) (relating to comparability), to apply subparagraph (A)
by substituting for `$500,000', an amount that exceeds such amount, but
does not exceed $750,000.
``(C) The dollar amounts specified in this paragraph shall be
increased, beginning with 2011, from year to year based on the
percentage increase in the consumer price index for all urban consumers
(all items; United States city average), rounded to the nearest $1,000.
``(2) Paragraph (1) shall not apply with respect to an individual
if--
``(A) the spouse of such individual, or
``(B) such individual's child who is under age 21, or (with
respect to States eligible to participate in the State program
established under title XVI) is blind or permanently and totally
disabled, or (with respect to States which are not eligible to
participate in such program) is blind or disabled as defined in
section 1614,
is lawfully residing in the individual's home.
``(3) Nothing in this subsection shall be construed as preventing
an individual from using a reverse mortgage or home equity loan to
reduce the individual's total equity interest in the home.
``(4) The Secretary shall establish a process whereby paragraph (1)
is waived in the case of a demonstrated hardship.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individuals who are determined eligible for medical assistance
with respect to nursing facility services or other long-term care
services based on an application filed on or after January 1, 2006.

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(CCRC) AND LIFE CARE COMMUNITY ADMISSION CONTRACTS.
(a) Admission Policies of Nursing Facilities.--Section 1919(c)(5)
of the Social Security Act (42 U.S.C. 1396r(c)(5)) is amended--
(1) in subparagraph (A)(i)(II), by inserting ``subject to
clause (v),'' after ``(II)''; and
(2) by adding at the end of subparagraph (B) the following new
clause:
``(v) Treatment of continuing care retirement
communities admission contracts.--Notwithstanding subclause
(II) of subparagraph (A)(i), subject to subsections (c) and
(d) of section 1924, contracts for admission to a State
licensed, registered, certified, or equivalent continuing
care retirement community or life care community, including
services in a nursing facility that is part of such
community, may require residents to spend on their care
resources declared for the purposes of admission before
applying for medical assistance.''.
(b) Treatment of Entrance Fees.--Section 1917 of such Act (42
U.S.C. 1396p), as amended by sections 6012(a) and 6014(a), is amended
by redesignating subsection (g) as subsection (h) and by inserting
after subsection (f) the following new subsection:
``(g) Treatment of Entrance Fees of Individuals Residing in
Continuing Care Retirement Communities.--
``(1) In general.--For purposes of determining an individual's
eligibility for, or amount of, benefits under a State plan under
this title, the rules specified in paragraph (2) shall apply to
individuals residing in continuing care retirement communities or
life care communities that collect an entrance fee on admission
from such individuals.
``(2) Treatment of entrance fee.--For purposes of this
subsection, an individual's entrance fee in a continuing care
retirement community or life care community shall be considered a
resource available to the individual to the extent that--
``(A) the individual has the ability to use the entrance
fee, or the contract provides that the entrance fee may be
used, to pay for care should other resources or income of the
individual be insufficient to pay for such care;
``(B) the individual is eligible for a refund of any
remaining entrance fee when the individual dies or terminates
the continuing care retirement community or life care community
contract and leaves the community; and
``(C) the entrance fee does not confer an ownership
interest in the continuing care retirement community or life
care community.''.

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(a) Requirement To Impose Partial Months of Ineligibility.--Section
1917(c)(1)(E) of the Social Security Act (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 One
Penalty Period.--Section 1917(c)(1) of such Act (42 U.S.C.
1396p(c)(1)), as amended by subsections (b) and (c) of section 6012, is
amended by adding at the end the following:
``(H) Notwithstanding the preceding provisions of this paragraph,
in the case of an individual (or individual's spouse) who makes
multiple fractional transfers of 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) of such Act (42 U.S.C. 1396p(c)(1)), as amended by
subsection (b), is amended by adding at the end the following:
``(I) 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) Inclusion of Transfers To Purchase Life Estates.--Section
1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), as amended by
subsection (c), 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.''.
(e) 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.
Subchapter B--Expanded Access to Certain Benefits

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(a) Expansion Authority.--
(1) In general.--Section 1917(b) of the Social Security Act (42
U.S.C. 1396p(b)) is amended--
(A) in paragraph (1)(C)--
(i) in clause (ii), by inserting ``and which satisfies
clause (iv), or which has a State plan amendment that
provides for a qualified State long-term care insurance
partnership (as defined in clause (iii))'' after ``1993,'';
and
(ii) by adding at the end the following new clauses:
``(iii) For purposes of this paragraph, the term `qualified
State long-term care insurance partnership' means an approved State
plan amendment under this title that provides for the disregard of
any assets or resources in an amount equal to the insurance benefit
payments that are made to or on behalf of an individual who is a
beneficiary under a long-term care insurance policy if the
following requirements are met:
``(I) The policy covers an insured who was a resident of
such State when coverage first became effective under the
policy.
``(II) The policy is a qualified long-term care insurance
policy (as defined in section 7702B(b) of the Internal Revenue
Code of 1986) issued not earlier than the effective date of the
State plan amendment.
``(III) The policy meets the model regulations and the
requirements of the model Act specified in paragraph (5).
``(IV) If the policy is sold to an individual who--
``(aa) has not attained age 61 as of the date of
purchase, the policy provides compound annual inflation
protection;
``(bb) has attained age 61 but has not attained age 76
as of such date, the policy provides some level of
inflation protection; and
``(cc) has attained age 76 as of such date, the policy
may (but is not required to) provide some level of
inflation protection.
``(V) The State Medicaid agency under section 1902(a)(5)
provides information and technical assistance to the State
insurance department on the insurance department's role of
assuring that any individual who sells a long-term care
insurance policy under the partnership receives training and
demonstrates evidence of an understanding of such policies and
how they relate to other public and private coverage of long-
term care.
``(VI) The issuer of the policy provides regular reports to
the Secretary, in accordance with regulations of the Secretary,
that include notification regarding when benefits provided
under the policy have been paid and the amount of such benefits
paid, notification regarding when the policy otherwise
terminates, and such other information as the Secretary
determines may be appropriate to the administration of such
partnerships.
``(VII) The State does not impose any requirement affecting
the terms or benefits of such a policy unless the State imposes
such requirement on long-term care insurance policies without
regard to whether the policy is covered under the partnership
or is offered in connection with such a partnership.
In the case of a long-term care insurance policy which is exchanged
for another such policy, subclause (I) shall be applied based on
the coverage of the first such policy that was exchanged. For
purposes of this clause and paragraph (5), the term `long-term care
insurance policy' includes a certificate issued under a group
insurance contract.
``(iv) With respect to a State which had a State plan amendment
approved as of May 14, 1993, such a State satisfies this clause for
purposes of clause (ii) if the Secretary determines that the State
plan amendment provides for consumer protection standards which are
no less stringent than the consumer protection standards which
applied under such State plan amendment as of December 31, 2005.
``(v) The regulations of the Secretary required under clause
(iii)(VI) shall be promulgated after 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, and 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. The
Secretary, as appropriate, shall provide copies of the reports
provided in accordance with that clause to the State involved.
``(vi) The Secretary, in consultation with other appropriate
Federal agencies, issuers of long-term care insurance, the National
Association of Insurance Commissioners, State insurance
commissioners, States with experience with long-term care insurance
partnership plans, other States, and representatives of consumers
of long-term care insurance policies, shall develop recommendations
for Congress to authorize and fund a uniform minimum data set to be
reported electronically by all issuers of long-term care insurance
policies under qualified State long-term care insurance
partnerships to a secure, centralized electronic query and report-
generating mechanism that the State, the Secretary, and other
Federal agencies can access.''; and
(B) by adding at the end the following:
``(5)(A) For purposes of clause (iii)(III), the model regulations
and the requirements of the model Act specified in this paragraph are:
``(i) In the case of the model regulation, the following
requirements:
``(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 24 (relating to suitability).
``(XVI) Section 25 (relating to prohibition against
preexisting conditions and probationary periods in replacement
policies or certificates).
``(XVII) The provisions of section 26 relating to
contingent nonforfeiture benefits, if the policyholder declines
the offer of a nonforfeiture provision described in paragraph
(4).
``(XVIII) Section 29 (relating to standard format outline
of coverage).
``(XIX) Section 30 (relating to requirement to deliver
shopper's guide).
``(ii) In the case of the model Act, the following:
``(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).
``(IX) Section 7 (relating to incontestability period).
``(B) For purposes of this paragraph and paragraph (1)(C)--
``(i) 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) any provision of the model regulation or model Act
listed under subparagraph (A) shall be treated as including any
other provision of such regulation or Act necessary to implement
the provision; and
``(iii) with respect to a long-term care insurance policy
issued in a State, the policy shall be deemed to meet applicable
requirements of the model regulation or the model Act if the State
plan amendment under paragraph (1)(C)(iii) provides that the State
insurance commissioner for the State certifies (in a manner
satisfactory to the Secretary) that the policy meets such
requirements.
``(C) Not later than 12 months after the National Association of
Insurance Commissioners issues a revision, update, or other
modification of a model regulation or model Act provision specified in
subparagraph (A), or of any provision of such regulation or Act that is
substantively related to a provision specified in such subparagraph,
the Secretary shall review the changes made to the provision, determine
whether incorporating such changes into the corresponding provision
specified in such subparagraph would improve qualified State long-term
care insurance partnerships, and if so, shall incorporate the changes
into such provision.''.
(2) State reporting requirements.--Nothing in clauses (iii)(VI)
and (v) of section 1917(b)(1)(C) of the Social Security Act (as
added by paragraph (1)) 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
qualified State long-term care insurance partnership under section
1917(b)(1)(C)(iii) of such Act) to require the issuer to report
information or data to the State that is in addition to the
information or data required under such clauses.
(3) Effective date.--A State plan amendment that provides for a
qualified State long-term care insurance partnership under the
amendments made by paragraph (1) may provide that such amendment is
effective for long-term care insurance policies issued on or after
a date, specified in the amendment, that is not earlier than the
first day of the first calendar quarter in which the plan amendment
was submitted to the Secretary of Health and Human Services.
(b) Standards for Reciprocal Recognition Among Partnership
States.--In order to permit portability in long-term care insurance
policies purchased under State long-term care insurance partnerships,
the Secretary of Health and Human Services shall develop, not later
than January 1, 2007, and 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, standards for uniform reciprocal
recognition of such policies among States with qualified State long-
term care insurance partnerships under which--
(1) benefits paid under such policies will be treated the same
by all such States; and
(2) States with such partnerships shall be subject to such
standards unless the State notifies the Secretary in writing of the
State's election to be exempt from such standards.
(c) Annual Reports to Congress.--
(1) In general.--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. Nothing in this section shall
be construed as requiring the Secretary to conduct an independent
review of each long-term care insurance policy offered under or in
connection with such a partnership.
(2) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated to the Secretary of
Health and Human Services, $1,000,000 for the period of fiscal
years 2006 through 2010 to carry out paragraph (1).
(d) National Clearinghouse for Long-Term Care Information.--
(1) Establishment.--The Secretary of Health and Human Services
shall establish a National Clearinghouse for Long-Term Care
Information. The Clearinghouse may be established through a
contract or interagency agreement.
(2) Duties.--
(A) In general.--The National Clearinghouse for Long-Term
Care Information shall--
(i) educate consumers with respect to the availability
and limitations of coverage for long-term care under the
Medicaid program and provide contact information for
obtaining State-specific information on long-term care
coverage, including eligibility and estate recovery
requirements under State Medicaid programs;
(ii) provide objective information to assist consumers
with the decisionmaking process for determining whether to
purchase long-term care insurance or to pursue other
private market alternatives for purchasing long-term care
and provide contact information for additional objective
resources on planning for long-term care needs; and
(iii) maintain a list of States with State long-term
care insurance partnerships under the Medicaid program that
provide reciprocal recognition of long-term care insurance
policies issued under such partnerships.
(B) Requirement.--In providing information to consumers on
long-term care in accordance with this subsection, the National
Clearinghouse for Long-Term Care Information shall not advocate
in favor of a specific long-term care insurance provider or a
specific long-term care insurance policy.
(3) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated to carry out this
subsection, $3,000,000 for each of fiscal years 2006 through 2010.
CHAPTER 3--ELIMINATING FRAUD, WASTE, AND ABUSE IN MEDICAID

96f99c348adf1da0034d92972a426bf949b3d535d4f25ca8b7393ade9fb3d87e

(a) In General.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.) is amended by inserting after section 1908A the
following:
``STATE FALSE CLAIMS ACT REQUIREMENTS FOR INCREASED STATE SHARE OF
RECOVERIES
``Sec. 1909. (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.
``(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 6035(e), the
amendments made by this section take effect on January 1, 2007.

8bde2bb3e7d066b6148d7115077319d75998b5c872fd7be2cdb87928a2387c97

(a) In General.--Section 1902(a) of the Social Security Act (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 $5,000,000, as a
condition of receiving such payments, shall--
``(A) establish written policies for all employees of the
entity (including management), and of any contractor or agent
of the entity, that provide detailed information about 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, detailed
provisions regarding the entity's policies and procedures for
detecting and preventing fraud, waste, and abuse; and
``(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.''.
(b) Effective Date.--Except as provided in section 6035(e), the
amendments made by subsection (a) take effect on January 1, 2007.

6329140cad7274b61931787a900967adce91bc725739857981d5c360c628cf2b

DRUGS.
(a) In General.--Section 1903(i)(10) of the Social Security Act (42
U.S.C. 1396b(i)), as amended by section 6002(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 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.

4bdf2e192ab4d3748f988ef5bf295baad51d6999d73926e068dff992f5fe8b57

(a) Establishment of Medicaid Integrity Program.--Title XIX of the
Social Security Act (42 U.S.C. 1396 et seq.) is amended--
(1) by redesignating section 1936 as section 1937; and
(2) by inserting after section 1935 the following:
``MEDICAID INTEGRITY PROGRAM
``Sec. 1936. (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 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 quality of care.
``(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, $5,000,000;
``(B) for each of fiscal years 2007 and 2008, $50,000,000;
and
``(C) for each fiscal year thereafter, $75,000,000.
``(2) Availability.--Amounts appropriated pursuant to paragraph
(1) shall remain available until expended.
``(3) Increase in cms staffing devoted to protecting medicaid
program integrity.--From the amounts appropriated under paragraph
(1), the Secretary shall increase by 100 the number of full-time
equivalent employees whose duties consist solely of protecting the
integrity of the Medicaid program established under this section by
providing effective support and assistance to States to combat
provider fraud and abuse.
``(4) 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.''.
(b) State Requirement To Cooperate With Integrity Program
Efforts.--Section 1902(a) of such Act (42 U.S.C. 1396a(a)), as amended
by section 6033(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.''.
(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) National Expansion of the Medicare-Medicaid (Medi-Medi) Data
Match Pilot Program.--
(1) Requirement of the medicare integrity program.--Section
1893 of the Social Security Act (42 U.S.C. 1395ddd) is amended--
(A) in subsection (b), by adding at the end the following:
``(6) The Medicare-Medicaid Data Match Program in accordance
with subsection (g).''; and
(B) by adding at the end the following:
``(g) Medicare-Medicaid Data Match Program.--
``(1) Expansion of program.--
``(A) In general.--The Secretary shall enter into contracts
with eligible entities for the purpose of ensuring that,
beginning with 2006, the Medicare-Medicaid Data Match Program
(commonly referred to as the `Medi-Medi Program') is conducted
with respect to the program established under this title and
State Medicaid programs under title XIX for the purpose of--
``(i) identifying program vulnerabilities in the
program established under this title and the Medicaid
program established under title XIX through the use of
computer algorithms to look for payment anomalies
(including billing or billing patterns identified with
respect to service, time, or patient that appear to be
suspect or otherwise implausible);
``(ii) working with States, the Attorney General, and
the Inspector General of the Department of Health and Human
Services to coordinate appropriate actions to protect the
Federal and State share of expenditures under the Medicaid
program under title XIX, as well as the program established
under this title; and
``(iii) increasing the effectiveness and efficiency of
both such programs through cost avoidance, savings, and
recoupments of fraudulent, wasteful, or abusive
expenditures.
``(B) Reporting requirements.--The Secretary shall make
available in a timely manner any data and statistical
information collected by the Medi-Medi Program to the Attorney
General, the Director of the Federal Bureau of Investigation,
the Inspector General of the Department of Health and Human
Services, and the States (including a Medicaid fraud and abuse
control unit described in section 1903(q)). Such information
shall be disseminated no less frequently than quarterly.
``(2) Limited waiver authority.--The Secretary shall waive only
such requirements of this section and of titles XI and XIX as are
necessary to carry out paragraph (1).''.
(2) Funding.--Section 1817(k)(4) of such Act (42 U.S.C.
1395i(k)(4)), as amended by section 5204 of this Act, is amended--
(A) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B), (C), and (D)''; and
(B) by adding at the end the following:
``(D) Expansion of the medicare-medicaid data match
program.--The amount appropriated under subparagraph (A) for a
fiscal year is further increased as follows for purposes of
carrying out section 1893(b)(6) for the respective fiscal year:
``(i) $12,000,000 for fiscal year 2006.
``(ii) $24,000,000 for fiscal year 2007.
``(iii) $36,000,000 for fiscal year 2008.
``(iv) $48,000,000 for fiscal year 2009.
``(v) $60,000,000 for fiscal year 2010 and each fiscal
year thereafter.''.
(e) Delayed Effective Date for Chapter.--Except as otherwise
provided in this 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.

57de98397ff0438ff3155b4a7bc34f4facd8e8ef29033df7ab85b0bf8dce17d9

(a) Clarification of Third Parties Legally Responsible for Payment
of a Claim for a Health Care Item or Service.--Section 1902(a)(25) of
the Social Security Act (42 U.S.C. 1396a(a)(25)) is amended--
(1) in subparagraph (A), in the matter preceding clause (i)--
(A) by inserting ``, self-insured plans'' after ``health
insurers''; and
(B) by striking ``and health maintenance organizations''
and inserting ``managed care 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 managed care 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) of such Act
(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, managed
care 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, with respect to individuals who are
eligible for, or are provided, medical assistance under the
State plan, upon the request of the State, information to
determine during what period the individual or their
spouses or their dependents may be (or may have been)
covered by a health insurer and the nature of the coverage
that is or was provided by the health insurer (including
the name, address, and identifying number of the plan) in a
manner prescribed by the Secretary;
``(ii) accept the State's right of recovery and the
assignment to the State of 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 that
is 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,
the type or format of the claim form, or a failure to
present proper documentation at the point-of-sale that is
the basis of the claim, if--
``(I) the claim is submitted by the State within
the 3-year period beginning on the date on which the
item or service was furnished; and
``(II) any action by the State to enforce its
rights with respect to such claim is commenced within 6
years of the State's submission of such claim;''.
(c) Effective Date.--Except as provided in section 6035(e), the
amendments made by this section take effect on January 1, 2006.

a04e12521fe953ff8b1be798c0ab7a45916ab0662e34c8e897854f769ed00eef

(a) In General.--Section 1903 of the Social Security Act (42 U.S.C.
1396b) is amended--
(1) in subsection (i), as amended by section 104 of Public Law
109-91--
(A) by striking ``or'' at the end of paragraph (20);
(B) by striking the period at the end of paragraph (21) and
inserting ``; or''; and
(C) by inserting after paragraph (21) the following new
paragraph:
``(22) with respect to amounts expended for medical assistance
for an individual who declares under section 1137(d)(1)(A) to be a
citizen or national of the United States for purposes of
establishing eligibility for benefits under this title, unless the
requirement of subsection (x) is met.''; and
(2) by adding at the end the following new subsection:
``(x)(1) For purposes of subsection (i)(23), the requirement of
this subsection is, with respect to an individual declaring to be a
citizen or national of the United States, that, subject to paragraph
(2), there is presented satisfactory documentary evidence of
citizenship or nationality (as defined in paragraph (3)) of the
individual.
``(2) The requirement of paragraph (1) shall not apply to an alien
who is eligible for medical assistance under this title--
``(A) and is entitled to or enrolled for benefits under any
part of title XVIII;
``(B) on the basis of receiving supplemental security income
benefits under title XVI; or
``(C) on such other basis as the Secretary may specify under
which satisfactory documentary evidence of citizenship or
nationality had been previously presented.
``(3)(A) For purposes of this subsection, the term `satisfactory
documentary evidence of citizenship or nationality' means--
``(i) any document described in subparagraph (B); or
``(ii) a document described in subparagraph (C) and a document
described in subparagraph (D).
``(B) The following are documents described in this subparagraph:
``(i) A United States passport.
``(ii) Form N-550 or N-570 (Certificate of Naturalization).
``(iii) Form N-560 or N-561 (Certificate of United States
Citizenship).
``(iv) A valid State-issued driver's license or other identity
document described in section 274A(b)(1)(D) of the Immigration and
Nationality Act, but only if the State issuing the license or such
document requires proof of United States citizenship before
issuance of such license or document or obtains a social security
number from the applicant and verifies before certification that
such number is valid and assigned to the applicant who is a
citizen.
``(v) Such other document as the Secretary may specify, by
regulation, that provides proof of United States citizenship or
nationality and that provides a reliable means of documentation of
personal identity.
``(C) The following are documents described in this subparagraph:
``(i) A certificate of birth in the United States.
``(ii) Form FS-545 or Form DS-1350 (Certification of Birth
Abroad).
``(iii) Form I-97 (United States Citizen Identification Card).
``(iv) Form FS-240 (Report of Birth Abroad of a Citizen of the
United States).
``(v) Such other document (not described in subparagraph
(B)(iv)) as the Secretary may specify that provides proof of United
States citizenship or nationality.
``(D) The following are documents described in this subparagraph:
``(i) Any identity document described in section 274A(b)(1)(D)
of the Immigration and Nationality Act.
``(ii) Any other documentation of personal identity of such
other type as the Secretary finds, by regulation, provides a
reliable means of identification.
``(E) A reference in this paragraph to a form includes a reference
to any successor form.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to determinations of initial eligibility for medical assistance
made on or after July 1, 2006, and to redeterminations of eligibility
made on or after such date in the case of individuals for whom the
requirement of section 1903(z) of the Social Security Act, as added by
such amendments, was not previously met.
(c) Implementation Requirement.--As soon as practicable after the
date of enactment of this Act, the Secretary of Health and Human
Services shall establish an outreach program that is designed to
educate individuals who are likely to be affected by the requirements
of subsections (i)(23) and (x) of section 1903 of the Social Security
Act (as added by subsection (a)) about such requirements and how they
may be satisfied.
CHAPTER 4--FLEXIBILITY IN COST SHARING AND BENEFITS

b987e89f398fef07c14c7f8e6e905ea2ebe65fb4c779b3d7ac7fef6336082031

SHARING.
(a) In General.--Title XIX of the Social Security Act is amended by
inserting after section 1916 the following new section:
``State option for alternative premiums and cost sharing
``Sec. 1916A. (a) State Flexibility.--
``(1) In general.--Notwithstanding sections 1916 and
1902(a)(10)(B), a State, at its option and through a State plan
amendment, may impose premiums and cost sharing for any group of
individuals (as specified by the State) and for any type of
services (other than drugs for which cost sharing may be imposed
under subsection (c)), and may vary such premiums and cost sharing
among such groups or types, consistent with the limitations
established under this section. Nothing in this section shall be
construed as superseding (or preventing the application of) section
1916(g).
``(2) Definitions.--In this section:
``(A) Premium.--The term `premium' includes any enrollment
fee or similar charge.
``(B) Cost sharing.--The term `cost sharing' includes any
deduction, copayment, or similar charge.
``(b) Limitations on Exercise of Authority.--
``(1) Individuals with family income between 100 and 150
percent of the poverty line.--In the case of an individual whose
family income exceeds 100 percent, but does not exceed 150 percent,
of the poverty line applicable to a family of the size involved,
subject to subsections (c)(2) and (e)(2)(A)--
``(A) no premium may be imposed under the plan; and
``(B) with respect to cost sharing--
``(i) the cost sharing imposed under subsection (a)
with respect to any item or service may not exceed 10
percent of the cost of such item or service; and
``(ii) the total aggregate amount of cost sharing
imposed under this section (including any cost sharing
imposed under subsection (c) or (e)) for all individuals in
the family may not exceed 5 percent of the family income of
the family involved, as applied on a quarterly or monthly
basis (as specified by the State).
``(2) Individuals with family income above 150 percent of the
poverty line.--In the case of an individual whose family income
exceeds 150 percent of the poverty line applicable to a family of
the size involved, subject to subsections (c)(2) and (e)(2)(A)--
``(A) the total aggregate amount of premiums and cost
sharing imposed under this section (including any cost sharing
imposed under subsection (c) or (e)) for all individuals in the
family may not exceed 5 percent of the family income of the
family involved, as applied on a quarterly or monthly basis (as
specified by the State); and
``(B) with respect to cost sharing, the cost sharing
imposed with respect to any item or service under subsection
(a) may not exceed 20 percent of the cost of such item or
service.
``(3) Additional limitations.--
``(A) Premiums.--No premiums shall be imposed under this
section with respect to the following:
``(i) Individuals under 18 years of age that are
required to be provided medical assistance under section
1902(a)(10)(A)(i), and including individuals with respect
to whom aid or assistance is made available under part B of
title IV to children in foster care and individuals with
respect to whom adoption or foster care assistance is made
available under part E of such title, without regard to
age.
``(ii) Pregnant women.
``(iii) Any terminally ill individual who is receiving
hospice care (as defined in section 1905(o)).
``(iv) Any individual who is an inpatient in a
hospital, nursing facility, intermediate care facility for
the mentally retarded, or other medical institution, if
such individual is required, as a condition of receiving
services in such institution under the State plan, to spend
for costs of medical care all but a minimal amount of the
individual's income required for personal needs.
``(v) Women who are receiving medical assistance by
virtue of the application of sections
1902(a)(10)(A)(ii)(XVIII) and 1902(aa).
``(B) Cost sharing.--Subject to the succeeding provisions
of this section, no cost sharing shall be imposed under
subsection (a) with respect to the following:
``(i) Services furnished to individuals under 18 years
of age that are required to be provided medical assistance
under section 1902(a)(10)(A)(i), and including services
furnished to individuals with respect to whom aid or
assistance is made available under part B of title IV to
children in foster care and individuals with respect to
whom adoption or foster care assistance is made available
under part E of such title, without regard to age.
``(ii) Preventive services (such as well baby and well
child care and immunizations) provided to children under 18
years of age regardless of family income.
``(iii) Services furnished to pregnant women, if such
services relate to the pregnancy or to any other medical
condition which may complicate the pregnancy.
``(iv) Services furnished to a terminally ill
individual who is receiving hospice care (as defined in
section 1905(o)).
``(v) Services furnished to any individual who is an
inpatient in a hospital, nursing facility, intermediate
care facility for the mentally retarded, or other medical
institution, if such individual is required, as a condition
of receiving services in such institution under the State
plan, to spend for costs of medical care all but a minimal
amount of the individual's income required for personal
needs.
``(vi) Emergency services (as defined by the Secretary
for purposes of section 1916(a)(2)(D)).
``(vii) Family planning services and supplies described
in section 1905(a)(4)(C).
``(viii) Services furnished to women who are receiving
medical assistance by virtue of the application of sections
1902(a)(10)(A)(ii)(XVIII) and 1902(aa).
``(C) Construction.--Nothing in this paragraph shall be
construed as preventing a State from exempting additional
classes of individuals from premiums under this section or from
exempting additional individuals or services from cost sharing
under subsection (a).
``(4) Determinations of family income.--In applying this
subsection, family income shall be determined in a manner specified
by the State for purposes of this subsection, including the use of
such disregards as the State may provide. Family income shall be
determined for such period and at such periodicity as the State may
provide under this title.
``(5) Poverty line defined.--For purposes of this section, the
term `poverty line' has the meaning given such term in section
673(2) of the Community Services Block Grant Act (42 U.S.C.
9902(2)), including any revision required by such section.
``(6) Construction.--Nothing in this section shall be
construed--
``(A) as preventing a State from further limiting the
premiums and cost sharing imposed under this section beyond the
limitations provided under this section;
``(B) as affecting the authority of the Secretary through
waiver to modify limitations on premiums and cost sharing under
this section; or
``(C) as affecting any such waiver of requirements in
effect under this title before the date of the enactment of
this section with regard to the imposition of premiums and cost
sharing.
``(d) Enforceability of Premiums and Other Cost Sharing.--
``(1) Premiums.--Notwithstanding section 1916(c)(3) and section
1902(a)(10)(B), a State may, at its option, condition the provision
of medical assistance for an individual upon prepayment of a
premium authorized to be imposed under this section, or may
terminate eligibility for such medical assistance on the basis of
failure to pay such a premium but shall not terminate eligibility
of an individual for medical assistance under this title on the
basis of failure to pay any such premium until such failure
continues for a period of not less than 60 days. A State may apply
the previous sentence for some or all groups of beneficiaries as
specified by the State and may waive payment of any such premium in
any case where the State determines that requiring such payment
would create an undue hardship.
``(2) Cost sharing.--Notwithstanding section 1916(e) or any
other provision of law, a State may permit a provider participating
under the State plan to require, as a condition for the provision
of care, items, or services to an individual entitled to medical
assistance under this title for such care, items, or services, the
payment of any cost sharing authorized to be imposed under this
section with respect to such care, items, or services. Nothing in
this paragraph shall be construed as preventing a provider from
reducing or waiving the application of such cost sharing on a case-
by-case basis.''.
(b) Indexing Nominal Cost Sharing and Conforming Amendment.--
Section 1916 of such Act (42 U.S.C. 1396o) is amended--
(1) in subsection (f), by inserting ``and section 1916A'' after
``(b)(3)''; and
(2) by adding at the end the following new subsection:
``(h) In applying this section and subsections (c) and (e) of
section 1916A, with respect to cost sharing that is `nominal' in
amount, the Secretary shall increase such `nominal' amounts for each
year (beginning with 2006) by the annual percentage increase in the
medical care component of the consumer price index for all urban
consumers (U.S. city average) as rounded up in an appropriate
manner.''.
(c) Effective Date.--The amendments made by this section shall
apply to cost sharing imposed for items and services furnished on or
after March 31, 2006.

2d9f8c09574b2f1376fc6e3a9927bb8e0a9e3b860ebc132b0c88ef09172377a2

(a) In General.--Section 1916A of the Social Security Act, as
inserted by section 6041(a), is amended by inserting after subsection
(b) the following new subsection:
``(c) Special Rules for Cost Sharing for Prescription Drugs.--
``(1) In general.--In order to encourage beneficiaries to use
drugs (in this subsection referred to as `preferred drugs')
identified by the State as the least (or less) costly effective
prescription drugs within a class of drugs (as defined by the
State), with respect to one or more groups of beneficiaries
specified by the State, subject to paragraph (2), the State may--
``(A) provide cost sharing (instead of the level of cost
sharing otherwise permitted under section 1916, but subject to
paragraphs (2) and (3)) with respect to drugs that are not
preferred drugs within a class; and
``(B) waive or reduce the cost sharing otherwise applicable
for preferred drugs within such class and shall not apply any
such cost sharing for such preferred drugs for individuals for
whom cost sharing may not otherwise be imposed under subsection
(b)(3)(B).
``(2) Limitations.--
``(A) By income group.--In no case may the cost sharing
under paragraph (1)(A) with respect to a non-preferred drug
exceed--
``(i) in the case of an individual whose family income
does not exceed 150 percent of the poverty line applicable
to a family of the size involved, the amount of nominal
cost sharing (as otherwise determined under section 1916);
or
``(ii) in the case of an individual whose family income
exceeds 150 percent of the poverty line applicable to a
family of the size involved, 20 percent of the cost of the
drug.
``(B) Limitation to nominal for exempt populations.--In the
case of an individual who is otherwise not subject to cost
sharing due to the application of subsection (b)(3)(B), any
cost sharing under paragraph (1)(A) with respect to a non-
preferred drug may not exceed a nominal amount (as otherwise
determined under section 1916).
``(C) Continued application of aggregate cap.--In addition
to the limitations imposed under subparagraphs (A) and (B), any
cost sharing under paragraph (1)(A) continues to be subject to
the aggregate cap on cost sharing applied under paragraph (1)
or (2) of subsection (b), as the case may be.
``(3) Waiver.--In carrying out paragraph (1), a State shall
provide for the application of cost sharing levels applicable to a
preferred drug in the case of a drug that is not a preferred drug
if the prescribing physician determines that the preferred drug for
treatment of the same condition either would not be as effective
for the individual or would have adverse effects for the individual
or both.
``(4) Exclusion authority.--Nothing in this subsection shall be
construed as preventing a State from excluding specified drugs or
classes of drugs from the application of paragraph (1).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to cost sharing imposed for items and services furnished on or
after March 31, 2006.

c040d4255795327b34f2568da683383c156b75a2c3d40a613052f98156ae886b

(a) In General.--Section 1916A of the Social Security Act, as
inserted by section 6041 and as amended by section 6042, is further
amended by adding at the end the following new subsection:
``(e) State Option for Permitting Hospitals To Impose Cost Sharing
for Non-Emergency Care Furnished in an Emergency Department.--
``(1) In general.--Notwithstanding section 1916 and section
1902(a)(1) or the previous provisions of this section, but subject
to the limitations of paragraph (2), a State may, by amendment to
its State plan under this title, permit a hospital to impose cost
sharing for non-emergency services furnished to an individual
(within one or more groups of individuals specified by the State)
in the hospital emergency department under this subsection if the
following conditions are met:
``(A) Access to non-emergency room provider.--The
individual has actually available and accessible (as such terms
are applied by the Secretary under section 1916(b)(3)) an
alternate non-emergency services provider with respect to such
services.
``(B) Notice.--The hospital must inform the beneficiary
after receiving an appropriate medical screening examination
under section 1867 and after a determination has been made that
the individual does not have an emergency medical condition,
but before providing the non-emergency services, of the
following:
``(i) The hospital may require the payment of the State
specified cost sharing before the service can be provided.
``(ii) The name and location of an alternate non-
emergency services provider (described in subparagraph (A))
that is actually available and accessible (as described in
such subparagraph).
``(iii) The fact that such alternate provider can
provide the services without the imposition of cost sharing
described in clause (i).
``(iv) The hospital provides a referral to coordinate
scheduling of this treatment.
Nothing in this subsection shall be construed as preventing a
State from applying (or waiving) cost sharing otherwise
permissible under this section to services described in clause
(iii).
``(2) Limitations.--
``(A) For poorest beneficiaries.--In the case of an
individual described in subsection (b)(1), the cost sharing
imposed under this subsection may not exceed twice the amount
determined to be nominal under section 1916, subject to the
percent of income limitation otherwise applicable under
subsection (b)(1).
``(B) Application to exempt populations.--In the case of an
individual who is otherwise not subject to cost sharing under
subsection (b)(3), a State may impose cost sharing under
paragraph (1) for care in an amount that does not exceed a
nominal amount (as otherwise determined under section 1916) so
long as no cost sharing is imposed to receive such care through
an outpatient department or other alternative health care
provider in the geographic area of the hospital emergency
department involved.
``(C) Continued application of aggregate cap; relation to
other cost sharing.--In addition to the limitations imposed
under subparagraphs (A) and (B), any cost sharing under
paragraph (1) is subject to the aggregate cap on cost sharing
applied under paragraph (1) or (2) of subsection (b), as the
case may be. Cost sharing imposed for services under this
subsection shall be instead of any cost sharing that may be
imposed for such services under subsection (a).
``(3) Construction.--Nothing in this section shall be
construed--
``(A) to limit a hospital's obligations with respect to
screening and stabilizing treatment of an emergency medical
condition under section 1867; or
``(B) to modify any obligations under either State or
Federal standards relating to the application of a prudent-
layperson standard with respect to payment or coverage of
emergency services by any managed care organization.
``(4) Definitions.--For purposes of this subsection:
``(A) Non-emergency services.--The term `non-emergency
services' means any care or services furnished in an emergency
department of a hospital that the physician determines do not
constitute an appropriate medical screening examination or
stabilizing examination and treatment required to be provided
by the hospital under section 1867.
``(B) Alternate non-emergency services provider.--The term
`alternative non-emergency services provider' means, with
respect to non-emergency services for the diagnosis or
treatment of a condition, a health care provider, such as a
physician's office, health care clinic, community health
center, hospital outpatient department, or similar health care
provider, that can provide clinically appropriate services for
the diagnosis or treatment of a condition contemporaneously
with the provision of the non-emergency services that would be
provided in an emergency department of a hospital for the
diagnosis or treatment of a condition, and that is
participating in the program under this title.''.
(b) Grant Funds for Establishment of Alternate Non-Emergency
Services Providers.--Section 1903 of the Social Security Act (42 U.S.C.
1396b), as amended by section 6037(a)(2), is amended by adding at the
end the following new subsection:
``(y) Payments for Establishment of Alternate Non-Emergency
Services Providers.--
``(1) Payments.--In addition to the payments otherwise provided
under subsection (a), subject to paragraph (2), the Secretary shall
provide for payments to States under such subsection for the
establishment of alternate non-emergency service providers (as
defined in section 1916A(e)(5)(B)), or networks of such providers.
``(2) Limitation.--The total amount of payments under this
subsection shall not exceed $50,000,000 during the 4-year period
beginning with 2006. This subsection constitutes budget authority
in advance of appropriations Acts and represents the obligation of
the Secretary to provide for the payment of amounts provided under
this subsection.
``(3) Preference.--In providing for payments to States under
this subsection, the Secretary shall provide preference to States
that establish, or provide for, alternate non-emergency services
providers or networks of such providers that--
``(A) serve rural or underserved areas where beneficiaries
under this title may not have regular access to providers of
primary care services; or
``(B) are in partnership with local community hospitals.
``(4) Form and manner of payment.--Payment to a State under
this subsection shall be made only upon the filing of such
application in such form and in such manner as the Secretary shall
specify. Payment to a State under this subsection shall be made in
the same manner as other payments under section 1903(a).''.
(c) Effective Date.--The amendments made by this section shall
apply to non-emergency services furnished on or after January 1, 2007.

6cd5441ba050cd170a516e55d292681fd7203430d506167e00b1d6a4723d12af

(a) In General.--Title XIX of the Social Security Act, as amended
by section 6035, is amended by redesignating section 1937 as section
1938 and by inserting after section 1936 the following new section:
``State flexibility in benefit packages
``Sec. 1937. (a) State Option of Providing Benchmark Benefits.--
``(1) Authority.--
``(A) In general.--Notwithstanding any other provision of
this title, a State, at its option as a State plan amendment,
may provide for medical assistance under this title to
individuals within one or more groups of individuals specified
by the State through enrollment in coverage that provides--
``(i) benchmark coverage described in subsection (b)(1)
or benchmark equivalent coverage described in subsection
(b)(2); and
``(ii) for any child under 19 years of age who is
covered under the State plan under section 1902(a)(10)(A),
wrap-around benefits to the benchmark coverage or benchmark
equivalent coverage consisting of early and periodic
screening, diagnostic, and treatment services defined in
section 1905(r).
``(B) Limitation.--The State may only exercise the option
under subparagraph (A) for an individual eligible under an
eligibility category that had been established under the State
plan on or before the date of the enactment of this section.
``(C) Option of wrap-around benefits.--In the case of
coverage described in subparagraph (A), a State, at its option,
may provide such wrap-around or additional benefits as the
State may specify.
``(D) Treatment as medical assistance.--Payment of premiums
for such coverage under this subsection shall be treated as
payment of other insurance premiums described in the third
sentence of section 1905(a).
``(2) Application.--
``(A) In general.--Except as provided in subparagraph (B),
a State may require that a full-benefit eligible individual (as
defined in subparagraph (C)) within a group obtain benefits
under this title through enrollment in coverage described in
paragraph (1)(A). A State may apply the previous sentence to
individuals within 1 or more groups of such individuals.
``(B) Limitation on application.--A State may not require
under subparagraph (A) an individual to obtain benefits through
enrollment described in paragraph (1)(A) if the individual is
within one of the following categories of individuals:
``(i) Mandatory pregnant women.--The individual is a
pregnant woman who is required to be covered under the
State plan under section 1902(a)(10)(A)(i).
``(ii) Blind or disabled individuals.--The individual
qualifies for medical assistance under the State plan on
the basis of being blind or disabled (or being treated as
being blind or disabled) without regard to whether the
individual is eligible for supplemental security income
benefits under title XVI on the basis of being blind or
disabled and including an individual who is eligible for
medical assistance on the basis of section 1902(e)(3).
``(iii) Dual eligibles.--The individual is entitled to
benefits under any part of title XVIII.
``(iv) Terminally ill hospice patients.--The individual
is terminally ill and is receiving benefits for hospice
care under this title.
``(v) Eligible on basis of institutionalization.--The
individual is an inpatient in a hospital, nursing facility,
intermediate care facility for the mentally retarded, or
other medical institution, and is required, as a condition
of receiving services in such institution under the State
plan, to spend for costs of medical care all but a minimal
amount of the individual's income required for personal
needs.
``(vi) Medically frail and special medical needs
individuals.--The individual is medically frail or
otherwise an individual with special medical needs (as
identified in accordance with regulations of the
Secretary).
``(vii) Beneficiaries qualifying for long-term care
services.--The individual qualifies based on medical
condition for medical assistance for long-term care
services described in section 1917(c)(1)(C).
``(viii) Children in foster care receiving child
welfare services and children receiving foster care or
adoption assistance.--The individual is an individual with
respect to whom aid or assistance is made available under
part B of title IV to children in foster care and
individuals with respect to whom adoption or foster care
assistance is made available under part E of such title,
without regard to age.
``(ix) TANF and section 1931 parents.--The individual
qualifies for medical assistance on the basis of
eligibility to receive assistance under a State plan funded
under part A of title IV (as in effect on or after the
welfare reform effective date defined in section 1931(i)).
``(x) Women in the breast or cervical cancer program.--
The individual is a woman who is receiving medical
assistance by virtue of the application of sections
1902(a)(10)(A)(ii)(XVIII) and 1902(aa).
``(xi) Limited services beneficiaries.--The
individual--
``(I) qualifies for medical assistance on the basis
of section 1902(a)(10)(A)(ii)(XII); or
``(II) is not a qualified alien (as defined in
section 431 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996) and receives
care and services necessary for the treatment of an
emergency medical condition in accordance with section
1903(v).
``(C) Full-benefit eligible individuals.--
``(i) In general.--For purposes of this paragraph,
subject to clause (ii), the term `full-benefit eligible
individual' means for a State for a month an individual who
is determined eligible by the State for medical assistance
for all services defined in section 1905(a) which are
covered under the State plan under this title for such
month under section 1902(a)(10)(A) or under any other
category of eligibility for medical assistance for all such
services under this title, as determined by the Secretary.
``(ii) Exclusion of medically needy and spend-down
populations.--Such term shall not include an individual
determined to be eligible by the State for medical
assistance under section 1902(a)(10)(C) or by reason of
section 1902(f) or otherwise eligible based on a reduction
of income based on costs incurred for medical or other
remedial care.
``(b) Benchmark Benefit Packages.--
``(1) In general.--For purposes of subsection (a)(1), each of
the following coverages shall be considered to be benchmark
coverage:
``(A) FEHBP-equivalent health insurance coverage.--The
standard Blue Cross/Blue Shield preferred provider option
service benefit plan, described in and offered under section
8903(1) of title 5, United States Code.
``(B) State employee coverage.--A health benefits coverage
plan that is offered and generally available to State employees
in the State involved.
``(C) Coverage offered through hmo.--The health insurance
coverage plan that--
``(i) is offered by a health maintenance organization
(as defined in section 2791(b)(3) of the Public Health
Service Act), and
``(ii) has the largest insured commercial, non-medicaid
enrollment of covered lives of such coverage plans offered
by such a health maintenance organization in the State
involved.
``(D) Secretary-approved coverage.--Any other health
benefits coverage that the Secretary determines, upon
application by a State, provides appropriate coverage for the
population proposed to be provided such coverage.
``(2) Benchmark-equivalent coverage.--For purposes of
subsection (a)(1), coverage that meets the following requirement
shall be considered to be benchmark-equivalent coverage:
``(A) Inclusion of basic services.--The coverage includes
benefits for items and services within each of the following
categories of basic services:
``(i) Inpatient and outpatient hospital services.
``(ii) Physicians' surgical and medical services.
``(iii) Laboratory and x-ray services.
``(iv) Well-baby and well-child care, including age-
appropriate immunizations.
``(v) Other appropriate preventive services, as
designated by the Secretary.
``(B) Aggregate actuarial value equivalent to benchmark
package.--The coverage has an aggregate actuarial value that is
at least actuarially equivalent to one of the benchmark benefit
packages described in paragraph (1).
``(C) Substantial actuarial value for additional services
included in benchmark package.--With respect to each of the
following categories of additional services for which coverage
is provided under the benchmark benefit package used under
subparagraph (B), the coverage has an actuarial value that is
equal to at least 75 percent of the actuarial value of the
coverage of that category of services in such package:
``(i) Coverage of prescription drugs.
``(ii) Mental health services.
``(iii) Vision services.
``(iv) Hearing services.
``(3) Determination of actuarial value.--The actuarial value of
coverage of benchmark benefit packages shall be set forth in an
actuarial opinion in an actuarial report that has been prepared--
``(A) by an individual who is a member of the American
Academy of Actuaries;
``(B) using generally accepted actuarial principles and
methodologies;
``(C) using a standardized set of utilization and price
factors;
``(D) using a standardized population that is
representative of the population involved;
``(E) applying the same principles and factors in comparing
the value of different coverage (or categories of services);
``(F) without taking into account any differences in
coverage based on the method of delivery or means of cost
control or utilization used; and
``(G) taking into account the ability of a State to reduce
benefits by taking into account the increase in actuarial value
of benefits coverage offered under this title that results from
the limitations on cost sharing under such coverage.
The actuary preparing the opinion shall select and specify in the
memorandum the standardized set and population to be used under
subparagraphs (C) and (D).
``(4) Coverage of rural health clinic and fqhc services.--
Notwithstanding the previous provisions of this section, a State
may not provide for medical assistance through enrollment of an
individual with benchmark coverage or benchmark equivalent coverage
under this section unless--
``(A) the individual has access, through such coverage or
otherwise, to services described in subparagraphs (B) and (C)
of section 1905(a)(2); and
``(B) payment for such services is made in accordance with
the requirements of section 1902(bb).''.
(b) Effective Date.--The amendment made by subsection (a) takes
effect on March 31, 2006.
CHAPTER 5--STATE FINANCING UNDER MEDICAID

757f147985b0c9bfa4f9eceb34886cbcb68e1f47d7652136f00017d5b5799f99

(a) In General.--Section 1903(w)(7)(A)(viii) of the Social Security
Act (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.--Subject to paragraph (2), the amendment made
by subsection (a) shall be effective as of the date of the
enactment of this Act.
(2) Delay in effective date.--
(A) In general.--Subject to subparagraph (B), in the case
of a State specified in subparagraph (B), the amendment made by
subsection (a) shall be effective as of October 1, 2009.
(B) Specified states.--For purposes of subparagraph (A),
the States specified in this subparagraph are States that have
enacted a law providing for a tax on the services of a Medicaid
managed care organization with a contract under section 1903(m)
of the Social Security Act as of December 8, 2005.
(c) Clarification Regarding Non-Regulation of Transfers.--
(1) In general.--Nothing in section 1903(w) of the Social
Security Act (42 U.S.C. 1396b(w)) shall be construed by the
Secretary of Health and Human Services as prohibiting a State's use
of funds as the non-Federal share of expenditures under title XIX
of such Act where such funds are transferred from or certified by a
publicly-owned regional medical center located in another State and
described in paragraph (2), so long as the Secretary determines
that such use of funds is proper and in the interest of the program
under title XIX.
(2) Center described.--A center described in this paragraph is
a publicly-owned regional medical center that--
(A) provides level 1 trauma and burn care services;
(B) provides level 3 neonatal care services;
(C) is obligated to serve all patients, regardless of State
of origin;
(D) is located within a Standard Metropolitan Statistical
Area (SMSA) that includes at least 3 States, including the
States described in paragraph (1);
(E) serves as a tertiary care provider for patients
residing within a 125-mile radius; and
(F) meets the criteria for a disproportionate share
hospital under section 1923 of such Act in at least one State
other than the one in which the center is located.
(3) Effective period.--This subsection shall apply through
December 31, 2006.

d2336ae55ccb185e682e60b10869f39e1c2d576811571b107a46cfa80ef20dc8

(a) In General.--Section 1915(g) of the Social Security Act (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.
``(5) Nothing in this subsection shall be construed as affecting
the application of rules with respect to third party liability under
programs, or activities carried out under title XXVI of the Public
Health Service Act or by the Indian Health Service.''.
(b) Regulations.--The Secretary shall promulgate regulations to
carry out the amendment made by subsection (a) which may be effective
and final immediately on an interim basis as of the date of publication
of the interim final regulation. If the Secretary provides for an
interim final regulation, the Secretary shall provide for a period of
public comments on such regulation after the date of publication. The
Secretary may change or revise such regulation after completion of the
period of public comment.
(c) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2006.

4732c3174f5c7a876074a4416b1c2623fd3d63e7269ebf3049df6950de83641a

(a) Hold Harmless for Certain Decrease.--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 the State specified in
section 4725(a) of Public Law 105-33 for fiscal year 2006 or fiscal
year 2007 is less than the Federal medical assistance percentage
determined for such State for fiscal year 2005, the Federal medical
assistance percentage determined for such State for fiscal year 2005
shall be substituted for the Federal medical assistance percentage
otherwise determined for such State for fiscal year 2006 or fiscal year
2007, as the case may be.
(b) Hold Harmless for Katrina Impact.--Notwithstanding any other
provision of law, for purposes of titles XIX and XXI of the Social
Security Act, the Secretary of Health and Human Services, in computing
the Federal medical assistance percentage under section 1905(b) of such
Act (42 U.S.C. 1396d(b)) for any year after 2006 for a State that the
Secretary determines has a significant number of evacuees who were
evacuated to, and live in, the State as a result of Hurricane Katrina
as of October 1, 2005, shall disregard such evacuees (and income
attributable to such evacuees) from such computation.

c673881a1555555bb34eb85eff806c7097c3b0c522ae0b456cf7b22b41220960

(a) In General.--For purposes of determining the DSH allotment for
the District of Columbia under section 1923 of the Social Security Act
(42 U.S.C. 1396r-4) for fiscal year 2006 and each subsequent fiscal
year, the table in subsection (f)(2) of such section is amended under
each of the columns for fiscal year 2000, fiscal year 2001, and fiscal
year 2002, 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 only apply to
disproportionate share hospital adjustment expenditures applicable to
fiscal year 2006 and subsequent fiscal years made on or after that
date.

2d475a85bd92991a8b16db80aed6d337a9810eb418e545775039fb0a5a0fb21e

Section 1108(g) of the Social Security Act (42 U.S.C. 1308(g)) is
amended--
(1) in paragraph (2), by inserting ``and subject to paragraph
(3)'' after ``subsection (f)''; and
(2) by adding at the end the following new paragraph:
``(3) Fiscal years 2006 and 2007 for certain insular areas.--
The amounts otherwise determined under this subsection for Puerto
Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and
American Samoa for fiscal year 2006 and fiscal year 2007 shall be
increased by the following amounts:
``(A) For Puerto Rico, $12,000,000 for fiscal year 2006 and
$12,000,000 for fiscal year 2007.
``(B) For the Virgin Islands, $2,500,000 for fiscal year
2006 and $5,000,000 for fiscal year 2007.
``(C) For Guam, $2,500,000 for fiscal year 2006 and
$5,000,000 for fiscal year 2007.
``(D) For the Northern Mariana Islands, $1,000,000 for
fiscal year 2006 and $2,000,000 for fiscal year 2007.
``(E) For American Samoa, $2,000,000 for fiscal year 2006
and $4,000,000 for fiscal year 2007.
Such amounts shall not be taken into account in applying paragraph
(2) for fiscal year 2007 but shall be taken into account in
applying such paragraph for fiscal year 2008 and subsequent fiscal
years.''.
CHAPTER 6--OTHER PROVISIONS
Subchapter A--Family Opportunity Act

a1713bab4e1136c6eab842af9ad174a1628452c2d42865764ec9bf92604426cc

Deficit Reduction Act of 2005

Other Sections

TITLE I

TITLE II

TITLE III

TITLE IV

TITLE V

TITLE VI

TITLE VII

TITLE VIII

TITLE IX

TITLE X

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