Affordable Health Care Act - Amends the Federal Food, Drug, and Cosmetic Act to revise provisions governing the importation of prescription drugs. Requires the Secretary of Health and Human Services to promulgate regulations allowing the importation of prescription drugs from certain countries.
Allows the Secretary to require the sponsor of an approved drug to conduct one or more studies that confirms or refutes a credible hypothesis of a significant safety issue.
Amends the Public Health Service Act to establish the Office of Health Information Technology to improve the quality and efficiency of health care delivery through the use of health information technology.
Requires the Secretary, the Secretary of Defense, and the Secretary of Veterans Affairs to establish uniform health care quality measures and public reporting requirements across all federally supported health delivery programs.
Amends the Social Security Act (SSA) to give States the option to expand or add coverage of children, pregnant women, and legal immigrants under titles XIX (Medicaid) and XXI (State Children's Health Insurance) (SCHIP).
Amends the Internal Revenue Code to allow certain small business employers a refundable tax credit for a portion of their employee health insurance costs.
Amends SSA to set forth provisions (as a new title XXII) addressing health insurance coverage for small businesses.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 16 Introduced in Senate (IS)]
1st Session
S. 16
To reduce to the cost of quality health care coverage and improve the
availability of health care coverage for all Americans.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 24, 2005
Mr. Kennedy (for himself, Mr. Reid, Ms. Stabenow, Mr. Corzine, Mr.
Schumer, Ms. Mikulski, Mr. Akaka, Mr. Inouye, Mr. Levin, Mr. Kerry, Mr.
Lautenberg, Mr. Rockefeller, Mr. Dodd, Mr. Pryor, and Mr. Durbin)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To reduce to the cost of quality health care coverage and improve the
availability of health care coverage for all Americans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Affordable Health
Care Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--MAKING PRESCRIPTION DRUGS MORE SAFE AND AFFORDABLE
Subtitle A--Access to Prescription Drugs
Sec. 101. Findings.
Sec. 102. Repeal of certain section regarding importation of
prescription drugs.
Sec. 103. Importation of prescription drugs; waiver of certain import
restrictions.
Sec. 104. Additional waivers regarding personal importation;
enforcement policies of Secretary.
Sec. 105. Disposition of certain drugs denied admission into United
States.
Sec. 106. Civil actions regarding property.
Sec. 107. Wholesale distribution of drugs; Statements regarding prior
sale, purchase, or trade.
Sec. 108. Repeal of importation exemption under Controlled Substances
Import and Export Act.
Sec. 109. Effect on administration practices.
Subtitle B--Ensuring Drug Safety
Sec. 121. Drug safety.
Sec. 122. Report by GAO on drug safety.
TITLE II--MODERNIZING THE HEALTH CARE SYSTEM
Sec. 201. Amendment to the Public Health Service Act.
Sec. 202. Standardized measures of quality health care and data
collection.
TITLE III--MAKING HEALTH CARE MORE AFFORDABLE FOR CHILDREN AND PREGNANT
WOMEN
Subtitle A--Covering all Children
Sec. 300. Findings.
Chapter 1--Expanded Coverage of Children Under Medicaid and SCHIP
Sec. 301. State option to receive 100 percent fmap for medical
assistance for children in poverty in
exchange for expanded coverage of children
in working poor families under title XXI.
Sec. 302. Elimination of cap on SCHIP funding for States that expand
eligibility for children.
Chapter 2--State Options for Incremental Child Coverage Expansions
Sec. 311. State option to enroll low-income children of State employees
in SCHIP.
Sec. 312. State option for passive renewal of eligibility for children
under medicaid and SCHIP.
Chapter 3--Tax Incentives for Health Insurance Coverage of Children
Sec. 321. Refundable credit for health insurance coverage of children.
Sec. 322. Forfeiture of personal exemption for any child not covered by
health insurance.
Chapter 4--Miscellaneous
Sec. 331. Requirement for group market health insurers to offer
dependent coverage option for workers with
children.
Sec. 332. Effective date.
Subtitle B--Covering Pregnant Women
Sec. 351. State option to expand or add coverage of pregnant women
under the medicaid program and State
Children's Health Insurance Program.
Sec. 352. Optional coverage of legal immigrants under the medicaid
program and SCHIP.
Sec. 353. Promoting cessation of tobacco use under the medicaid
program.
Sec. 354. Promoting cessation of tobacco use under the maternal and
child health services block grant program.
Sec. 355. State option to provide family planning services and supplies
to individuals with incomes that do not
exceed a State's income eligibility level
for medical assistance.
Sec. 356. State option to extend the postpartum period for provision of
family planning services and supplies.
Sec. 357. State option to provide wrap-around SCHIP coverage to
children who have other health coverage.
Sec. 358. Innovative outreach programs.
Subtitle C--Affirming the Importance of Medicaid
Sec. 361. Sense of the Senate.
TITLE IV--REDUCING HEALTH CARE COSTS FOR SMALL EMPLOYERS
Subtitle A--Tax Relief
Sec. 401. Refundable credit for small business employee health
insurance expenses.
Subtitle B--Three-Share Program
Sec. 421. Three-share programs.
TITLE I--MAKING PRESCRIPTION DRUGS MORE SAFE AND AFFORDABLE
Subtitle A--Access to Prescription Drugs
SEC. 101. FINDINGS.
Congress finds that--
(1) Americans unjustly pay up to 5 times more to fill their
prescriptions than consumers in other countries;
(2) the United States is the largest market for
pharmaceuticals in the world, yet American consumers pay the
highest prices for brand pharmaceuticals in the world;
(3) a prescription drug is neither safe nor effective to an
individual who cannot afford it;
(4) allowing and structuring the importation of
prescription drugs to ensure access to safe and affordable
drugs approved by the Food and Drug Administration will provide
a level of safety to American consumers that they do not
currently enjoy;
(5) American seniors alone will spend $1,800,000,000,000 on
pharmaceuticals over the next 10 years; and
(6) allowing open pharmaceutical markets could save
American consumers at least $38,000,000,000 each year.
SEC. 102. REPEAL OF CERTAIN SECTION REGARDING IMPORTATION OF
PRESCRIPTION DRUGS.
Chapter VIII of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
381 et seq.) is amended by striking section 804.
SEC. 103. IMPORTATION OF PRESCRIPTION DRUGS; WAIVER OF CERTAIN IMPORT
RESTRICTIONS.
(a) In General.--Chapter VIII of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 381 et seq.), as amended by section 102, is
further amended by inserting after section 803 the following:
``SEC. 804. COMMERCIAL AND PERSONAL IMPORTATION OF PRESCRIPTION DRUGS.
``(a) Importation of Prescription Drugs.--
``(1) In general.--The Secretary shall in accordance with
this section provide by regulation that, in the case of
qualifying drugs imported or offered for import into the United
States from registered exporters or by registered importers--
``(A) the limitation on importation that is
established in section 801(d)(1) is waived; and
``(B) the standards referred to in section 801(a)
regarding admission of the drugs are subject to
subsection (g) of this section (including with respect
to qualifying drugs to which section 801(d)(1) does not
apply).
``(2) Importers.--A qualifying drug may not be imported
under paragraph (1) unless--
``(A) the drug is imported by a pharmacy or a
wholesaler that is a registered importer; or
``(B) the drug is imported by an individual for
personal use or for the use of a family member of the
individual (not for resale) from a registered exporter.
``(3) Rule of construction.--This section shall apply only
with respect to a drug that is imported or offered for import
into the United States--
``(A) by a registered importer; or
``(B) from a registered exporter to an individual.
``(4) Definitions.--
``(A) Registered exporter; registered importer.--
For purposes of this section:
``(i) The term `registered exporter' means
an exporter for which a registration under
subsection (b) has been approved and is in
effect.
``(ii) The term `registered importer' means
a pharmacy, group of pharmacies, or a
wholesaler for which a registration under
subsection (b) has been approved and is in
effect.
``(iii) The term `registration condition'
means a condition that must exist for a
registration under subsection (b) to be
approved.
``(B) Qualifying drug.--For purposes of this
section, the term `qualifying drug' means a
prescription drug, other than any of the following:
``(i) A controlled substance, as defined in
section 102 of the Controlled Substances Act
(21 U.S.C. 802).
``(ii) A biological product, as defined in
section 351 of the Public Health Service Act
(42 U.S.C. 262).
``(iii) An infused drug, including a
peritoneal dialysis solution.
``(iv) An intravenously injected drug.
``(v) A drug that is inhaled during
surgery.
``(C) Other definitions.--For purposes of this
section:
``(i) The term `exporter' means a person
that is in the business of exporting a drug
from Canada to individuals in the United States
or that, pursuant to submitting a registration
under subsection (b), seeks to be in such
business.
``(ii) The term `importer' means a
pharmacy, a group of pharmacies, or a
wholesaler that is in the business of importing
a drug into the United States or that, pursuant
to submitting a registration under subsection
(b), seeks to be in such business.
``(iii) The term `pharmacist' means a
person licensed by a State to practice
pharmacy, including the dispensing and selling
of prescription drugs.
``(iv) The term `pharmacy' means a person
that--
``(I) is licensed by a State to
engage in the business of selling
prescription drugs at retail; and
``(II) employs 1 or more
pharmacists.
``(v) The term `prescription drug' means a
drug that is described in section 503(b)(1).
``(vi) The term `wholesaler'--
``(I) means a person licensed as a
wholesaler or distributor of
prescription drugs in the United States
under section 503(e)(2)(A); and
``(II) does not include a person
authorized to import drugs under
section 801(d)(1).
``(D) Permitted country.--The term `permitted
country' means--
``(i) Australia;
``(ii) Canada;
``(iii) a member country of the European
Union as of January 1, 2003;
``(iv) Japan;
``(v) New Zealand; and
``(vi) Switzerland.
``(b) Registration of Importers and Exporters.--
``(1) Registration of importers and exporters.--A
registration condition is that the importer or exporter
involved (referred to in this subsection as a `registrant')
submits to the Secretary a registration containing the
following:
``(A) The name of the registrant and an
identification of all places of business of the
registrant that relate to qualifying drugs, including
each warehouse or other facility owned or controlled
by, or operated for, the registrant.
``(B) Such information as the Secretary determines
to be necessary to demonstrate that the registrant is
in compliance with registration conditions under--
``(i) in the case of an importer,
subsections (c), (d), (e), (g), and (j)
(relating to the sources of exported drugs; the
inspection of facilities of the importer; the
payment of fees; compliance with the standards
referred to in section 801(a); and maintenance
of records and samples); or
``(ii) in the case of an exporter,
subsections (c), (d), (f), (g), (h), (i), and
(j) (relating to the sources of exported drugs;
the inspection of facilities of the exporter
and the marking of compliant shipments; the
payment of fees; and compliance with the
standards referred to in section 801(a); being
licensed as a pharmacist; conditions for
individual importation from Canada; and
maintenance of records and samples).
``(C) An agreement by the registrant that the
registrant will not under subsection (a) import or
export any drug that is not a qualifying drug.
``(D) An agreement by the registrant to--
``(i) notify the Secretary of a recall or
withdrawal of a drug distributed in a permitted
country that the registrant has exported or
imported, or intends to export or import, to
the United States under subsection (a);
``(ii) provide for the return to the
registrant of such drug; and
``(iii) cease, or not begin, the
exportation or importation of such drug unless
the Secretary has notified the registrant that
exportation or importation of such drug may
proceed.
``(E) An agreement by the registrant to ensure and
monitor compliance with each registration condition, to
promptly correct any noncompliance with such a
condition, and to promptly report to the Secretary any
such noncompliance.
``(F) A plan describing the manner in which the
registrant will comply with the agreement under
subparagraph (E).
``(G) An agreement by the registrant to enforce a
contract under subsection (c)(3)(B) against a party in
the chain of custody of a qualifying drug with respect
to the authority of the Secretary under clauses (ii)
and (iii) of that subsection.
``(H) An agreement by the registrant to notify the
Secretary of--
``(i) any change that the registrant
intends to make regarding information provided
under subparagraph (A) or (B); and
``(ii) any change that the registrant
intends to make in the compliance plan under
subparagraph (F).
``(I) In the case of an exporter--
``(i) An agreement by the exporter that a
qualifying drug will not under subsection (a)
be exported to any individual not authorized
pursuant to subsection (a)(2)(B) to be an
importer of such drug.
``(ii) An agreement to post a bond, payable
to the Treasury of the United States if, after
opportunity for an informal hearing, the
Secretary determines that the exporter has
exported a drug to the United States that is
not a qualifying drug or that is not in
compliance with subsections (g) or (i), that is
equal in value to the lesser of--
``(I) the value of drugs exported
by the exporter to the United States in
a typical 4-week period over the course
of a year under this section; or
``(II) $1,000,000.
``(J) Such other provisions as the Secretary may
require to protect the public health while permitting--
``(i) the importation by pharmacies, groups
of pharmacies, wholesalers as registered
importers of qualifying drugs under subsection
(a); and
``(ii) importation by individuals of
qualifying drugs under subsection (a).
``(2) Approval or disapproval of registration.--
``(A) In general.--Not later than 90 days after the
date on which a registrant submits to the Secretary a
registration under paragraph (1), the Secretary shall
notify the registrant whether the registration is
approved or is disapproved. The Secretary shall
disapprove a registration if there is reason to believe
that the registrant is not in compliance with one or
more registration conditions, and shall notify the
registrant of such reason. In the case of a disapproved
registration, the Secretary shall subsequently notify
the registrant that the registration is approved if the
Secretary determines that the registrant is in
compliance with such conditions.
``(B) Changes in registration information.--Not
later than 30 days after receiving a notice under
paragraph (1)(G) from a registrant, the Secretary shall
determine whether the change involved affects the
approval of the registration of the registrant under
paragraph (1), and shall inform the registrant of the
determination.
``(3) Publication of contact information for registered
exporters.--Through the Internet website of the Food and Drug
Administration, the Secretary shall make readily available to
the public a list of registered exporters, including contact
information for the exporters. Promptly after the approval of a
registration submitted under paragraph (1), the Secretary shall
update the Internet website accordingly.
``(4) Suspension and termination.--
``(A) Suspension.--With respect to the
effectiveness of a registration submitted under
paragraph (1):
``(i) Subject to clause (ii), if the
Secretary determines, after notice and
opportunity for a hearing, that the registrant
has failed to maintain substantial compliance
with all registration conditions, the Secretary
may suspend the registration.
``(ii) If the Secretary determines that,
under color of the registration, the exporter
has exported a drug or the importer has
imported a drug that is not a qualifying drug,
or a drug that does not meet the criteria under
subsection (g)(2)(A), or has exported a
qualifying drug to an individual in violation
of subsection (i)(1)(F), the Secretary shall
immediately suspend the registration. A
suspension under the preceding sentence is not
subject to the provision by the Secretary of
prior notice, and the Secretary shall provide
to the registrant an opportunity for a hearing
not later than 10 days after the date on which
the registration is suspended.
``(iii) The Secretary may reinstate the
registration, whether suspended under clause
(i) or (ii), if the Secretary determines that
the registrant has demonstrated that further
violations of registration conditions will not
occur.
``(B) Termination.--The Secretary, after notice and
opportunity for a hearing, may terminate the
registration under paragraph (1) of a registrant if the
Secretary determines that the registrant has engaged in
a pattern or practice of violating 1 or more
registration conditions, or if on 1 or more occasions
the Secretary has under subparagraph (A)(ii) suspended
the registration of the registrant. The Secretary may
make the termination permanent, or for a fixed period
of not less than 1 year. During the period in which the
registration is terminated, any registration submitted
under paragraph (1) by the registrant, or a person that
is a partner in the export or import enterprise, or a principal officer
in such enterprise, and any registration prepared with the assistance
of the registrant or such a person, has no legal effect under this
section.
``(c) Sources of Qualifying Drugs.--A registration condition is
that the exporter or importer involved agrees that a qualifying drug
will under subsection (a) be exported or imported to the United States
only if there is compliance with the following:
``(1) The drug was manufactured in an establishment--
``(A) required to register under subsection (h) or
(i) of section 510; or
``(B) inspected by the Secretary as provided by
this section.
``(2) The establishment is located in the United States or
in any foreign country, and the establishment manufactured the
drug for distribution in the United States or for distribution
in 1 or more of the permitted countries (without regard to
whether in addition the drug was manufactured for distribution
in a foreign country that is not a permitted country).
``(3) The exporter or importer obtained the drug--
``(A) directly from the establishment; or
``(B) directly from an entity that, by contract
with the exporter or importer--
``(i) provides to the exporter or importer
a statement (in such form and containing such
information as the Secretary may require) that,
for the chain of custody from the
establishment, identifies each prior sale,
purchase, or trade of the drug (including the
date of the transaction and the names and
addresses of all parties to the transaction);
``(ii) agrees to permit the Secretary to
inspect such statements and related records to
determine their accuracy;
``(iii) agrees, with respect to the
qualifying drugs involved, to permit the
Secretary to inspect warehouses and other
facilities of the entity for purposes of
determining whether the facilities are in
compliance with any standards under this Act
that are applicable to facilities of that type
in the United States; and
``(iv) has ensured, through such
contractual relationships as may be necessary,
that the Secretary has the same authority
regarding other parties in the chain of custody
from the establishment that the Secretary has
under clauses (ii) and (iii) regarding such
entity.
``(4) The foreign country from which the importer will
import the drug is a permitted country.
``(5) The foreign country from which the exporter will
export the drug is Canada.
``(6) During any period in which the drug was not in the
control of the manufacturer of the drug, the drug did not enter
any country that is not a permitted country.
``(7) The exporter or importer retains a sample of each lot
of the drug sufficient for testing by the Secretary.
``(d) Inspection of Facilities; Marking of Shipments.--
``(1) Inspection of facilities.--A registration condition
is that, for the purpose of assisting the Secretary in
determining whether the exporter involved is in compliance with
all other registration conditions--
``(A) the exporter agrees to permit the Secretary--
``(i) to conduct onsite inspections,
including monitoring on a day-to-day basis, of
places of business of the exporter that relate
to qualifying drugs, including each warehouse
or other facility owned or controlled by, or
operated for, the exporter;
``(ii) to have access, including on a day-
to-day basis, to--
``(I) records of the exporter that
relate to the export of such drugs,
including financial records; and
``(II) samples of such drugs;
``(iii) to carry out the duties described
in paragraph (3); and
``(iv) to carry out any other functions
determined by the Secretary to be necessary
regarding the compliance of the exporter; and
``(B) the Secretary has assigned 1 or more
employees of the Secretary to carry out the functions
described in this subsection for the Secretary not less
than every 3 weeks on the premises of places of
businesses referred to in subparagraph (A)(i), and such
an assignment remains in effect on a continuous basis.
``(2) Marking of compliant shipments.--A registration
condition is that the exporter involved agrees to affix to each
shipping container of qualifying drugs exported under
subsection (a) such markings as the Secretary determines to be
necessary to identify the shipment as being in compliance with
all registration conditions. Markings under the preceding
sentence--
``(A) shall be designed to prevent affixation of
the markings to any shipping container that is not
authorized to bear the markings; and
``(B) may include anti-counterfeiting or track-and-
trace technologies.
``(3) Certain duties relating to exporters.--Duties of the
Secretary with respect to an exporter include the following:
``(A) Verifying the chain of custody of a
statistically significant sample of qualifying drugs
from the establishment in which the drug was
manufactured to the exporter, which may be accomplished
by the use of anticounterfeiting or track-and-trace
technologies, if available.
``(B) Randomly reviewing records of exports to
individuals for the purpose of determining whether the
drugs are being imported by the individuals in
accordance with the conditions under subsection (i).
Such reviews shall be conducted in a manner that will
result in a statistically significant determination of
compliance with all such conditions.
``(C) Monitoring the affixing of markings under
paragraph (2).
``(D) Inspect as the Secretary determines is
necessary the warehouses and other facilities of other
parties in the chain of custody of qualifying drugs.
``(E) Determine whether the exporter is in
compliance with all other registration conditions.
``(4) Certain duties relating to importers.--Duties of the
Secretary with respect to an importer include the following:
``(A) As authorized under section 704, inspect not
less than every 3 weeks, the places of business of the
importer that relate to the receipt and distribution of
a qualifying drug, including each warehouse or other
facility owned or controlled by, or operated for, the
importer at which qualifying drugs are received or from
which they are distributed to pharmacies.
``(B) During the inspections under subparagraph
(A), verify the chain of custody of a statistically
significant sample of qualifying drugs from the
establishment in which the drug was manufactured to the
importer, which may be accomplished by the use of
anticounterfeiting or track-and-trace technologies, if
available.
``(C) Inspect as the Secretary determines is
necessary the warehouses and other facilities of other
parties in the chain of custody of qualifying drugs.
``(D) Determine whether the importer is in
compliance with all other registration conditions.
``(e) Importer Fees.--
``(1) Registration fee.--A registration condition is that
the importer involved pays to the Secretary a fee of $10,000
due on the date on which the importer first submits the
registration to the Secretary under subsection (b).
``(2) Inspection fee.--A registration condition is that the
importer involved pays to the Secretary in accordance with this
subsection a fee on a semiannual basis, with the first fee due
on the date that is 6 months after the date on which the
registration of the importer under subsection (b) is first
approved by the Secretary.
``(3) Amount of inspection fee.--
``(A) Aggregate total of fees.--The Secretary shall
ensure that the aggregate total of fees collected under
paragraph (2) for a fiscal year from all importers is
sufficient, and no more than necessary, to pay the
costs of administering this section with respect to
registered importers for a fiscal year, including--
``(i) inspection of the facilities of
importers under subsection (d)(4);
``(ii) reviewing qualifying drugs offered
for import to importers; and
``(iii) determining the compliance of
importers with registration conditions.
``(B) Limitation.--The aggregate total of fees
collected under paragraph (2) shall not exceed 1
percent of the total price of drugs imported annually
to the United States by registered importers under this
section.
``(C) Individual importer fee.--Subject to the
limitation described in subparagraph (B), a fee under
paragraph (2) for an importer shall be an amount that
is a reasonable estimate by the Secretary of the
semiannual share of the importer of the volume of drugs
imported by importers under this section.
``(D) Adjustment of fee.--The Secretary shall
annually adjust the fees under paragraph (2) to ensure
that the fees accurately reflect the actual costs
referred to in subparagraph (A) and do not exceed, in
the aggregate, 1 percent of the total price of drugs
imported annually to the United States under this
section.
``(4) Use of fees.--Subject to appropriations Acts, fees
collected by the Secretary under paragraphs (1) and (2) are
available only to the Secretary and are for the sole purpose of
paying the costs referred to in paragraph (3)(A).
``(f) Exporter Fees.--
``(1) Registration fee.--A registration condition is that
the exporter involved pays to the Secretary a fee of $10,000
due on the date on which the exporter first submits that
registration to the Secretary under subsection (b).
``(2) Inspection fee.--A registration condition is that the
exporter involved pays to the Secretary in accordance with this
subsection a fee on a semiannual basis, with the first fee due
on the date that is 6 months after the date on which the
registration of the exporter under subsection (b) is first
approved by the Secretary.
``(3) Amount of inspection fee.--
``(A) Aggregate total of fees.--The Secretary shall
ensure that the aggregate total of fees collected under
paragraph (2) for a fiscal year from all exporters is
sufficient, and not more than necessary, to pay the
costs of administering this section with respect to
registered exporters for a fiscal year, including--
``(i) monitoring foreign facilities under
subsection (d);
``(ii) developing, implementing, and
maintaining under such subsection a system to
mark shipments to indicate compliance with all
registration conditions; and
``(iii) conducting under such subsection
inspections within the United States to
determine compliance with conditions under subsections (h) and (i).
``(B) Limitation.--The aggregate total of fees
collected under paragraph (2) shall not exceed 1
percent of the total price of drugs imported annually
to the United States by registered exporters under this
section.
``(C) Individual exporter fee.--Subject to the
limitation described in subparagraph (B), a fee under
paragraph (2) for an exporter shall be an amount that
is a reasonable estimate by the Secretary of the
semiannual share of the exporter of the volume of drugs
exported by exporters under this section.
``(D) Adjustment of fee.--The Secretary shall
annually adjust the fees under paragraph (2) to ensure
that the fees accurately reflect the actual costs
referred to in subparagraph (A) and do not exceed, in
the aggregate, 1 percent of the total price of drugs
imported annually to the United States under this
section.
``(4) Use of fees.--Subject to appropriations Acts, fees
collected by the Secretary under paragraphs (1) and (2) are
only available to the Secretary and are for the sole purpose of
paying the costs referred to in paragraph (3)(A).
``(g) Compliance With Section 801(a).--
``(1) In general.--A registration condition is that each
qualifying drug exported under subsection (a) by the registered
exporter involved or imported under subsection (a) by the
registered importer involved is in compliance with the
standards referred to in section 801(a) regarding admission of
the drug into the United States, subject to paragraphs (2),
(3), and (4).
``(2) Section 505; approval status.--
``(A) In general.--For purposes of administrative
and judicial procedure, there is a presumption that a
drug proposed for export or import under subsection (a)
is an approved drug under section 505(b) if the
following criteria are met:
``(i) The drug proposed for export or
import is in compliance with subsection (c).
``(ii) The drug proposed for export or
import has the same active ingredient or
ingredients, route of administration, dosage
form, and strength, according to information
provided by the labeling of the drug proposed
for export or import, as a drug (referred to in
this subsection as a `U.S. label drug') that--
``(I) is manufactured by or for the
person that manufactures the drug
proposed for export or import; and
``(II) is approved under section
505(b).
``(B) Importation.--Subject to subparagraphs (D)
and (E), a drug meeting the criteria described in
subparagraph (A) may, in accordance with the other
subsections of this section, be imported into the
United States.
``(C) Notice by manufacturer; general provisions.--
``(i) In general.--The person that
manufactures a drug that may be imported under
subsection (a) shall in accordance with this
paragraph submit to the Secretary a notice
that--
``(I) includes each difference in
the drug from a condition established
in the approved application for the
U.S. label drug beyond the variations
provided for in the application, any
difference in labeling, the date on
which the drug with such difference
was, or will be, introduced for
commercial distribution in a permitted
country, and such additional
information as the Secretary may
require; or
``(II) states that there is no
difference in the drug from a condition
established in the approved application
for the U.S. label drug beyond the
variations provided for in the
application and differences in
labeling.
``(ii) Information regarding foreign
government.--A notice under clause (i)(I) shall
with respect to the permitted country that
approved the drug for commercial distribution,
or with respect to which such approval is
sought, include the following:
``(I) Information demonstrating
that the person submitting the notice
has also notified the government of the
permitted country in writing that the
person is submitting to the Secretary a
notice under clause (i)(I), which
notice describes the difference in the
drug from a condition established in
the approved application for the U.S.
label drug.
``(II) The information that the
person submitted or will submit to the
government of the permitted country for
purposes of obtaining approval for
commercial distribution of the drug in
the country which, if in a language
other than English, shall be
accompanied by an English translation
verified to be complete and accurate,
with the name, address, and a brief
statement of the qualifications of the
person that made the translation.
``(iii) Certifications.--The chief
executive officer and the chief medical officer
of the manufacturer involved shall each certify
in the notice under clause (i) that--
``(I) the information provided in
the notice is complete and true; and
``(II) a copy of the notice has
been provided to the Federal Trade
Commission and to the Assistant
Attorney General in charge of the
Antitrust Division of the Department of
Justice (referred to in this subsection
as the `Assistant Attorney General').
``(iv) Fee.--If a notice submitted under
clause (i) includes a difference that would,
under section 506A, require the submission of a
supplemental application if made as a change to
the U.S. label drug, the person that submits
the notice shall pay to the Secretary a fee in
the same amount as would apply if the person
were paying a fee pursuant to section
736(a)(1)(A)(ii). Subject to appropriations
Acts, fees collected by the Secretary under the
preceding sentence are available only to the
Secretary and are for the sole purpose of
paying the costs of reviewing notices submitted
under clause (i).
``(v) Timing of submission of notices.--
``(I) Prior approval notices.--A
notice under clause (i) to which
subparagraph (D) applies shall be
submitted to the Secretary not later
than 120 days before the drug with the
difference is introduced for commercial
distribution in a permitted country,
unless the country requires that
distribution of the drug with the
difference begin less than 120 days
after the country requires the
difference.
``(II) Other approval notices.--A
notice under clause (i) to which
subparagraph (E) applies shall be
submitted to the Secretary not later
than the day on which the drug with the
difference is introduced for commercial
distribution in a permitted country.
``(III) Other notices.--A notice
under clause (i) to which subparagraph
(F) applies shall be submitted to the
Secretary on the date that the drug is
first introduced for commercial
distribution in a permitted country and
annually thereafter.
``(vi) Review by secretary.--
``(I) In general.--In this
paragraph, the difference in a drug
that may be imported under subsection
(a) from the U.S. label drug shall be
treated by the Secretary as if it was a
manufacturing change to the U.S. label
drug under section 506A.
``(II) Review by the secretary.--
The Secretary shall review and approve
or disapprove the difference in a
notice submitted under clause (i), if
required under section 506A, not later
than 120 days after the date on which
the notice is submitted.
``(III) Establishment inspection.--
If review of such difference would
require an inspection by the Secretary
of the establishment in which the drug
is manufactured, such inspection shall
be authorized by section 704.
``(vii) Publication of information on
notices.--
``(I) In general.--Through the
Internet website of the Food and Drug
Administration, the Secretary shall
readily make available to the public a
list of notices submitted under clause
(i).
``(II) Contents.--The list under
subclause (I) shall include the date on
which a notice is submitted and
whether--
``(aa) a notice is under
review;
``(bb) the Secretary has
ordered that importation of the
drug from a permitted country
cease; or
``(cc) the importation of
the drug is permitted under
subsection (a).
``(III) Update.--The Secretary
shall promptly update the Internet
website with any changes to the list.
``(D) Notice; drug difference requiring prior
approval.--In the case of a notice under subparagraph
(C)(i) that includes a difference that would, under
section 506A(c) or (d)(3)(B)(i), require the approval
of a supplemental application before the difference
could be made to the U.S. label drug the following
shall occur:
``(i) Promptly after the notice is
submitted, the Secretary shall notify
registered exporters, registered importers, the
Federal Trade Commission, and the Assistant
Attorney General that the notice has been
submitted with respect to the drug involved.
``(ii) If the Secretary has not made a
determination whether a supplemental
application regarding the U.S. label drug would
be approved or disapproved by the date on which
the drug involved is to be introduced for
commercial distribution in a permitted country,
the Secretary shall--
``(I) order that the importation of
the drug involved from the permitted
country cease for the period in
which the Secretary completes review of the notice; and
``(II) promptly notify registered
exporters, registered importers, the
Federal Trade Commission, and the
Attorney General of the order.
``(iii) If the Secretary determines that
such a supplemental application regarding the
U.S. label drug would not be approved, the
Secretary shall--
``(I) order that the importation of
the drug involved from the permitted
country cease, or provide that an order
under clause (ii), if any, remains in
effect;
``(II) notify the permitted country
that approved the drug for commercial
distribution of the determination; and
``(III) promptly notify registered
exporters, registered importers, the
Federal Trade Commission, and the
Assistant Attorney General of the
determination.
``(iv) If the Secretary determines that
such a supplemental application regarding the
U.S. label drug would be approved, the
Secretary shall vacate the order under clause
(ii), if any, permit importation of the drug
under subsection (a), and promptly notify
registered exporters, registered importers, the
Federal Trade Commission, and the Assistant
Attorney General of the determination.
``(E) Notice; drug difference not requiring prior
approval.--In the case of a notice under subparagraph
(C)(i) that includes a difference that would, under
section 506A(d)(3)(B)(ii), not require the approval of
a supplemental application before the difference could
be made to the U.S. label drug the following shall
occur:
``(i) During the period in which the notice
is being reviewed by the Secretary, the
authority under this subsection to import the
drug involved continues in effect.
``(ii) If the Secretary determines that
such a supplemental application regarding the
U.S. label drug would not be approved, the
Secretary shall order that the importation of
the drug involved from the permitted country
cease, shall notify the permitted country that
approved the drug for commercial distribution
of the determination, and shall promptly notify
registered exporters, registered importers, the
Federal Trade Commission, and the Assistant
Attorney General of the determination.
``(F) Notice; drug difference not requiring
approval; no difference.--In the case of a notice under
subparagraph (C)(i) that includes a difference for
which, under section 506A(d)(1)(A), a supplemental
application would not be required for the difference to
be made to the U.S. label drug, or that states that
there is no difference, the Secretary--
``(i) may not order that the importation of
the drug involved cease; and
``(ii) shall promptly notify registered
exporters and registered importers.
``(G) Differences in active ingredient, route of
administration, dosage form, or strength.--
``(i) In general.--A person who
manufactures a U.S. label drug shall submit an
application under section 505(b) for a drug
that is manufactured for distribution in a
permitted country by or for the person that
manufactures the U.S. label drug if--
``(I) there is no drug for export
from at least half of the permitted
countries with the same active
ingredient or ingredients, route of
administration, dosage form, and
strength as the U.S. label drug; and
``(II) each active ingredient of
the drug is related to an active
ingredient of the U.S. label drug, as
defined in clause (v).
``(ii) Application under section 505(b).--
The application under section 505(b) required
under clause (i) shall--
``(I) request approval of the drug
for the indication or indications for
which the U.S. label drug is approved
under section 505;
``(II) include the information that
the person submitted to the government
of the permitted country for purposes
of obtaining approval for commercial
distribution of the drug in that
country, which if in a language other
than English, shall be accompanied by
an English translation verified to be
complete and accurate, with the name,
address, and a brief statement of the
qualifications of the person that made
the translation;
``(III) include a right of
reference to the application under
section 505(b) for the U.S. label drug;
and
``(IV) include such additional
information as the Secretary may
require.
``(iii) Timing of submission of
application.--An application under section
505(b) required under clause (i) shall be
submitted to the Secretary not later than the
day on which the information referred to in
clause (ii)(II) is submitted to the government
of the permitted country.
``(iv) Notice of decision on application.--
The Secretary shall promptly notify registered
exporters, registered importers, the Federal
Trade Commission, and the Assistant Attorney
General of a determination to approve or to
disapprove an application under section 505(b)
required under clause (i).
``(v) Related active ingredients.--For
purposes of clause (i)(II), 2 active
ingredients are related if they are--
``(I) the same; or
``(II) different salts, esters, or
complexes of the same moiety.
``(3) Section 502; labeling.--
``(A) Importation by registered importer.--
``(i) In general.--In the case of a
qualifying drug that is imported or offered for
import by a registered importer, such drug
shall be considered to be in compliance with
section 502 if the drug bears--
``(I) a copy of the labeling
approved for the drug under section
505, without regard to whether the copy
bears the trademark involved;
``(II) the name of the manufacturer
and location of the manufacturer;
``(III) the lot number assigned by
the manufacturer; and
``(IV) the name, location, and
registration number of the importer.
``(ii) Request for copy of the labeling.--
The Secretary shall provide such copy to the
registered importer involved, upon request of
the importer.
``(B) Importation by individual.--In the case of a
qualifying drug that is imported or offered for import
by a registered exporter to an individual, such drug
shall be considered to be in compliance with section
502 if the drug bears a label providing the directions
for use by the consumer, and bears a copy of any
special labeling that would be required by the
Secretary had the drug been dispensed by a pharmacist
in the United States, without regard to whether the
special labeling bears the trademark involved. The
Secretary shall provide to the registered exporter
involved a copy of the special labeling, upon request
of the exporter.
``(4) Section 501; standards for refusing admission.--
``(A) In general.--For purposes of administrative
and judicial procedure, there is a presumption that a
drug proposed for export or import under subsection (a)
is in compliance with section 501 if the drug is in
compliance with subsection (c).
``(B) Standards for refusing admission.--A
qualifying drug exported under subsection (a) from a
registered exporter or imported by a registered
importer may be refused admission into the United
States if 1 or more of the following applies:
``(i) The shipping container appears
damaged in a way that may affect the strength,
quality, or purity of the drug.
``(ii) The Secretary becomes aware that--
``(I) the drug may be counterfeit;
``(II) the drug may have been
prepared, packed, or held under
insanitary conditions; or
``(III) the methods used in, or the
facilities or controls used for, the
manufacturing, processing, packing, or
holding of the drug do not conform to
good manufacturing practice.
``(iii) The Secretary has obtained an
injunction under section 302 that prohibits the
distribution of the drug in interstate
commerce.
``(iv) The Secretary has under section
505(e) withdrawn approval of the drug.
``(v) The manufacturer of the drug has
instituted a recall of the drug.
``(vi) If the qualifying drug is exported
from a registered exporter to an individual and
1 or more of the following applies:
``(I) The shipping container for
such drug does not bear the markings
required under subsection (d)(2).
``(II) The markings on the shipping
container appear to be counterfeit.
``(III) The shipping container or
markings appear to have been tampered
with.
``(h) Licensing as Pharmacist.--A registration condition is that
the exporter involved agrees that a qualifying drug will be exported to
an individual only if the Secretary has verified that--
``(1) the exporter is authorized under Canadian law to
dispense prescription drugs; and
``(2) the exporter employs persons that are licensed under
Canadian law to dispense prescription drugs in sufficient
number to dispense safely the qualifying drugs exported by the
exporter to individuals, and the exporter assigns to those
persons responsibility for dispensing such qualifying drugs to
individuals.
``(i) Individuals; Conditions for Importation From Canada.--
``(1) In general.--For purposes of subsection (a)(2)(B),
the importation of a qualifying drug by an individual is in
accordance with this subsection if the following conditions are
met:
``(A) The drug is accompanied by a copy of a
prescription for the drug, which prescription--
``(i) is valid under applicable Federal and
State laws; and
``(ii) was issued by a practitioner who,
under the law of a State of which the
individual is a resident, or in which the
individual receives care from the practitioner
who issues the prescription, is authorized to
administer prescription drugs.
``(B) The drug is accompanied by a copy of the
documentation that was required under the law or
regulations of Canada as a condition of dispensing the
drug to the individual.
``(C) The copies referred to in subparagraphs
(A)(i) and (B) are marked in a manner sufficient--
``(i) to indicate that the prescription,
and the equivalent document in Canada, have
been filled; and
``(ii) to prevent a duplicative filling by
another pharmacist.
``(D) The individual has provided to the registered
exporter a complete list of all drugs used by the
individual for review by the individuals who dispense
the drug.
``(E) The quantity of the drug does not exceed a
90-day supply.
``(F) The drug is not an ineligible subpart H drug.
For purposes of this section, a prescription drug is an
`ineligible subpart H drug' if the drug was approved by
the Secretary under subpart H of part 314 of title 21,
Code of Federal Regulations (relating to accelerated
approval), with restrictions under section 520 of such
part to assure safe use, and the Secretary has
published in the Federal Register a notice that the
Secretary has determined that good cause exists to
prohibit the drug from being imported pursuant to this
subsection.
``(2) Notice regarding drug refused admission.--If a
registered exporter ships a drug to an individual pursuant to
subsection (a)(2)(B) and the drug is refused admission to the
United States, a written notice shall be sent to the individual
and to the exporter that informs the individual and the
exporter of such refusal and the reason for the refusal.
``(j) Maintenance of Records and Samples.--A registration condition
is that the importer or exporter involved shall--
``(1) maintain records required under this section for not
less than 2 years; and
``(2) maintain samples of each lot of a drug required under
this section for not less than 2 years.
``(k) Drug Recalls.--
``(1) Manufacturers.--A person that manufactures a
prescription drug imported from a permitted country under this
section shall promptly inform the Secretary--
``(A) if the drug is recalled or withdrawn from the
market in a permitted country;
``(B) how the drug may be identified, including lot
number; and
``(C) the reason for the recall or withdrawal.
``(2) Secretary.--With respect to each permitted country,
the Secretary shall--
``(A) enter into an agreement with the government
of the country to receive information about recalls and
withdrawals of prescription drugs in the country; or
``(B) monitor recalls and withdrawals of
prescription drugs in the country using any information
that is available to the public in any media.
``(3) Notice.--The Secretary may notify, as appropriate,
registered exporters, registered importers, wholesalers,
pharmacies, or the public of a recall or withdrawal of a
prescription drug in a permitted country.''.
(b) Prohibited Acts.--The Federal Food, Drug, and Cosmetic Act is
amended--
(1) in section 301 (21 U.S.C. 331), by striking paragraph
(aa) and inserting the following:
``(aa)(1) The sale or trade by a pharmacist, or by a business
organization of which the pharmacist is a part, of a qualifying drug
that under section 804(a)(2)(A) was imported by the pharmacist, other
than--
``(A) a sale at retail made pursuant to dispensing the drug
to a customer of the pharmacist or organization; or
``(B) a sale or trade of the drug to a pharmacy or a
wholesaler registered to import drugs under section 804.
``(2) The sale or trade by an individual of a qualifying drug that
under section 804(a)(2)(B) was imported by the individual.
``(3) The making of a materially false, fictitious, or fraudulent
statement or representation, or a material omission, in a notice under
clause (i) of section 804(g)(2)(C) or in an application required under
section 804(g)(2)(G), or the failure to submit such a notice or
application.
``(4) The importation of a drug in violation of a requirement under
section 804.''; and
(2) in section 303(a) (21 U.S.C. 333(a)), by striking
paragraph (6) and inserting the following:
``(6) Notwithstanding subsection (a), any person that knowingly
violates section 301(aa) (3) or (4) shall be imprisoned not more than
10 years, or fined in accordance with title 18, United States Code, or
both.''.
(c) Implementation.--
(1) Rulemaking.--
(A) In general.--
(i) Promulgation by secretary.--Not later
than 90 days after the date of the enactment of
this Act, the Secretary of Health and Human
Services shall promulgate an interim rule for
implementing section 804 of the Federal Food,
Drug, and Cosmetic Act, as added by subsection
(a) of this section. Such rule shall be
developed and promulgated by the Secretary
without providing general notice of proposed
rulemaking. Not later than 1 year after the
date on which the interim rule is promulgated, the Secretary shall, in
accordance with procedures under section 553 of title 5, United States
Code, promulgate a final rule for implementing such section 804, which
may incorporate by reference provisions of the interim rule, to the
extent that such provisions are not modified.
(ii) Effect of rules.--The rules
promulgated under clause (i) shall permit the
importation of prescription drugs--
(I) from registered exporters by
individuals effective on the date of
the promulgation of the interim rule;
(II) from Canada by registered
importers effective on the date of the
promulgation of the interim rule; and
(III) from Australia, a member
country of the European Union as of
January 1, 2003, Japan, New Zealand, or
Switzerland by registered importers on
the date that is 1 year after the date
of the enactment of this Act.
(B) Certain exporters.--The interim rule under
subparagraph (A) shall provide that, in the review of
registrations submitted under subsection (b) of the
section 804 referred to in such subparagraph,
registrations submitted by entities in Canada that are
significant exporters of prescription drugs to
individuals in the United States as of the date of the
enactment of this Act will have priority during the
period in which the interim rule under subparagraph (A)
is in effect. During such period, the reference in
subsection (b)(2)(A) of such section 804 to 90 days
(relating to approval or disapproval of registrations)
is, as applied to such entities, deemed to be 30 days.
(C) Drugs for import from canada.--The notices with
respect to drugs to be imported from Canada that are
required under subsection (g)(2)(C)(i)(I) of such
section 804 and that require approval under subsection
(g)(2)(D) or (E) of such section 804 shall be submitted
to the Secretary not later than 30 days after the date
of enactment of this Act. The notices with respect to
drugs to be imported from Canada that are required
under subsection (g)(2)(C)(i) of such section 804 and
that do not require approval under subsection (g)(2)(D)
or (E) of such section 804 shall be submitted to the
Secretary not later than 90 days after the date of
enactment of this Act.
(D) Drugs for import from other countries.--The
notices with respect to drugs to be imported from
Australia, a member country of the European Union as of
January 1, 2003, Japan, New Zealand, or Switzerland
that are required under subsection (g)(2)(C)(i)(I) of
such section 804 and that require approval under
subsection (g)(2)(D) or (E) of such section 804 shall
be submitted to the Secretary not later than 180 days
after the date of enactment of this Act. The notices
with respect to drugs to be imported from such
countries that are required under subsection
(g)(2)(C)(i)(II) of such section 804 and that do not
require approval under subsection (g)(2)(D) or (E) of
such section 804 shall be submitted to the Secretary
not later than 270 days after the date of enactment of
this Act.
(2) Personal importation from canada.--Until the expiration
of the 60-day period beginning on the date on which the interim
rule under paragraph (1)(A) is promulgated, an individual may
import a prescription drug from Canada for personal use or for
the use of a family member of the individual (rather than for
resale), subject to compliance with the following conditions:
(A) The drug is not--
(i) a controlled substance, as defined in
section 102 of the Controlled Substances Act
(21 U.S.C. 802);
(ii) a biological product, as defined in
section 351 of the Public Health Service Act
(42 U.S.C. 262);
(iii) an infused drug, including a
peritoneal dialysis solution;
(iv) an intravenously injected drug;
(v) a drug that is inhaled during surgery;
or
(vi) a drug approved by the Secretary under
subpart H of part 314 of title 21, Code of
Federal Regulations (relating to accelerated
approval) with restrictions under section 520
of such part to assure safe use.
(B) The drug is dispensed by a person licensed in
Canada to dispense such drugs.
(C) The drug is accompanied by a copy of the
prescription for the drug, which prescription--
(i) is valid under applicable Federal and
State laws; and
(ii) was issued by a practitioner who,
under the law of a State of which the
individual is a resident, or in which the
individual receives care from the practitioner
who issues the prescription, is authorized to
administer prescription drugs.
(D) The drug is accompanied by a copy of the
document that was required in Canada as a condition of
dispensing the drug to the individual.
(E) The copies referred to in subparagraphs (C) and
(D) are marked in a manner sufficient--
(i) to indicate that the prescription, and
the equivalent document in Canada, have been
filled; and
(ii) to prevent a duplicative filling by
another pharmacist.
(F) The quantity of the drug does not exceed a 90-
day supply.
(3) Facilitation of canadian imports.--Not less than 15
days after the enactment of this Act and until the expiration
of the 60-day period that begins on the date on which the
interim rule under paragraph (1)(A) is promulgated, the
Secretary shall, through the Internet website of the Food and
Drug Administration, make readily available to the public a
list of persons licensed in Canada to dispense prescription
drugs who are willing to export drugs under paragraph (2) to
individuals in the United States.
(4) Effect of provisions.--The amendments made in
subsection (d), section 6, and section 7 of this Act shall have
no effect with respect to imports made under paragraph (2).
(d) Amendment of Certain Provision.--Section 801 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 381) is amended by striking
subsection (g) and inserting the following:
``(g) With respect to a prescription drug that is imported or
offered for import into the United States by an individual who is not
in the business of such importation, that is not shipped by a
registered exporter under section 804, and that is refused admission
under subsection (a), the Secretary shall notify the individual that--
``(1) the drug has been refused admission because the drug
was not a lawful import under section 804;
``(2) the drug is not otherwise subject to a waiver of the
requirements of subsection (a);
``(3) the individual may under section 804 lawfully import
certain prescription drugs from Canadian exporters registered
with the Secretary; and
``(4) the individual can find information about such
importation, including a list of registered exporters, on the
Internet website of the Food and Drug Administration.''.
(e) Anticompetitive Practices Relating to Importing and Exporting
Drugs to the United States.--
(1) In general.--The Clayton Act (15 U.S.C. 12 et seq.) is
amended by adding at the end the following:
``SEC. 27. RESTRAINT OF TRADE REGARDING PRESCRIPTION DRUGS.
``(a) In General.--It shall be unlawful for any person engaged in
commerce, directly or indirectly to--
``(1) charge a higher price for prescription drugs sold to
a registered exporter or other person that exports prescription
drugs to the United States under section 804 of the Federal
Food, Drug, and Cosmetic Act than the price that is charged to
another person that is in the same country and that does not
export prescription drugs into the United States under section
804 of such Act;
``(2) charge a higher price for prescription drugs sold to
a registered importer or other person that distributes, sells,
or uses prescription drugs imported to the United States under
section 804 of such Act than the price that is charged to
another person in the United States that does not import
prescription drugs under section 804 of such Act, or that does
not distribute, sell, or use such drugs;
``(3) deny supplies of prescription drugs to a registered
exporter or other person that exports prescription drugs to the
United States under section 804 of such Act or to a registered
importer or other person that distributes, sells, or uses
prescription drugs imported to the United States under section
804 of such Act;
``(4) publicly, privately, or otherwise refuse to do
business with a registered exporter or other person that
exports prescription drugs to the United States under section
804 of such Act or with a registered importer or other person
that distributes, sells, or uses prescription drugs imported to
the United States under section 804 of such Act;
``(5) specifically restrict supplies of prescription drugs
to a registered exporter or other person that exports
prescription drugs to the United States under section 804 of
such Act or to a registered importer or other person that
distributes, sells, or uses prescription drugs imported to the
United States under section 804 of such Act;
``(6) fail to submit a notice under subsection (g)(2)(C)(i)
of section 804 of such Act, fail to submit such a notice on or
before the date specified in subsection (g)(2)(C)(v) of section
804 of such Act, submit such a notice that makes a materially
false, fictitious, or fraudulent statement, or fail to provide
promptly any information requested by the Secretary of Health
and Human Services to review such a notice;
``(7) fail to submit an application required under
subsection (g)(2)(G) of section 804 of such Act, fail to submit
such an application on or before the date specified in
subsection (g)(2)(G)(ii) of section 804 of such Act, submit
such an application that makes a materially false, fictitious,
or fraudulent statement, or fail to provide promptly any
information requested by the Secretary of Health and Human
Services to review such an application;
``(8) cause there to be a difference (including a
difference in active ingredient, route of administration,
dosage form, strength, formulation, manufacturing
establishment, manufacturing process, or person that
manufactures the drug) between a prescription drug for
distribution in the United States and a prescription drug for
distribution in Australia, Canada, a member country of the
European Union as of January 1, 2003, Japan, New Zealand, or
Switzerland for the purpose of restricting importation of the
drug to the United States under section 804 of such Act;
``(9) refuse to allow an inspection authorized under
section 804 of such Act of an establishment that manufactures a
prescription drug that is offered for import under such
section;
``(10) fail to conform to the methods used in, or the
facilities used for, the manufacturing, processing, packing, or
holding of a prescription drug offered for import under section
804 to good manufacturing practice under such Act; or
``(11) engage in any other action that the Federal Trade
Commission determines to unfairly restrict competition under
section 804 of such Act.
``(b) Presumption.--A difference (including a difference in active
ingredient, route of administration, dosage form, strength,
formulation, manufacturing establishment, manufacturing process, or
person that manufactures the drug) between a prescription drug for
distribution in the United States and a prescription drug for
distribution in Australia, Canada, a member country of the European
Union as of January 1, 2003, Japan, New Zealand, or Switzerland made
after January 1, 2004, shall be presumed to be for the purpose of
restricting importation of the drug to the United States under section
804 of the Federal Food, Drug, and Cosmetic Act unless--
``(1) the person manufacturing the drug for distribution in
the United States proves that the difference was required by
the country in which the drug is distributed;
``(2) the Secretary of Health and Human Services, acting
through the Commissioner of Food and Drug, determines that the
difference was necessary to improve the safety or efficacy of
the drug; or
``(3) the person manufacturing the drug for distribution in
the United States has given notice to the Secretary of Health
and Human Services under subsection (g)(2)(C)(i) of section 804
of such Act that the drug for distribution in the United States
is not different from a drug for distribution in not fewer than
half of those countries.
``(c) Affirmative Defense.--It shall be an affirmative defense to a
charge that a person has violated paragraph (1), (2), (3), (4), or (5)
of subsection (a) that the higher prices charged for prescription drugs
sold to a person, the denial of supplies of prescription drugs to a
person, the refusal to do business with a person, or the specific
restriction or delay of supplies to a person is not based, in whole or
in part, on--
``(1) the person exporting or importing prescription drugs
to the United States under section 804 of the Federal Food,
Drug, and Cosmetic Act; or
``(2) the person distributing, selling, or using
prescription drugs imported to the United States under section
804 of such Act.
``(d) Definitions.--In this section:
``(1) Prescription drug.--The term `prescription drug'
means a drug that is described in section 503(b)(1) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)).
``(2) Registered importer.--The term `registered importer'
has the meaning given such term in section 804 of the Federal
Food, Drug, and Cosmetic Act.
``(3) Registered exporter.--The term `registered exporter'
has the same meaning as in section 804 of the Federal Food,
Drug, and Cosmetic Act.''.
(2) Applicability of amendments to importation under the
pharmaceutical market access and fair trade act of 2004.--
(A) Personal importation from canada.--Paragraphs
(1) through (5) and (11) of subsection (a) of section
27 of the Clayton Act (15 U.S.C. et seq.) (as amended
by paragraph (1)) shall apply with respect to the
importation of drugs from Canada under subsection
(c)(2).
(B) Notices respecting drug for import.--Paragraph
(6) of subsection (a) of section 27 of the Clayton Act
(15 U.S.C. et seq.) (as amended by paragraph (1)) shall
apply with respect to notices required under section
804(g)(2)(C)(i) of the Federal Food Drug and Cosmetic
Act (21 U.S.C. 384(g)(2)(C)(i)) that are not submitted
by the dates required under subsections (c)(1)(C) and
(D).
(f) Exhaustion.--
(1) In general.--Section 271 of title 35, United States
Code, is amended--
(A) by redesignating subsections (h) and (i) as (i)
and (j), respectively; and
(B) by inserting after subsection (g) the
following:
``(h) It shall not be an act of infringement to use, offer to sell,
or sell within the United States or to import into the United States
any patented invention under section 804 of the Federal Food, Drug, and
Cosmetic Act that was first sold abroad by or under authority of the
owner or licensee of such patent.''.
(2) Rule of construction.--Nothing in the amendment made by
paragraph (1) shall be construed to affect the ability of a
patent owner or licensee to enforce their patent, subject to
such amendment.
SEC. 104. ADDITIONAL WAIVERS REGARDING PERSONAL IMPORTATION;
ENFORCEMENT POLICIES OF SECRETARY.
(a) In General.--Section 801 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 381) is amended by adding at the end the
following:
``(p)(1) Waivers under this subsection are in addition to, and
independent of, the waiver pursuant to section 804(a)(2)(B).
``(2) With respect to the standards referred to in subsection
(d)(1), the Secretary shall establish by regulation a waiver of such
standards in the case of the importation by an individual of a drug
into the United States in the following circumstances:
``(A) The drug was dispensed to the individual while the
individual was in the United States, the drug was dispensed by
a pharmacist or by a practitioner licensed by law to administer
the drug, and the individual traveled from the United States
with the drug.
``(B) The individual is entering the United States and the
drug accompanies the individual at the time of entry.
``(C) The drug does not appear to the Secretary to be
adulterated.
``(D) The quantity of the drug does not exceed a 90-day
supply.
``(E) The drug is accompanied by a statement that the
individual seeks to import the drug into the United States
under a personal importation waiver.
``(F) Such additional standards as the Secretary determines
to be appropriate to protect the public health.
``(3) With respect to the standards referred to in subsections (a)
and (d)(1), the Secretary shall establish by regulation a waiver of
such standards in the case of the importation by an individual of a
drug into the United States in the following circumstances:
``(A) The drug was dispensed to the individual while the
individual was in a foreign country, and the drug was dispensed
in accordance with the laws and regulations of such country.
``(B) The individual is entering the United States and the
drug accompanies the individual at the time of entry.
``(C) The drug is approved for commercial distribution in
the foreign country in which the drug was obtained.
``(D) The drug does not appear to the Secretary to be
adulterated.
``(E) The quantity of the drug does not exceed--
``(i) a 90-day supply if the drug is dispensed in
Australia, Canada, a member country of the European
Union as of January 1, 2003, Japan, New Zealand, or
Switzerland; or
``(ii) a 14-day supply otherwise.
``(F) The drug is accompanied by a statement that the
individual seeks to import the drug into the United States
under a personal importation waiver.
``(G) Such additional standards as the Secretary determines
to be appropriate to protect the public health.
``(q) The Secretary may not administer any enforcement policy that
has the effect of permitting the importation of a prescription drug
into the United States in violation of this Act or section 351 of the
Public Health Service Act.''.
(b) Additional Waiver.--This Act and the amendments made by this
Act shall not be construed as limiting the authority of the Secretary
of Health and Human Services to establish a waiver of the standards
referred to in section 801(a) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 381(a)) with respect to the importation by an individual
of a drug into the United States that does not meet such standards,
provided that such waiver is no more permissive than the guidance, as
in effect on January 1, 2004, that is provided in the item numbered 2
(relating to a specific situation, consisting of conditions (a) through
(d)) under the heading ``Drugs, Biologics, and Devices'' in chapter 9
of the FDA/ORA Regulatory Procedures Manual (relating to import
operations/actions), in the subchapter relating to coverage of personal
importations.
SEC. 105. DISPOSITION OF CERTAIN DRUGS DENIED ADMISSION INTO UNITED
STATES.
(a) In General.--Chapter VIII of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 381 et seq.), as amended by section 102, is
further amended by adding at the end the following section:
``SEC. 805. DISPOSITION OF CERTAIN DRUGS DENIED ADMISSION.
``(a) In General.--The Secretary of Homeland Security shall refuse
admission to a shipment of drugs that is imported or offered for import
into the United States if the shipment has a declared value of less
than $10,000 and the drugs are in violation of any standard referred to
in section 801(a) or 801(d)(1), including any drugs imported or offered
for import under enforcement policies prohibited under section 801(q).
``(b) Importation Under Section 804.--In the case of a drug that
under section 804 is imported or offered for import from a registered
exporter, the reference in subsection (a) to standards referred to in
section 801(a) or 801(d)(1) shall be considered a reference to
standards referred to in section 804(g)(4)(B).
``(c) Destruction of Violative Shipments.--Drugs refused admission
under subsection (a) or (b) shall be destroyed, subject to subsection
(e). Section 801(b) does not authorize the delivery of the drugs
pursuant to the execution of a bond, and the drugs may not be exported.
``(d) Certain Procedures.--
``(1) In general.--The refusal of admission and destruction
of drugs under this section may be carried out without notice
to the importer, owner, or consignee of the drugs except as
required by section 801(g) or section 804(i)(2). The issuance
of receipts for the drugs, and recordkeeping activities
regarding the drugs, may be carried out on a summary basis.
``(2) Objective of procedures.--Procedures promulgated
under paragraph (1) shall be designed toward the objective of
ensuring that, with respect to efficiently utilizing Federal
resources available for carrying out this section, a
substantial majority of shipments of drugs subject to
subsection (a) or (b) are identified and refused admission and
destroyed.
``(e) Evidence Exception.--Drugs may not be destroyed under
subsection (c) to the extent that the Attorney General of the United
States determines that the drugs should be preserved as evidence or
potential evidence with respect to an offense against the United
States.
``(f) Rule of Construction.--This section may not be construed as
having any legal effect on applicable law with respect to a shipment of
drugs that is imported or offered for import into the United States and
has a declared value equal to or greater than $10,000.''.
(b) Procedures.--Procedures for carrying out section 805 of the
Federal Food, Drug, and Cosmetic Act, as added by subsection (a), shall
be established not later than 90 days after the date of the enactment
of this Act.
SEC. 106. CIVIL ACTIONS REGARDING PROPERTY.
Section 303 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
333) is amended by adding at the end the following subsection:
``(g)(1) If a person is alienating or disposing of property, or
intends to alienate or dispose of property, that is obtained as a
result of or is traceable to a drug imported in violation of section
801(a) or 801(d), the Attorney General may commence a civil action in
any Federal court--
``(A) to enjoin such alienation or disposition of property;
or
``(B) for a restraining order to--
``(i) prohibit any person from withdrawing,
transferring, removing, dissipating, or disposing of
any such property or property of equivalent value; and
``(ii) appoint a temporary receiver to administer
such restraining order.
``(2) Proceedings under paragraph (1) shall be carried out in the
same manner as applies under section 1345 of title 18, United States
Code.''.
SEC. 107. WHOLESALE DISTRIBUTION OF DRUGS; STATEMENTS REGARDING PRIOR
SALE, PURCHASE, OR TRADE.
(a) Striking of Exemptions; Applicability to Registered
Exporters.--Section 503(e) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 353(e)) is amended--
(1) in paragraph (1)--
(A) by striking ``and who is not the manufacturer
or an authorized distributor of record of such drug'';
(B) by striking ``to an authorized distributor of
record or''; and
(C) by striking subparagraph (B) and inserting the
following:
``(B) The fact that a drug subject to subsection (b) is exported
from the United States does not with respect to such drug exempt any
person that is engaged in the business of the wholesale distribution of
the drug from providing the statement described in subparagraph (A) to
the person that receives the drug pursuant to the export of the drug.
``(C)(i) The Secretary may by regulation establish requirements
that supersede subparagraph (A) (referred to in this subparagraph as
`alternative requirements') to identify the chain of custody of a drug
subject to subsection (b) from the manufacturer of the drug throughout
the wholesale distribution of the drug to a pharmacist who intends to
sell the drug at retail if the Secretary determines that the
alternative requirements, which may include anti-counterfeiting or
track-and-trace technologies, will identify such chain of custody or
the identity of the drug with equal certainty to the requirements of
subparagraph (A), and that the alternative requirements are
economically and technically feasible.
``(ii) If the Secretary promulgates a final rule to establish such
alternative requirements, the final rule in addition shall, with
respect to the registration condition established in clause (i) of
section 804(c)(3)(B), establish a condition equivalent to the
alternative requirements, and such equivalent condition supersedes such
clause (i).'';
(2) in paragraph (2)(A), by adding at the end the
following: ``The preceding sentence may not be construed as
having any applicability with respect to a registered exporter
under section 804.''; and
(3) in paragraph (3), by striking ``and subsection (d)--''
in the matter preceding subparagraph (A) and all that follows
through ``the term `wholesale distribution' means'' in
subparagraph (B) and inserting the following: ``and subsection
(d), the term `wholesale distribution' means''.
(b) Conforming Amendment.--Section 503(d) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 353(d)) is amended by adding at the
end the following:
``(4) Each manufacturer of a drug subject to subsection (b) shall
maintain at its corporate offices a current list of the authorized
distributors of record of such drug.
``(5) For purposes of this subsection, the term `authorized
distributors of record' means those distributors with whom a
manufacturer has established an ongoing relationship to distribute such
manufacturer's products.''.
SEC. 108. REPEAL OF IMPORTATION EXEMPTION UNDER CONTROLLED SUBSTANCES
IMPORT AND EXPORT ACT.
Section 1006 of the Controlled Substances Import and Export Act (21
U.S.C. 956) is repealed.
SEC. 109. EFFECT ON ADMINISTRATION PRACTICES.
Notwithstanding any provision of this Act (and the amendments made
by this Act), nothing in this Act (or the amendments made by this Act)
shall be construed to change, limit, or restrict the practices of the
Food and Drug Administration or the Bureau of Customs and Border
Protection in effect on January 1, 2004, with respect to the
importation of prescription drugs into the United States by an
individual, on the person of such individual, for personal use.
Subtitle B--Ensuring Drug Safety
SEC. 121. DRUG SAFETY.
(a) In General.--Chapter V of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 351 et seq.) is amended by inserting after section 506C
the following:
``SEC. 507. DRUG SAFETY.
``(a) Phase IV Studies.--
``(1) In general.--The Secretary may require that the
sponsor of a drug that is approved or licensed under section
505(c) or under section 351 of the Public Health Service Act
conduct one or more studies, to be completed by a date after
approval or licensing of such drug specified by the Secretary,
that confirms or refutes an empirical or theoretical hypothesis
of a significant safety issue with the drug, raised with
respect to the drug or the class of the drug, found in--
``(A) the MedWatch post-market surveillance system;
``(B) a clinical or epidemiological study; or
``(C) the scientific literature.
``(b) Supplements.--The sponsor of a drug that is approved or
licensed under section 505(c) or under section 351 of the Public Health
Service Act shall promptly submit the results of a study required under
subsection (a) as a supplement to the application for the drug.
``(c) Public Disclosure.--The Secretary shall, not less than every
quarter, make public each study required under subsection (a),
including a description of, and the reason for, the study, the required
completion date, and whether the study has been completed, through--
``(1) a notice in the Federal Register; and
``(2) a database that shall be readily accessible to the
public through the Internet site of the Food and Drug
Administration.
``(d) Civil Penalties.--
``(1) In general.--The Secretary may order the sponsor of a
drug that is approved or licensed under section 505(c) or under
section 351 of the Public Health Service Act to pay a civil
penalty, subject to paragraph (2), if, after providing an
opportunity for an informal hearing, the Secretary determines
that--
``(A) the sponsor has failed to complete a study
required under subsection (a) by the date specified by
the Secretary; and
``(B) there is no legitimate reason for such
failure.
``(2) Amount of penalties.--The civil penalty order under
paragraph (1) may be assessed for each day the completion of a
required study of a drug is delayed in an amount that is not
more than 3 times the gross revenue received by the sponsor for
the average sales of the drug in a day.
``(3) Records relating to gross revenue.--When provided an
opportunity for an informal hearing under paragraph (1), a drug
sponsor shall provide to the Secretary all records relating to
the gross revenues received by the sponsor for average sales of
the drug in a day.
``(4) Procedure.--The provisions of paragraphs (3) (other
than subparagraph (A)), (4), and (5) of section 303(f) shall
apply to a violation under subsection (a) in the same manner as
such provisions apply to a violation of a requirement of this
Act that relates to devices.''.
(b) Resources.--In addition to fees that may be available to the
Office of Drug Safety under sections 735 and 736 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 379g and 379h), there is authorized
to be appropriated for the Office of Drug Safety within the Center for
Drug Evaluation and Research of the Food and Drug Administration--
(1) $30,000,000 for fiscal year 2006;
(2) $40,000,0000 for fiscal year 2007;
(3) $50,000,000 for fiscal year 2008;
(4) $60,000,000 for fiscal year 2009; and
(5) $70,00,000 for fiscal year 2010.
SEC. 122. REPORT BY GAO ON DRUG SAFETY.
(a) In General.--The Government Accountability Office shall provide
for the conduct of a study concerning measures to increase the safety
of prescription drugs, including--
(1) whether Federal funding levels are adequate to ensure
drug safety and whether the uncertainty associated with the
Federal budgetary process hampers planning;
(2) whether the lack of permanent leadership at the Food
and Drug Administration has contributed to problems in
decisionmaking and in transmitting information to the public
concerning the safety of drugs;
(3) whether prolonged and rampant vacancies within the Food
and Drug Administration have contributed to the ability of the
Food and Drug Administration to properly examine drug safety;
(4) whether conflicts of interest exist that unduly bias
approvals or later reviews of drug safety;
(5) whether employees of the Food and Drug Administration
have been improperly threatened or face any barriers to raising
concerns about drug safety;
(6) whether the procedure of the Food and Drug
Administration for notifying the public of possible drug safety
issues is appropriate and complied with;
(7) whether further measures or authorities are necessary
to ensure the safety of drugs; and
(8) other matters determined appropriate.
(b) Report.--Not later than 90 days after the date of enactment of
this Act, the Government Accountability Office shall prepare and submit
to the appropriate committees of Congress a report concerning the
results of the study conducted under subsection (a). Such report shall
include a proposal (including legislative language) for improving the
safety of prescription drugs.
TITLE II--MODERNIZING THE HEALTH CARE SYSTEM
SEC. 201. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT.
The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by
adding at the end thereof the following:
``TITLE XXIX--HEALTH CARE INFORMATION TECHNOLOGY
``SEC. 2901. DEFINITIONS.
``In this title:
``(1) Coverage area.--The term `coverage area' means the
boundaries of a local health information infrastructure.
``(2) Director.--The term `Director' means the Director of
the Office of Health Information Technology.
``(3) Health care provider.--The term `health care
provider' means a hospital, skilled nursing facility, home
health entity, health care clinic, community health center,
group practice (as defined in section 1877(h)(4) of the Social
Security Act, including practices with only 1 physician), and
any other facility or clinician determined appropriate by the
Director.
``(4) Health information technology.--The term `health
information technology' means a computerized system that--
``(A) is consistent with the standards developed
pursuant to section 2903;
``(B) permits the secure electronic transmission of
information to other health care providers and public
health entities; and
``(C) includes--
``(i) an electronic health record (EHR)
that provides access in real-time to the
patient's complete medical record;
``(ii) a personal health record (PHR)
through which an individual (and anyone
authorized by such individual) can maintain and
manage their health information;
``(iii) computerized provider order entry
(CPOE) technology that permits the electronic
ordering of diagnostic and treatment services,
including prescription drugs;
``(iv) decision support to assist
physicians in making clinical decisions by
providing electronic alerts and reminders to
improve compliance with best practices, promote
regular screenings and other preventive
practices, and facilitate diagnoses and
treatments;
``(v) error notification procedures so that
a warning is generated if an order is entered
that is likely to lead to a significant adverse
outcome for the patient; and
``(vi) tools to allow for the collection,
analysis, and reporting of data on adverse
events, near misses, and the quality of care
provided to the patient.
``(5) Local health information infrastructures.--The term
`local health information infrastructure' means an independent
organization of health care entities established for the
purpose of linking health information systems to electronically
shared information. A local health information infrastructure
may not be a single business entity.
``(6) Office.--The term `Office' means the Office of Health
Information Technology established under section 2902.
``SEC. 2902. OFFICE OF HEALTH INFORMATION TECHNOLOGY.
``(a) Establishment.--There is established within the executive
office of the President an Office of Health Information Technology. The
Office shall be headed by a Director to be appointed by the President.
The Director shall report directly to the President.
``(b) Purpose.--It shall be the purpose of the Office to--
``(1) improve the quality and increase the efficiency of
health care delivery through the use of health information
technology;
``(2) provide national leadership relating to, and
encourage the adoption of, health information technology;
``(3) direct all health information technology activities
within the Federal Government; and
``(4) facilitate the interaction between the Federal
Government and the private sector relating to health
information technology development and use.
``(c) Duties and Responsibilities.--The Office shall be responsible
for the following:
``(1) National strategy.--The Office shall develop a
national strategy for improving the quality and enhancing the
efficiency of health care through the improved use of health
information technology and the creation of a National Health
Information Infrastructure.
``(2) Federal leadership.--The Office shall--
``(A) serve as the principle advisor to the
President concerning health information technology;
``(B) direct all health information technology
activity within the Federal Government, including
approving or disapproving agency policies submitted
under paragraph (3);
``(C) work with public and private health
information technology stakeholders to implement the
national strategy described in paragraph (1); and
``(D) ensure that health information technology is
utilized as fully as practicable in carrying out health
surveillance efforts.
``(3) Agency policies.--
``(A) In general.--The Office shall, in accordance
with this paragraph, approve or disapprove the policies
of Federal departments or agencies with respect to any
policy proposed to be implemented by such agency or
department that would significantly affect that agency
or department's use of health information technology.
``(B) Submission of proposal.--The head of any
Federal Government agency or department that desires to
implement any policy with respect to such agency or
department that would significantly affect that agency
or department's use of health information technology
shall submit an implementation proposal to the Office
at least 60 days prior to the proposed date of the
implementation of such policy.
``(C) Approval or disapproval.--Not later than 60
days after the date on which a proposal is received
under subparagraph (B), the Office shall determine
whether to approve the implementation of such proposal.
In making such determination, the Office shall consider
whether the proposal is consistent with the national
strategy described in paragraph (1). If the Office
fails to make a determination within such 60-day
period, such proposal shall be deemed to be approved.
``(D) Failure to approve.--Except as otherwise
provided for by law, a proposal submitted under
subparagraph (B) may not be implemented unless such
proposal is approved or deemed to be approved under
subparagraph (C).
``(4) Coordination.--The Office shall--
``(A) encourage the development and adoption of
clinical, messaging, and decision support health
information data standards, pursuant to the
requirements of section 2903;
``(B) ensure the maintenance and implementation of
the data standards described in subparagraph (A);
``(C) oversee and coordinate the health information
technology efforts of the Federal Government;
``(D) ensure the compliance of the Federal
Government with Federally adopted health information
technology data standards;
``(E) ensure that the Federal Government consults
and collaborates on decision making with respect to
health information technology with the private sector
and other interested parties; and
``(F) in consultation with private sector, adopt
certification and testing criteria to determine if
electronic health information systems interoperate.
``(5) Communication.--The Office shall--
``(A) act as the point of contact for the private
sector with respect to the use of health information
technology; and
``(B) work with the private sector to collect and
disseminate best health information technology
practices.
``(6) Evaluation and dissemination.--The Office shall
coordinate with the Agency for Health Research and Quality and
other Federal agencies to--
``(A) evaluate and disseminate information relating
to evidence of the costs and benefits of health
information technology and to whom those costs and
benefits accrue;
``(B) evaluate and disseminate information on the
impact of health information technology on the quality
and efficiency of patient care; and
``(C) review Federal payment structures and
differentials for health care providers that utilize
health information technology systems.
``(7) Technical assistance.--The Office shall utilize
existing private sector quality improvement organizations to--
``(A) promote the adoption of health information
technology among healthcare providers; and
``(B) provide technical assistance concerning the
implementation of health information technology to
healthcare providers.
``(8) Federal reimbursement.--
``(A) In general.--Not later than 6 months after
the date of enactment of this title, the Office shall
make recommendations to the President and the Secretary
of Health and Human Services on changes to Federal
reimbursement and payment structures that would
encourage the adoption of information technology (IT)
to improve health care quality and safety.
``(B) Plan.--Not later than 90 days after receiving
recommendations under subparagraph (A), the Secretary
shall provide to the relevant Committees of Congress a
report that provides, with respect to each
recommendation, a plan for the implementation, or an
explanation as to why implementation is inadvisable, of
such recommendations. The Office shall continue to
monitor federally funded and supported information
technology and quality initiatives (including the initiatives
authorized in this title), and periodically update recommendations to
the President and the Secretary.
``(d) Resources.--The President shall make available to the Office,
the resources, both financial and otherwise, necessary to enable the
Director to carry out the purposes of, and perform the duties and
responsibilities of the Office under, this section.
``(e) Detail of Federal Employees.--Upon the request of the
Director, the head of any Federal agency is authorized to detail,
without reimbursement from the Office, any of the personnel of such
agency to the Office to assist it in carrying out its duties under this
section. Any such detail shall not interrupt or otherwise affect the
civil service status or privileges of the Federal employee.
``SEC. 2903. PROMOTING THE INTEROPERABILITY OF HEALTH CARE INFORMATION
TECHNOLOGY SYSTEMS.
``(a) Development, and Federal Government Adoption, of Standards.--
``(1) Adoption.--
``(A) In general.--Not later than 2 years after the
date of the enactment of this title, the Director, in
collaboration with the Consolidated Health Informatics
Initiative (or a successor organization to such
Initiative), shall provide for the adoption by the
Federal Government of national data and communication
health information technology standards that promote
the efficient exchange of data between varieties of
provider health information technology systems. In
carrying out the preceding sentence, the Director may
adopt existing standards. Except as otherwise provided
for in this title, standards adopted under this section
shall be voluntary for private sector entities.
``(B) Grants or contracts.--The Director may
utilize grants or contracts to provide for the private
sector development of standards for adoption by the
Federal Government under subparagraph (A).
``(C) Definition.--In this paragraph, the term
`provide for' means that the Director shall promulgate,
and each Federal agency or department shall adopt,
regulations to ensure that each such agency or
department complies with the requirements of subsection
(b).
``(2) Requirements.--The standards developed and adopted
under paragraph (1) shall be designed to--
``(A) enable health information technology to be
used for the collection and use of clinically specific
data;
``(B) promote the interoperability of health care
information across health care settings;
``(C) facilitate clinical decision support through
the use of health information technology; and
``(D) ensure the privacy and confidentiality of
medical records.
``(3) Public private partnership.--Consistent with
activities being carried out on the date of enactment of this
title, including the Consolidated Health Informatics Initiative
(or a successor organization to such Initiative), health
information technology standards shall be adopted by the
Director under paragraph (1) at the conclusion of a
collaborative process that includes consultation between the
Federal Government and private sector health care and
information technology stakeholders.
``(4) Privacy and security.--The regulations promulgated by
the Secretary under part C of title XI of the Social Security
Act (42 U.S.C. 1320d et seq.) and sections 261, 262, 263, and
264 of the Health Insurance Portability and Accountability Act
of 1996 (42 U.S.C. 1320d-2 note) with respect to the privacy,
confidentiality, and security of health information shall apply
to the implementation of programs and activities under this
title.
``(5) Pilot tests.--To the extent practical, the Director
shall pilot test the health information technology data
standards developed under paragraph (1) prior to their
implementation under this section.
``(6) Dissemination.--
``(A) In general.--The Director shall ensure that
the standards adopted under paragraph (1) are widely
disseminated to interested stakeholders.
``(B) Licensing.--To facilitate the dissemination
and implementation of the standards developed and
adopted under paragraph (1), the Director may license
such standards, or utilize other means, to ensure the
widespread use of such standards.
``(b) Implementation of Standards.--
``(1) Purchase of systems by the secretary.--Effective
beginning on the date that is 1 year after the adoption of the
technology standards pursuant to subsection (a), the Secretary
shall not purchase any health care information technology
system unless such system is in compliance with the standards
adopted under subsection (a), nor shall the Director approve
any proposal pursuant to section 2902(c)(3) unless such
proposal utilizes systems that are in compliance with the
standards adopted under subsection (a).
``(2) Recipients of federal funds.--Effective on the date
described in paragraph (1), no appropriated funds may be used
to purchase a health care information technology system unless
such system is in compliance with applicable standards adopted
under subsection (a).
``(c) Modification of Standards.--The Director shall provide for
ongoing oversight of the health information technology standards
developed under subsection (a) to--
``(1) identify gaps or other shortcomings in such
standards; and
``(2) modify such standards when determined appropriate or
develop additional standards, in collaboration with standard
setting organizations.
``SEC. 2904. LOAN GUARANTEES FOR THE ADOPTION OF HEALTH INFORMATION
TECHNOLOGY.
``(a) In General.--The Director shall guarantee payment of the
principal of and the interest on loans made to eligible entities to
enable such entities--
``(1) to implement local health information infrastructures
to facilitate the development of interoperability across health
care settings to improve quality and efficiency; or
``(2) to facilitate the purchase and adoption of health
information technology to improve quality and efficiency.
``(b) Eligibility.--To be eligible to receive a loan guarantee
under subsection (a) an entity shall--
``(1) with respect to an entity desiring a loan guarantee--
``(A) under subsection (a)(1), be a coalition of
entities that represent an independent consortium of
health care stakeholders within a community that--
``(i) includes--
``(I) physicians (as defined in
section 1881(r)(1) of the Social
Security Act);
``(II) hospitals; and
``(III) group health plans or other
health insurance issuers (as such terms
are defined in section 2791); and
``(ii) may include any other health care
providers; or
``(B) under subsection (a)(2) be a health care
provider;
``(2) to the extent practicable, adopt the national health
information technology standards adopted under section 2903;
``(3) provide assurances that the entity shall submit to
the Director regular reports on the activities carried out
under the loan guarantee, including--
``(A) a description of the financial costs and
benefits of the project involved and of the entities to
which such costs and benefits accrue;
``(B) a description of the impact of the project on
health care quality and safety; and
``(C) a description of any reduction in duplicative
or unnecessary care as a result of the project
involved;
``(4) provide assurances that not later than 30 days after
the development of the standard quality measures pursuant to
section 2906, the entity shall submit to the Director regular
reports on such measures, including provider level data and
analysis of the impact of information technology on such
measures;
``(5) prepare and submit to the Director an application at
such time, in such manner, and containing such information as
the Director may require.
``(c) Use of Funds.--Amounts received under a loan guarantee under
subsection (a) shall be used--
``(1) with respect to a loan guarantee described in
subsection (a)(1)--
``(A) to develop a plan for the implementation of a
local health information infrastructure under this
section;
``(B) to establish systems for the sharing of data
in accordance with the national health information
technology standards developed under section 2903;
``(C) to purchase directly related integrated
hardware and software to establish an interoperable
health information technology system that is capable of
linking to a local health care information
infrastructure; and
``(D) to train staff, maintain health information
technology systems, and maintain adequate security and
privacy protocols;
``(2) with respect to a loan guarantee described in
subsection (a)(2)--
``(A) to develop a plan for the purchase and
installation of health information technology;
``(B) to purchase directly related integrated
hardware and software to establish an interoperable
health information technology system that is capable of
linking to a national or local health care information
infrastructure; and
``(C) to train staff, maintain health information
technology systems, and maintain adequate security and
privacy protocols; and
``(3) to carry out any other activities determined
appropriate by the Director.
``(d) Special Considerations for Certain Entities.--In awarding
loan guarantees under this section, the Director shall give special
consideration to eligible entities that--
``(1) provide service to low-income and underserved
populations; and
``(2) agree to electronically submit the information
described in paragraphs (3) and (4) of subsection (b) on a
daily basis.
``(e) Special Considerations for Local Health Information
Infrastructures.--In awarding loan guarantees under this section to
local health information infrastructures, the Director shall give
special consideration to eligible entities that--
``(1) include at least 50 percent of the patients living in
the designated coverage area;
``(2) incorporate public health surveillance and reporting
into the overall architecture of the proposed infrastructure;
and
``(3) link local health information infrastructures.
``(f) Areas of Specific Interest.--In awarding loan guarantees
under this section, the Director shall include--
``(1) entities with a coverage area that includes an entire
State; and
``(2) entities with a multi-state coverage area.
``(g) Administrative Provisions.--
``(1) Aggregate amount.--
``(A) In general.--Except as provided in
subparagraph (B), the aggregate amount of principal of
loans guaranteed under subsection (a) with respect to
an eligible entity may not exceed $5,000,000. In any
12-month period the amount disbursed to an eligible
entity under this section (by a lender under a
guaranteed loan) may not exceed $5,000,000.
``(B) Exception.--The cumulative total of the
principal of the loans outstanding at any time to which
guarantees have been issued under subsection (a) may
not exceed such limitations as may be specified in
appropriation Acts.
``(2) Protection of federal government.--
``(A) In general.--The Director may not approve an
application for a loan guarantee under this section
unless the Director determines that--
``(i) the terms, conditions, security (if
any), and schedule and amount of repayments
with respect to the loan are sufficient to
protect the financial interests of the United
States and are otherwise reasonable, including
a determination that the rate of interest does
not exceed such percent per annum on the
principal obligation outstanding as the
Director determines to be reasonable, taking
into account the range of interest rates
prevailing in the private market for loans with
similar maturities, terms, conditions, and
security and the risks assumed by the United
States; and
``(ii) the loan would not be available on
reasonable terms and conditions without the
enactment of this section.
``(B) Recovery.--
``(i) In general.--The United States shall
be entitled to recover from the applicant for a
loan guarantee under this section the amount of
any payment made pursuant to such loan
guarantee, unless the Director for good cause
waives such right of recovery, and, upon making
any such payment, the United States shall be
subrogated to all of the rights of the
recipient of the payments with respect to which
the loan was made.
``(ii) Modification of terms.--Any terms
and conditions applicable to a loan guarantee
under this section may be modified by the
Director to the extent the Director determines
it to be consistent with the financial interest
of the United States.
``(3) Defaults.--The Director may take such action as the
Director deems appropriate to protect the interest of the
United States in the event of a default on a loan guaranteed
under this section, including taking possession of, holding,
and using real property pledged as security for such a loan
guarantee.
``(h) Authorization of Appropriations.--
``(1) In general.--There is authorized to be appropriated
to carry out this section, such sums as may be necessary for
each of fiscal years 2006 through 2011.
``(2) Availability.--Amounts appropriated under
subparagraph (A) shall remain available for obligation until
expended.
``SEC. 2905. GRANTS FOR THE PURCHASE OF HEALTH INFORMATION TECHNOLOGY.
``(a) In General.--The Director may award competitive grants to
eligible entities--
``(1) to implement local health information infrastructures
to facilitate the development of interoperability across health
care settings; or
``(2) to facilitate the purchase and adoption of health
information technology.
``(b) Eligibility.--To be eligible to receive a grant under
subsection (a) an entity shall--
``(1) demonstrate financial need to the Director;
``(2) with respect to an entity desiring a grant--
``(A) under subsection (a)(1), represent an
independent consortium of health care stakeholders
within a community that--
``(i) includes--
``(I) physicians (as defined in
section 1881(r)(1) of the Social
Security Act);
``(II) hospitals; and
``(III) group health plans or other
health insurance issuers (as such terms
are defined in section 2791); and
``(ii) may include any other health care
providers; or
``(B) under subsection (a)(2) be a health care
provider that provides health care services to low-
income and underserved populations;
``(3) adopt the national health information technology
standards developed under section 2903;
``(4) provide assurances that the entity shall submit to
the Director regular reports on the activities carried out
under the loan guarantee, including--
``(A) a description of the financial costs and
benefits of the project involved and of the entities to
which such costs and benefits accrue;
``(B) a description of the impact of the project on
health care quality and safety; and
``(C) a description of any reduction in duplicative
or unnecessary care as a result of the project
involved;
``(5) provide assurances that not later than 30 days after
the development of the standard quality measures pursuant to
section 2906, the entity shall submit to the Director regular
reports on such measures, including provider level data and
analysis of the impact of information technology on such
measures;
``(6) prepare and submit to the Director an application at
such time, in such manner, and containing such information as
the Director may require; and
``(7) agree to provide matching funds in accordance with
subsection (g).
``(c) Use of Funds.--Amounts received under a grant under
subsection (a) shall be used to--
``(1) with respect to a grant described in subsection
(a)(1)--
``(A) to develop a plan for the implementation of a
local health information infrastructure under this
section;
``(B) to establish systems for the sharing of data
in accordance with the national health information
technology standards developed under section 2903;
``(C) to implement, enhance, or upgrade a
comprehensive, electronic health information technology
system; and
``(D) to maintain adequate security and privacy
protocols;
``(2) with respect to a grant described in subsection
(a)(2)--
``(A) to develop a plan for the purchase and
installation of health information technology;
``(B) to purchase directly related integrated
hardware and software to establish an interoperable
health information technology system that is capable of
linking to a national or local health care information
infrastructure; and
``(C) to train staff, maintain health information
technology systems, and maintain adequate security and
privacy protocols;
``(3) maintain adequate security and privacy protocols; and
``(4) carry out any other activities determined appropriate
by the Director.
``(d) Special Considerations for Certain Entities.--In awarding
grants under this section, the Director shall give special
consideration to eligible entities that--
``(1) provide service to low-income and underserved
populations; and
``(2) agree to electronically submit the information
described in paragraphs (4) and (5) of subsection (b).
``(e) Special Considerations for Local Health Information
Infrastructures.--In awarding grants under this section to local health
information infrastructures, the Director shall give special
consideration to eligible entities that--
``(1) include at least 50 percent of the patients living in
the designated coverage area;
``(2) incorporate public health surveillance and reporting
into the overall architecture of the proposed infrastructure;
and
``(3) link local health information infrastructures;
``(f) Areas of Specific Interest.--In awarding grants under this
section, the Director shall include--
``(1) entities with a coverage area that includes an entire
State; and
``(2) entities with a multi-state coverage area.
``(g) Matching Requirement.--
``(1) In general.--The Director may not make a grant under
this section to an entity unless the entity agrees that, with
respect to the costs to be incurred by the entity in carrying
out the infrastructure program for which the grant was awarded,
the entity will make available (directly or through donations
from public or private entities) non-Federal contributions
toward such costs in an amount equal to not less than 20
percent of such costs ($1 for each $5 of Federal funds provided
under the grant).
``(2) Determination of amount contributed.--Non-Federal
contributions required under paragraph (1) may be in cash or in
kind, fairly evaluated, including equipment, technology, or
services. Amounts provided by the Federal Government, or
services assisted or subsidized to any significant extent by
the Federal Government, may not be included in determining the
amount of such non-Federal contributions.
``(h) Authorization of Appropriations.--
``(1) In general.--There is authorized to be appropriated
to carry out this section, such sums as may be necessary for
each of fiscal years 2006 through 2011.
``(2) Availability.--Amounts appropriated under paragraph
(1) shall remain available for obligation until expended.''.
SEC. 202. STANDARDIZED MEASURES OF QUALITY HEALTH CARE AND DATA
COLLECTION.
Title XXIX of the Public Health Service Act, as added by section
201, is amended by adding at the end the following:
``SEC. 2906. STANDARDIZED MEASURES OF QUALITY HEALTH CARE.
``(a) In General.--
``(1) Collaboration.--The Secretary of Health and Human
Services, the Secretary of Defense, and the Secretary of
Veterans Affairs (referred to in this section as the
`Secretaries'), in consultation with the Quality Interagency
Coordination Taskforce (as established by Executive Order on
March 13, 1998), the Institute of Medicine, the Joint
Commission on Accreditation of Healthcare Organizations, the
National Committee for Quality Assurance, the American Health
Quality Association, the National Quality Forum, the Medicare
Payment Advisory Committee, and other individuals and
organizations determined appropriate by the Secretaries, shall
establish uniform health care quality measures to assess the
effectiveness, timeliness, patient-centeredness, efficiency,
equity, and safety of care delivered across all federally
supported health delivery programs.
``(2) Development of measures.--Not later than 18 months
after the date of enactment of this title, the Secretaries
shall develop standardized sets of quality measures for each of
the 20 priority areas for improvement in health care quality as
identified by the Institute of Medicine in their report
entitled `Priority Areas for National Action' in 2003, or other
such areas as identified by the Secretaries in order to assist
beneficiaries in making informed choices about health plans or
care delivery systems. The selection of appropriate quality
indicators under this subsection shall include the evaluation
criteria formulated by clinical professionals, consumers, and
data collection experts.
``(3) Pilot testing.--Each federally supported health
delivery program may conduct a pilot test of the quality
measures developed under paragraph (2) that shall include a
collection of patient-level data and a public release of
comparative performance reports.
``(b) Public Reporting Requirements.--The Secretaries, working
collaboratively, shall establish public reporting requirements for
clinicians, institutional providers, and health plans in each of the
federally supported health delivery program described in subsection
(a). Such requirements shall provide that the entities described in the
preceding sentence shall report to the appropriate Secretary on the
measures developed under subsection (a).
``(c) Full Implementation.--The Secretaries, working
collaboratively, shall implement all sets of quality measures and
reporting systems developed under subsections (a) and (b) by not later
than the date that is 1 year after the date on which the measures are
developed under subsection (a)(2).
``(d) Reports.--Not later than 1 year after the date of enactment
of this title, and annually thereafter, the Secretary shall--
``(1) submit to Congress a report that details the
collaborative efforts carried out under subsection (a), the
progress made on standardizing quality indicators throughout
the Federal Government, and the state of quality measurement
for priority areas that links data to the report submitted
under paragraph (2) for the year involved; and
``(2) submit to Congress a report that details areas of
clinical care requiring further research necessary to establish
effective clinical treatments that will serve as a basis for
additional quality indicators.
``(e) Comparative Quality Reports.--Beginning not later than 3
years after the date of enactment of this title, in order to make
comparative quality information available to health care consumers,
including members of health disparity populations, health
professionals, public health officials, researchers, and other
appropriate individuals and entities, the Secretaries shall provide for
the pooling, analysis, and dissemination of quality measures collected
under this section. Nothing in this section shall be construed as
modifying the privacy standards under the Health Insurance Portability
and Accountability Act of 1996 (Public Law 104-191).
``(f) Ongoing Evaluation of Use.--The Secretary of Health and Human
Services shall ensure the ongoing evaluation of the use of the health
care quality measures established under this section.
``(g) Evaluation and Regulations.--
``(1) Evaluation.--
``(A) In general.--The Secretary shall, directly or
indirectly through a contract with another entity,
conduct an evaluation of the collaborative efforts of
the Secretaries to establish uniform health care
quality measures and reporting requirements for
federally supported health care delivery programs as
required under this section.
``(B) Report.--Not later than 1 year after the date
of enactment of this title, the Secretary of Health and
Human Services shall submit a report to the appropriate
committees of Congress concerning the results of the
evaluation under subparagraph (A).
``(2) Regulations.--
``(A) Proposed.--Not later than 6 months after the
date on which the report is submitted under paragraph
(1)(B), the Secretary shall publish proposed
regulations regarding the application of the uniform
health care quality measures and reporting requirements
described in this section to federally supported health
delivery programs.
``(B) Final regulations.--Not later than 1 year
after the date on which the report is submitted under
paragraph (1)(B), the Secretary shall publish final
regulations regarding the uniform health care quality
measures and reporting requirements described in this
section.
``(h) Definitions.--In this section, the term `federally supported
health delivery program' means a program that is funded by the Federal
Government under which health care items or services are delivered
directly to patients.''.
TITLE III--MAKING HEALTH CARE MORE AFFORDABLE FOR CHILDREN AND PREGNANT
WOMEN
Subtitle A--Covering all Children
SEC. 300. FINDINGS.
Congress makes the following findings:
(1) Need for universal coverage.--
(A) Currently, there are 9,000,000 children under
the age of 19 that are uninsured. One out of every 8
children are uninsured while 1 in 5 Hispanic children
and 1 in 7 African American children are uninsured.
Three-quarters, approximately 6,800,000, of these
children are eligible but not enrolled in the medicaid
program or the State children's health insurance
program (SCHIP). Long-range studies found that 1 in 3
children went without health insurance for all or part
of 2002 and 2003.
(B) Low-income children are 3 times as likely as
children in higher income families to be uninsured. It
is estimated that 65 percent of uninsured children have
at least 1 parent working full time over the course of
the year.
(C) It is estimated that 50 percent of all legal
immigrant children in families with income that is less
than 200 percent of the Federal poverty line are
uninsured. In States without programs to cover
immigrant children, 57 percent of non-citizen children
are uninsured.
(D) Children in the Southern and Western parts of
the United States were nearly 1.7 times more likely to
be uninsured than children in the Northeast. In the
Northeast, 9.4 percent of children are uninsured while
in the Midwest, 8.3 percent are uninsured. The South's
rate of uninsured children is 14.3 percent while the
West has an uninsured rate of 13 percent.
(E) Children's health care needs are neglected in
the United States. One-quarter of young children in the
United States are not fully up to date on their basic
immunizations. One-third of children with chronic
asthma do not get a prescription for the necessary
medications to manage the disease.
(F) According to the Centers for Disease Control
and Prevention, nearly \1/2\ of all uninsured children
have not had a well-child visit in the past year. One
out of every 5 children has problems accessing needed
care, and 1 out of every 4 children do not receive
annual dental exams. One in 6 uninsured children had a
delayed or unmet medical need in the past year.
Minority children are less likely to receive proven
treatments such as prescription medications to treat
chronic disease.
(G) There are 7,600,000 young adults between the
ages of 19 and 20. In the United States, approximately
28 percent, or 2,100,000 individuals, of this group are
uninsured.
(H) Chronic illness and disability among children
are on the rise. Children most at risk for chronic
illness and disability are children who are most likely
to be poor and uninsured.
(2) Role of the medicaid and state children's health
insurance programs.--
(A) The medicaid program and SCHIP serve as a
crucial health safety net for 30,000,000 children.
During the recent economic downturn and the highest
number of uninsured individuals ever recorded in the
United States, the medicaid program and SCHIP offset
losses in employer-sponsored coverage. While the number
of children living in low-income families increased by
2,000,000 between 2000 and 2003, the number of
uninsured children fell due to the medicaid program and
SCHIP.
(B) In 2003, 25,000,000 children were enrolled in
the medicaid program, accounting for \1/2\ of all
enrollees and only 19 percent of total program costs.
(C) The medicaid program and SCHIP do more than
just fill in the gaps. Gains in public coverage have
reduced the percentage of low-income uninsured by a \1/
3\ from 1997 to 2003. In addition, a recent study found
that publicly-insured children are more likely to
obtain medical care, preventive care and dental care
than similar low-income privately-insured children.
(D) Publicly funded programs such as the medicaid
program and SCHIP actually improve children's health.
Children who are currently insured by public programs
are in better health than they were a year ago.
Expansion of coverage for children and pregnant women
under the medicaid program and SCHIP reduces rates of
avoidable hospitalizations by 22 percent.
(E) Studies have found that children enrolled in
public insurance programs experienced a 68 percent
improvement in measures of school performance.
(F) Despite the success of expansions in general
under the medicaid program and SCHIP, due to current
budget constraints, many States have stopped doing
aggressive outreach and have raised premiums and cost-
sharing requirements on families under these programs.
In addition, 8 States stopped enrollment in SCHIP for a
period of time between April 2003 and July 2004. As a
result, SCHIP enrollment fell by 200,000 children for
the first time in the program's history.
(G) It is estimated that nearly 50 percent of
children covered through SCHIP do not remain in the
program due to reenrollment barriers. A recent study
found that between 10 and 40 percent of these children
are ``lost'' in the system. Difficult renewal policies
and reenrollment barriers make seamless coverage in
SCHIP unattainable. Studies indicate that as many as 67
percent of children who were eligible but not enrolled
for SCHIP had applied for coverage but were denied due
to procedural issues.
(H) While the medicaid program and SCHIP expansions
to date have done much to offset what otherwise would
have been a significant loss of coverage among children
because of declining access to employer coverage, the
shortcomings of previous expansions, such as the
failure to enroll all eligible children and caps on
enrollment in SCHIP because of under-funding, also are
clear.
CHAPTER 1--EXPANDED COVERAGE OF CHILDREN UNDER MEDICAID AND SCHIP
SEC. 301. STATE OPTION TO RECEIVE 100 PERCENT FMAP FOR MEDICAL
ASSISTANCE FOR CHILDREN IN POVERTY IN EXCHANGE FOR
EXPANDED COVERAGE OF CHILDREN IN WORKING POOR FAMILIES
UNDER TITLE XXI.
(a) State Option.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.) is amended by redesignating section 1936 as section 1937,
and by inserting after section 1935 the following:
``state option for increased fmap for medical assistance for children
in poverty in exchange for expanded coverage of children in working
poor families under title xxi
``Sec. 1936. (a) 100 Percent FMAP.--
``(1) In general.--Notwithstanding any other provision of
this title, in the case of a State that, through an amendment
to each of its State plans under this title and title XXI (or
to a waiver of either such plan), agrees to satisfy the
conditions described in subsections (b), (c), and (d) the
Federal medical assistance percentage shall be 100 percent with
respect to the total amount expended by the State for providing
medical assistance under this title for each fiscal year
quarter beginning on or after the date described in subsection
(e) for children whose family income does not exceed 100
percent of the poverty line.
``(2) Limitation on scope of application of increase.--The
increase in the Federal medical assistance percentage for a
State under this section shall apply only with respect to the
total amount expended for providing medical assistance under
this title for a fiscal year quarter for children described in
paragraph (1) and shall not apply with respect to--
``(A) any other payments made under this title,
including disproportionate share hospital payments
described in section 1923;
``(B) payments under title IV or XXI; or
``(C) any payments made under this title or title
XXI that are based on the enhanced FMAP described in
section 2105(b).
``(b) Eligibility Expansions.--The condition described in this
subsection is that the State agrees to do the following:
``(1) Coverage under medicaid or schip for children in
families whose income does not exceed 300 percent of the
poverty line.--
``(A) In general.--The State agrees to provide
medical assistance under this title or child health
assistance under title XXI to children whose family
income exceeds the medicaid applicable income level (as
defined in section 2110(b)(4) but by substituting
`January 1, 2005' for `March 31, 1997'), but does not
exceed 300 percent of the poverty line.
``(B) State option to expand coverage through
subsidized purchase of family coverage.--A State may
elect to carry out subparagraph (A) through the
provision of assistance for the purchase of dependent
coverage under a group health plan or health insurance
coverage if--
``(i) the dependent coverage is consistent
with the benefit standards under this title or
title XXI, as approved by the Secretary; and
``(ii) the State provides `wrap-around'
coverage under this title or title XXI.
``(C) Deemed satisfaction for certain states.--A
State that, as of January 1, 2005, provides medical
assistance under this title or child health assistance
under title XXI to children whose family income is 300
percent of the poverty line shall be deemed to satisfy
this paragraph.
``(2) Coverage for children under age 21.--The State agrees
to define a child for purposes of this title and title XXI as
an individual who has not attained 21 years of age.
``(3) Opportunity for higher income children to purchase
schip coverage.--The State agrees to permit any child whose
family income exceeds 300 percent of the poverty line to
purchase full or `wrap-around' coverage under title XXI at the
full cost of providing such coverage, as determined by the
State.
``(4) Coverage for legal immigrant children.--The State
agrees to--
``(A) provide medical assistance under this title
and child health assistance under title XXI for alien
children who are lawfully residing in the United States
(including battered aliens described in section 431(c)
of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996) and who are otherwise
eligible for such assistance in accordance with section
1903(v)(4) and 2107(e)(1)(E); and
``(B) not establish or enforce barriers that deter
applications by such aliens, including through the
application of the removal of the barriers described in
subsection (c).
``(c) Removal of Enrollment and Access Barriers.--The condition
described in this subsection is that the State agrees to do the
following:
``(1) Presumptive eligibility for children.--The State
agrees to--
``(A) provide presumptive eligibility for children
under this title and title XXI in accordance with
section 1920A;
``(B) treat any items or services that are provided
to an uncovered child (as defined in section
2110(c)(8)) who is determined ineligible for medical
assistance under this title as child health assistance
for purposes of paying a provider of such items or
services, so long as such items or services would be
considered child health assistance for a targeted low-
income child under title XXI.
``(2) Adoption of 12-month continuous enrollment.--The
State agrees to provide that eligibility for assistance under
this title and title XXI shall not be regularly redetermined
more often than once every year for children.
``(3) Acceptance of self-declaration of income.--The State
agrees to permit the family of a child applying for medical
assistance under this title or child health assistance under
title XXI to declare and certify by signature under penalty of
perjury family income for purposes of collecting financial
eligibility information.
``(4) Adoption of acceptance of eligibility determinations
for other assistance programs.--The State agrees to accept
determinations (made within a reasonable period, as found by
the State, before its use for this purpose) of an individual's
family or household income made by a Federal or State agency
(or a public or private entity making such determination on
behalf of such agency), including the agencies administering
the Food Stamp Act of 1977, the Richard B. Russell National
School Lunch Act, and the Child Nutrition Act of 1966,
notwithstanding any differences in budget unit, disregard,
deeming, or other methodology, but only if--
``(A) such agency has fiscal liabilities or
responsibilities affected or potentially affected by
such determinations; and
``(B) any information furnished by such agency
pursuant to this subparagraph is used solely for
purposes of determining eligibility for medical
assistance under this title or for child health
assistance under title XXI.
``(5) No assets test.--The State agrees to not (or
demonstrates that it does not) apply any assets or resources
test for eligibility under this title or title XXI with respect
to children.
``(6) Eligibility Determinations and Redeterminations.--
``(A) In general.--The State agrees for purposes of
initial eligibility determinations and redeterminations
of children under this title and title XXI not to
require a face-to-face interview and to permit
applications and renewals by mail, telephone, and the
Internet.
``(B) Nonduplication of information.--
``(i) In general.--For purposes of
redeterminations of eligibility for currently
or previously enrolled children under this
title and title XXI, the State agrees to use
all information in its possession (including
information available to the State under other
Federal or State programs) to determine
eligibility or redetermine continued
eligibility before seeking similar information
from parents.
``(ii) Rule of construction.--Nothing in
clause (i) shall be construed as limiting any
obligation of a State to provide notice and a
fair hearing before denying, terminating, or
reducing a child's coverage based on such
information in the possession of the State.
``(7) No waiting list for children under schip.--The State
agrees to not impose any numerical limitation, waiting list,
waiting period, or similar limitation on the eligibility of
children for child health assistance under title XXI or to
establish or enforce other barriers to the enrollment of
eligible children based on the date of their application for
coverage.
``(8) Adequate provider payment rates.--The State agrees
to--
``(A) establish payment rates for children's health
care providers under this title that are no less than
the average of payment rates for similar services for
such providers provided under the benchmark benefit
packages described in section 2103(b);
``(B) establish such rates in amounts that are
sufficient to ensure that children enrolled under this
title or title XXI have adequate access to
comprehensive care, in accordance with the requirements
of section 1902(a)(30)(A); and
``(C) include provisions in its contracts with
providers under this title guaranteeing compliance with
these requirements.
``(d) Maintenance of Medicaid Eligibility Levels for Children.--
``(1) In general.--The condition described in this
subsection is that the State agrees to maintain eligibility
income, resources, and methodologies applied under this title
(including under a waiver of such title or under section 1115)
with respect to children that are no more restrictive than the
eligibility income, resources, and methodologies applied with
respect to children under this title (including under such a
waiver) as of January 1, 2005.
``(2) Rule of construction.--Nothing in this section shall
be construed as implying that a State does not have to comply
with the minimum income levels required for children under
section 1902(l)(2).
``(e) Date Described.--The date described in this subsection is the
date on which, with respect to a State, a plan amendment that satisfies
the requirements of subsections (b), (c), and (d) is approved by the
Secretary.
``(f) Definition of Poverty Line.--In this section, the term
`poverty line' has the meaning given that term in section
2110(c)(5).''.
(b) Conforming Amendments.--
(1) The third sentence of section 1905(b) of the Social
Security Act (42 U.S.C. 1396d(b)) is amended by inserting
before the period the following: ``, and with respect to
amounts expended for medical assistance for children on or
after the date described in subsection (d) of section 1936, in
the case of a State that has, in accordance with such section,
an approved plan amendment under this title and title XXI''.
(2) Section 1903(f)(4) of the Social Security Act (42
U.S.C. 1396b(f)(4)) is amended--
(A) in subparagraph (C), by adding ``or'' after
``section 1611(b)(1),''; and
(B) by inserting after subparagraph (C), the
following:
``(D) who would not receive such medical assistance but for
State electing the option under section 1936 and satisfying the
conditions described in subsections (b), (c), and (d) of such
section,''.
SEC. 302. ELIMINATION OF CAP ON SCHIP FUNDING FOR STATES THAT EXPAND
ELIGIBILITY FOR CHILDREN.
(a) In General.--Section 2105 of the Social Security Act (42 U.S.C.
1397dd) is amended by adding at the end the following:
``(h) Guaranteed Funding for Child Health Assistance for Coverage
Expansion States.--
``(1) In general.--Only in the case of a State that has, in
accordance with section 1936, an approved plan amendment under
this title and title XIX, any payment cap that would otherwise
apply to the State under this title as a result of having
expended all allotments available for expenditure by the State
with respect to a fiscal year shall not apply with respect to
amounts expended by the State on or after the date described in
section 1936(d).
``(2) Appropriation.--There is appropriated, out of any
money in the Treasury not otherwise appropriated, such sums as
may be necessary for the purpose of paying a State described in
paragraph (1) for each quarter beginning on or after the date
described in section 1936(d), an amount equal to the enhanced
FMAP of expenditures described in paragraph (1) and incurred
during such quarter.''.
(b) Conforming Amendments.--Section 2104 of the Social Security Act
(42 U.S.C. 1397dd) is amended--
(1) in subsection (a), by inserting ``subject to section
2105(h),'' after ``under this section,'';
(2) in subsection (b)(1), by inserting ``and section
2105(h)'' after ``Subject to paragraph (4)''; and
(3) in subsection (c)(1), by inserting ``subject to section
2105(h),'' after ``for a fiscal year,''.
CHAPTER 2--STATE OPTIONS FOR INCREMENTAL CHILD COVERAGE EXPANSIONS
SEC. 311. STATE OPTION TO ENROLL LOW-INCOME CHILDREN OF STATE EMPLOYEES
IN SCHIP.
Section 2110(b)(2) of the Social Security Act (42 U.S.C.
1397jj(b)(2)) is amended--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively and realigning the left margins of
such clauses appropriately;
(2) by striking ``Such term'' and inserting the following:
``(A) In general.--Such term''; and
(3) by adding at the end the following:
``(B) State option to enroll low-income children of
state employees.--At the option of a State,
subparagraph (A)(ii) shall not apply to any low-income
child who would otherwise be eligible for child health
assistance under this title but for such
subparagraph.''.
SEC. 312. STATE OPTION FOR PASSIVE RENEWAL OF ELIGIBILITY FOR CHILDREN
UNDER MEDICAID AND SCHIP.
(a) In General.--Section 1902(l) of the Social Security Act (42
U.S.C. 1396a(l)) is amended by adding at the end the following:
``(5) Notwithstanding any other provision of this title, a State
may provide that an individual who has not attained 21 years of age who
has been determined eligible for medical assistance under this title
shall remain eligible for medical assistance until such time as the
State has information demonstrating that the individual is no longer so
eligible.''.
(b) Application Under Title XXI.--Section 2107(e)(1) of the Social
Security Act (42 U.S.C. 1397gg(e)) is amended--
(1) by redesignating subparagraphs (B) through (D) as
subparagraphs (C) through (E), respectively; and
(2) by inserting after subparagraph (A), the following:
``(B) Section 1902(l)(5) (relating to passive
renewal of eligibility for children).''.
CHAPTER 3--TAX INCENTIVES FOR HEALTH INSURANCE COVERAGE OF CHILDREN
SEC. 321. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE OF CHILDREN.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to refundable credits)
is amended by redesignating section 36 as section 37 and by inserting
after section 35 the following new section:
``SEC. 36. HEALTH INSURANCE COVERAGE OF CHILDREN.
``(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this subtitle an amount
equal to so much of the amount paid during the taxable year, not
compensated for by insurance or otherwise, for qualified health
insurance for each dependent child of the taxpayer, as exceeds 5
percent of the adjusted gross income of such taxpayer for such taxable
year.
``(b) Dependent child.--For purposes of this section, the term
`dependent child' means any child (as defined in section 152(f)(1)) who
has not attained the age of 19 as of the close of the calendar year in
which the taxable year of the taxpayer begins and with respect to whom
a deduction under section 151 is allowable to the taxpayer.
``(c) Qualified Health Insurance.--For purposes of this section--
``(1) In general.--The term `qualified health insurance'
means insurance, either employer-provided or made available
under title XIX or XXI of the Social Security Act, which
constitutes medical care as defined in section 213(d) without
regard to--
``(A) paragraph (1)(C) thereof, and
``(B) so much of paragraph (1)(D) thereof as
relates to qualified long-term care insurance
contracts.
``(2) Exclusion of certain other contracts.--Such term
shall not include insurance if a substantial portion of its
benefits are excepted benefits (as defined in section 9832(c)).
``(d) Medical Savings Account and Health Savings Account
Contributions.--
``(1) In general.--If a deduction would (but for paragraph
(2)) be allowed under section 220 or 223 to the taxpayer for a
payment for the taxable year to the medical savings account or
health savings account of an individual, subsection (a) shall
be applied by treating such payment as a payment for qualified
health insurance for such individual.
``(2) Denial of double benefit.--No deduction shall be
allowed under section 220 or 223 for that portion of the
payments otherwise allowable as a deduction under section 220
or 223 for the taxable year which is equal to the amount of
credit allowed for such taxable year by reason of this
subsection.
``(e) Special Rules.--
``(1) Determination of insurance costs.--The Secretary
shall provide rules for the allocation of the cost of any
qualified health insurance for family coverage to the coverage
of any dependent child under such insurance.
``(2) Coordination with deduction for health insurance
costs of self-employed individuals.--In the case of a taxpayer
who is eligible to deduct any amount under section 162(l) for
the taxable year, this section shall apply only if the taxpayer
elects not to claim any amount as a deduction under such
section for such year.
``(3) Coordination with medical expense and high deductible
health plan deductions.--The amount which would (but for this
paragraph) be taken into account by the taxpayer under section
213 or 224 for the taxable year shall be reduced by the credit
(if any) allowed by this section to the taxpayer for such year.
``(4) Denial of credit to dependents.--No credit shall be
allowed under this section to any individual with respect to
whom a deduction under section 151 is allowable to another
taxpayer for a taxable year beginning in the calendar year in
which such individual's taxable year begins.
``(5) Denial of double benefit.--No credit shall be allowed
under subsection (a) if the credit under section 35 is allowed
and no credit shall be allowed under 35 if a credit is allowed
under this section.
``(6) Election not to claim credit.--This section shall not
apply to a taxpayer for any taxable year if such taxpayer
elects to have this section not apply for such taxable year.''.
(b) Information Reporting.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 (relating to
information concerning transactions with other persons) is
amended by inserting after section 6050T the following new
section:
``SEC. 6050U. RETURNS RELATING TO PAYMENTS FOR QUALIFIED HEALTH
INSURANCE.
``(a) In General.--Any governmental unit or any person who, in
connection with a trade or business conducted by such person, receives
payments during any calendar year from any individual for coverage of a
dependent child (as defined in section 36(b)) of such individual under
creditable health insurance, shall make the return described in
subsection (b) (at such time as the Secretary may by regulations
prescribe) with respect to each individual from whom such payments were
received.
``(b) Form and Manner of Returns.--A return is described in this
subsection if such return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains--
``(A) the name, address, and TIN of the individual
from whom payments described in subsection (a) were
received,
``(B) the name, address, and TIN of each dependent
child (as so defined) who was provided by such person
with coverage under creditable health insurance by
reason of such payments and the period of such
coverage, and
``(C) such other information as the Secretary may
reasonably prescribe.
``(c) Creditable Health Insurance.--For purposes of this section,
the term `creditable health insurance' means qualified health insurance
(as defined in section 36(c)).
``(d) Statements To Be Furnished to Individuals With Respect to
Whom Information Is Required.--Every person required to make a return
under subsection (a) shall furnish to each individual whose name is
required under subsection (b)(2)(A) to be set forth in such return a
written statement showing--
``(1) the name and address of the person required to make
such return and the phone number of the information contact for
such person,
``(2) the aggregate amount of payments described in
subsection (a) received by the person required to make such
return from the individual to whom the statement is required to
be furnished, and
``(3) the information required under subsection (b)(2)(B)
with respect to such payments.
The written statement required under the preceding sentence shall be
furnished on or before January 31 of the year following the calendar
year for which the return under subsection (a) is required to be made.
``(e) Returns Which Would Be Required To Be Made by 2 or More
Persons.--Except to the extent provided in regulations prescribed by
the Secretary, in the case of any amount received by any person on
behalf of another person, only the person first receiving such amount
shall be required to make the return under subsection (a).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of such
Code (relating to definitions) is amended by
redesignating clauses (xiii) through (xviii) as clauses
(xiv) through (xix), respectively, and by inserting
after clause (xii) the following new clause:
``(xiii) section 6050U (relating to returns
relating to payments for qualified health
insurance),''.
(B) Paragraph (2) of section 6724(d) of such Code
is amended by striking ``or'' at the end of the next to
last subparagraph, by striking the period at the end of
the last subparagraph and inserting ``, or'', and by
adding at the end the following new subparagraph:
``(CC) section 6050U(d) (relating to returns
relating to payments for qualified health
insurance).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61 of such Code is
amended by inserting after the item relating to section 6050T
the following new item:
``Sec. 6050U. Returns relating to
payments for qualified health
insurance.''.
(c) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``, or
from section 36 of such Code''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by striking the last item and inserting the
following new items:
``Sec. 36. Health insurance coverage of
children.
``Sec. 37. Overpayments of tax.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.
SEC. 322. FORFEITURE OF PERSONAL EXEMPTION FOR ANY CHILD NOT COVERED BY
HEALTH INSURANCE.
(a) In General.--Section 151(d) of the Internal Revenue Code of
1986 (relating to exemption amount) is amended by adding at the end the
following new paragraph:
``(5) Reduction of exemption amount for any child not
covered by health insurance.--
``(A) In general.--Except as otherwise provided in
this paragraph, the exemption amount otherwise
determined under this subsection for any dependent
child (as defined in section 36(b)) for any taxable
year shall be reduced by the same percentage as the
percentage of such taxable year during which such
dependent child was not covered by qualified health
insurance (as defined in section 36(c)).
``(B) Full reduction if no proof of coverage is
provided.--For purposes of subparagraph (A), in the
case of any taxpayer who fails to attach to the return
of tax for any taxable year a copy of the statement
furnished to such taxpayer under section 6050U, the
percentage reduction under such subparagraph shall be
deemed to be 100 percent.
``(C) Nonapplication of paragraph to taxpayers in
lowest tax bracket.--This paragraph shall not apply to
any taxpayer whose taxable income for the taxable year
does not exceed the initial bracket amount determined
under section 1(i)(1)(B).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2004.
CHAPTER 4--MISCELLANEOUS
SEC. 331. REQUIREMENT FOR GROUP MARKET HEALTH INSURERS TO OFFER
DEPENDENT COVERAGE OPTION FOR WORKERS WITH CHILDREN.
(a) ERISA.--
(1) In general.--Subpart B of part 7 of subtitle B of title
I of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1185 et seq.) is amended by adding at the end the
following:
``SEC. 714. REQUIREMENT TO OFFER OPTION TO PURCHASE DEPENDENT COVERAGE
FOR CHILDREN.
``(a) Requirements for Coverage.--A group health plan, and a health
insurance issuer providing health insurance coverage in connection with
a group health plan, shall offer an individual who is enrolled in such
coverage the option to purchase dependent coverage for a child of the
individual.
``(b) No Employer Contribution Required.--An employer shall not be
required to contribute to the cost of purchasing dependent coverage for
a child by an individual who is an employee of such employer.
``(c) Definition of Child.--In this section, the term `child' means
an individual who has not attained 21 years of age.''.
(2) Clerical amendment.--The table of contents in section 1
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1001) is amended by inserting after the item relating to
section 713 the following:
``Sec. 714. Requirement to offer option to purchase dependent coverage
for children.''.
(b) Public Health Service Act.--Subpart 2 of part A of title XXVII
of the Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is amended
by adding at the end the following:
``SEC. 2707. REQUIREMENT TO OFFER OPTION TO PURCHASE DEPENDENT COVERAGE
FOR CHILDREN.
``(a) Requirements for Coverage.--A group health plan, and a health
insurance issuer providing health insurance coverage in connection with
a group health plan, shall offer an individual who is enrolled in such
coverage the option to purchase dependent coverage for a child of the
individual.
``(b) No Employer Contribution Required.--An employer shall not be
required to contribute to the cost of purchasing dependent coverage for
a child by an individual who is an employee of such employer.
``(c) Definition of Child.--In this section, the term `child' means
an individual who has not attained 21 years of age.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning on or after January 1, 2006.
SEC. 332. EFFECTIVE DATE.
Unless otherwise provided, the amendments made by this subtitle
shall take effect on October 1, 2005, and shall apply to child health
assistance and medical assistance provided on or after that date
without regard to whether or not final regulations to carry out such
amendments have been promulgated by such date.
Subtitle B--Covering Pregnant Women
SEC. 351. STATE OPTION TO EXPAND OR ADD COVERAGE OF PREGNANT WOMEN
UNDER THE MEDICAID PROGRAM AND STATE CHILDREN'S HEALTH
INSURANCE PROGRAM.
(a) Medicaid.--
(1) Authority to expand coverage.--Section 1902(l)(2)(A)(i)
of the Social Security Act (42 U.S.C. 1396a(l)(2)(A)(i)) is
amended by inserting ``(or such higher percentage as the State
may elect for purposes of expenditures for medical assistance
for pregnant women described in section 1905(u)(4)(A))'' after
``185 percent''.
(2) Enhanced matching funds available if certain conditions
met.--Section 1905 of the Social Security Act (42 U.S.C.
1396d), as amended by section 311(b)(2), is amended--
(A) in the fourth sentence of subsection (b), by
striking ``or (u)(4)'' and inserting ``, (u)(4), or
(u)(5)''; and
(B) in subsection (u)--
(i) by redesignating paragraph (5) as
paragraph (6); and
(ii) by inserting after paragraph (4) the
following new paragraph:
``(5) For purposes of the fourth sentence of subsection (b) and
section 2105(a), the expenditures described in this paragraph are the
following:
``(A) Certain pregnant women.--If the conditions described
in subparagraph (B) are met, expenditures for medical
assistance for pregnant women described in subsection (n) or
under section 1902(l)(1)(A) in a family the income of which
exceeds 185 percent of the poverty line, but does not exceed
the income eligibility level established under title XXI for a
targeted low-income child.
``(B) Conditions.--The conditions described in this
subparagraph are the following:
``(i) The State plans under this title and title
XXI do not provide coverage for pregnant women
described in subparagraph (A) with higher family income
without covering such pregnant women with a lower
family income.
``(ii) The State does not apply an effective income
level for pregnant women that is lower than the
effective income level (expressed as a percent of the
poverty line and considering applicable income
disregards) that has been specified under the State
plan under subsection (a)(10)(A)(i)(III) or (l)(2)(A)
of section 1902, as of January 1, 2005, to be eligible
for medical assistance as a pregnant woman.
``(C) Definition of poverty line.--In this subsection, the
term `poverty line' has the meaning given such term in section
2110(c)(5).''.
(3) Payment from title xxi allotment for medicaid expansion
costs; elimination of counting medicaid child presumptive
eligibility costs against title xxi allotment.--Section
2105(a)(1) of the Social Security Act (42 U.S.C. 1397ee(a)(1))
is amended--
(A) in the matter preceding subparagraph (A), by
striking ``(or, in the case of expenditures described
in subparagraph (B), the Federal medical assistance
percentage (as defined in the first sentence of section
1905(b)))''; and
(B) by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) for the provision of medical assistance that
is attributable to expenditures described in section
1905(u)(5)(A);''.
(b) SCHIP.--
(1) Coverage.--Title XXI of the Social Security Act (42
U.S.C. 1397aa et seq.) is amended by adding at the end the
following new section:
``SEC. 2111. OPTIONAL COVERAGE OF TARGETED LOW-INCOME PREGNANT WOMEN.
``(a) Optional Coverage.--Notwithstanding any other provision of
this title, a State may provide for coverage, through an amendment to
its State child health plan under section 2102, of pregnancy-related
assistance for targeted low-income pregnant women in accordance with
this section, but only if--
``(1) the State has established an income eligibility level
for pregnant women under subsection (a)(10)(A)(i)(III) or
(l)(2)(A) of section 1902 that is at least 185 percent of the
income official poverty line; and
``(2) the State meets the conditions described in section
1905(u)(5)(B).
``(b) Definitions.--For purposes of this title:
``(1) Pregnancy-related assistance.--The term `pregnancy-
related assistance' has the meaning given the term child health
assistance in section 2110(a) as if any reference to targeted
low-income children were a reference to targeted low-income
pregnant women, except that the assistance shall be limited to
services related to pregnancy (which include prenatal,
delivery, and postpartum services and services described in
section 1905(a)(4)(C)) and to other conditions that may
complicate pregnancy.
``(2) Targeted low-income pregnant woman.--The term
`targeted low-income pregnant woman' means a woman--
``(A) during pregnancy and through the end of the
month in which the 60-day period (beginning on the last
day of her pregnancy) ends;
``(B) whose family income exceeds the effective
income level (expressed as a percent of the poverty
line and considering applicable income disregards) that
has been specified under subsection (a)(10)(A)(i)(III)
or (l)(2)(A) of section 1902, as of January 1, 2005, to
be eligible for medical assistance as a pregnant woman
under title XIX but does not exceed the income
eligibility level established under the State child
health plan under this title for a targeted low-income
child; and
``(C) who satisfies the requirements of paragraphs
(1)(A), (1)(C), (2), and (3) of section 2110(b).
``(c) References to Terms and Special Rules.--In the case of, and
with respect to, a State providing for coverage of pregnancy-related
assistance to targeted low-income pregnant women under subsection (a),
the following special rules apply:
``(1) Any reference in this title (other than in subsection
(b)) to a targeted low-income child is deemed to include a
reference to a targeted low-income pregnant woman.
``(2) Any such reference to child health assistance with
respect to such women is deemed a reference to pregnancy-
related assistance.
``(3) Any such reference to a child is deemed a reference
to a woman during pregnancy and the period described in
subsection (b)(2)(A).
``(4) In applying section 2102(b)(3)(B), any reference to
children found through screening to be eligible for medical
assistance under the State medicaid plan under title XIX is
deemed a reference to pregnant women.
``(5) There shall be no exclusion of benefits for services
described in subsection (b)(1) based on any preexisting
condition and no waiting period (including any waiting period
imposed to carry out section 2102(b)(3)(C)) shall apply.
``(6) Subsection (a) of section 2103 (relating to required
scope of health insurance coverage) shall not apply insofar as
a State limits coverage to services described in subsection
(b)(1) and the reference to such section in section
2105(a)(1)(C) is deemed not to require, in such case,
compliance with the requirements of section 2103(a).
``(7) In applying section 2103(e)(3)(B) in the case of a
pregnant woman provided coverage under this section, the
limitation on total annual aggregate cost-sharing shall be
applied to such pregnant woman.
``(8) The reference in section 2107(e)(1)(D) to section
1920A (relating to presumptive eligibility for children) is
deemed a reference to section 1920 (relating to presumptive
eligibility for pregnant women).
``(d) Automatic Enrollment for Children Born to Women Receiving
Pregnancy-Related Assistance.--If a child is born to a targeted low-
income pregnant woman who was receiving pregnancy-related assistance
under this section on the date of the child's birth, the child shall be
deemed to have applied for child health assistance under the State
child health plan and to have been found eligible for such assistance
under such plan or to have applied for medical assistance under title
XIX and to have been found eligible for such assistance under such
title, as appropriate, on the date of such birth and to remain eligible
for such assistance until the child attains 1 year of age. During the
period in which a child is deemed under the preceding sentence to be
eligible for child health or medical assistance, the child health or
medical assistance eligibility identification number of the mother
shall also serve as the identification number of the child, and all
claims shall be submitted and paid under such number (unless the State
issues a separate identification number for the child before such
period expires).''.
(2) Additional allotments for providing coverage of
pregnant women.--
(A) In general.--Section 2104 of the Social
Security Act (42 U.S.C. 1397dd) is amended by inserting
after subsection (c) the following new subsection:
``(d) Additional Allotments for Providing Coverage of Pregnant
Women.--
``(1) Appropriation; total allotment.--For the purpose of
providing additional allotments to States under this title,
there is appropriated, out of any money in the Treasury not
otherwise appropriated, for each of fiscal years 2006 through
2009, $200,000,000.
``(2) State and territorial allotments.--In addition to the
allotments provided under subsections (b) and (c), subject to
paragraphs (3) and (4), of the amount available for the
additional allotments under paragraph (1) for a fiscal year,
the Secretary shall allot to each State with a State child
health plan approved under this title--
``(A) in the case of such a State other than a
commonwealth or territory described in subparagraph
(B), the same proportion as the proportion of the
State's allotment under subsection (b) (determined
without regard to subsection (f)) to the total amount
of the allotments under subsection (b) for such States
eligible for an allotment under this paragraph for such
fiscal year; and
``(B) in the case of a commonwealth or territory
described in subsection (c)(3), the same proportion as
the proportion of the commonwealth's or territory's
allotment under subsection (c) (determined without
regard to subsection (f)) to the total amount of the
allotments under subsection (c) for commonwealths and
territories eligible for an allotment under this
paragraph for such fiscal year.
``(3) Use of additional allotment.--Additional allotments
provided under this subsection are not available for amounts
expended before October 1, 2005. Such amounts are available for
amounts expended on or after such date for child health
assistance for targeted low-income children, as well as for
pregnancy-related assistance for targeted low-income pregnant
women.
``(4) No payments unless election to expand coverage of
pregnant women.--No payments may be made to a State under this
title from an allotment provided under this subsection unless
the State provides pregnancy-related assistance for targeted
low-income pregnant women under this title, or provides medical
assistance for pregnant women under title XIX, whose family
income exceeds the effective income level applicable under
subsection (a)(10)(A)(i)(III) or (l)(2)(A) of section 1902 to a
family of the size involved as of January 1, 2005.''.
(B) Conforming amendments.--Section 2104 of the
Social Security Act (42 U.S.C. 1397dd), as amended by
section 302(b), is amended--
(i) in subsection (a), in the matter
preceding paragraph (1), by inserting
``subsection (d) and'' before ``section
2105(h)'';
(ii) in subsection (b)(1), by inserting ``,
subsection (d),'' after ``Subject to paragraph
(4)''; and
(iii) in subsection (c)(1), by inserting
``subsection (d) and'' after ``section
2105(h)''.
(3) Additional conforming amendments.--
(A) No cost-sharing for pregnancy-related
benefits.--Section 2103(e)(2) of the Social Security
Act (42 U.S.C. 1397cc(e)(2)) is amended--
(i) in the heading, by inserting ``or
pregnancy-related services'' after ``preventive
services''; and
(ii) by inserting before the period at the
end the following: ``or for pregnancy-related
services''.
(B) No waiting period.--Section 2102(b)(1)(B) (42
U.S.C. 1397bb(b)(1)(B)) is amended--
(i) in clause (i), by striking ``, and'' at
the end and inserting a semicolon;
(ii) in clause (ii), by striking the period
at the end and inserting ``; and''; and
(iii) by adding at the end the following
new clause:
``(iii) may not apply a waiting period
(including a waiting period to carry out
paragraph (3)(C)) in the case of a targeted
low-income pregnant woman.''.
(c) Authority for States That Provide Medicaid or SCHIP Coverage
for Pregnant Women With Income Above 185 Percent of the Poverty Line To
Use Portion of SCHIP Funds for Medicaid Expenditures.--Section 2105(g)
of the Social Security Act (42 U.S.C. 1397ee(g)) is amended--
(1) in the subsection heading, by inserting ``and Certain
Pregnancy Coverage Expansion States'' after ``Qualifying
States'';
(2) by adding at the end the following:
``(4) Special authority for certain pregnancy coverage
expansion states.--
``(A) In general.--In the case of a State that, as
of the date of enactment of the Affordable Health Care
Act of 2005, has an income eligibility standard under
title XIX or this title (under section 1902(a)(10)(A)
or under a statewide waiver in effect under section
1115 with respect to title XIX or this title) that is
at least 185 percent of the poverty line with respect
to pregnant women, the State may elect to use not more
than 20 percent of any allotment under section 2104 for
any fiscal year (insofar as it is available under
subsections (e) and (g) of such section) for payments
under title XIX in accordance with subparagraph (B),
instead of for expenditures under this title.
``(B) Payments to states.--
``(i) In general.--In the case of a State
described in subparagraph (A) that has elected
the option described in that subparagraph,
subject to the availability of funds under such
subparagraph and, if applicable, paragraph
(1)(A), with respect to the State, the
Secretary shall pay the State an amount each
quarter equal to the additional amount that
would have been paid to the State under title
XIX with respect to expenditures described in
clause (ii) if the enhanced FMAP (as determined
under subsection (b)) had been substituted for
the Federal medical assistance percentage (as
defined in section 1905(b)).
``(ii) Expenditures described.--For
purposes of this subparagraph, the expenditures
described in this clause are expenditures, made
after the date of the enactment of this
paragraph and during the period in which funds
are available to the State for use under
subparagraph (A), for medical assistance under
title XIX for pregnant women whose family
income is at least 185 percent of the poverty
line.
``(iii) No impact on determination of
budget neutrality for waivers.--In the case of
a State described in subparagraph (A) that uses
amounts paid under this paragraph for
expenditures described in clause (ii) that are
incurred under a waiver approved for the State,
any budget neutrality determinations with
respect to such waiver shall be determined
without regard to such amounts paid.''; and
(3) in paragraph (3), by striking ``and (2)'' and inserting
``(2), and (4)''.
(d) Other Amendments to Medicaid.--
(1) Eligibility of a newborn.--Section 1902(e)(4) of the
Social Security Act (42 U.S.C. 1396a(e)(4)) is amended in the
first sentence by striking ``so long as the child is a member
of the woman's household and the woman remains (or would remain
if pregnant) eligible for such assistance''.
(2) Application of qualified entities to presumptive
eligibility for pregnant women under medicaid.--Section 1920(b)
of the Social Security Act (42 U.S.C. 1396r-1(b)) is amended by
adding after paragraph (2) the following flush sentence:
``The term `qualified provider' includes a qualified entity as defined
in section 1920A(b)(3).''.
(e) Effective Date.--The amendments made by this section apply to
items and services furnished on or after October 1, 2005, without
regard to whether regulations implementing such amendments have been
promulgated.
SEC. 352. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS UNDER THE MEDICAID
PROGRAM AND SCHIP.
(a) Medicaid Program.--Section 1903(v) of the Social Security Act
(42 U.S.C. 1396b(v)) is amended--
(1) in paragraph (1), by striking ``paragraph (2)'' and
inserting ``paragraphs (2) and (4)''; and
(2) by adding at the end the following new paragraph:
``(4)(A) A State may elect (in a plan amendment under this title)
to provide medical assistance under this title for aliens who are
lawfully residing in the United States (including battered aliens
described in section 431(c) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996) and who are otherwise eligible
for such assistance, within any of the following eligibility
categories:
``(i) Pregnant women.--Women during pregnancy (and during
the 60-day period beginning on the last day of the pregnancy).
``(ii) Children.--Children (as defined under such plan),
including optional targeted low-income children described in
section 1905(u)(2)(B).
``(B)(i) In the case of a State that has elected to provide medical
assistance to a category of aliens under subparagraph (A), no debt
shall accrue under an affidavit of support against any sponsor of such
an alien on the basis of provision of assistance to such category and
the cost of such assistance shall not be considered as an unreimbursed
cost.
``(ii) The provisions of sections 401(a), 402(b), 403, and 421 of
the Personal Responsibility and Work Opportunity Reconciliation Act of
1996 shall not apply to a State that makes an election under
subparagraph (A).''.
(b) Title XXI.--Section 2107(e)(1) of the Social Security Act (42
U.S.C. 1397gg(e)(1)) is amended by adding at the end the following new
subparagraph:
``(E) Section 1903(v)(4) (relating to optional
coverage of permanent resident alien pregnant women and
children), but only with respect to an eligibility
category under this title, if the same eligibility
category has been elected under such section for
purposes of title XIX.''.
(c) Effective Date.--The amendments made by this section take
effect on October 1, 2005, and apply to medical assistance and child
health assistance furnished on or after such date.
SEC. 353. PROMOTING CESSATION OF TOBACCO USE UNDER THE MEDICAID
PROGRAM.
(a) Dropping Exception From Medicaid Prescription Drug Coverage for
Tobacco Cessation Medications.--Section 1927(d)(2) of the Social
Security Act (42 U.S.C. 1396r-8(d)(2)) is amended--
(1) by striking subparagraph (E);
(2) by redesignating subparagraphs (F) through (J) as
subparagraphs (E) through (I), respectively; and
(3) in subparagraph (F) (as redesignated by paragraph (2)),
by inserting before the period at the end the following: ``,
except agents approved by the Food and Drug Administration for
purposes of promoting, and when used to promote, tobacco
cessation''.
(b) Requiring Coverage of Tobacco Cessation Counseling Services for
Pregnant Women.--Section 1905 of the Social Security Act (42 U.S.C.
1396d(a)(4)) is amended--
(1) in subsection (a)(4)--
(A) by striking ``and'' before ``(C)''; and
(B) by inserting before the semicolon at the end
the following new subparagraph: ``; and (D) counseling
for cessation of tobacco use (as defined in subsection
(x)) for pregnant women''; and
(2) by adding at the end the following:
``(y)(1) For purposes of this title, the term `counseling for
cessation of tobacco use' means therapy and counseling for cessation of
tobacco use for pregnant women who use tobacco products or who are
being treated for tobacco use that is furnished--
``(A) by or under the supervision of a physician; or
``(B) by any other health care professional who--
``(i) is legally authorized to furnish such
services under State law (or the State regulatory
mechanism provided by State law) of the State in which
the services are furnished; and
``(ii) is authorized to receive payment for other
services under this title or is designated by the
Secretary for this purpose.
``(2) Subject to paragraph (3), such term is limited to--
``(A) therapy and counseling services recommended in
`Treating Tobacco Use and Dependence: A Clinical Practice
Guideline', published by the Public Health Service in June
2000, or any subsequent modification of such Guideline; and
``(B) such other therapy and counseling services that the
Secretary recognizes to be effective.
``(3) Such term shall not include coverage for drugs or biologicals
that are not otherwise covered under this title.''.
(c) Removal of Cost-Sharing for Tobacco Cessation Counseling
Services for Pregnant Women.--Section 1916 of the Social Security Act
(42 U.S.C. 1396o) is amended in each of subsections (a)(2)(B) and
(b)(2)(B) by inserting ``, and counseling for cessation of tobacco use
(as defined in section 1905(x))'' after ``complicate the pregnancy''.
(d) Effective Date.--The amendments made by this section shall
apply to services furnished on or after the date that is 1 year after
the date of enactment of this Act.
SEC. 354. PROMOTING CESSATION OF TOBACCO USE UNDER THE MATERNAL AND
CHILD HEALTH SERVICES BLOCK GRANT PROGRAM.
(a) Quality Maternal and Child Health Services Includes Tobacco
Cessation Counseling and Medications.--
(1) In general.--Section 501 of the Social Security Act (42
U.S.C. 701) is amended by adding at the end the following new
subsection:
``(c) For purposes of this title, counseling for cessation of
tobacco use (as defined in section 1905(y)), drugs and biologicals used
to promote smoking cessation, and the inclusion of antitobacco messages
in health promotion counseling shall be considered to be part of
quality maternal and child health services.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date that is 1 year after the date of
enactment of this Act.
(b) Evaluation of National Core Performance Measures.--
(1) In general.--The Administrator of the Health Resources
and Services Administration shall assess the current national
core performance measures and national core outcome measures
utilized under the Maternal and Child Health Block Grant under
title V of the Social Security Act (42 U.S.C. 701 et seq.) for
purposes of expanding such measures to include some of the
known causes of low birthweight and prematurity, including the
percentage of infants born to pregnant women who smoked during
pregnancy.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Administrator of the Health
Resources and Services Administration shall submit to the
appropriate committees of Congress a report concerning the
results of the evaluation conducted under paragraph (1).
SEC. 355. STATE OPTION TO PROVIDE FAMILY PLANNING SERVICES AND SUPPLIES
TO INDIVIDUALS WITH INCOMES THAT DO NOT EXCEED A STATE'S
INCOME ELIGIBILITY LEVEL FOR MEDICAL ASSISTANCE.
(a) In General.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.), as amended by section 301(a), is amended--
(1) by redesignating section 1937 as section 1938; and
(2) by inserting after section 1936 the following new
section:
``state option to provide family planning services and supplies
``Sec. 1937. (a) In General.--Subject to subsections (b) and (c), a
State may elect (through a State plan amendment) to make medical
assistance described in section 1905(a)(4)(C) available to any
individual whose family income does not exceed the greater of--
``(1) 185 percent of the income official poverty line (as
defined by the Office of Management and Budget, and revised
annually in accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a family of
the size involved; or
``(2) the eligibility income level (expressed as a
percentage of such poverty line) that has been specified under
a waiver authorized by the Secretary or under section
1902(r)(2)), as of January 1, 2005, for an individual to be
eligible for medical assistance under the State plan.
``(b) Comparability.--Medical assistance described in section
1905(a)(4)(C) that is made available under a State plan amendment under
subsection (a) shall--
``(1) not be less in amount, duration, or scope than the
medical assistance described in that section that is made
available to any other individual under the State plan; and
``(2) be provided in accordance with the restrictions on
deductions, cost sharing, or similar charges imposed under
section 1916(a)(2)(D).
``(c) Option To Extend Coverage During a Post-Eligibility Period.--
``(1) Initial period.--A State plan amendment made under
subsection (a) may provide that any individual who was
receiving medical assistance described in section 1905(a)(4)(C)
as a result of such amendment, and who becomes ineligible for
such assistance because of hours of, or income from,
employment, may remain eligible for such medical assistance
through the end of the 6-month period that begins on the first
day the individual becomes so ineligible.
``(2) Additional extension.--A State plan amendment made
under subsection (a) may provide that any individual who has
received medical assistance described in section 1905(a)(4)(C)
during the entire 6-month period described in paragraph (1) may
be extended coverage for such assistance for a succeeding 6-
month period.''.
(b) Effective Date.--The amendments made by subsection (a) apply to
medical assistance provided on and after October 1, 2005.
SEC. 356. STATE OPTION TO EXTEND THE POSTPARTUM PERIOD FOR PROVISION OF
FAMILY PLANNING SERVICES AND SUPPLIES.
(a) In General.--Section 1902(e)(5) of the Social Security Act (42
U.S.C. 1396a(e)(5)) is amended--
(1) by striking ``eligible under the plan, as though'' and
inserting ``eligible under the plan--
``(A) as though'';
(2) by striking the period and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(B) for medical assistance described in section
1905(a)(4)(C) for so long as the family income of such woman
does not exceed the maximum income level established by the
State for the woman to be eligible for medical assistance under
the State plan (as a result of pregnancy or otherwise).''.
(b) Effective Date.--The amendments made by subsection (a) apply to
medical assistance provided on and after October 1, 2005.
SEC. 357. STATE OPTION TO PROVIDE WRAP-AROUND SCHIP COVERAGE TO
CHILDREN WHO HAVE OTHER HEALTH COVERAGE.
(a) In General.--
(1) SCHIP.--
(A) State option to provide wrap-around coverage.--
Section 2110(b) of the Social Security Act (42 U.S.C.
1397jj(b)) is amended--
(i) in paragraph (1)(C), by inserting ``,
subject to paragraph (5),'' after ``under title
XIX or''; and
(ii) by adding at the end the following:
``(5) State option to provide wrap-around coverage.--A
State may waive the requirement of paragraph (1)(C) that a
targeted low-income child may not be covered under a group
health plan or under health insurance coverage, if the State
satisfies the conditions described in subsection (c)(8). The
State may waive such requirement in order to provide--
``(A) services for a child with special health care
needs; or
``(B) all services.
In waiving such requirement, a State may limit the application
of the waiver to children whose family income does not exceed a
level specified by the State, so long as the level so specified
does not exceed the maximum income level otherwise established
for other children under the State child health plan.''.
(B) Conditions described.--Section 2105(c) of the
Social Security Act (42 U.S.C. 1397ee(c)) is amended by
adding at the end the following:
``(8) Conditions for provision of wrap-around coverage.--
For purposes of section 2110(b)(5), the conditions described in
this paragraph are the following:
``(A) Income eligibility.--The State child health
plan (whether implemented under title XIX or this
XXI)--
``(i) has the highest income eligibility
standard permitted under this title as of
January 1, 2005;
``(ii) subject to subparagraph (B), does
not limit the acceptance of applications for
children; and
``(iii) provides benefits to all children
in the State who apply for and meet eligibility
standards.
``(B) No waiting list imposed.--With respect to
children whose family income is at or below 200 percent
of the poverty line, the State does not impose any
numerical limitation, waiting list, or similar
limitation on the eligibility of such children for
child health assistance under such State plan.
``(C) No more favorable treatment.--The State child
health plan may not provide more favorable coverage of
dental services to the children covered under section
2110(b)(5) than to children otherwise covered under
this title.''.
(C) State option to waive waiting period.--Section
2102(b)(1)(B) of the Social Security Act (42 U.S.C.
1397bb(b)(1)(B)), as amended by section 2(b)(3)(B), is
amended--
(i) in clause (ii), by striking ``, and''
at the end and inserting a semicolon;
(ii) in clause (iii), by striking the
period at the end and inserting ``; and''; and
(iii) by adding at the end the following
new clause:
``(iv) at State option, may not apply a
waiting period in the case of a child described
in section 2110(b)(5), if the State satisfies
the requirements of section 2105(c)(8).''.
(2) Application of enhanced match under medicaid.--Section
1905 of the Social Security Act (42 U.S.C. 1396d), as amended
by section 2(a)(2), is amended--
(A) in subsection (b), in the fourth sentence, by
striking ``or (u)(4)'' and inserting ``(u)(4), or
(u)(5)''; and
(B) in subsection (u)--
(i) by redesignating paragraph (5) as
paragraph (6); and
(ii) by inserting after paragraph (4) the
following:
``(5) For purposes of subsection (b), the expenditures
described in this paragraph are expenditures for items and
services for children described in section 2110(b)(5), but only
in the case of a State that satisfies the requirements of
section 2105(c)(8).''.
(3) Application of secondary payor provisions.--Section
2107(e)(1) of the Social Security Act (42 U.S.C. 1397gg(e)(1)),
as amended by section 3(b), is amended by adding at the end the
following:
``(F) Section 1902(a)(25) (relating to coordination
of benefits and secondary payor provisions) with
respect to children covered under a waiver described in
section 2110(b)(5).''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on January 1, 2005, and shall apply to child health
assistance and medical assistance provided on or after that date.
SEC. 358. INNOVATIVE OUTREACH PROGRAMS.
Title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.), as
amended by section 351(b), is amended by adding at the end the
following:
``SEC. 2112. EXPANDED OUTREACH ACTIVITIES.
``(a) In General.--Funds made available under subsection (f) for
expenditure under this section for a fiscal year shall be used by the
Secretary to award grants to eligible entities to conduct innovative
outreach and enrollment efforts that are designed to increase the
enrollment and participation of eligible children under this title and
title XIX.
``(b) Priority for Grants in Certain Areas.--In making grants under
subsection (a), the Secretary shall give priority to eligible entities
that propose to target geographic areas with high rates of--
``(1) eligible but unenrolled children, including such
children who reside in rural areas;
``(2) families for whom English is not their primary
language; or
``(3) racial and ethnic minorities and health disparity
populations
``(c) Application.--An eligible entity that desires to receive a
grant under this section shall submit an application to the Secretary
in such form and manner, and containing such information, as the
Secretary may decide. Such application shall include--
``(1) quality and outcomes performance measures to evaluate
the effectiveness of activities funded by a grant under this
paragraph to ensure that the activities are meeting their
goals; and
``(2) an assurance that the entity will--
``(A) collect and report enrollment data; and
``(B) disseminate findings from evaluations of the
activities funded under the grant.
``(d) Report.--The Secretary shall report to Congress on an annual
basis the results of the outreach efforts under grants awarded under
this section.
``(e) Definition of Eligible Entity.--In this section, the term
`eligible entity' means any of the following:
``(1) A State.
``(2) A national, local, or community-based public or
nonprofit private organization.
``(f) Appropriation.--For the purpose of awarding grants to
eligible entities under this section, there is appropriated, out of any
money in the Treasury not otherwise appropriated, $50,000,000 for each
of fiscal years 2006 and 2007.''.
Subtitle C--Affirming the Importance of Medicaid
SEC. 361. SENSE OF THE SENATE.
(a) Findings.--The Senate makes the following findings:
(1) The Medicaid program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) provides essential health
care and long-term care coverage to more than 50,000,000 low-
income children, pregnant women and families, individuals with
disabilities, and senior citizens. It is a Federal guarantee
that even the most vulnerable will have access to needed
medical services.
(2) Medicaid provides health insurance for more than \1/4\
of America's children and is the largest purchaser of maternity
care, paying for more than \1/3\ of all the births in the
United States each year.
(3) Medicaid provides critical help for the elderly and
individuals living with disabilities. Medicaid is America's
single largest purchaser of nursing home services and other
long-term care, covering the majority of nursing home
residents.
(4) Medicaid pays for personal care and other supportive
services, which are typically not provided by private health
insurance, even if individuals could obtain it. These services
are necessary to enable individuals with spinal cord injuries,
developmental disabilities, neurological degenerative diseases,
serious and persistent mental illnesses, HIV/AIDS, and other
chronic conditions to remain in the community, to work, and to
maintain independence.
(5) Medicaid is an essential supplement to the Medicare
program under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) for more than 6,000,000 Medicare beneficiaries
who are low-income elderly or disabled, assisting them with
their Medicare premiums and co-insurance, wrap-around benefits,
and, in most States, the costs of nursing home care that
Medicare does not cover.
(6) About 42 percent of all Medicaid spending is for those
who are elderly or are living with disabilities and are dually
eligible for Medicare and Medicaid.
(7) Medicaid faces an ever growing burden as a result of
Medicare's gaps. The Medicaid program spent nearly
$40,000,000,000 on uncovered Medicare services in 2002.
Medicaid payments for low-income Medicare beneficiary cost-
sharing are the largest and fastest growing share of Medicaid
spending.
(8) The Medicare drug benefit imposes additional costs on
States, which will add to the already significant long-term
care cost burden. Medicaid spending on Medicare beneficiaries'
long-term care costs is expected to double from $25,000,000,000
in 2002 to $51,000,000,000 in 2012.
(9) Medicaid helps ensure access to care for all Americans.
Medicaid is the single largest source of revenue for the
Nation's safety net hospitals and health centers and is
critical to the ability of those providers to serve Medicaid
enrollees and uninsured Americans.
(10) Medicaid serves a major role in ensuring that the
number of Americans without health insurance, approximately
45,000,000 in 2003, is not substantially higher. Medicaid helps
buffer the drop in private coverage during recessions. More
than 4,800,000 Americans lost employer sponsored coverage
between 2000 and 2003. Medicaid covered an additional 5,800,000
Americans during this period, preventing even greater numbers
of uninsured.
(11) Medicaid matters to women in America. More than
16,000,000 women depend on Medicaid for their health care.
Women comprise the majority of seniors (71 percent) on
Medicaid. Half of nonelderly women with permanent mental or
physical disabilities have health coverage through Medicaid.
Medicaid provides treatment for low-income women diagnosed with
breast or cervical cancer in every State.
(12) Medicaid is critical for children with disabilities.
Medicaid covers 78 percent of poor children with disabilities
who are under 5 years of age and 70 percent of poor children
with disabilities who are between the ages of 5 and 17.
Similarly, Medicaid covers a substantial portion of children
with disabilities who are near poor, covering 40 percent of
children with disabilities who are under 5 years of age and 25
percent of children with disabilities who are between the ages
of 5 and 17.
(13) Medicaid is the Nation's largest source of payment for
mental health services, HIV/AIDS care, and care for children
with special needs. Much of this care is either not covered by
private insurance or limited in scope or duration. Medicaid is
also a critical source of funding for health care for children
in foster care and for health services in schools.
(14) The need for Medicaid is greater than ever today,
because the number of Americans living in poverty has increased
by 8,000,000 over the last 4 years and the number of the
uninsured has increased by 5,000,000.
(15) The system of Federal matching for State Medicaid
expenditures ensures that Federal funds will grow as State
spending increases in response to unmet needs.
(16) Despite the varied population served by the Medicaid
program, including those with significant health care needs,
Medicaid per capita growth has been consistently about half the
rate of growth in private insurance premiums and Medicaid has
far lower administrative costs. Medicaid costs less per person
than private coverage for people who have similar health
status.
(b) Sense of the Senate.--It is the sense of the Senate that--
(1) the Medicaid program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) is a critical component
of the health care system of the United States;
(2) Federal support for the Medicaid program must be
adequate to support State spending meeting the essential health
needs of the low-income elderly, low-income individuals with
disabilities, and low-income children and families, and should
not be cut or capped; and
(3) any retreat from the Federal commitment to Medicaid
would threaten not only the health care safety net of the
United States but the entire health care system
TITLE IV--REDUCING HEALTH CARE COSTS FOR SMALL EMPLOYERS
Subtitle A--Tax Relief
SEC. 401. REFUNDABLE CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH
INSURANCE EXPENSES.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to refundable credits)
is amended by redesignating section 36 as section 37 and inserting
after section 35 the following new section:
``SEC. 36. SMALL BUSINESS EMPLOYEE HEALTH INSURANCE EXPENSES.
``(a) Determination of Amount.--In the case of a qualified small
employer, there shall be allowed as a credit against the tax imposed by
this subtitle for the taxable year an amount equal to the expense
amount described in subsection (b) paid by the taxpayer during the
taxable year.
``(b) Expense Amount.--For purposes of this section--
``(1) In general.--The expense amount described in this
subsection is the applicable percentage of the amount of
qualified employee health insurance expenses of each qualified
employee.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage is equal to--
``(A) for any qualified small employer described in
subparagraph (A) of paragraph (4), 50 percent,
``(B) for any qualified small employer described in
subparagraph (B) of paragraph (4), 35 percent, and
``(C) for any qualified small employer described in
subparagraph (C) of paragraph (4), 25 percent.
``(3) Per employee dollar limitation.--The amount of
qualified employee health insurance expenses taken into account
under paragraph (1) with respect to any qualified employee for
any taxable year shall not exceed--
``(A) $1,500 in the case of self-only coverage; and
``(B) $3,500 in the case of family coverage.
``(4) Qualified small employers described.--A qualified
small employer is described in--
``(A) this subparagraph if such employer employed
an average of 9 or fewer employees (as determined under
subsection (c)(1)(A)(ii)),
``(B) this subparagraph if such employer employed
an average of more than 9 but less than 25 employees
(as so determined), and
``(C) this subparagraph if such employer employed
an average of more than 24 but not more than 50
employees (as so determined).
``(c) Definitions.--For purposes of this section--
``(1) Qualified small employer.--
``(A) In general.--The term `qualified small
employer' means, with respect to any calendar year, any
employer if--
``(i) such employer pays or incurs at least
75 percent of the qualified employee health
insurance expenses of each qualified employee
(determined without regard to subsection
(b)(3)), and
``(ii) such employer employed an average of
50 or fewer employees on business days during
either of the 2 preceding calendar years.
For purposes of clause (ii), a preceding calendar year
may be taken into account only if the employer was in
existence throughout such year.
``(B) Employers not in existence in preceding
year.--In the case of an employer which was not in
existence throughout the 1st preceding calendar year,
the determination under subparagraph (A)(ii) shall be
based on the average number of employees that it is
reasonably expected such employer will employ on
business days in the current calendar year.
``(2) Qualified employee health insurance expenses.--
``(A) In general.--The term `qualified employee
health insurance expenses' means any amount paid by an
employer for health insurance coverage (as defined in
section 9832(b)(1)) to the extent such amount is
attributable to coverage provided to any employee while
such employee is a qualified employee.
``(B) Exception for amounts paid under salary
reduction arrangements.--No amount paid or incurred for
health insurance coverage pursuant to a salary
reduction arrangement shall be taken into account under
subparagraph (A).
``(3) Qualified employee.--
``(A) In general.--The term `qualified employee'
means, with respect to any period, an employee of an
employer if--
``(i) the annual amount of hours in the
employ of such employer by such employee is at
least 400 hours,
``(ii) the total amount of wages paid or
incurred by such employer to such employee at
an annual rate during the taxable year is at
least $5,000, and
``(iii) such employee is not eligible for--
``(I) any benefits under title
XVIII, XIX, or XXI of the Social
Security Act, or
``(II) any other publicly-sponsored
health insurance program.
``(B) Treatment of certain employees.--For purposes
of subparagraph (A), the term `employee'--
``(i) shall not include an employee within
the meaning of section 401(c)(1), and
``(ii) shall include a leased employee
within the meaning of section 414(n).
``(C) Wages.--The term `wages' has the meaning
given such term by section 3121(a) (determined without
regard to any dollar limitation contained in such
section).
``(d) Certain Rules Made Applicable.--For purposes of this section,
rules similar to the rules of section 52 shall apply.
``(e) Coordination With Deduction for Health Insurance Costs of
Self-Employed Individuals.--In the case of a taxpayer who is eligible
to deduct any amount under section 162(l) for the taxable year, this
section shall apply only if the taxpayer elects not to claim any amount
as a deduction under such section for such year.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``, or
from section 36 of such Code''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by striking the last item and inserting the
following new items:
``Sec. 36. Small business employee health
insurance expenses.
``Sec. 37. Overpayments of tax.''.
(e) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2005.
Subtitle B--Three-Share Program
SEC. 421. THREE-SHARE PROGRAMS.
The Social Security Act (42 U.S.C. 301 et seq.) is amended by
adding at the end the following:
``TITLE XXII--PROVIDING FOR THE UNINSURED
``SEC. 2201. THREE-SHARE PROGRAMS.
``(a) Pilot Programs.--The Secretary, acting through the
Administrator, shall award grants under this section for the startup
and operation of 25 eligible three-share pilot programs for a 5-year
period.
``(b) Grants for Three-Share Programs.--
``(1) Establishment.--The Administrator may award grants to
eligible entities--
``(A) to establish three-share programs;
``(B) to provide for contributions to the premiums
assessed for coverage under a three-share program as
provided for in subsection (c)(2)(B)(iii); and
``(C) to establish risk pools.
``(2) Three-share program plan.--Each entity desiring a
grant under this subsection shall develop a plan for the
establishment and operation of a three-share program that meets
the requirements of paragraphs (2) and (3) of subsection (c).
``(3) Application.--Each entity desiring a grant under this
subsection shall submit an application to the Administrator at
such time, in such manner and containing such information as
the Administrator may require, including--
``(A) the three-share program plan described in
paragraph (2); and
``(B) an assurance that the eligible entity will--
``(i) determine a benefit package;
``(ii) recruit businesses and employees for
the three-share program;
``(iii) build and manage a network of
health providers or contract with an existing
network or licensed insurance provider;
``(iv) manage all administrative needs; and
``(v) establish relationships among
community, business, and provider interests.
``(4) Priority.--In awarding grants under this section the
Secretary shall give priority to an applicant--
``(A) that is an existing three-share program;
``(B) that is an eligible three-share program that
has demonstrated community support; or
``(C) that is located in a State with insurance
laws and regulations that permit three-share program
expansion.
``(c) Grant Eligibility.--
``(1) In general.--The Secretary, acting through the
Administrator, shall promulgate regulations providing for the
eligibility of three-share programs for participation in the
pilot program under this section.
``(2) Three-share program requirements.--
``(A) In general.--To be determined to be an
eligible three-share program for purposes of
participation in the pilot program under this section a
three-share program shall--
``(i) be either a non-profit or local
governmental entity;
``(ii) define the region in which such
program will provide services;
``(iii) have the capacity to carry out
administrative functions of managing health
plans, including monthly billings,
verification/enrollment of eligible employers
and employees, maintenance of membership
rosters, development of member materials (such
as handbooks and identification cards),
customer service, and claims processing; and
``(iv) have demonstrated community
involvement.
``(B) Payment.--To be eligible under paragraph (1),
a three-share program shall pay the costs of services
provided under subparagraph (A)(ii) by charging a
monthly premium for each covered individual to be
divided as follows:
``(i) Not more than 30 percent of such
premium shall be paid by a qualified employee
desiring coverage under the three-share
program.
``(ii) Not more than 30 percent of such
premium shall be paid by the qualified employer
of such a qualified employee.
``(iii) At least 40 percent of such premium
shall be paid from amounts provided under a
grant under this section.
``(iv) Any remaining amount shall be paid
by the three-share program from other public,
private, or charitable sources.
``(C) Program flexibility.--A three-share program
may set an income eligibility guideline for enrollment
purposes.
``(3) Coverage.--
``(A) In general.--To be an eligible three-share
program under this section, the three-share program
shall provide at least the following benefits:
``(i) Physicians services.
``(ii) In-patient hospital services.
``(iii) Out-patient services.
``(iv) Emergency room visits.
``(v) Emergency ambulance services.
``(vi) Diagnostic lab fees and x-rays.
``(vii) Prescription drug benefits.
``(B) Limitation.--Nothing in subparagraph (A)
shall be construed to require that a three-share
program provide coverage for services performed outside
the region described in paragraph (2)(A)(i).
``(C) Preexisting conditions.--A program described
in subparagraph (A) shall not be an eligible three-
share program under paragraph (1) if any individual can
be excluded from coverage under such program because of
a preexisting health condition.
``(d) Grants for Existing Three-Share Programs To Meet
Certification Requirements.--
``(1) In general.--The Administrator may award grants to
three-share programs that are operating on the date of
enactment of this section.
``(2) Application.--Each eligible entity desiring a grant
under this subsection shall submit an application to the
Administrator at such time, in such manner, and containing such
information as the Administrator may require.
``(e) Application of State Laws.--Nothing in this section shall be
construed to preempt State law.
``(f) Distressed Business Formula.--
``(1) In general.--Not later than 60 days after the date of
enactment of this section, the Administrator of the Health
Resources and Services Administration shall develop a formula
to determine which businesses qualify as distressed businesses
for purposes of this section.
``(2) Effect on insurance market.--Granting eligibility to
a distressed business using the formula under paragraph (1)
shall not interfere with the insurance market. Any business
found to have reduced benefits to qualify as a distressed
business under the formula under paragraph (1) shall not be
eligible to be a three-share program for purposes of this
section.
``(g) Definitions.--In this section:
``(1) Administrator.--The term `Administrator' means the
Administrator of the Health Resources and Services
Administration.
``(2) Covered individual.--The term `covered individual'
means--
``(A) a qualified employee; or
``(B) a child under the age of 23 or a spouse of
such qualified employee who--
``(i) lacks access to health care coverage
through their employment or employer;
``(ii) lacks access to health coverage
through a family member;
``(iii) is not eligible for coverage under
the medicare program under title XVIII or the
medicaid program under title XIX; and
``(iv) does not qualify for benefits under
the State Children's Health Insurance Program
under title XXI.
``(3) Distressed business.--The term `distressed business'
means a business that--
``(A) in light of economic hardship and rising
health care premiums may be forced to discontinue or
scale back its health care coverage; and
``(B) qualifies as a distressed business according
to the formula under subsection (g).
``(4) Eligible entity.--The term `eligible entity' means an
entity that meets the requirements of subsection (a)(2)(A).
``(5) Qualified employee.--The term `qualified employee'
means any individual employed by a qualified employer who meets
certain criteria including--
``(A) lacking access to health coverage through a
family member or common law partner;
``(B) not being eligible for coverage under the
medicare program under title XVIII or the medicaid
program under title XIX; and
``(C) agreeing that the share of fees described in
subsection (a)(2)(B)(i) shall be paid in the form of
payroll deductions from the wages of such individual.
``(6) Qualified employer.--The term `qualified employer'
means an employer as defined in section 3(d) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 203(d)) who--
``(A) is a small business concern as defined in
section 3(a) of the Small Business Act (15 U.S.C. 632);
``(B) is located in the region described in
subsection (a)(2)(A)(i); and
``(C) has not contributed to the health care
benefits of its employees for at least 12 months
consecutively or currently provides insurance but is
classified as a distressed business.
``(h) Evaluation.--Not later than 90 days after the end of the 5-
year period during which grants are available under this section, the
Government Accountability Office shall submit to the Secretary and the
appropriate committees of Congress a report concerning--
``(1) the effectiveness of the programs established under
this section;
``(2) the number of individuals covered under such
programs;
``(3) any resulting best practices; and
``(4) the level of community involvement.
``(i) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, such sums as may be necessary
for each of fiscal years 2006 through 2011.''.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S183-184)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR S184-204)
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