HR 598 RH

To provide for a portion of the economic recovery package relating to revenue measures, unemployment, and health.

Mr. RANGEL (for himself, Mr. STARK, and Mr. MCDERMOTT) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Science and Technology, Education and Labor, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

Reported from the Committee on Ways and Means with an amendment

Committees on Energy and Commerce, Science and Technology, Education and Labor, and Financial Services discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed

To provide for a portion of the economic recovery package relating to revenue measures, unemployment, and health.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1000. SHORT TITLE, ETC.

(a) Short Title- This title may be cited as the `American Recovery and Reinvestment Tax Act of 2009'.

(b) Reference- Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(c) Table of Contents- The table of contents for this title is as follows:

Sec. 1000. Short title, etc.

Subtitle A--Making Work Pay

Sec. 1001. Making work pay credit.

Subtitle B--Additional Tax Relief for Families With Children

Sec. 1101. Increase in earned income tax credit.

Sec. 1102. Increase of refundable portion of child credit.

Subtitle C--American Opportunity Tax Credit

Sec. 1201. American opportunity tax credit.

Subtitle D--Housing Incentives

Sec. 1301. Waiver of requirement to repay first-time homebuyer credit.

Sec. 1302. Coordination of low-income housing credit and low-income housing grants.

Subtitle E--Tax Incentives for Business

Part I--Temporary Investment Incentives

Sec. 1401. Special allowance for certain property acquired during 2009.

Sec. 1402. Temporary increase in limitations on expensing of certain depreciable business assets.

Part II--5-Year Carryback of Operating Losses

Sec. 1411. 5-year carryback of operating losses.

Sec. 1412. Exception for TARP recipients.

Part III--Incentives for New Jobs

Sec. 1421. Incentives to hire unemployed veterans and disconnected youth.

Part IV--Clarification of Regulations Related to Limitations on Certain Built-In Losses Following an Ownership Change

Sec. 1431. Clarification of regulations related to limitations on certain built-in losses following an ownership change.

Subtitle F--Fiscal Relief for State and Local Governments

Part I--Improved Marketability for Tax-Exempt Bonds

Sec. 1501. De minimis safe harbor exception for tax-exempt interest expense of financial institutions.

Sec. 1502. Modification of small issuer exception to tax-exempt interest expense allocation rules for financial institutions.

Sec. 1503. Temporary modification of alternative minimum tax limitations on tax-exempt bonds.

Part II--Tax Credit Bonds for Schools

Sec. 1511. Qualified school construction bonds.

Sec. 1512. Extension and expansion of qualified zone academy bonds.

Part III--Taxable Bond Option for Governmental Bonds

Sec. 1521. Taxable bond option for governmental bonds.

Part IV--Recovery Zone Bonds

Sec. 1531. Recovery zone bonds.

Sec. 1532. Tribal economic development bonds.

Part V--Repeal of Withholding Tax on Government Contractors

Sec. 1541. Repeal of withholding tax on government contractors.

Subtitle G--Energy Incentives

Part I--Renewable Energy Incentives

Sec. 1601. Extension of credit for electricity produced from certain renewable resources.

Sec. 1602. Election of investment credit in lieu of production credit.

Sec. 1603. Repeal of certain limitations on credit for renewable energy property.

Sec. 1604. Coordination with renewable energy grants.

Part II--Increased Allocations of New Clean Renewable Energy Bonds and Qualified Energy Conservation Bonds

Sec. 1611. Increased limitation on issuance of new clean renewable energy bonds.

Sec. 1612. Increased limitation and expansion of qualified energy conservation bonds.

Part III--Energy Conservation Incentives

Sec. 1621. Extension and modification of credit for nonbusiness energy property.

Sec. 1622. Modification of credit for residential energy efficient property.

Sec. 1623. Temporary increase in credit for alternative fuel vehicle refueling property.

Part IV--Energy Research Incentives

Sec. 1631. Increased research credit for energy research.

Subtitle H--Other Provisions

Part I--Application of Certain Labor Standards to Projects Financed With Certain Tax-Favored Bonds

Sec. 1701. Application of certain labor standards to projects financed with certain tax-favored bonds.

Part II--Grants To Provide Financing for Low-Income Housing

Sec. 1711. Grants to States for low-income housing projects in lieu of low-income housing credit allocations for 2009.

Part III--Grants for Specified Energy Property in Lieu of Tax Credits

Sec. 1721. Grants for specified energy property in lieu of tax credits.

Part IV--Study of Economic, Employment, and Related Effects of This Act

Sec. 1731. Study of economic, employment, and related effects of this Act.

SEC. 1001. MAKING WORK PAY CREDIT.

(a) In General- Subpart C of part IV of subchapter A of chapter 1 is amended by inserting after section 36 the following new section:

`SEC. 36A. MAKING WORK PAY CREDIT.

`(a) Allowance of Credit- In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the lesser of--

`(1) 6.2 percent of earned income of the taxpayer, or

`(2) $500 ($1,000 in the case of a joint return).

`(b) Limitation Based on Modified Adjusted Gross Income-

`(1) IN GENERAL- The amount allowable as a credit under subsection (a) (determined without regard to this paragraph) for the taxable year shall be reduced (but not below zero) by 2 percent of so much of the taxpayer's modified adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return).

`(2) MODIFIED ADJUSTED GROSS INCOME- For purposes of subparagraph (A), the term `modified adjusted gross income' means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.

`(c) Definitions- For purposes of this section--

`(1) ELIGIBLE INDIVIDUAL- The term `eligible individual' means any individual other than--

`(A) any nonresident alien individual,

`(B) 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 the individual's taxable year begins, and

`(C) an estate or trust.

Such term shall not include any individual unless the requirements of section 32(c)(1)(E) are met with respect to such individual.

`(2) EARNED INCOME- The term `earned income' has the meaning given such term by section 32(c)(2), except that such term shall not include net earnings from self-employment which are not taken into account in computing taxable income. For purposes of the preceding sentence, any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year.

`(d) Termination- This section shall not apply to taxable years beginning after December 31, 2010.'.

(b) Treatment of Possessions-

(1) PAYMENTS TO POSSESSIONS-

(A) MIRROR CODE POSSESSION- The Secretary of the Treasury shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss to that possession by reason of the amendments made by this section with respect to taxable years beginning in 2009 and 2010. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession.

(B) OTHER POSSESSIONS- The Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of the amendments made by this section for taxable years beginning in 2009 and 2010 if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payments to the residents of such possession.

(2) COORDINATION WITH CREDIT ALLOWED AGAINST UNITED STATES INCOME TAXES- No credit shall be allowed against United States income taxes for any taxable year under section 36A of the Internal Revenue Code of 1986 (as added by this section) to any person--

(A) to whom a credit is allowed against taxes imposed by the possession by reason of the amendments made by this section for such taxable year, or

(B) who is eligible for a payment under a plan described in paragraph (1)(B) with respect to such taxable year.

(3) DEFINITIONS AND SPECIAL RULES-

(A) POSSESSION OF THE UNITED STATES- For purposes of this subsection, the term `possession of the United States' includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands.

(B) MIRROR CODE TAX SYSTEM- For purposes of this subsection, the term `mirror code tax system' means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.

(C) TREATMENT OF PAYMENTS- For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from the credit allowed under section 36A of the Internal Revenue Code of 1986 (as added by this section).

(c) Refunds Disregarded in the Administration of Federal Programs and Federally Assisted Programs- Any credit or refund allowed or made to any individual by reason of section 36A of the Internal Revenue Code of 1986 (as added by this section) or by reason of subsection (b) of this section shall not be taken into account as income and shall not be taken into account as resources for the month of receipt and the following 2 months, for purposes of determining the eligibility of such individual or any other individual for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds.

(d) Conforming Amendments-

(1) Section 6211(b)(4)(A) is amended by inserting `36A,' after `36,'.

(2) Section 1324(b)(2) of title 31, United States Code, is amended by inserting `36A,' after `36,'.

(3) The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 36 the following new item:

`Sec. 36A. Making work pay credit.'.

(e) Effective Date- This section shall apply to taxable years beginning after December 31, 2008.

SEC. 1101. INCREASE IN EARNED INCOME TAX CREDIT.

(a) In General- Subsection (b) of section 32 is amended by adding at the end the following new paragraph:

`(3) SPECIAL RULES FOR 2009 AND 2010- In the case of any taxable year beginning in 2009 or 2010--

`(A) INCREASED CREDIT PERCENTAGE FOR 3 OR MORE QUALIFYING CHILDREN- In the case of a taxpayer with 3 or more qualifying children, the credit percentage is 45 percent.

`(B) REDUCTION OF MARRIAGE PENALTY-

`(i) IN GENERAL- The dollar amount in effect under paragraph (2)(B) shall be $5,000.

`(ii) INFLATION ADJUSTMENT- In the case of any taxable year beginning in 2010, the $5,000 amount in clause (i) shall be increased by an amount equal to--

`(I) such dollar amount, multiplied by

`(II) the cost of living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting `calendar year 2008' for `calendar year 1992' in subparagraph (B) thereof.

`(iii) ROUNDING- Subparagraph (A) of subsection (j)(2) shall apply after taking into account any increase under clause (ii).'.

(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

SEC. 1102. INCREASE OF REFUNDABLE PORTION OF CHILD CREDIT.

(a) In General- Paragraph (4) of section 24(d) is amended to read as follows:

`(4) SPECIAL RULE FOR 2009 AND 2010- Notwithstanding paragraph (3), in the case of any taxable year beginning in 2009 or 2010, the dollar amount in effect for such taxable year under paragraph (1)(B)(i) shall be zero.'.

(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT.

(a) In General- Section 25A (relating to Hope scholarship credit) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection:

`(i) American Opportunity Tax Credit- In the case of any taxable year beginning in 2009 or 2010--

`(1) INCREASE IN CREDIT- The Hope Scholarship Credit shall be an amount equal to the sum of--

`(A) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000, plus

`(B) 25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000.

`(2) CREDIT ALLOWED FOR FIRST 4 YEARS OF POST-SECONDARY EDUCATION- Subparagraphs (A) and (C) of subsection (b)(2) shall be applied by substituting `4' for `2'.

`(3) QUALIFIED TUITION AND RELATED EXPENSES TO INCLUDE REQUIRED COURSE MATERIALS- Subsection (f)(1)(A) shall be applied by substituting `tuition, fees, and course materials' for `tuition and fees'.

`(4) INCREASE IN AGI LIMITS FOR HOPE SCHOLARSHIP CREDIT- In lieu of applying subsection (d) with respect to the Hope Scholarship Credit, such credit (determined without regard to this paragraph) shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as--

`(A) the excess of--

`(i) the taxpayer's modified adjusted gross income (as defined in subsection (d)(3)) for such taxable year, over

`(ii) $80,000 ($160,000 in the case of a joint return), bears to

`(B) $10,000 ($20,000 in the case of a joint return).

`(5) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX- In the case of a taxable year to which section 26(a)(2) does not apply, so much of the credit allowed under subsection (a) as is attributable to the Hope Scholarship Credit shall not exceed the excess of--

`(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

`(B) the sum of the credits allowable under this subpart (other than this subsection and sections 23, 25D, and 30D) and section 27 for the taxable year.

Any reference in this section or section 24, 25, 26, 25B, 904, or 1400C to a credit allowable under this subsection shall be treated as a reference to so much of the credit allowable under subsection (a) as is attributable to the Hope Scholarship Credit.

`(6) PORTION OF CREDIT MADE REFUNDABLE- 40 percent of so much of the credit allowed under subsection (a) as is attributable to the Hope Scholarship Credit (determined after application of paragraph (4) and without regard to this paragraph and section 26(a)(2) or paragraph (5), as the case may be) shall be treated as a credit allowable under subpart C (and not allowed under subsection (a)). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whom subsection (g) of section 1 applies for such taxable year.

`(7) COORDINATION WITH MIDWESTERN DISASTER AREA BENEFITS- In the case of a taxpayer with respect to whom section 702(a)(1)(B) of the Heartland Disaster Tax Relief Act of 2008 applies for any taxable year, such taxpayer may elect to waive the application of this subsection to such taxpayer for such taxable year.'.

(b) Conforming Amendments-

(1) Section 24(b)(3)(B) is amended by inserting `25A(i),' after `23,'.

(2) Section 25(e)(1)(C)(ii) is amended by inserting `25A(i),' after `24,'.

(3) Section 26(a)(1) is amended by inserting `25A(i),' after `24,'.

(4) Section 25B(g)(2) is amended by inserting `25A(i),' after `23,'.

(5) Section 904(i) is amended by inserting `25A(i),' after `24,'.

(6) Section 1400C(d)(2) is amended by inserting `25A(i),' after `24,'.

(7) Section 1324(b)(2) of title 31, United States Code, is amended by inserting `25A,' before `35'.

(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

(d) Application of EGTRRA Sunset- The amendment made by subsection (b)(1) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provision of such Act to which such amendment relates.

(e) Treasury Studies Regarding Education Incentives-

(1) STUDY REGARDING COORDINATION WITH NON-TAX EDUCATIONAL INCENTIVES- The Secretary of the Treasury, or the Secretary's delegate, shall study how to coordinate the credit allowed under section 25A of the Internal Revenue Code of 1986 with the Federal Pell Grant program under section 401 of the Higher Education Act of 1965.

(2) STUDY REGARDING IMPOSITION OF COMMUNITY SERVICE REQUIREMENTS- The Secretary of the Treasury, or the Secretary's delegate, shall study the feasibility of requiring students to perform community service as a condition of taking their tuition and related expenses into account under section 25A of the Internal Revenue Code of 1986.

(3) REPORT- Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury, or the Secretary's delegate, shall report to Congress on the results of the studies conducted under this paragraph.

SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST-TIME HOMEBUYER CREDIT.

(a) In General- Paragraph (4) of section 36(f) is amended by adding at the end the following new subparagraph:

`(D) WAIVER OF RECAPTURE FOR PURCHASES IN 2009- In the case of any credit allowed with respect to the purchase of a principal residence after December 31, 2008, and before July 1, 2009--

`(i) paragraph (1) shall not apply, and

`(ii) paragraph (2) shall apply only if the disposition or cessation described in paragraph (2) with respect to such residence occurs during the 36-month period beginning on the date of the purchase of such residence by the taxpayer.'.

(b) Conforming Amendment- Subsection (g) of section 36 is amended by striking `subsection (c)' and inserting `subsections (c) and (f)(4)(D)'.

(c) Effective Date- The amendments made by this section shall apply to residences purchased after December 31, 2008.

SEC. 1302. COORDINATION OF LOW-INCOME HOUSING CREDIT AND LOW-INCOME HOUSING GRANTS.

Subsection (i) of section 42 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

`(9) COORDINATION WITH LOW-INCOME HOUSING GRANTS-

`(A) REDUCTION IN STATE HOUSING CREDIT CEILING FOR LOW-INCOME HOUSING GRANTS RECEIVED IN 2009- For purposes of this section, the amounts described in clauses (i) through (iv) of subsection (h)(3)(C) with respect to any State for 2009 shall each be reduced by so much of such amount as is taken into account in determining the amount of any grant to such State under section 1711 of the American Recovery and Reinvestment Tax Act of 2009.

`(B) SPECIAL RULE FOR BASIS- Basis of a qualified low-income building shall not be reduced by the amount of any grant described in subparagraph (A).'.

PART I--TEMPORARY INVESTMENT INCENTIVES

SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED DURING 2009.

(a) In General- Paragraph (2) of section 168(k) is amended--

(1) by striking `January 1, 2010' and inserting `January 1, 2011', and

(2) by striking `January 1, 2009' each place it appears and inserting `January 1, 2010'.

(b) Conforming Amendments-

(1) The heading for subsection (k) of section 168 is amended by striking `January 1, 2009' and inserting `January 1, 2010'.

(2) The heading for clause (ii) of section 168(k)(2)(B) is amended by striking `PRE-JANUARY 1, 2009' and inserting `PRE-JANUARY 1, 2010'.

(3) Subparagraph (D) of section 168(k)(4) is amended--

(A) by striking `and' at the end of clause (i),

(B) by redesignating clause (ii) as clause (v), and

(C) by inserting after clause (i) the following new clauses:

`(ii) `April 1, 2008' shall be substituted for `January 1, 2008' in subparagraph (A)(iii)(I) thereof,

`(iii) `January 1, 2009' shall be substituted for `January 1, 2010' each place it appears,

`(iv) `January 1, 2010' shall be substituted for `January 1, 2011' in subparagraph (A)(iv) thereof, and'.

(4) Subparagraph (B) of section 168(l)(5) is amended by striking `January 1, 2009' and inserting `January 1, 2010'.

(5) Clause (ii) of section 168(n)(2)(C) is amended by striking `January 1, 2009' and inserting `January 1, 2010'.

(6) Subparagraph (B) of section 1400N(d)(3) is amended by striking `January 1, 2009' and inserting `January 1, 2010'.

(c) Effective Dates-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service after December 31, 2008, in taxable years ending after such date.

(2) TECHNICAL AMENDMENT- Section 168(k)(4)(D)(ii) of the Internal Revenue Code of 1986, as added by subsection (b)(3)(C), shall apply to taxable years ending after March 31, 2008.

SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EXPENSING OF CERTAIN DEPRECIABLE BUSINESS ASSETS.

(a) In General- Paragraph (7) of section 179(b) is amended--

(1) by striking `2008' and inserting `2008, or 2009', and

(2) by striking `2008' in the heading thereof and inserting `2008, AND 2009'.

(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

PART II--5-YEAR CARRYBACK OF OPERATING LOSSES

SEC. 1411. 5-YEAR CARRYBACK OF OPERATING LOSSES.

(a) In General- Subparagraph (H) of section 172(b)(1) is amended to read as follows:

`(H) CARRYBACK FOR 2008 AND 2009 NET OPERATING LOSSES-

`(i) IN GENERAL- In the case of an applicable 2008 or 2009 net operating loss with respect to which the taxpayer has elected the application of this subparagraph--

`(I) such net operating loss shall be reduced by 10 percent of such loss (determined without regard to this subparagraph),

`(II) subparagraph (A)(i) shall be applied by substituting any whole number elected by the taxpayer which is more than 2 and less than 6 for `2',

`(III) subparagraph (E)(ii) shall be applied by substituting the whole number which is one less than the whole number substituted under subclause (II) for `2', and

`(IV) subparagraph (F) shall not apply.

`(ii) APPLICABLE 2008 OR 2009 NET OPERATING LOSS- For purposes of this subparagraph, the term `applicable 2008 or 2009 net operating loss' means--

`(I) the taxpayer's net operating loss for any taxable year ending in 2008 or 2009, or

`(II) if the taxpayer elects to have this subclause apply in lieu of subclause (I), the taxpayer's net operating loss for any taxable year beginning in 2008 or 2009.

`(iii) ELECTION- Any election under this subparagraph shall be made in such manner as may be prescribed by the Secretary, and shall be made by the due date (including extension of time) for filing the taxpayer's return for the taxable year of the net operating loss. Any such election, once made, shall be irrevocable.

`(iv) COORDINATION WITH ALTERNATIVE TAX NET OPERATING LOSS DEDUCTION- In the case of a taxpayer who elects to have clause (ii)(II) apply, section 56(d)(1)(A)(ii) shall be applied by substituting `ending during 2001 or 2002 or beginning during 2008 or 2009' for `ending during 2001, 2002, 2008, or 2009'.'.

(b) Alternative Tax Net Operating Loss Deduction- Subclause (I) of section 56(d)(1)(A)(ii) is amended to read as follows:

`(I) the amount of such deduction attributable to the sum of carrybacks of net operating losses from taxable years ending during 2001, 2002, 2008, or 2009 and carryovers of net operating losses to such taxable years, or'.

(c) Loss From Operations of Life Insurance Companies- Subsection (b) of section 810 is amended by adding at the end the following new paragraph:

`(4) CARRYBACK FOR 2008 AND 2009 LOSSES-

`(A) IN GENERAL- In the case of an applicable 2008 or 2009 loss from operations with respect to which the taxpayer has elected the application of this paragraph--

`(i) such loss from operations shall be reduced by 10 percent of such loss (determined without regard to this paragraph), and

`(ii) paragraph (1)(A) shall be applied, at the election of the taxpayer, by substituting `5' or `4' for `3'.

`(B) APPLICABLE 2008 OR 2009 LOSS FROM OPERATIONS- For purposes of this paragraph, the term `applicable 2008 or 2009 loss from operations' means--

`(i) the taxpayer's loss from operations for any taxable year ending in 2008 or 2009, or

`(ii) if the taxpayer elects to have this clause apply in lieu of clause (i), the taxpayer's loss from operations for any taxable year beginning in 2008 or 2009.

`(C) ELECTION- Any election under this paragraph shall be made in such manner as may be prescribed by the Secretary, and shall be made by the due date (including extension of time) for filing the taxpayer's return for the taxable year of the loss from operations. Any such election, once made, shall be irrevocable.

`(D) COORDINATION WITH ALTERNATIVE TAX NET OPERATING LOSS DEDUCTION- In the case of a taxpayer who elects to have subparagraph (B)(ii) apply, section 56(d)(1)(A)(ii) shall be applied by substituting `ending during 2001 or 2002 or beginning during 2008 or 2009' for `ending during 2001, 2002, 2008, or 2009'.'.

(d) Conforming Amendment- Section 172 is amended by striking subsection (k).

(e) Effective Date-

(1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall apply to net operating losses arising in taxable years ending after December 31, 2007.

(2) ALTERNATIVE TAX NET OPERATING LOSS DEDUCTION- The amendment made by subsection (b) shall apply to taxable years ending after 1997.

(3) LOSS FROM OPERATIONS OF LIFE INSURANCE COMPANIES- The amendment made by subsection (d) shall apply to losses from operations arising in taxable years ending after December 31, 2007.

(4) TRANSITIONAL RULE- In the case of a net operating loss (or, in the case of a life insurance company, a loss from operations) for a taxable year ending before the date of the enactment of this Act--

(A) any election made under section 172(b)(3) or 810(b)(3) of the Internal Revenue Code of 1986 with respect to such loss may (notwithstanding such section) be revoked before the applicable date,

(B) any election made under section 172(b)(1)(H) or 810(b)(4) of such Code with respect to such loss shall (notwithstanding such section) be treated as timely made if made before the applicable date, and

(C) any application under section 6411(a) of such Code with respect to such loss shall be treated as timely filed if filed before the applicable date.

For purposes of this paragraph, the term `applicable date' means the date which is 60 days after the date of the enactment of this Act.

SEC. 1412. EXCEPTION FOR TARP RECIPIENTS.

The amendments made by this part shall not apply to--

(1) any taxpayer if--

(A) the Federal Government acquires, at any time, an equity interest in the taxpayer pursuant to the Emergency Economic Stabilization Act of 2008, or

(B) the Federal Government acquires, at any time, any warrant (or other right) to acquire any equity interest with respect to the taxpayer pursuant to such Act,

(2) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, and

(3) any taxpayer which at any time in 2008 or 2009 is a member of the same affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986, determined without regard to subsection (b) thereof) as a taxpayer described in paragraph (1) or (2).

PART III--INCENTIVES FOR NEW JOBS

SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS AND DISCONNECTED YOUTH.

(a) In General- Subsection (d) of section 51 is amended by adding at the end the following new paragraph:

`(14) CREDIT ALLOWED FOR UNEMPLOYED VETERANS AND DISCONNECTED YOUTH HIRED IN 2009 OR 2010-

`(A) IN GENERAL- Any unemployed veteran or disconnected youth who begins work for the employer during 2009 or 2010 shall be treated as a member of a targeted group for purposes of this subpart.

`(B) DEFINITIONS- For purposes of this paragraph--

`(i) UNEMPLOYED VETERAN- The term `unemployed veteran' means any veteran (as defined in paragraph (3)(B), determined without regard to clause (ii) thereof) who is certified by the designated local agency as--

`(I) having been discharged or released from active duty in the Armed Forces during 2008, 2009, or 2010, and

`(II) being in receipt of unemployment compensation under State or Federal law for not less than 4 weeks during the 1-year period ending on the hiring date.

`(ii) DISCONNECTED YOUTH- The term `disconnected youth' means any individual who is certified by the designated local agency--

`(I) as having attained age 16 but not age 25 on the hiring date,

`(II) as not regularly attending any secondary, technical, or post-secondary school during the 6-month period preceding the hiring date,

`(III) as not regularly employed during such 6-month period, and

`(IV) as not readily employable by reason of lacking a sufficient number of basic skills.'.

(b) Effective Date- The amendments made by this section shall apply to individuals who begin work for the employer after December 31, 2008.

PART IV--CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE

SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE.

(a) Findings- Congress finds as follows:

(1) The delegation of authority to the Secretary of the Treasury under section 382(m) of the Internal Revenue Code of 1986 does not authorize the Secretary to provide exemptions or special rules that are restricted to particular industries or classes of taxpayers.

(2) Internal Revenue Service Notice 2008-83 is inconsistent with the congressional intent in enacting such section 382(m).

(3) The legal authority to prescribe Internal Revenue Service Notice 2008-83 is doubtful.

(4) However, as taxpayers should generally be able to rely on guidance issued by the Secretary of the Treasury legislation is necessary to clarify the force and effect of Internal Revenue Service Notice 2008-83 and restore the proper application under the Internal Revenue Code of 1986 of the limitation on built-in losses following an ownership change of a bank.

(b) Determination of Force and Effect of Internal Revenue Service Notice 2008-83 Exempting Banks From Limitation on Certain Built-In Losses Following Ownership Change-

(1) IN GENERAL- Internal Revenue Service Notice 2008-83--

(A) shall be deemed to have the force and effect of law with respect to any ownership change (as defined in section 382(g) of the Internal Revenue Code of 1986) occurring on or before January 16, 2009, and

(B) shall have no force or effect with respect to any ownership change after such date.

(2) BINDING CONTRACTS- Notwithstanding paragraph (1), Internal Revenue Service Notice 2008-83 shall have the force and effect of law with respect to any ownership change (as so defined) which occurs after January 16, 2009 if such change--

(A) is pursuant to a written binding contract entered into on or before such date, or

(B) is pursuant to a written agreement entered into on or before such date and such agreement was described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission required by reason of such ownership change.

PART I--IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS

SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX-EXEMPT INTEREST EXPENSE OF FINANCIAL INSTITUTIONS.

(a) In General- Subsection (b) of section 265 is amended by adding at the end the following new paragraph:

`(7) DE MINIMIS EXCEPTION FOR BONDS ISSUED DURING 2009 OR 2010-

`(A) IN GENERAL- In applying paragraph (2)(A), there shall not be taken into account tax-exempt obligations issued during 2009 or 2010.

`(B) LIMITATION- The amount of tax-exempt obligations not taken into account by reason of subparagraph (A) shall not exceed 2 percent of the amount determined under paragraph (2)(B).

`(C) REFUNDINGS- For purposes of this paragraph, a refunding bond (whether a current or advance refunding) shall be treated as issued on the date of the issuance of the refunded bond (or in the case of a series of refundings, the original bond).'.

(b) Treatment as Financial Institution Preference Item- Clause (iv) of section 291(e)(1)(B) is amended by adding at the end the following: `That portion of any obligation not taken into account under paragraph (2)(A) of section 265(b) by reason of paragraph (7) of such section shall be treated for purposes of this section as having been acquired on August 7, 1986.'.

(c) Effective Date- The amendments made by this section shall apply to obligations issued after December 31, 2008.

SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION TO TAX-EXEMPT INTEREST EXPENSE ALLOCATION RULES FOR FINANCIAL INSTITUTIONS.

(a) In General- Paragraph (3) of section 265(b) (relating to exception for certain tax-exempt obligations) is amended by adding at the end the following new subparagraph:

`(G) SPECIAL RULES FOR OBLIGATIONS ISSUED DURING 2009 AND 2010-

`(i) INCREASE IN LIMITATION- In the case of obligations issued during 2009 or 2010, subparagraphs (C)(i), (D)(i), and (D)(iii)(II) shall each be applied by substituting `$30,000,000' for `$10,000,000'.

`(ii) QUALIFIED 501(C)(3) BONDS TREATED AS ISSUED BY EXEMPT ORGANIZATION- In the case of a qualified 501(c)(3) bond (as defined in section 145) issued during 2009 or 2010, this paragraph shall be applied by treating the 501(c)(3) organization for whose benefit such bond was issued as the issuer.

`(iii) SPECIAL RULE FOR QUALIFIED FINANCINGS- In the case of a qualified financing issue issued during 2009 or 2010--

`(I) subparagraph (F) shall not apply, and

`(II) any obligation issued as a part of such issue shall be treated as a qualified tax-exempt obligation if the requirements of this paragraph are met with respect to each qualified portion of the issue (determined by treating each qualified portion as a separate issue issued by the qualified borrower with respect to which such portion relates).

`(iv) QUALIFIED FINANCING ISSUE- For purposes of this subparagraph, the term `qualified financing issue' means any composite, pooled, or other conduit financing issue the proceeds of which are used directly or indirectly to make or finance loans to one or more ultimate borrowers each of whom is a qualified borrower.

`(v) QUALIFIED PORTION- For purposes of this subparagraph, the term `qualified portion' means that portion of the proceeds which are used with respect to each qualified borrower under the issue.

`(vi) QUALIFIED BORROWER- For purposes of this subparagraph, the term `qualified borrower' means a borrower which is a State or political subdivision thereof or an organization described in section 501(c)(3) and exempt from taxation under section 501(a).'.

(b) Effective Date- The amendments made by this section shall apply to obligations issued after December 31, 2008.

SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE MINIMUM TAX LIMITATIONS ON TAX-EXEMPT BONDS.

(a) Interest on Private Activity Bonds Issued During 2009 and 2010 Not Treated as Tax Preference Item- Subparagraph (C) of section 57(a)(5) is amended by adding at the end a new clause:

`(vi) EXCEPTION FOR BONDS ISSUED IN 2009 AND 2010- For purposes of clause (i), the term `private activity bond' shall not include any bond issued after December 31, 2008, and before January 1, 2011. For purposes of the preceding sentence, a refunding bond (whether a current or advance refunding) shall be treated as issued on the date of the issuance of the refunded bond (or in the case of a series of refundings, the original bond).'.

(b) No Adjustment to Adjusted Current Earnings for Interest on Tax-Exempt Bonds Issued After 2008- Subparagraph (B) of section 56(g)(4) is amended by adding at the end the following new clause:

`(iv) TAX EXEMPT INTEREST ON BONDS ISSUED IN 2009 AND 2010- Clause (i) shall not apply in the case of any interest on a bond issued after December 31, 2008, and before January 1, 2011. For purposes of the preceding sentence, a refunding bond (whether a current or advance refunding) shall be treated as issued on the date of the issuance of the refunded bond (or in the case of a series of refundings, the original bond).'.

(c) Effective Date- The amendments made by this section shall apply to obligations issued after December 31, 2008.

PART II--TAX CREDIT BONDS FOR SCHOOLS

SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS.

(a) In General- Subpart I of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

`SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS.

`(a) Qualified School Construction Bond- For purposes of this subchapter, the term `qualified school construction bond' means any bond issued as part of an issue if--

`(1) 100 percent of the available project proceeds of such issue are to be used for the construction, rehabilitation, or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the proceeds of such issue,

`(2) the bond is issued by a State or local government within the jurisdiction of which such school is located, and

`(3) the issuer designates such bond for purposes of this section.

`(b) Limitation on Amount of Bonds Designated- The maximum aggregate face amount of bonds issued during any calendar year which may be designated under subsection (a) by any issuer shall not exceed the sum of--

`(1) the limitation amount allocated under subsection (d) for such calendar year to such issuer, and

`(2) if such issuer is a large local educational agency (as defined in subsection (e)(4)) or is issuing on behalf of such an agency, the limitation amount allocated under subsection (e) for such calendar year to such agency.

`(c) National Limitation on Amount of Bonds Designated- There is a national qualified school construction bond limitation for each calendar year. Such limitation is--

`(1) $11,000,000,000 for 2009,

`(2) $11,000,000,000 for 2010, and

`(3) except as provided in subsection (f), zero after 2010.

`(d) 60 Percent of Limitation Allocated Among States-

`(1) IN GENERAL- 60 percent of the limitation applicable under subsection (c) for any calendar year shall be allocated by the Secretary among the States in proportion to the respective numbers of children in each State who have attained age 5 but not age 18 for the most recent fiscal year ending before such calendar year. The limitation amount allocated to a State under the preceding sentence shall be allocated by the State to issuers within such State.

`(2) MINIMUM ALLOCATIONS TO STATES-

`(A) IN GENERAL- The Secretary shall adjust the allocations under this subsection for any calendar year for each State to the extent necessary to ensure that the sum of--

`(i) the amount allocated to such State under this subsection for such year, and

`(ii) the aggregate amounts allocated under subsection (e) to large local educational agencies in such State for such year,

is not less than an amount equal to such State's adjusted minimum percentage of the amount to be allocated under paragraph (1) for the calendar year.

`(B) ADJUSTED MINIMUM PERCENTAGE- A State's adjusted minimum percentage for any calendar year is the product of--

`(i) the minimum percentage described in section 1124(d) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6334(d)) for such State for the most recent fiscal year ending before such calendar year, multiplied by

`(ii) 1.68.

`(3) ALLOCATIONS TO CERTAIN POSSESSIONS- The amount to be allocated under paragraph (1) to any possession of the United States other than Puerto Rico shall be the amount which would have been allocated if all allocations under paragraph (1) were made on the basis of respective populations of individuals below the poverty line (as defined by the Office of Management and Budget). In making other allocations, the amount to be allocated under paragraph (1) shall be reduced by the aggregate amount allocated under this paragraph to possessions of the United States.

`(4) ALLOCATIONS FOR INDIAN SCHOOLS- In addition to the amounts otherwise allocated under this subsection, $200,000,000 for calendar year 2009, and $200,000,000 for calendar year 2010, shall be allocated by the Secretary of the Interior for purposes of the construction, rehabilitation, and repair of schools funded by the Bureau of Indian Affairs. In the case of amounts allocated under the preceding sentence, Indian tribal governments (as defined in section 7701(a)(40)) shall be treated as qualified issuers for purposes of this subchapter.

`(e) 40 Percent of Limitation Allocated Among Largest School Districts-

`(1) IN GENERAL- 40 percent of the limitation applicable under subsection (c) for any calendar year shall be allocated under paragraph (2) by the Secretary among local educational agencies which are large local educational agencies for such year.

`(2) ALLOCATION FORMULA- The amount to be allocated under paragraph (1) for any calendar year shall be allocated among large local educational agencies in proportion to the respective amounts each such agency received for Basic Grants under subpart 2 of part A of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for the most recent fiscal year ending before such calendar year.

`(3) ALLOCATION OF UNUSED LIMITATION TO STATE- The amount allocated under this subsection to a large local educational agency for any calendar year may be reallocated by such agency to the State in which such agency is located for such calendar year. Any amount reallocated to a State under the preceding sentence may be allocated as provided in subsection (d)(1).

`(4) LARGE LOCAL EDUCATIONAL AGENCY- For purposes of this section, the term `large local educational agency' means, with respect to a calendar year, any local educational agency if such agency is--

`(A) among the 100 local educational agencies with the largest numbers of children aged 5 through 17 from families living below the poverty level, as determined by the Secretary using the most recent data available from the Department of Commerce that are satisfactory to the Secretary, or

`(B) 1 of not more than 25 local educational agencies (other than those described in subparagraph (A)) that the Secretary of Education determines (based on the most recent data available satisfactory to the Secretary) are in particular need of assistance, based on a low level of resources for school construction, a high level of enrollment growth, or such other factors as the Secretary deems appropriate.

`(f) Carryover of Unused Limitation- If for any calendar year--

`(1) the amount allocated under subsection (d) to any State, exceeds

`(2) the amount of bonds issued during such year which are designated under subsection (a) pursuant to such allocation,

the limitation amount under such subsection for such State for the following calendar year shall be increased by the amount of such excess. A similar rule shall apply to the amounts allocated under subsection (d)(4) or (e).'.

(b) Conforming Amendments-

(1) Paragraph (1) of section 54A(d) is amended by striking `or' at the end of subparagraph (C), by inserting `or' at the end of subparagraph (D), and by inserting after subparagraph (D) the following new subparagraph:

`(E) a qualified school construction bond,'.

(2) Subparagraph (C) of section 54A(d)(2) is amended by striking `and' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting `, and', and by adding at the end the following new clause:

`(v) in the case of a qualified school construction bond, a purpose specified in section 54F(a)(1).'.

(3) The table of sections for subpart I of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

`Sec. 54F. Qualified school construction bonds.'.

(c) Effective Date- The amendments made by this section shall apply to obligations issued after December 31, 2008.

SEC. 1512. EXTENSION AND EXPANSION OF QUALIFIED ZONE ACADEMY BONDS.

(a) In General- Section 54E(c)(1) is amended by striking `and 2009' and inserting `and $1,400,000,000 for 2009 and 2010'.

(b) Effective Date- The amendment made by this section shall apply to obligations issued after December 31, 2008.

PART III--TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS

SEC. 1521. TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS.

(a) In General- Part IV of subchapter A of chapter 1 is amended by adding at the end the following new subpart:

`Subpart J--Taxable Bond Option for Governmental Bonds

`Sec. 54AA. Taxable bond option for governmental bonds.

`SEC. 54AA. TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS.

`(a) In General- If a taxpayer holds a taxable governmental bond on one or more interest payment dates of the bond during any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to such dates.

`(b) Amount of Credit- The amount of the credit determined under this subsection with respect to any interest payment date for a taxable governmental bond is 35 percent of the amount of interest payable by the issuer with respect to such date.

`(c) Limitation Based on Amount of Tax-

`(1) IN GENERAL- The credit allowed under subsection (a) for any taxable year shall not exceed the excess of--

`(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

`(B) the sum of the credits allowable under this part (other than subpart C and this subpart).

`(2) CARRYOVER OF UNUSED CREDIT- If the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year (determined before the application of paragraph (1) for such succeeding taxable year).

`(d) Taxable Governmental Bond-

`(1) IN GENERAL- For purposes of this section, the term `taxable governmental bond' means any obligation (other than a private activity bond) if--

`(A) the interest on such obligation would (but for this section) be excludable from gross income under section 103, and

`(B) the issuer makes an irrevocable election to have this section apply.

`(2) APPLICABLE RULES- For purposes of applying paragraph (1)--

`(A) a taxable governmental bond shall not be treated as federally guaranteed by reason of the credit allowed under subsection (a) or section 6432,

`(B) the yield on a taxable governmental bond shall be determined without regard to the credit allowed under subsection (a), and

`(C) a bond shall not be treated as a taxable governmental bond if the issue price has more than a de minimis amount (determined under rules similar to the rules of section 1273(a)(3)) of premium over the stated principal amount of the bond.

`(e) Interest Payment Date- For purposes of this section, the term `interest payment date' means any date on which the holder of record of the taxable governmental bond is entitled to a payment of interest under such bond.

`(f) Special Rules-

`(1) INTEREST ON TAXABLE GOVERNMENTAL BONDS INCLUDIBLE IN GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES- For purposes of this title, interest on any taxable governmental bond shall be includible in gross income.

`(2) APPLICATION OF CERTAIN RULES- Rules similar to the rules of subsections (f), (g), (h), and (i) of section 54A shall apply for purposes of the credit allowed under subsection (a).

`(g) Special Rule for Qualified Bonds Issued Before 2011- In the case of a qualified bond issued before January 1, 2011--

`(1) ISSUER ALLOWED REFUNDABLE CREDIT- In lieu of any credit allowed under this section with respect to such bond, the issuer of such bond shall be allowed a credit as provided in section 6432.

`(2) QUALIFIED BOND- For purposes of this subsection, the term `qualified bond' means any taxable governmental bond issued as part of an issue if--

`(A) 100 percent of the available project proceeds (as defined in section 54A) of such issue are to be used for capital expenditures, and

`(B) the issuer makes an irrevocable election to have this subsection apply.

`(h) Regulations- The Secretary may prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section and section 6432.'.

(b) Credit for Qualified Bonds Issued Before 2011- Subchapter B of chapter 65, as amended by this Act, is amended by adding at the end the following new section:

`SEC. 6432. CREDIT FOR QUALIFIED BONDS ALLOWED TO ISSUER.

`(a) In General- In the case of a qualified bond issued before January 1, 2011, the issuer of such bond shall be allowed a credit with respect to each interest payment under such bond which shall be payable by the Secretary as provided in subsection (b).

`(b) Payment of Credit- The Secretary shall pay (contemporaneously with each interest payment date under such bond) to the issuer of such bond (or to any person who makes such interest payments on behalf of the issuer) 35 percent of the interest payable under such bond on such date.

`(c) Application of Arbitrage Rules- For purposes of section 148, the yield on a qualified bond shall be reduced by the credit allowed under this section.

`(d) Interest Payment Date- For purposes of this subsection, the term `interest payment date' means each date on which interest is payable by the issuer under the terms of the bond.

`(e) Qualified Bond- For purposes of this subsection, the term `qualified bond' has the meaning given such term in section 54AA(g).'.

(c) Conforming Amendments-

(1) Section 1324(b)(2) of title 31, United States Code, is amended by striking `or 6428' and inserting `6428, or 6432,'.

(2) Section 54A(c)(1)(B) is amended by striking `subpart C' and inserting `subparts C and J'.

(3) Sections 54(c)(2), 1397E(c)(2), and 1400N(l)(3)(B) are each amended by striking `and I' and inserting `, I, and J'.

(4) Section 6401(b)(1) is amended by striking `and I' and inserting `I, and J'.

(5) The table of subparts for part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

`Subpart J. Taxable bond option for governmental bonds.'.

(6) The table of sections for subchapter B of chapter 65, as amended by this Act, is amended by adding at the end the following new item:

`Sec. 6432. Credit for qualified bonds allowed to issuer.'.

(d) Transitional Coordination With State Law- Except as otherwise provided by a State after the date of the enactment of this Act, the interest on any taxable governmental bond (as defined in section 54AA of the Internal Revenue Code of 1986, as added by this section) and the amount of any credit determined under such section with respect to such bond shall be treated for purposes of the income tax laws of such State as being exempt from Federal income tax.

(e) Effective Date- The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

PART IV--RECOVERY ZONE BONDS

SEC. 1531. RECOVERY ZONE BONDS.

(a) In General- Subchapter Y of chapter 1 is amended by adding at the end the following new part:

`PART III--RECOVERY ZONE BONDS

`Sec. 1400U-1. Allocation of recovery zone bonds.

`Sec. 1400U-2. Recovery zone economic development bonds.

`Sec. 1400U-3. Recovery zone facility bonds.

`SEC. 1400U-1. ALLOCATION OF RECOVERY ZONE BONDS.

`(a) Allocations-

`(1) IN GENERAL- The Secretary shall allocate the national recovery zone economic development bond limitation and the national recovery zone facility bond limitation among the States in the proportion that each such State's 2008 State employment decline bears to the aggregate of the 2008 State employment declines for all of the States.

`(2) 2008 STATE EMPLOYMENT DECLINE- For purposes of this subsection, the term `2008 State employment decline' means, with respect to any State, the excess (if any) of--

`(A) the number of individuals employed in such State determined for December 2007, over

`(B) the number of individuals employed in such State determined for December 2008.

`(3) ALLOCATIONS BY STATES-

`(A) IN GENERAL- Each State with respect to which an allocation is made under paragraph (1) shall reallocate such allocation among the counties and large municipalities in such State in the proportion the each such county's or municipality's 2008 employment decline bears to the aggregate of the 2008 employment declines for all the counties and municipalities in such State.

`(B) LARGE MUNICIPALITIES- For purposes of subparagraph (A), the term `large municipality' means a municipality with a population of more than 100,000.

`(C) DETERMINATION OF LOCAL EMPLOYMENT DECLINES- For purposes of this paragraph, the employment decline of any municipality or county shall be determined in the same manner as determining the State employment decline under paragraph (2), except that in the case of a municipality any portion of which is in a county, such portion shall be treated as part of such municipality and not part of such county.

`(4) NATIONAL LIMITATIONS-

`(A) RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS- There is a national recovery zone economic development bond limitation of $10,000,000,000.

`(B) RECOVERY ZONE FACILITY BONDS- There is a national recovery zone facility bond limitation of $15,000,000,000.

`(b) Recovery Zone- For purposes of this part, the term `recovery zone' means--

`(1) any area designated by the issuer as having significant poverty, unemployment, home foreclosures, or general distress, and

`(2) any area for which a designation as an empowerment zone or renewal community is in effect.

`SEC. 1400U-2. RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS.

`(a) In General- In the case of a recovery zone economic development bond--

`(1) such bond shall be treated as a qualified bond for purposes of section 6432, and

`(2) subsection (b) of such section shall be applied by substituting `55 percent' for `35 percent'.

`(b) Recovery Zone Economic Development Bond-

`(1) IN GENERAL- For purposes of this section, the term `recovery zone economic development bond' means any taxable governmental bond (as defined in section 54AA(d)) issued before January 1, 2011, as part of issue if--

`(A) 100 percent of the available project proceeds (as defined in section 54A) of such issue are to be used for one or more qualified economic development purposes, and

`(B) the issuer designates such bond for purposes of this section.

`(2) LIMITATION ON AMOUNT OF BONDS DESIGNATED- The maximum aggregate face amount of bonds which may be designated by any issuer under paragraph (1) shall not exceed the amount of the recovery zone economic development bond limitation allocated to such issuer under section 1400U-1.

`(c) Qualified Economic Development Purpose- For purposes of this section, the term `qualified economic development purpose' means expenditures for purposes of promoting development or other economic activity in a recovery zone, including--

`(1) capital expenditures paid or incurred with respect to property located in such zone,

`(2) expenditures for public infrastructure and construction of public facilities, and

`(3) expenditures for job training and educational programs.

`SEC. 1400U-3. RECOVERY ZONE FACILITY BONDS.

`(a) In General- For purposes of part IV of subchapter B (relating to tax exemption requirements for State and local bonds), the term `exempt facility bond' includes any recovery zone facility bond.

`(b) Recovery Zone Facility Bond-

`(1) IN GENERAL- For purposes of this section, the term `recovery zone facility bond' means any bond issued as part of an issue if--

`(A) 95 percent or more of the net proceeds (as defined in section 150(a)(3)) of such issue are to be used for recovery zone property,

`(B) such bond is issued before January 1, 2011, and

`(C) the issuer designates such bond for purposes of this section.

`(2) LIMITATION ON AMOUNT OF BONDS DESIGNATED- The maximum aggregate face amount of bonds which may be designated by any issuer under paragraph (1) shall not exceed the amount of recovery zone facility bond limitation allocated to such issuer under section 1400U-1.

`(c) Recovery Zone Property- For purposes of this section--

`(1) IN GENERAL- The term `recovery zone property' means any property to which section 168 applies (or would apply but for section 179) if--

`(A) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after the date on which the designation of the recovery zone took effect,

`(B) the original use of which in the recovery zone commences with the taxpayer, and

`(C) substantially all of the use of which is in the recovery zone and is in the active conduct of a qualified business by the taxpayer in such zone.

`(2) QUALIFIED BUSINESS- The term `qualified business' means any trade or business except that--

`(A) the rental to others of real property located in a recovery zone shall be treated as a qualified business only if the property is not residential rental property (as defined in section 168(e)(2)), and

`(B) such term shall not include any trade or business consisting of the operation of any facility described in section 144(c)(6)(B).

`(3) SPECIAL RULES FOR SUBSTANTIAL RENOVATIONS AND SALE-LEASEBACK- Rules similar to the rules of subsections (a)(2) and (b) of section 1397D shall apply for purposes of this subsection.

`(d) Nonapplication of Certain Rules- Sections 146 (relating to volume cap) and 147(d) (relating to acquisition of existing property not permitted) shall not apply to any recovery zone facility bond.'.

(b) Clerical Amendment- The table of parts for subchapter Y of chapter 1 of such Code is amended by adding at the end the following new item:

`Part III. Recovery Zone Bonds.'.

(c) Effective Date- The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

SEC. 1532. TRIBAL ECONOMIC DEVELOPMENT BONDS.

(a) In General- Section 7871 is amended by adding at the end the following new subsection:

`(f) Tribal Economic Development Bonds-

`(1) ALLOCATION OF LIMITATION-

`(A) IN GENERAL- The Secretary shall allocate the national tribal economic development bond limitation among the Indian tribal governments in such manner as the Secretary, in consultation with the Secretary of the Interior, determines appropriate.

`(B) NATIONAL LIMITATION- There is a national tribal economic development bond limitation of $2,000,000,000.

`(2) BONDS TREATED AS EXEMPT FROM TAX- In the case of a tribal economic development bond--

`(A) notwithstanding subsection (c), such bond shall be treated for purposes of this title in the same manner as if such bond were issued by a State, and

`(B) section 146 shall not apply.

`(3) TRIBAL ECONOMIC DEVELOPMENT BOND-

`(A) IN GENERAL- For purposes of this section, the term `tribal economic development bond' means any bond issued by an Indian tribal government--

`(i) the interest on which is not exempt from tax under section 103 by reason of subsection (c) (determined without regard to this subsection) but would be so exempt if issued by a State or local government, and

`(ii) which is designated by the Indian tribal government as a tribal economic development bond for purposes of this subsection.

`(B) EXCEPTIONS- The term tribal economic development bond shall not include any bond issued as part of an issue if any portion of the proceeds of such issue are used to finance--

`(i) any portion of a building in which class II or class III gaming (as defined in section 4 of the Indian Gaming Regulatory Act) is conducted or housed or any other property actually used in the conduct of such gaming, or

`(ii) any facility located outside the Indian reservation (as defined in section 168(j)(6)).

`(C) LIMITATION ON AMOUNT OF BONDS DESIGNATED- The maximum aggregate face amount of bonds which may be designated by any Indian tribal government under subparagraph (A) shall not exceed the amount of national tribal economic development bond limitation allocated to such government under paragraph (1).'.

(b) Study- The Secretary of the Treasury, or the Secretary's delegate, shall conduct a study of the effects of the amendment made by subsection (a). Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury, or the Secretary's delegate, shall report to Congress on the results of the studies conducted under this paragraph, including the Secretary's recommendations regarding such amendment.

(c) Effective Date- The amendment made by subsection (a) shall apply to obligations issued after the date of the enactment of this Act.

PART V--REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS

SEC. 1541. REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS.

Section 3402 is amended by striking subsection (t).

PART I--RENEWABLE ENERGY INCENTIVES

SEC. 1601. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES.

(a) In General- Subsection (d) of section 45 is amended--

(1) by striking `2010' in paragraph (1) and inserting `2013',

(2) by striking `2011' each place it appears in paragraphs (2), (3), (4), (6), (7), and (9) and inserting `2014', and

(3) by striking `2012' in paragraph (11)(B) and inserting `2014'.

(b) Technical Amendment- Paragraph (5) of section 45(d) is amended by striking `and before' and all that follows and inserting `and before October 3, 2008.'.

(c) Effective Date-

(1) IN GENERAL- The amendments made by subsection (a) shall apply to property placed in service after the date of the enactment of this Act.

(2) TECHNICAL AMENDMENT- The amendment made by subsection (b) shall take effect as if included in section 102 of the Energy Improvement and Extension Act of 2008.

SEC. 1602. ELECTION OF INVESTMENT CREDIT IN LIEU OF PRODUCTION CREDIT.

(a) In General- Subsection (a) of section 48 is amended by adding at the end the following new paragraph:

`(5) ELECTION TO TREAT QUALIFIED FACILITIES AS ENERGY PROPERTY-

`(A) IN GENERAL- In the case of any qualified investment credit facility placed in service in 2009 or 2010--

`(i) such facility shall be treated as energy property for purposes of this section, and

`(ii) the energy percentage with respect to such property shall be 30 percent.

`(B) DENIAL OF PRODUCTION CREDIT- No credit shall be allowed under section 45 for any taxable year with respect to any qualified investment credit facility.

`(C) QUALIFIED INVESTMENT CREDIT FACILITY- For purposes of this paragraph, the term `qualified investment credit facility' means any facility described in paragraph (1), (2), (3), (4), (6), (7), (9), or (11) of section 45(d) if no credit has been allowed under section 45 with respect to such facility and the taxpayer makes an irrevocable election to have this paragraph apply to such facility.'.

(b) Effective Date- The amendments made by this section shall apply to facilities placed in service after December 31, 2008.

SEC. 1603. REPEAL OF CERTAIN LIMITATIONS ON CREDIT FOR RENEWABLE ENERGY PROPERTY.

(a) Repeal of Limitation on Credit for Qualified Small Wind Energy Property- Paragraph (4) of section 48(c) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C).

(b) Repeal of Limitation on Property Financed by Subsidized Energy Financing-

(1) IN GENERAL- Subsection (a) of section 48, as amended by section 1602, is amended by striking paragraph (4) and by redesignating paragraph (5) as paragraph (4).

(2) CONFORMING AMENDMENTS-

(A) Section 25C(e)(1) is amended by striking `(8), and (9)' and inserting `and (8)'.

(B) Section 25D(e) is amended by striking paragraph (9).

(c) Effective Date-

(1) IN GENERAL- Except as provided in paragraph (2),the amendment made by this section shall apply to periods after December 31, 2008, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(2) CONFORMING AMENDMENTS- The amendments made by subsection (b)(2) shall apply to taxable years beginning after December 31, 2008.

SEC. 1604. COORDINATION WITH RENEWABLE ENERGY GRANTS.

Section 48 is amended by adding at the end the following new subsection:

`(d) Coordination With Department of Energy Grants- In the case of any property with respect to which the Secretary of Energy makes a grant under section 1721 of the American Recovery and Reinvestment Tax Act of 2009--

`(1) DENIAL OF PRODUCTION AND INVESTMENT CREDITS- No credit shall be determined under this section or section 45 with respect to such property for the taxable year in which such grant is made or any subsequent taxable year.

`(2) RECAPTURE OF CREDITS FOR PROGRESS EXPENDITURES MADE BEFORE GRANT- If a credit was determined under this section with respect to such property for any taxable year ending before such grant is made--

`(A) the tax imposed under subtitle A on the taxpayer for the taxable year in which such grant is made shall be increased by so much of such credit as was allowed under section 38,

`(B) the general business carryforwards under section 39 shall be adjusted so as to recapture the portion of such credit which was not so allowed, and

`(C) the amount of such grant shall be determined without regard to any reduction in the basis of such property by reason of such credit.

`(3) TREATMENT OF GRANTS- Any such grant shall--

`(A) not be includible in the gross income of the taxpayer, but

`(B) shall be taken into account in determining the basis of the property to which such grant relates, except that the basis of such property shall be reduced under section 50(c) in the same manner as a credit allowed under subsection (a).'.

PART II--INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY BONDS AND QUALIFIED ENERGY CONSERVATION BONDS

SEC. 1611. INCREASED LIMITATION ON ISSUANCE OF NEW CLEAN RENEWABLE ENERGY BONDS.

Subsection (c) of section 54C is amended by adding at the end the following new paragraph:

`(4) ADDITIONAL LIMITATION- The national new clean renewable energy bond limitation shall be increased by $1,600,000,000. Such increase shall be allocated by the Secretary consistent with the rules of paragraphs (2) and (3).'.

SEC. 1612. INCREASED LIMITATION AND EXPANSION OF QUALIFIED ENERGY CONSERVATION BONDS.

(a) Increased Limitation- Subsection (e) of section 54D is amended by adding at the end the following new paragraph:

`(4) ADDITIONAL LIMITATION- The national qualified energy conservation bond limitation shall be increased by $2,400,000,000. Such increase shall be allocated by the Secretary consistent with the rules of paragraphs (1), (2), and (3).'.

(b) Loans and Grants To Implement Green Community Programs-

(1) IN GENERAL- Subparagraph (A) of section 54D(f)(1) is amended by inserting `(or loans or grants for capital expenditures to implement any green community program)' after `Capital expenditures'.

(2) BONDS TO IMPLEMENT GREEN COMMUNITY PROGRAMS NOT TREATED AS PRIVATE ACTIVITY BONDS FOR PURPOSES OF LIMITATIONS ON QUALIFIED ENERGY CONSERVATION BONDS- Subsection (e) of section 54D, as amended by subsection (a), is amended by adding at the end the following new paragraph:

`(5) BONDS TO IMPLEMENT GREEN COMMUNITY PROGRAMS NOT TREATED AS PRIVATE ACTIVITY BONDS- For purposes of paragraph (3) and subsection (f)(2), a bond shall not be treated as a private activity bond solely because proceeds of the issue of which such bond is a part are to be used for loans or grants for capital expenditures to implement any green community program.'.

(c) Effective Date- The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

PART III--ENERGY CONSERVATION INCENTIVES

SEC. 1621. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY PROPERTY.

(a) In General- Section 25C is amended by striking subsections (a) and (b) and inserting the following new subsections:

`(a) Allowance of Credit- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the sum of--

`(1) the amount paid or incurred by the taxpayer during such taxable year for qualified energy efficiency improvements, and

`(2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during such taxable year.

`(b) Limitation- The aggregate amount of the credits allowed under this section for taxable years beginning in 2009 and 2010 with respect to any taxpayer shall not exceed $1,500.'.

(b) Extension- Section 25C(g)(2) is amended by striking `December 31, 2009' and inserting `December 31, 2010'.

(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

SEC. 1622. MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

(a) Removal of Credit Limitation for Property Placed in Service-

(1) IN GENERAL- Paragraph (1) of section 25D(b) is amended to read as follows:

`(1) MAXIMUM CREDIT FOR FUEL CELLS- In the case of any qualified fuel cell property expenditure, the credit allowed under subsection (a) (determined without regard to subsection (c)) for any taxable year shall not exceed $500 with respect to each half kilowatt of capacity of the qualified fuel cell property (as defined in section 48(c)(1)) to which such expenditure relates.'.

(2) CONFORMING AMENDMENT- Paragraph (4) of section 25D(e) is amended--

(A) by striking all that precedes subparagraph (B) and inserting the following:

`(4) FUEL CELL EXPENDITURE LIMITATIONS IN CASE OF JOINT OCCUPANCY- In the case of any dwelling unit with respect to which qualified fuel cell property expenditures are made and which is jointly occupied and used during any calendar year as a residence by two or more individuals the following rules shall apply:

`(A) MAXIMUM EXPENDITURES FOR FUEL CELLS- The maximum amount of such expenditures which may be taken into account under subsection (a) by all such individuals with respect to such dwelling unit during such calendar year shall be $1,667 in the case of each half kilowatt of capacity of qualified fuel cell property (as defined in section 48(c)(1)) with respect to which such expenditures relate.', and

(B) by striking subparagraph (C).

(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

SEC. 1623. TEMPORARY INCREASE IN CREDIT FOR ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY.

(a) In General- Section 30C(e) is amended by adding at the end the following new paragraph:

`(6) SPECIAL RULE FOR PROPERTY PLACED IN SERVICE DURING 2009 AND 2010- In the case of property placed in service in taxable years beginning after December 31, 2008, and before January 1, 2011--

`(A) in the case of any such property which does not relate to hydrogen--

`(i) subsection (a) shall be applied by substituting `50 percent' for `30 percent',

`(ii) subsection (b)(1) shall be applied by substituting `$50,000' for `$30,000', and

`(iii) subsection (b)(2) shall be applied by substituting `$2,000' for `$1,000', and

`(B) in the case of any such property which relates to hydrogen, subsection (b) shall be applied by substituting `$200,000' for `$30,000'.'.

(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2008.

PART IV--ENERGY RESEARCH INCENTIVES

SEC. 1631. INCREASED RESEARCH CREDIT FOR ENERGY RESEARCH.

(a) In General- Section 41 is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

`(h) Energy Research Credit- In the case of any taxable year beginning in 2009 or 2010--

`(1) IN GENERAL- The credit determined under subsection (a)(1) shall be increased by 20 percent of the qualified energy research expenses for the taxable year.

`(2) QUALIFIED ENERGY RESEARCH EXPENSES- For purposes of this subsection, the term `qualified energy research expenses' means so much of the taxpayer's qualified research expenses as are related to the fields of fuel cells and battery technology, renewable energy, energy conservation technology, efficient transmission and distribution of electricity, and carbon capture and sequestration.

`(3) COORDINATION WITH OTHER RESEARCH CREDITS-

`(A) INCREMENTAL CREDIT- The amount of qualified energy research expenses taken into account under subsection (a)(1)(A) shall not exceed the base amount.

`(B) ALTERNATIVE SIMPLIFIED CREDIT- For purposes of subsection (c)(5), the amount of qualified energy research expenses taken into account for the taxable year for which the credit is being determined shall not exceed--

`(i) in the case of subsection (c)(5)(A), 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined, and

`(ii) in the case of subsection (c)(5)(B)(ii), zero.

`(C) BASIC RESEARCH AND ENERGY RESEARCH CONSORTIUM PAYMENTS- Any amount taken into account under paragraph (1) shall not be taken into account under paragraph (2) or (3) of subsection (a).'.

(b) Conforming Amendment- Subparagraph (B) of section 41(i)(1), as redesignated by subsection (a), is amended by inserting `(in the case of the increase in the credit determined under subsection (h), December 31, 2010)' after `December 31, 2009'.

(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

PART I--APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS FINANCED WITH CERTAIN TAX-FAVORED BONDS

SEC. 1701. APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS FINANCED WITH CERTAIN TAX-FAVORED BONDS.

Subchapter IV of chapter 31 of the title 40, United States Code, shall apply to projects financed with the proceeds of--

(1) any qualified clean renewable energy bond (as defined in section 54C of the Internal Revenue Code of 1986) issued after the date of the enactment of this Act,

(2) any qualified energy conservation bond (as defined in section 54D of the Internal Revenue Code of 1986) issued after the date of the enactment of this Act,

(3) any qualified zone academy bond (as defined in section 54E of the Internal Revenue Code of 1986) issued after the date of the enactment of this Act,

(4) any qualified school construction bond (as defined in section 54F of the Internal Revenue Code of 1986), and

(5) any recovery zone economic development bond (as defined in section 1400U-2 of the Internal Revenue Code of 1986).

PART II--GRANTS TO PROVIDE FINANCING FOR LOW-INCOME HOUSING

SEC. 1711. GRANTS TO STATES FOR LOW-INCOME HOUSING PROJECTS IN LIEU OF LOW-INCOME HOUSING CREDIT ALLOCATIONS FOR 2009.

(a) In General- The Secretary of the Treasury shall make a grant to the housing credit agency of each State in an amount equal to such State's low-income housing grant election amount.

(b) Low-Income Housing Grant Election Amount- For purposes of this section, the term `low-income housing grant election amount' means, with respect to any State, such amount as the State may elect which does not exceed 85 percent of the product of--

(1) the sum of--

(A) 100 percent of the State housing credit ceiling for 2009 which is attributable to amounts described in clauses (i) and (iii) of section 42(h)(3)(C) of the Internal Revenue Code of 1986, and

(B) 40 percent of the State housing credit ceiling for 2009 which is attributable to amounts described in clauses (ii) and (iv) of such section, multiplied by

(2) 10.

(c) Subawards for Low-Income Buildings-

(1) IN GENERAL- A State housing credit agency receiving a grant under this section shall use such grant to make subawards to finance the construction or acquisition and rehabilitation of qualified low-income buildings. A subaward under this section may be made to finance a qualified low-income building with or without an allocation under section 42 of the Internal Revenue Code of 1986, except that a State housing credit agency may make subawards to finance qualified low-income buildings without an allocation only if it makes a determination that such use will increase the total funds available to the State to build and rehabilitate affordable housing. In complying with such determination requirement, a State housing credit agency shall establish a process in which applicants that are allocated credits are required to demonstrate good faith efforts to obtain investment commitments for such credits before the agency makes such subawards.

(2) SUBAWARDS SUBJECT TO SAME REQUIREMENTS AS LOW-INCOME HOUSING CREDIT ALLOCATIONS- Any such subaward with respect to any qualified low-income building shall be made in the same manner and shall be subject to the same limitations (including rent, income, and use restrictions on such building) as an allocation of housing credit dollar amount allocated by such State housing credit agency under section 42 of the Internal Revenue Code of 1986, except that such subawards shall not be limited by, or otherwise affect (except as provided in subsection (h)(3)(J) of such section), the State housing credit ceiling applicable to such agency.

(3) COMPLIANCE AND ASSET MANAGEMENT- The State housing credit agency shall perform asset management functions to ensure compliance with section 42 of the Internal Revenue Code of 1986 and the long-term viability of buildings funded by any subaward under this section. The State housing credit agency may collect reasonable fees from a subaward recipient to cover expenses associated with the performance of its duties under this paragraph. The State housing credit agency may retain an agent or other private contractor to satisfy the requirements of this paragraph.

(4) RECAPTURE- The State housing credit agency shall impose conditions or restrictions, including a requirement providing for recapture, on any subaward under this section so as to assure that the building with respect to which such subaward is made remains a qualified low-income building during the compliance period. Any such recapture shall be payable to the Secretary of the Treasury for deposit in the general fund of the Treasury and may be enforced by means of liens or such other methods as the Secretary of the Treasury determines appropriate.

(d) Return of Unused Grant Funds- Any grant funds not used to make subawards under this section before January 1, 2011, shall be returned to the Secretary of the Treasury on such date. Any subawards returned to the State housing credit agency on or after such date shall be promptly returned to the Secretary of the Treasury. Any amounts returned to the Secretary of the Treasury under this subsection shall be deposited in the general fund of the Treasury.

(e) Definitions- Any term used in this section which is also used in section 42 of the Internal Revenue Code of 1986 shall have the same meaning for purposes of this section as when used in such section 42. Any reference in this section to the Secretary of the Treasury shall be treated as including the Secretary's delegate.

(f) Appropriations- There is hereby appropriated to the Secretary of the Treasury such sums as may be necessary to carry out this section.

PART III--GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS

SEC. 1721. GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS.

(a) In General- Upon application, the Secretary of Energy shall, within 60 days of the application and subject to the requirements of this section, provide a grant to each person who places in service specified energy property during 2009 or 2010 to reimburse such person for a portion of the expense of such facility as provided in subsection (b).

(b) Grant Amount-

(1) IN GENERAL- The amount of the grant under subsection (a) with respect to any specified energy property shall be the applicable percentage of the basis of such facility.

(2) APPLICABLE PERCENTAGE- For purposes of paragraph (1), the term `applicable percentage' means--

(A) 30 percent in the case of any property described in paragraphs (1) through (4) of subsection (c), and

(B) 10 percent in the case of any other property.

(3) DOLLAR LIMITATIONS- In the case of property described in paragraph (2), (6), or (7) of subsection (c), the amount of any grant under this section with respect to such property shall not exceed the limitation described in section 48(c)(1)(B), 48(c)(2)(B), or 48(c)(3)(B) of the Internal Revenue Code of 1986, respectively, with respect to such property.

(c) Specified Energy Property- For purposes of this section, the term `specified energy property' means any of the following:

(1) QUALIFIED FACILITIES- Any facility described in paragraph (1), (2), (3), (4), (6), (7), (9), or (11) of section 45(d) of the Internal Revenue Code of 1986.

(2) QUALIFIED FUEL CELL PROPERTY- Any qualified fuel cell property (as defined in section 48(c)(1) of such Code).

(3) SOLAR PROPERTY- Any property described in clause (i) or (ii) of section 48(a)(3)(A) of such Code.

(4) QUALIFIED SMALL WIND ENERGY PROPERTY- Any qualified small wind energy property (as defined in section 48(c)(4) of such Code).

(5) GEOTHERMAL PROPERTY- Any property described in clause (iii) of section 48(a)(3)(A) of such Code.

(6) QUALIFIED MICROTURBINE PROPERTY- Any qualified microturbine property (as defined in section 48(c)(2) of such Code).

(7) COMBINED HEAT AND POWER SYSTEM PROPERTY- Any combined heat and power system property (as defined in section 48(c)(3) of such Code).

(8) GEOTHERMAL HEATPUMP PROPERTY- Any property described in clause (vii) of section 48(a)(3)(A) of such Code.

(d) Application of Certain Rules- In making grants under this section, the Secretary of Energy shall apply rules similar to the rules of section 50 of the Internal Revenue Code of 1986. In applying such rules, if the facility is disposed of, or otherwise ceases to be a qualified renewable energy facility, the Secretary of Energy shall provide for the recapture of the appropriate percentage of the grant amount in such manner as the Secretary of Energy determines appropriate.

(e) Exception for Certain Non-Taxpayers- The Secretary of Energy shall not make any grant under this section to any Federal, State, or local government (or any political subdivision, agency, or instrumentality thereof) or any organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code.

(f) Definitions- Terms used in this section which are also used in section 45 or 48 of the Internal Revenue Code of 1986 shall have the same meaning for purposes of this section as when used in such section 45 or 48. Any reference in this section to the Secretary of the Treasury shall be treated as including the Secretary's delegate.

(g) Coordination Between Departments of Treasury and Energy- The Secretary of the Treasury shall provide the Secretary of Energy with such technical assistance as the Secretary of Energy may require in carrying out this section. The Secretary of Energy shall provide the Secretary of the Treasury with such information as the Secretary of the Treasury may require in carrying out the amendment made by section 1604.

(h) Appropriations- There is hereby appropriated to the Secretary of Energy such sums as may be necessary to carry out this section.

(i) Termination- The Secretary of Energy shall not make any grant to any person under this section unless the application of such person for such grant is received before October 1, 2011.

PART IV--STUDY OF ECONOMIC, EMPLOYMENT, AND RELATED EFFECTS OF THIS ACT

SEC. 1731. STUDY OF ECONOMIC, EMPLOYMENT, AND RELATED EFFECTS OF THIS ACT.

On February 1, 2010, and every 3 months thereafter in calendar year 2010, the Comptroller General of the United States shall submit to the Committee on Ways and Means a written report on the most recent national (and, where available, State-by-State) information on--

(1) the economic effects of this Act;

(2) the employment effects of this Act, including--

(A) a comparison of the number of jobs preserved and the number of jobs created as a result of this Act; and

(B) a comparison of the numbers of jobs preserved and the number of jobs created in each of the public and private sectors;

(3) the share of tax and non-tax expenditures provided under this Act that were spent or saved, by group and income class;

(4) how the funds provided to States under this Act have been spent, including a breakdown of--

(A) funds used for services provided to citizens; and

(B) wages and other compensation for public employees; and

(5) a description of any funds made available under this Act that remain unspent, and the reasons why.

SEC. 2000. SHORT TITLE, ETC.

(a) Short Title- This title may be cited as the `Assistance for Unemployed Workers and Struggling Families Act'.

(b) Table of Contents- The table of contents for this title is as follows:

Sec. 2000. Short title, etc.

Subtitle A--Unemployment Insurance

Sec. 2001. Extension of emergency unemployment compensation program.

Sec. 2002. Increase in unemployment compensation benefits.

Sec. 2003. Special transfers for unemployment compensation modernization.

Subtitle B--Assistance for Vulnerable Individuals

Sec. 2101. Emergency fund for TANF program.

Sec. 2102. One-time emergency payment to SSI recipients.

Sec. 2103. Temporary resumption of prior child support law.

SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT COMPENSATION PROGRAM.

(a) In General- Section 4007 of the Supplemental Appropriations Act, 2008 (Public Law 110-252; 26 U.S.C. 3304 note), as amended by section 4 of the Unemployment Compensation Extension Act of 2008 (Public Law 110-449; 122 Stat. 5015), is amended--

(1) by striking `March 31, 2009' each place it appears and inserting `December 31, 2009';

(2) in the heading for subsection (b)(2), by striking `MARCH 31, 2009' and inserting `DECEMBER 31, 2009'; and

(3) in subsection (b)(3), by striking `August 27, 2009' and inserting `May 31, 2010'.

(b) Financing Provisions- Section 4004 of such Act is amended by adding at the end the following:

`(e) Transfer of Funds- Notwithstanding any other provision of law, the Secretary of the Treasury shall transfer from the general fund of the Treasury (from funds not otherwise appropriated)--

`(1) to the extended unemployment compensation account (as established by section 905 of the Social Security Act) such sums as the Secretary of Labor estimates to be necessary to make payments to States under this title by reason of the amendments made by section 2001(a) of the Assistance for Unemployed Workers and Struggling Families Act; and

`(2) to the employment security administration account (as established by section 901 of the Social Security Act) such sums as the Secretary of Labor estimates to be necessary for purposes of assisting States in meeting administrative costs by reason of the amendments referred to in paragraph (1).

There are appropriated from the general fund of the Treasury, without fiscal year limitation, the sums referred to in the preceding sentence and such sums shall not be required to be repaid.'.

SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION BENEFITS.

(a) Federal-State Agreements- Any State which desires to do so may enter into and participate in an agreement under this section with the Secretary of Labor (hereinafter in this section referred to as the `Secretary'). Any State which is a party to an agreement under this section may, upon providing 30 days' written notice to the Secretary, terminate such agreement.

(b) Provisions of Agreement-

(1) ADDITIONAL COMPENSATION- Any agreement under this section shall provide that the State agency of the State will make payments of regular compensation to individuals in amounts and to the extent that they would be determined if the State law of the State were applied, with respect to any week for which the individual is (disregarding this section) otherwise entitled under the State law to receive regular compensation, as if such State law had been modified in a manner such that the amount of regular compensation (including dependents' allowances) payable for any week shall be equal to the amount determined under the State law (before the application of this paragraph) plus an additional $25.

(2) ALLOWABLE METHODS OF PAYMENT- Any additional compensation provided for in accordance with paragraph (1) shall be payable either--

(A) as an amount which is paid at the same time and in the same manner as any regular compensation otherwise payable for the week involved; or

(B) at the option of the State, by payments which are made separately from, but on the same weekly basis as, any regular compensation otherwise payable.

(c) Nonreduction Rule- An agreement under this section shall not apply (or shall cease to apply) with respect to a State upon a determination by the Secretary that the method governing the computation of regular compensation under the State law of that State has been modified in a manner such that--

(1) the average weekly benefit amount of regular compensation which will be payable during the period of the agreement (determined disregarding any additional amounts attributable to the modification described in subsection (b)(1)) will be less than

(2) the average weekly benefit amount of regular compensation which would otherwise have been payable during such period under the State law, as in effect on December 31, 2008.

(d) Payments to States-

(1) IN GENERAL-

(A) FULL REIMBURSEMENT- There shall be paid to each State which has entered into an agreement under this section an amount equal to 100 percent of--

(i) the total amount of additional compensation (as described in subsection (b)(1)) paid to individuals by the State pursuant to such agreement; and

(ii) any additional administrative expenses incurred by the State by reason of such agreement (as determined by the Secretary).

(B) TERMS OF PAYMENTS- Sums payable to any State by reason of such State's having an agreement under this section shall be payable, either in advance or by way of reimbursement (as determined by the Secretary), in such amounts as the Secretary estimates the State will be entitled to receive under this section for each calendar month, reduced or increased, as the case may be, by any amount by which the Secretary finds that his estimates for any prior calendar month were greater or less than the amounts which should have been paid to the State. Such estimates may be made on the basis of such statistical, sampling, or other method as may be agreed upon by the Secretary and the State agency of the State involved.

(2) CERTIFICATIONS- The Secretary shall from time to time certify to the Secretary of the Treasury for payment to each State the sums payable to such State under this section.

(3) APPROPRIATION- There are appropriated from the general fund of the Treasury, without fiscal year limitation, such sums as may be necessary for purposes of this subsection.

(e) Applicability-

(1) IN GENERAL- An agreement entered into under this section shall apply to weeks of unemployment--

(A) beginning after the date on which such agreement is entered into; and

(B) ending before January 1, 2010.

(2) TRANSITION RULE FOR INDIVIDUALS REMAINING ENTITLED TO REGULAR COMPENSATION AS OF JANUARY 1, 2010- In the case of any individual who, as of the date specified in paragraph (1)(B), has not yet exhausted all rights to regular compensation under the State law of a State with respect to a benefit year that began before such date, additional compensation (as described in subsection (b)(1)) shall continue to be payable to such individual for any week beginning on or after such date for which the individual is otherwise eligible for regular compensation with respect to such benefit year.

(3) TERMINATION- Notwithstanding any other provision of this subsection, no additional compensation (as described in subsection (b)(1)) shall be payable for any week beginning after June 30, 2010.

(f) Fraud and Overpayments- The provisions of section 4005 of the Supplemental Appropriations Act, 2008 (Public Law 110-252; 122 Stat. 2356) shall apply with respect to additional compensation (as described in subsection (b)(1)) to the same extent and in the same manner as in the case of emergency unemployment compensation.

(g) Application to Other Unemployment Benefits-

(1) IN GENERAL- Each agreement under this section shall include provisions to provide that the purposes of the preceding provisions of this section shall be applied with respect to unemployment benefits described in subsection (h)(3) to the same extent and in the same manner as if those benefits were regular compensation.

(2) ELIGIBILITY AND TERMINATION RULES- Additional compensation (as described in subsection (b)(1))--

(A) shall not be payable, pursuant to this subsection, with respect to any unemployment benefits described in subsection (h)(3) for any week beginning on or after the date specified in subsection (e)(1)(B), except in the case of an individual who was eligible to receive additional compensation (as so described) in connection with any regular compensation or any unemployment benefits described in subsection (h)(3) for any period of unemployment ending before such date; and

(B) shall in no event be payable for any week beginning after the date specified in subsection (e)(3).

(h) Definitions- For purposes of this section--

(1) the terms `compensation', `regular compensation', `benefit year', `State', `State agency', `State law', and `week' have the respective meanings given such terms under section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note);

(2) the term `emergency unemployment compensation' means emergency unemployment compensation under title IV of the Supplemental Appropriations Act, 2008 (Public Law 110-252; 122 Stat. 2353); and

(3) any reference to unemployment benefits described in this paragraph shall be considered to refer to--

(A) extended compensation (as defined by section 205 of the Federal-State Extended Unemployment Compensation Act of 1970); and

(B) unemployment compensation (as defined by section 85(b) of the Internal Revenue Code of 1986) provided under any program administered by a State under an agreement with the Secretary.

SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT COMPENSATION MODERNIZATION.

(a) In General- Section 903 of the Social Security Act (42 U.S.C. 1103) is amended by adding at the end the following:

`Special Transfers in Fiscal Years 2009, 2010, and 2011 for Modernization

`(f)(1)(A) In addition to any other amounts, the Secretary of Labor shall provide for the making of unemployment compensation modernization incentive payments (hereinafter `incentive payments') to the accounts of the States in the Unemployment Trust Fund, by transfer from amounts reserved for that purpose in the Federal unemployment account, in accordance with succeeding provisions of this subsection.

`(B) The maximum incentive payment allowable under this subsection with respect to any State shall, as determined by the Secretary of Labor, be equal to the amount obtained by multiplying $7,000,000,000 by the same ratio as would apply under subsection (a)(2)(B) for purposes of determining such State's share of any excess amount (as described in subsection (a)(1)) that would have been subject to transfer to State accounts, as of October 1, 2008, under the provisions of subsection (a).

`(C) Of the maximum incentive payment determined under subparagraph (B) with respect to a State--

`(i) one-third shall be transferred to the account of such State upon a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraph (2); and

`(ii) the remainder shall be transferred to the account of such State upon a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraph (3).

`(2) The State law of a State meets the requirements of this paragraph if such State law--

`(A) uses a base period that includes the most recently completed calendar quarter before the start of the benefit year for purposes of determining eligibility for unemployment compensation; or

`(B) provides that, in the case of an individual who would not otherwise be eligible for unemployment compensation under the State law because of the use of a base period that does not include the most recently completed calendar quarter before the start of the benefit year, eligibility shall be determined using a base period that includes such calendar quarter.

`(3) The State law of a State meets the requirements of this paragraph if such State law includes provisions to carry out at least 2 of the following subparagraphs:

`(A) An individual shall not be denied regular unemployment compensation under any State law provisions relating to availability for work, active search for work, or refusal to accept work, solely because such individual is seeking only part-time work (as defined by the Secretary of Labor), except that the State law provisions carrying out this subparagraph may exclude an individual if a majority of the weeks of work in such individual's base period do not include part-time work (as so defined).

`(B) An individual shall not be disqualified from regular unemployment compensation for separating from employment if that separation is for any compelling family reason. For purposes of this subparagraph, the term `compelling family reason' means the following:

`(i) Domestic violence, verified by such reasonable and confidential documentation as the State law may require, which causes the individual reasonably to believe that such individual's continued employment would jeopardize the safety of the individual or of any member of the individual's immediate family (as defined by the Secretary of Labor).

`(ii) The illness or disability of a member of the individual's immediate family (as those terms are defined by the Secretary of Labor).

`(iii) The need for the individual to accompany such individual's spouse--

`(I) to a place from which it is impractical for such individual to commute; and

`(II) due to a change in location of the spouse's employment.

`(C) Weekly unemployment compensation is payable under this subparagraph to any individual who is unemployed (as determined under the State unemployment compensation law), has exhausted all rights to regular unemployment compensation under the State law, and is enrolled and making satisfactory progress in a State-approved training program or in a job training program authorized under the Workforce Investment Act of 1998. Such programs shall prepare individuals who have been separated from a declining occupation, or who have been involuntarily and indefinitely separated from employment as a result of a permanent reduction of operations at the individual's place of employment, for entry into a high-demand occupation. The amount of unemployment compensation payable under this subparagraph to an individual for a week of unemployment shall be equal to the individual's average weekly benefit amount (including dependents' allowances) for the most recent benefit year, and the total amount of unemployment compensation payable under this subparagraph to any individual shall be equal to at least 26 times the individual's average weekly benefit amount (including dependents' allowances) for the most recent benefit year.

`(D) Dependents' allowances are provided, in the case of any individual who is entitled to receive regular unemployment compensation and who has any dependents (as defined by State law), in an amount equal to at least $15 per dependent per week, subject to any aggregate limitation on such allowances which the State law may establish (but which aggregate limitation on the total allowance for dependents paid to an individual may not be less than $50 for each week of unemployment or 50 percent of the individual's weekly benefit amount for the benefit year, whichever is less).

`(4)(A) Any State seeking an incentive payment under this subsection shall submit an application therefor at such time, in such manner, and complete with such information as the Secretary of Labor may within 60 days after the date of the enactment of this subsection prescribe (whether by regulation or otherwise), including information relating to compliance with the requirements of paragraph (2) or (3), as well as how the State intends to use the incentive payment to improve or strengthen the State's unemployment compensation program. The Secretary of Labor shall, within 30 days after receiving a complete application, notify the State agency of the State of the Secretary's findings with respect to the requirements of paragraph (2) or (3) (or both).

`(B)(i) If the Secretary of Labor finds that the State law provisions (disregarding any State law provisions which are not then currently in effect as permanent law or which are subject to discontinuation) meet the requirements of paragraph (2) or (3), as the case may be, the Secretary of Labor shall thereupon make a certification to that effect to the Secretary of the Treasury, together with a certification as to the amount of the incentive payment to be transferred to the State account pursuant to that finding. The Secretary of the Treasury shall make the appropriate transfer within 7 days after receiving such certification.

`(ii) For purposes of clause (i), State law provisions which are to take effect within 12 months after the date of their certification under this subparagraph shall be considered to be in effect as of the date of such certification.

`(C)(i) No certification of compliance with the requirements of paragraph (2) or (3) may be made with respect to any State whose State law is not otherwise eligible for certification under section 303 or approvable under section 3304 of the Federal Unemployment Tax Act.

`(ii) No certification of compliance with the requirements of paragraph (3) may be made with respect to any State whose State law is not in compliance with the requirements of paragraph (2).

`(iii) No application under subparagraph (A) may be considered if submitted before the date of the enactment of this subsection or after the latest date necessary (as specified by the Secretary of Labor) to ensure that all incentive payments under this subsection are made before October 1, 2011.

`(5)(A) Except as provided in subparagraph (B), any amount transferred to the account of a State under this subsection may be used by such State only in the payment of cash benefits to individuals with respect to their unemployment (including for dependents' allowances and for unemployment compensation under paragraph (3)(C)), exclusive of expenses of administration.

`(B) A State may, subject to the same conditions as set forth in subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the reference to `subsections (a) and (b)' in subparagraph (D) thereof to include this subsection), use any amount transferred to the account of such State under this subsection for the administration of its unemployment compensation law and public employment offices.

`(6) Out of any money in the Federal unemployment account not otherwise appropriated, the Secretary of the Treasury shall reserve $7,000,000,000 for incentive payments under this subsection. Any amount so reserved shall not be taken into account for purposes of any determination under section 902, 910, or 1203 of the amount in the Federal unemployment account as of any given time. Any amount so reserved for which the Secretary of the Treasury has not received a certification under paragraph (4)(B) by the deadline described in paragraph (4)(C)(iii) shall, upon the close of fiscal year 2011, become unrestricted as to use as part of the Federal unemployment account.

`(7) For purposes of this subsection, the terms `benefit year', `base period', and `week' have the respective meanings given such terms under section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note).

`Special Transfer in Fiscal Year 2009 for Administration

`(g)(1) In addition to any other amounts, the Secretary of the Treasury shall transfer from the employment security administration account to the account of each State in the Unemployment Trust Fund, within 30 days after the date of the enactment of this subsection, the amount determined with respect to such State under paragraph (2).

`(2) The amount to be transferred under this subsection to a State account shall (as determined by the Secretary of Labor and certified by such Secretary to the Secretary of the Treasury) be equal to the amount obtained by multiplying $500,000,000 by the same ratio as determined under subsection (f)(1)(B) with respect to such State.

`(3) Any amount transferred to the account of a State as a result of the enactment of this subsection may be used by the State agency of such State only in the payment of expenses incurred by it for--

`(A) the administration of the provisions of its State law carrying out the purposes of subsection (f)(2) or any subparagraph of subsection (f)(3);

`(B) improved outreach to individuals who might be eligible for regular unemployment compensation by virtue of any provisions of the State law which are described in subparagraph (A);

`(C) the improvement of unemployment benefit and unemployment tax operations, including responding to increased demand for unemployment compensation; and

`(D) staff-assisted reemployment services for unemployment compensation claimants.'.

(b) Regulations- The Secretary of Labor may prescribe any regulations, operating instructions, or other guidance necessary to carry out the amendment made by subsection (a).

SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM.

(a) In General- Section 403 of the Social Security Act (42 U.S.C. 603) is amended by adding at the end the following:

`(c) Emergency Fund-

`(1) ESTABLISHMENT- There is established in the Treasury of the United States a fund which shall be known as the `Emergency Contingency Fund for State Temporary Assistance for Needy Families Programs' (in this subsection referred to as the `Emergency Fund').

`(2) DEPOSITS INTO FUND- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated such sums as are necessary for payment to the Emergency Fund.

`(3) GRANTS-

`(A) GRANT RELATED TO CASELOAD INCREASES-

`(i) IN GENERAL- For each calendar quarter in fiscal year 2009 or 2010, the Secretary shall make a grant from the Emergency Fund to each State that--

`(I) requests a grant under this subparagraph for the quarter; and

`(II) meets the requirement of clause (ii) for the quarter.

`(ii) CASELOAD INCREASE REQUIREMENT- A State meets the requirement of this clause for a quarter if the average monthly assistance caseload of the State for the quarter exceeds the average monthly assistance caseload of the State for the corresponding quarter in the emergency fund base year of the State.

`(iii) AMOUNT OF GRANT- Subject to paragraph (5), the amount of the grant to be made to a State under this subparagraph for a quarter shall be 80 percent of the amount (if any) by which the total expenditures of the State for basic assistance (as defined by the Secretary) in the quarter, whether under the State program funded under this part or as qualified State expenditures, exceeds the total expenditures of the State for such assistance for the corresponding quarter in the emergency fund base year of the State.

`(B) GRANT RELATED TO INCREASED EXPENDITURES FOR NON-RECURRENT SHORT-TERM BENEFITS-

`(i) IN GENERAL- For each calendar quarter in fiscal year 2009 or 2010, the Secretary shall make a grant from the Emergency Fund to each State that--

`(I) requests a grant under this subparagraph for the quarter; and

`(II) meets the requirement of clause (ii) for the quarter.

`(ii) NON-RECURRENT SHORT-TERM EXPENDITURE REQUIREMENT- A State meets the requirement of this clause for a quarter if the total expenditures of the State for non-recurrent short-term benefits in the quarter, whether under the State program funded under this part or as qualified State expenditures, exceeds the total such expenditures of the State for non-recurrent short-term benefits in the corresponding quarter in the emergency fund base year of the State.

`(iii) AMOUNT OF GRANT- Subject to paragraph (5), the amount of the grant to be made to a State under this subparagraph for a quarter shall be an amount equal to 80 percent of the excess described in clause (ii).

`(C) GRANT RELATED TO INCREASED EXPENDITURES FOR SUBSIDIZED EMPLOYMENT-

`(i) IN GENERAL- For each calendar quarter in fiscal year 2009 or 2010, the Secretary shall make a grant from the Emergency Fund to each State that--

`(I) requests a grant under this subparagraph for the quarter; and

`(II) meets the requirement of clause (ii) for the quarter.

`(ii) SUBSIDIZED EMPLOYMENT EXPENDITURE REQUIREMENT- A State meets the requirement of this clause for a quarter if the total expenditures of the State for subsidized employment in the quarter, whether under the State program funded under this part or as qualified State expenditures, exceeds the total of such expenditures of the State in the corresponding quarter in the emergency fund base year of the State.

`(iii) AMOUNT OF GRANT- Subject to paragraph (5), the amount of the grant to be made to a State under this subparagraph for a quarter shall be an amount equal to 80 percent of the excess described in clause (ii).

`(4) AUTHORITY TO MAKE NECESSARY ADJUSTMENTS TO DATA AND COLLECT NEEDED DATA- In determining the size of the caseload of a State and the expenditures of a State for basic assistance, non-recurrent short-term benefits, and subsidized employment, during any period for which the State requests funds under this subsection, and during the emergency fund base year of the State, the Secretary may make appropriate adjustments to the data to ensure that the data reflect expenditures under the State program funded under this part and qualified State expenditures. The Secretary may develop a mechanism for collecting expenditure data, including procedures which allow States to make reasonable estimates, and may set deadlines for making revisions to the data.

`(5) LIMITATION- The total amount payable to a single State under subsection (b) and this subsection for a fiscal year shall not exceed 25 percent of the State family assistance grant.

`(6) LIMITATIONS ON USE OF FUNDS- A State to which an amount is paid under this subsection may use the amount only as authorized by section 404.

`(7) TIMING OF IMPLEMENTATION- The Secretary shall implement this subsection as quickly as reasonably possible, pursuant to appropriate guidance to States.

`(8) DEFINITIONS- In this subsection:

`(A) AVERAGE MONTHLY ASSISTANCE CASELOAD- The term `average monthly assistance caseload' means, with respect to a State and a quarter, the number of families receiving assistance during the quarter under the State program funded under this part or as qualified State expenditures, subject to adjustment under paragraph (4).

`(B) EMERGENCY FUND BASE YEAR-

`(i) IN GENERAL- The term `emergency fund base year' means, with respect to a State and a category described in clause (ii), whichever of fiscal year 2007 or 2008 is the fiscal year in which the amount described by the category with respect to the State is the lesser.

`(ii) CATEGORIES DESCRIBED- The categories described in this clause are the following:

`(I) The average monthly assistance caseload of the State.

`(II) The total expenditures of the State for non-recurrent short-term benefits, whether under the State program funded under this part or as qualified State expenditures.

`(III) The total expenditures of the State for subsidized employment, whether under the State program funded under this part or as qualified State expenditures.

`(C) QUALIFIED STATE EXPENDITURES- The term `qualified State expenditures' has the meaning given the term in section 409(a)(7).'.

(b) Temporary Modification of Caseload Reduction Credit- Section 407(b)(3)(A)(i) of such Act (42 U.S.C. 607(b)(3)(A)(i)) is amended by inserting `(or if the immediately preceding fiscal year is fiscal year 2009 or 2010, then, at State option, during the emergency fund base year of the State with respect to the average monthly assistance caseload of the State (within the meaning of section 403(c)(8)(B)))' before `under the State'.

(c) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.

SEC. 2102. ONE-TIME EMERGENCY PAYMENT TO SSI RECIPIENTS.

(a) Payment Authority-

(1) IN GENERAL- At the earliest practicable date in calendar year 2009 but not later than 120 days after the date of the enactment of this section, the Commissioner of Social Security shall make a one-time payment to each individual who is determined by the Commissioner in calendar year 2009 to be an individual who--

(A) is entitled to a cash benefit under the supplemental security income program under title XVI of the Social Security Act (other than pursuant to section 1611(e)(1)(B) of such Act) for at least 1 day in the calendar month in which the first payment under this section is to be made; or

(B)(i) was entitled to such a cash benefit (other than pursuant to section 1611(e)(1)(B) of such Act) for at least 1 day in the 2-month period preceding that calendar month; and

(ii) whose entitlement to that benefit ceased in that 2-month period solely because the income of the individual (and the income of the spouse, if any, of the individual) exceeded the applicable income limit described in paragraph (1)(A) or (2)(A) of section 1611(a) of such Act.

(2) AMOUNT OF PAYMENT- Subject to subsection (b)(1) of this section, the amount of the payment shall be--

(A) in the case of an individual eligible for a payment under this section who does not have a spouse eligible for such a payment, an amount equal to the average of the cash benefits payable in the aggregate under section 1611 or 1619(a) of the Social Security Act to eligible individuals who do not have an eligible spouse, for the most recent month for which data on payment of the benefits are available, as determined by the Commissioner of Social Security; or

(B) in the case of an individual eligible for a payment under this section who has a spouse eligible for such a payment, an amount equal to the average of the cash benefits payable in the aggregate under section 1611 or 1619(a) of the Social Security Act to eligible individuals who have an eligible spouse, for the most recent month for which data on payment of the benefits are available, as so determined.

(b) Administrative Provisions-

(1) AUTHORITY TO WITHHOLD PAYMENT TO RECOVER PRIOR OVERPAYMENT OF SSI BENEFITS- The Commissioner of Social Security may withhold part or all of a payment otherwise required to be made under subsection (a) of this section to an individual, in order to recover a prior overpayment of benefits to the individual under the supplemental security income program under title XVI of the Social Security Act, subject to the limitations of section 1631(b) of such Act.

(2) PAYMENT TO BE DISREGARDED IN DETERMINING UNDERPAYMENTS UNDER THE SSI PROGRAM- A payment under subsection (a) shall be disregarded in determining whether there has been an underpayment of benefits under the supplemental security income program under title XVI of the Social Security Act.

(3) NONASSIGNMENT- The provisions of section 1631(d) of the Social Security Act shall apply with respect to payments under this section to the same extent as they apply in the case of title XVI of such Act.

(c) Payments To Be Disregarded for Purposes of All Federal and Federally Assisted Programs- A payment under subsection (a) shall not be regarded as income to the recipient, and shall not be regarded as a resource of the recipient for the month of receipt and the following 6 months, for purposes of determining the eligibility of any individual for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds.

(d) Appropriation- Out of any sums in the Treasury of the United States not otherwise appropriated, there are appropriated such sums as may be necessary to carry out this section.

SEC. 2103. TEMPORARY RESUMPTION OF PRIOR CHILD SUPPORT LAW.

During the period that begins with October 1, 2008, and ends with September 30, 2010, section 455(a)(1) of the Social Security Act shall be applied and administered as if the phrase `from amounts paid to the State under section 458 or' did not appear in such section.

SEC. 3001. SHORT TITLE AND TABLE OF CONTENTS OF TITLE.

(a) Short Title of Title- This title may be cited as the `Health Insurance Assistance for the Unemployed Act of 2009'.

(b) Table of Contents of Title- The table of contents of this title is as follows:

Sec. 3001. Short title and table of contents of title.

Sec. 3002. Premium assistance for COBRA benefits and extension of COBRA benefits for older or long-term employees.

Sec. 3003. Temporary optional Medicaid coverage for the unemployed.

SEC. 3002. PREMIUM ASSISTANCE FOR COBRA BENEFITS AND EXTENSION OF COBRA BENEFITS FOR OLDER OR LONG-TERM EMPLOYEES.

(a) Premium Assistance for COBRA Continuation Coverage for Individuals and Their Families-

(1) PROVISION OF PREMIUM ASSISTANCE-

(A) REDUCTION OF PREMIUMS PAYABLE- In the case of any premium for a period of coverage beginning on or after the date of the enactment of this Act for COBRA continuation coverage with respect to any assistance eligible individual, such individual shall be treated for purposes of any COBRA continuation provision as having paid the amount of such premium if such individual pays 35 percent of the amount of such premium (as determined without regard to this subsection).

(B) PREMIUM REIMBURSEMENT- For provisions providing the balance of such premium, see section 6431 of the Internal Revenue Code of 1986, as added by paragraph (12).

(2) LIMITATION OF PERIOD OF PREMIUM ASSISTANCE-

(A) IN GENERAL- Paragraph (1)(A) shall not apply with respect to any assistance eligible individual for months of coverage beginning on or after the earlier of--

(i) the first date that such individual is eligible for coverage under any other group health plan (other than coverage consisting of only dental, vision, counseling, or referral services (or a combination thereof), coverage under a health reimbursement arrangement or a health flexible spending arrangement, or coverage of treatment that is furnished in an on-site medical facility maintained by the employer and that consists primarily of first-aid services, prevention and wellness care, or similar care (or a combination thereof)) or is eligible for benefits under title XVIII of the Social Security Act, or

(ii) the earliest of--

(I) the date which is 12 months after the first day of the first month that paragraph (1)(A) applies with respect to such individual,

(II) the date following the expiration of the maximum period of continuation coverage required under the applicable COBRA continuation coverage provision, or

(III) the date following the expiration of the period of continuation coverage allowed under paragraph (4)(B)(ii).

(B) TIMING OF ELIGIBILITY FOR ADDITIONAL COVERAGE- For purposes of subparagraph (A)(i), an individual shall not be treated as eligible for coverage under a group health plan before the first date on which such individual could be covered under such plan.

(C) NOTIFICATION REQUIREMENT- An assistance eligible individual shall notify in writing the group health plan with respect to which paragraph (1)(A) applies if such paragraph ceases to apply by reason of subparagraph (A)(i). Such notice shall be provided to the group health plan in such time and manner as may be specified by the Secretary of Labor.

(3) ASSISTANCE ELIGIBLE INDIVIDUAL- For purposes of this section, the term `assistance eligible individual' means any qualified beneficiary if--

(A) at any time during the period that begins with September 1, 2008, and ends with December 31, 2009, such qualified beneficiary is eligible for COBRA continuation coverage,

(B) such qualified beneficiary elects such coverage, and

(C) the qualifying event with respect to the COBRA continuation coverage consists of the involuntary termination of the covered employee's employment and occurred during such period.

(4) EXTENSION OF ELECTION PERIOD AND EFFECT ON COVERAGE-

(A) IN GENERAL- Notwithstanding section 605(a) of the Employee Retirement Income Security Act of 1974, section 4980B(f)(5)(A) of the Internal Revenue Code of 1986, section 2205(a) of the Public Health Service Act, and section 8905a(c)(2) of title 5, United States Code, in the case of an individual who is a qualified beneficiary described in paragraph (3)(A) as of the date of the enactment of this Act and has not made the election referred to in paragraph (3)(B) as of such date, such individual may elect the COBRA continuation coverage under the COBRA continuation coverage provisions containing such sections during the 60-day period commencing with the date on which the notification required under paragraph (7)(C) is provided to such individual.

(B) COMMENCEMENT OF COVERAGE; NO REACH-BACK- Any COBRA continuation coverage elected by a qualified beneficiary during an extended election period under subparagraph (A)--

(i) shall commence on the date of the enactment of this Act, and

(ii) shall not extend beyond the period of COBRA continuation coverage that would have been required under the applicable COBRA continuation coverage provision if the coverage had been elected as required under such provision.

(C) PREEXISTING CONDITIONS- With respect to a qualified beneficiary who elects COBRA continuation coverage pursuant to subparagraph (A), the period--

(i) beginning on the date of the qualifying event, and

(ii) ending with the day before the date of the enactment of this Act,

shall be disregarded for purposes of determining the 63-day periods referred to in section 701)(2) of the Employee Retirement Income Security Act of 1974, section 9801(c)(2) of the Internal Revenue Code of 1986, and section 2701(c)(2) of the Public Health Service Act.

(5) EXPEDITED REVIEW OF DENIALS OF PREMIUM ASSISTANCE- In any case in which an individual requests treatment as an assistance eligible individual and is denied such treatment by the group health plan by reason of such individual's ineligibility for COBRA continuation coverage, the Secretary of Labor (or the Secretary of Health and Human services in connection with COBRA continuation coverage which is provided other than pursuant to part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974), in consultation with the Secretary of the Treasury, shall provide for expedited review of such denial. An individual shall be entitled to such review upon application to such Secretary in such form and manner as shall be provided by such Secretary. Such Secretary shall make a determination regarding such individual's eligibility within 10 business days after receipt of such individual's application for review under this paragraph.

(6) DISREGARD OF SUBSIDIES FOR PURPOSES OF FEDERAL AND STATE PROGRAMS- Notwithstanding any other provision of law, any premium reduction with respect to an assistance eligible individual under this subsection shall not be considered income or resources in determining eligibility for, or the amount of assistance or benefits provided under, any other public benefit provided under Federal law or the law of any State or political subdivision thereof.

(7) NOTICES TO INDIVIDUALS-

(A) GENERAL NOTICE-

(i) IN GENERAL- In the case of notices provided under section 606(4) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1166(4)), section 4980B(f)(6)(D) of the Internal Revenue Code of 1986, section 2206(4) of the Public Health Service Act (42 U.S.C. 300bb-6(4)), or section 8905a(f)(2)(A) of title 5, United States Code, with respect to individuals who, during the period described in paragraph (3)(A), become entitled to elect COBRA continuation coverage, such notices shall include an additional notification to the recipient of the availability of premium reduction with respect to such coverage under this subsection.

(ii) ALTERNATIVE NOTICE- In the case of COBRA continuation coverage to which the notice provision under such sections does not apply, the Secretary of Labor, in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services, shall, in coordination with administrators of the group health plans (or other entities) that provide or administer the COBRA continuation coverage involved, provide rules requiring the provision of such notice.

(iii) FORM- The requirement of the additional notification under this subparagraph may be met by amendment of existing notice forms or by inclusion of a separate document with the notice otherwise required.

(B) SPECIFIC REQUIREMENTS- Each additional notification under subparagraph (A) shall include--

(i) the forms necessary for establishing eligibility for premium reduction under this subsection,

(ii) the name, address, and telephone number necessary to contact the plan administrator and any other person maintaining relevant information in connection with such premium reduction,

(iii) a description of the extended election period provided for in paragraph (4)(A),

(iv) a description of the obligation of the qualified beneficiary under paragraph (2)(C) to notify the plan providing continuation coverage of eligibility for subsequent coverage under another group health plan or eligibility for benefits under title XVIII of the Social Security Act and the penalty provided for failure to so notify the plan, and

(v) a description, displayed in a prominent manner, of the qualified beneficiary's right to a reduced premium and any conditions on entitlement to the reduced premium.

(C) NOTICE RELATING TO RETROACTIVE COVERAGE- In the case of an individual described in paragraph (3)(A) who has elected COBRA continuation coverage as of the date of enactment of this Act or an individual described in paragraph (4)(A), the administrator of the group health plan (or other entity) involved shall provide (within 60 days after the date of enactment of this Act) for the additional notification required to be provided under subparagraph (A).

(D) MODEL NOTICES- Not later than 30 days after the date of enactment of this Act, the Secretary of the Labor, in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services, shall prescribe models for the additional notification required under this paragraph.

(8) SAFEGUARDS- The Secretary of the Treasury shall provide such rules, procedures, regulations, and other guidance as may be necessary and appropriate to prevent fraud and abuse under this subsection.

(9) OUTREACH- The Secretary of Labor, in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services, shall provide outreach consisting of public education and enrollment assistance relating to premium reduction provided under this subsection. Such outreach shall target employers, group health plan administrators, public assistance programs, States, insurers, and other entities as determined appropriate by such Secretaries. Such outreach shall include an initial focus on those individuals electing continuation coverage who are referred to in paragraph (7)(C). Information on such premium reduction, including enrollment, shall also be made available on website of the Departments of Labor, Treasury, and Health and Human Services.

(10) DEFINITIONS- For purposes of this subsection--

(A) ADMINISTRATOR- The term `administrator' has the meaning given such term in section 3(16) of the Employee Retirement Income Security Act of 1974.

(B) COBRA CONTINUATION COVERAGE- The term `COBRA continuation coverage' means continuation coverage provided pursuant to part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (other than under section 609), title XXII of the Public Health Service Act, section 4980B of the Internal Revenue Code of 1986 (other than subsection (f)(1) of such section insofar as it relates to pediatric vaccines), or section 8905a of title 5, United States Code, or under a State program that provides continuation coverage comparable to such continuation coverage. Such term does not include coverage under a health flexible spending arrangement.

(C) COBRA CONTINUATION PROVISION- The term `COBRA continuation provision' means the provisions of law described in subparagraph (B).

(D) COVERED EMPLOYEE- The term `covered employee' has the meaning given such term in section 607(2) of the Employee Retirement Income Security Act of 1974.

(E) QUALIFIED BENEFICIARY- The term `qualified beneficiary' has the meaning given such term in section 607(3) of the Employee Retirement Income Security Act of 1974.

(F) GROUP HEALTH PLAN- The term `group health plan' has the meaning given such term in section 607(1) of the Employee Retirement Income Security Act of 1974.

(G) STATE- The term `State' includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

(11) REPORTS-

(A) INTERIM REPORT- The Secretary of the Treasury shall submit an interim report to the Committee on Education and Labor, the Committee on Ways and Means, and the Committee on Energy and Commerce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions and the Committee on Finance of the Senate regarding the premium reduction provided under this subsection that includes--

(i) the number of individuals provided such assistance as of the date of the report; and

(ii) the total amount of expenditures incurred (with administrative expenditures noted separately) in connection with such assistance as of the date of the report.

(B) FINAL REPORT- As soon as practicable after the last period of COBRA continuation coverage for which premium reduction is provided under this section, the Secretary of the Treasury shall submit a final report to each Committee referred to in subparagraph (A) that includes--

(i) the number of individuals provided premium reduction under this section;

(ii) the average dollar amount (monthly and annually) of premium reductions provided to such individuals; and

(iii) the total amount of expenditures incurred (with administrative expenditures noted separately) in connection with premium reduction under this section.

(12) COBRA PREMIUM ASSISTANCE-

(A) IN GENERAL- Subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

`SEC. 6431. COBRA PREMIUM ASSISTANCE.

`(a) In General- The entity to whom premiums are payable under COBRA continuation coverage shall be reimbursed for the amount of premiums not paid by plan beneficiaries by reason of section 3002(a) of the Health Insurance Assistance for the Unemployed Act of 2009. Such amount shall be treated as a credit against the requirement of such entity to make deposits of payroll taxes and the liability of such entity for payroll taxes. To the extent that such amount exceeds the amount of such taxes, the Secretary shall pay to such entity the amount of such excess. No payment may be made under this subsection to an entity with respect to any assistance eligible individual until after such entity has received the reduced premium from such individual required under section 3002(a)(1)(A) of such Act.

`(b) Payroll Taxes- For purposes of this section, the term `payroll taxes' means--

`(1) amounts required to be deducted and withheld for the payroll period under section 3401 (relating to wage withholding),

`(2) amounts required to be deducted for the payroll period under section 3102 (relating to FICA employee taxes), and

`(3) amounts of the taxes imposed for the payroll period under section 3111 (relating to FICA employer taxes).

`(c) Treatment of Credit- Except as otherwise provided by the Secretary, the credit described in subsection (a) shall be applied as though the employer had paid to the Secretary, on the day that the qualified beneficiary's premium payment is received, an amount equal to such credit.

`(d) Treatment of Payment- For purposes of section 1324(b)(2) of title 31, United States Code, any payment under this section shall be treated in the same manner as a refund of the credit under section 35.

`(e) Reporting-

`(1) IN GENERAL- Each entity entitled to reimbursement under subsection (a) for any period shall submit such reports as the Secretary may require, including--

`(A) an attestation of involuntary termination of employment for each covered employee on the basis of whose termination entitlement to reimbursement is claimed under subsection (a), and

`(B) a report of the amount of payroll taxes offset under subsection (a) for the reporting period and the estimated offsets of such taxes for the subsequent reporting period in connection with reimbursements under subsection (a).

`(2) TIMING OF REPORTS RELATING TO AMOUNT OF PAYROLL TAXES- Reports required under paragraph (1)(B) shall be submitted at the same time as deposits of taxes imposed by chapters 21, 22, and 24 or at such time as is specified by the Secretary.

`(f) Regulations- The Secretary may issue such regulations or other guidance as may be necessary or appropriate to carry out this section, including the requirement to report information or the establishment of other methods for verifying the correct amounts of payments and credits under this section. The Secretary shall issue such regulations or guidance with respect to the application of this section to group health plans that are multiemployer plans.'.

(B) SOCIAL SECURITY TRUST FUNDS HELD HARMLESS- In determining any amount transferred or appropriated to any fund under the Social Security Act, section 6431 of the Internal Revenue Code of 1986 shall not be taken into account.

(C) CLERICAL AMENDMENT- The table of sections for subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

`Sec. 6431. COBRA premium assistance.'.

(D) EFFECTIVE DATE- The amendments made by this paragraph shall apply to premiums to which subsection (a)(1)(A) applies.

(13) PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR PREMIUM ASSISTANCE-

(A) IN GENERAL- Part I of subchapter B of chapter 68 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

`SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR COBRA PREMIUM ASSISTANCE.

`(a) In General- Any person required to notify a group health plan under section 3002(a)(2)(C)) of the Health Insurance Assistance for the Unemployed Act of 2009 who fails to make such a notification at such time and in such manner as the Secretary of Labor may require shall pay a penalty of 110 percent of the premium reduction provided under such section after termination of eligibility under such subsection.

`(b) Reasonable Cause Exception- No penalty shall be imposed under subsection (a) with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.'.

(B) CLERICAL AMENDMENT- The table of sections of part I of subchapter B of chapter 68 of such Code is amended by adding at the end the following new item:

`Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility for COBRA premium assistance.'.

(C) EFFECTIVE DATE- The amendments made by this paragraph shall apply to failures occurring after the date of the enactment of this Act.

(14) COORDINATION WITH HCTC-

(A) IN GENERAL- Subsection (g) of section 35 of the Internal Revenue Code of 1986 is amended by redesignating paragraph (9) as paragraph (10) and inserting after paragraph (8) the following new paragraph:

`(9) COBRA PREMIUM ASSISTANCE- In the case of an assistance eligible individual who receives premium reduction for COBRA continuation coverage under section 3002(a) of the Health Insurance Assistance for the Unemployed Act of 2009 for any month during the taxable year, such individual shall not be treated as an eligible individual, a certified individual, or a qualifying family member for purposes of this section or section 7527 with respect to such month.'.

(B) EFFECTIVE DATE- The amendment made by subparagraph (A) shall apply to taxable years ending after the date of the enactment of this Act.

(15) EXCLUSION OF COBRA PREMIUM ASSISTANCE FROM GROSS INCOME-

(A) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139B the following new section:

`SEC. 139C. COBRA PREMIUM ASSISTANCE.

`In the case of an assistance eligible individual (as defined in section 3002 of the Health Insurance Assistance for the Unemployed Act of 2009), gross income does not include any premium reduction provided under subsection (a) of such section.'.

(B) CLERICAL AMENDMENT- The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139B the following new item:

`Sec. 139C. COBRA premium assistance.'.

(C) EFFECTIVE DATE- The amendments made by this paragraph shall apply to taxable years ending after the date of the enactment of this Act.

(b) Extension of COBRA Benefits for Older or Long-Term Employees-

(1) ERISA AMENDMENT- Section 602(2)(A) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new clauses:

`(x) SPECIAL RULE FOR OLDER OR LONG-TERM EMPLOYEES GENERALLY- In the case of a qualifying event described in section 603(2) with respect to a covered employee who (as of such qualifying event) has attained age 55 or has completed 10 or more years of service with the entity that is the employer at the time of the qualifying event, clauses (i) and (ii) shall not apply.

`(xi) YEAR OF SERVICE- For purposes of this subparagraph, the term `year of service' shall have the meaning provided in section 202(a)(3).'.

(2) IRC AMENDMENT- Clause (i) of section 4980B(f)(2)(B) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subclauses:

`(X) SPECIAL RULE FOR OLDER OR LONG-TERM EMPLOYEES GENERALLY- In the case of a qualifying event described in paragraph (3)(B) with respect to a covered employee who (as of such qualifying event) has attained age 55 or has completed 10 or more years of service with the entity that is the employer at the time of the qualifying event, subclauses (I) and (II) shall not apply.

`(XI) YEAR OF SERVICE- For purposes of this clause, the term `year of service' shall have the meaning provided in section 202(a)(3) of the Employee Retirement Income Security Act of 1974.'.

(3) PHSA AMENDMENT- Section 2202(2)(A) of the Public Health Service Act is amended by adding at the end the following new clauses:

`(viii) SPECIAL RULE FOR OLDER OR LONG-TERM EMPLOYEES GENERALLY- In the case of a qualifying event described in section 2203(2) with respect to a covered employee who (as of such qualifying event) has attained age 55 or has completed 10 or more years of service with the entity that is the employer at the time of the qualifying event, clauses (i) and (ii) shall not apply.

`(ix) YEAR OF SERVICE- For purposes of this subparagraph, the term `year of service' shall have the meaning provided in section 202(a)(3) of the Employee Retirement Income Security Act of 1974.'.

(4) EFFECTIVE DATE OF AMENDMENTS- The amendments made by this subsection shall apply to periods of coverage which would (without regard to the amendments made by this section) end on or after the date of the enactment of this Act.

SEC. 3003. TEMPORARY OPTIONAL MEDICAID COVERAGE FOR THE UNEMPLOYED.

(a) In General- Section 1902 of the Social Security Act (42 U.S.C. 1396b) is amended--

(1) in subsection (a)(10)(A)(ii)--

(A) by striking `or' at the end of subclause (XVIII);

(B) by adding `or' at the end of subclause (XIX); and

(C) by adding at the end the following new subclause

`(XX) who are described in subsection (dd)(1) (relating to certain unemployed individuals and their families);'; and

(2) by adding at the end the following new subsection:

`(dd)(1) Individuals described in this paragraph are--

`(A) individuals who--

`(i) are within one or more of the categories described in paragraph (2), as elected under the State plan; and

`(ii) meet the applicable requirements of paragraph (3); and

`(B) individuals who--

`(i) are the spouse, or dependent child under 19 years of age, of an individual described in subparagraph (A); and

`(ii) meet the requirement of paragraph (3)(B).

`(2) The categories of individuals described in this paragraph are each of the following:

`(A) Individuals who are receiving unemployment compensation benefits.

`(B) Individuals who were receiving, but have exhausted, unemployment compensation benefits on or after July 1, 2008.

`(C) Individuals who are involuntarily unemployed and were involuntarily separated from employment on or after September 1, 2008, and before January 1, 2011, whose family gross income does not exceed a percentage specified by the State (not to exceed 200 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, and who, but for subsection (a)(10)(A)(ii)(XX), are not eligible for medical assistance under this title or health assistance under title XXI.

`(D) Individuals who are involuntarily unemployed and were involuntarily separated from employment on or after September 1, 2008, and before January 1, 2011, who are members of households participating in the supplemental nutrition assistance program established under the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et seq), and who, but for subsection (a)(10)(A)(ii)(XX), are not eligible for medical assistance under this title or health assistance under title XXI.

A State plan may elect one or more of the categories described in this paragraph but may not elect the category described in subparagraph (B) unless the State plan also elects the category described in subparagraph (A).

`(3) The requirements of this paragraph with respect to an individual are the following:

`(A) In the case of individuals within a category described in subparagraph (A) or (B) of paragraph (2), the individual was involuntarily separated from employment on or after September 1, 2008, and before January 1, 2011, or meets such comparable requirement as the Secretary specifies through rule, guidance, or otherwise in the case of an individual who was an independent contractor.

`(B) The individual is not otherwise covered under creditable coverage, as defined in section 2701(c) of the Public Health Service Act (42 U.S.C. 300gg(c)), but applied without regard to paragraph (1)(F) of such section and without regard to coverage provided by reason of the application of subsection (a)(10)(A)(ii)(XX).

`(4)(A) No income or resources test shall be applied with respect to any category of individuals described in subparagraph (A), (B), or (D) of paragraph (2) who are eligible for medical assistance only by reason of the application of subsection (a)(10)(A)(ii)(XX).

`(B) Nothing in this subsection shall be construed to prevent a State from imposing a resource test for the category of individuals described in paragraph (2)(C)).

`(C) In the case of individuals provided medical assistance by reason of the application of subsection (a)(10)(A)(ii)(XX), the requirements of subsections (i)(22) and (x) shall not apply.'.

(b) 100 Percent Federal Matching Rate-

(1) FMAP FOR TIME-LIMITED PERIOD- The third sentence of section 1905(b) of such Act (42 U.S.C. 1396d(b)) is amended by inserting before the period at the end the following: `and for items and services furnished on or after the date of enactment of this Act and before January 1, 2011, to individuals who are eligible for medical assistance only by reason of the application of section 1902(a)(10)(A)(ii)(XX)'.

(2) CERTAIN ENROLLMENT-RELATED ADMINISTRATIVE COSTS- Notwithstanding any other provision of law, for purposes of applying section 1903(a) of the Social Security Act (42 U.S.C. 1396b(a)), with respect to expenditures incurred on or after the date of the enactment of this Act and before January 1, 2011, for costs of administration (including outreach and the modification and operation of eligibility information systems) attributable to eligibility determination and enrollment of individuals who are eligible for medical assistance only by reason of the application of section 1902(a)(10)(A)(ii)(XX) of such Act, as added by subsection (a)(1), the Federal matching percentage shall be 100 percent instead of the matching percentage otherwise applicable.

(c) Conforming Amendments- (1) Section 1903(f)(4) of such Act (42 U.S.C. 1396c(f)(4)) is amended by inserting `1902(a)(10)(A)(ii)(XX), or' after `1902(a)(10)(A)(ii)(XIX),'.

(2) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is amended, in the matter preceding paragraph (1)--

(A) by striking `or' at the end of clause (xii);

(B) by adding `or' at the end of clause (xiii); and

(C) by inserting after clause (xiii) the following new clause:

`(xiv) individuals described in section 1902(dd)(1),'.

SEC. 4001. SHORT TITLE; TABLE OF CONTENTS OF TITLE.

(a) Short Title- This title may be cited as the `Health Information Technology for Economic and Clinical Health Act' or the `HITECH Act'.

(b) Table of Contents of Title- The table of contents of this title is as follows:

Sec. 4001. Short title; table of contents of title.

Subtitle A--Promotion of Health Information Technology

Part I--Improving Health Care Quality, Safety, and Efficiency

Sec. 4101. ONCHIT; standards development and adoption.

`TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY

`Subtitle A--Promotion of Health Information Technology

Sec. 4102. Technical amendment.

Part II--Application and Use of Adopted Health Information Technology Standards; Reports

Sec. 4111. Coordination of Federal activities with adopted standards and implementation specifications.

Sec. 4112. Application to private entities.

Sec. 4113. Study and reports.

Subtitle B--Testing of Health Information Technology

Sec. 4201. National Institute for Standards and Technology testing.

Sec. 4202. Research and development programs.

Subtitle C--Incentives for the Use of Health Information Technology

Part I--Grants and Loans Funding

Sec. 4301. Grant, loan, and demonstration programs.

`Subtitle B--Incentives for the Use of Health Information Technology

Part II--Medicare Program

Sec. 4311. Incentives for eligible professionals.

Sec. 4312. Incentives for hospitals.

Sec. 4313. Treatment of payments and savings; implementation funding.

Sec. 4314. Study on application of EHR payment incentives for providers not receiving other incentive payments.

Part III--Medicaid Funding

Sec. 4321. Medicaid provider HIT adoption and operation payments; implementation funding.

Subtitle D--Privacy

Sec. 4400. Definitions.

Part I--Improved Privacy Provisions and Security Provisions

Sec. 4401. Application of security provisions and penalties to business associates of covered entities; annual guidance on security provisions.

Sec. 4402. Notification in the case of breach.

Sec. 4403. Education on Health Information Privacy.

Sec. 4404. Application of privacy provisions and penalties to business associates of covered entities.

Sec. 4405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format.

Sec. 4406. Conditions on certain contacts as part of health care operations.

Sec. 4407. Temporary breach notification requirement for vendors of personal health records and other non-HIPAA covered entities.

Sec. 4408. Business associate contracts required for certain entities.

Sec. 4409. Clarification of application of wrongful disclosures criminal penalties.

Sec. 4410. Improved enforcement.

Sec. 4411. Audits.

Part II--Relationship to Other Laws; Regulatory References; Effective Date; Reports

Sec. 4421. Relationship to other laws.

Sec. 4422. Regulatory references.

Sec. 4423. Effective date.

Sec. 4424. Studies, reports, guidance.

Subtitle E--Miscellaneous Medicare Provisions

Sec. 4501. Moratoria on certain Medicare regulations.

Sec. 4502. Long-term care hospital technical corrections.

PART I--IMPROVING HEALTH CARE QUALITY, SAFETY, AND EFFICIENCY

SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOPTION.

The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by adding at the end the following:

`SEC. 3000. DEFINITIONS.

`In this title:

`(1) CERTIFIED EHR TECHNOLOGY- The term `certified EHR technology' means a qualified electronic health record that is certified pursuant to section 3001(c)(5) as meeting standards adopted under section 3004 that are applicable to the type of record involved (as determined by the Secretary, such as an ambulatory electronic health record for office-based physicians or an inpatient hospital electronic health record for hospitals).

`(2) ENTERPRISE INTEGRATION- The term `enterprise integration' means the electronic linkage of health care providers, health plans, the government, and other interested parties, to enable the electronic exchange and use of health information among all the components in the health care infrastructure in accordance with applicable law, and such term includes related application protocols and other related standards.

`(3) HEALTH CARE PROVIDER- The term `health care provider' means a hospital, skilled nursing facility, nursing facility, home health entity or other long-term care facility, health care clinic, Federally qualified health center, group practice (as defined in section 1877(h)(4) of the Social Security Act), a pharmacist, a pharmacy, a laboratory, a physician (as defined in section 1861(r) of the Social Security Act), a practitioner (as described in section 1842(b)(18)(C) of the Social Security Act), a provider operated by, or under contract with, the Indian Health Service or by an Indian tribe (as defined in the Indian Self-Determination and Education Assistance Act), tribal organization, or urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act), a rural health clinic, a covered entity under section 340B, and any other category of facility or clinician determined appropriate by the Secretary.

`(4) HEALTH INFORMATION- The term `health information' has the meaning given such term in section 1171(4) of the Social Security Act.

`(5) HEALTH INFORMATION TECHNOLOGY- The term `health information technology' means hardware, software, integrated technologies and related licenses, intellectual property, upgrades, and packaged solutions sold as services that are specifically designed for use by health care entities for the electronic creation, maintenance, or exchange of health information.

`(6) HEALTH PLAN- The term `health plan' has the meaning given such term in section 1171(5) of the Social Security Act.

`(7) HIT POLICY COMMITTEE- The term `HIT Policy Committee' means such Committee established under section 3002(a).

`(8) HIT STANDARDS COMMITTEE- The term `HIT Standards Committee' means such Committee established under section 3003(a).

`(9) INDIVIDUALLY IDENTIFIABLE HEALTH INFORMATION- The term `individually identifiable health information' has the meaning given such term in section 1171(6) of the Social Security Act.

`(10) LABORATORY- The term `laboratory' has the meaning given such term in section 353(a).

`(11) NATIONAL COORDINATOR- The term `National Coordinator' means the head of the Office of the National Coordinator for Health Information Technology established under section 3001(a).

`(12) PHARMACIST- The term `pharmacist' has the meaning given such term in section 804(2) of the Federal Food, Drug, and Cosmetic Act.

`(13) QUALIFIED ELECTRONIC HEALTH RECORD- The term `qualified electronic health record' means an electronic record of health-related information on an individual that--

`(A) includes patient demographic and clinical health information, such as medical history and problem lists; and

`(B) has the capacity--

`(i) to provide clinical decision support;

`(ii) to support physician order entry;

`(iii) to capture and query information relevant to health care quality; and

`(iv) to exchange electronic health information with, and integrate such information from other sources.

`(14) STATE- The term `State' means each of the several States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.

`SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION TECHNOLOGY.

`(a) Establishment- There is established within the Department of Health and Human Services an Office of the National Coordinator for Health Information Technology (referred to in this section as the `Office'). The Office shall be headed by a National Coordinator who shall be appointed by the Secretary and shall report directly to the Secretary.

`(b) Purpose- The National Coordinator shall perform the duties under subsection (c) in a manner consistent with the development of a nationwide health information technology infrastructure that allows for the electronic use and exchange of information and that--

`(1) ensures that each patient's health information is secure and protected, in accordance with applicable law;

`(2) improves health care quality, reduces medical errors, and advances the delivery of patient-centered medical care;

`(3) reduces health care costs resulting from inefficiency, medical errors, inappropriate care, duplicative care, and incomplete information;

`(4) provides appropriate information to help guide medical decisions at the time and place of care;

`(5) ensures the inclusion of meaningful public input in such development of such infrastructure;

`(6) improves the coordination of care and information among hospitals, laboratories, physician offices, and other entities through an effective infrastructure for the secure and authorized exchange of health care information;

`(7) improves public health activities and facilitates the early identification and rapid response to public health threats and emergencies, including bioterror events and infectious disease outbreaks;

`(8) facilitates health and clinical research and health care quality;

`(9) promotes prevention of chronic diseases;

`(10) promotes a more effective marketplace, greater competition, greater systems analysis, increased consumer choice, and improved outcomes in health care services; and

`(11) improves efforts to reduce health disparities.

`(c) Duties of the National Coordinator-

`(1) STANDARDS- The National Coordinator shall review and determine whether to endorse each standard, implementation specification, and certification criterion for the electronic exchange and use of health information that is recommended by the HIT Standards Committee under section 3003 for purposes of adoption under section 3004. The Coordinator shall make such determination, and report to the Secretary such determination, not later than 45 days after the date the recommendation is received by the Coordinator.

`(2) HIT POLICY COORDINATION-

`(A) IN GENERAL- The National Coordinator shall coordinate health information technology policy and programs of the Department with those of other relevant executive branch agencies with a goal of avoiding duplication of efforts and of helping to ensure that each agency undertakes health information technology activities primarily within the areas of its greatest expertise and technical capability and in a manner towards a coordinated national goal.

`(B) HIT POLICY AND STANDARDS COMMITTEES- The National Coordinator shall be a leading member in the establishment and operations of the HIT Policy Committee and the HIT Standards Committee and shall serve as a liaison among those two Committees and the Federal Government.

`(3) STRATEGIC PLAN-

`(A) IN GENERAL- The National Coordinator shall, in consultation with other appropriate Federal agencies (including the National Institute of Standards and Technology), update the Federal Health IT Strategic Plan (developed as of June 3, 2008) to include specific objectives, milestones, and metrics with respect to the following:

`(i) The electronic exchange and use of health information and the enterprise integration of such information.

`(ii) The utilization of an electronic health record for each person in the United States by 2014.

`(iii) The incorporation of privacy and security protections for the electronic exchange of an individual's individually identifiable health information.

`(iv) Ensuring security methods to ensure appropriate authorization and electronic authentication of health information and specifying technologies or methodologies for rendering health information unusable, unreadable, or indecipherable.

`(v) Specifying a framework for coordination and flow of recommendations and policies under this subtitle among the Secretary, the National Coordinator, the HIT Policy Committee, the HIT Standards Committee, and other health information exchanges and other relevant entities.

`(vi) Methods to foster the public understanding of health information technology.

`(vii) Strategies to enhance the use of health information technology in improving the quality of health care, reducing medical errors, reducing health disparities, improving public health, and improving the continuity of care among health care settings.

`(B) COLLABORATION- The strategic plan shall be updated through collaboration of public and private entities.

`(C) MEASURABLE OUTCOME GOALS- The strategic plan update shall include measurable outcome goals.

`(D) PUBLICATION- The National Coordinator shall republish the strategic plan, including all updates.

`(4) WEBSITE- The National Coordinator shall maintain and frequently update an Internet website on which there is posted information on the work, schedules, reports, recommendations, and other information to ensure transparency in promotion of a nationwide health information technology infrastructure.

`(5) CERTIFICATION-

`(A) IN GENERAL- The National Coordinator, in consultation with the Director of the National Institute of Standards and Technology, shall develop a program (either directly or by contract) for the voluntary certification of health information technology as being in compliance with applicable certification criteria adopted under this subtitle. Such program shall include testing of the technology in accordance with section 4201(b) of the HITECH Act.

`(B) CERTIFICATION CRITERIA DESCRIBED- In this title, the term `certification criteria' means, with respect to standards and implementation specifications for health information technology, criteria to establish that the technology meets such standards and implementation specifications.

`(6) REPORTS AND PUBLICATIONS-

`(A) REPORT ON ADDITIONAL FUNDING OR AUTHORITY NEEDED- Not later than 12 months after the date of the enactment of this title, the National Coordinator shall submit to the appropriate committees of jurisdiction of the House of Representatives and the Senate a report on any additional funding or authority the Coordinator or the HIT Policy Committee or HIT Standards Committee requires to evaluate and develop standards, implementation specifications, and certification criteria, or to achieve full participation of stakeholders in the adoption of a nationwide health information technology infrastructure that allows for the electronic use and exchange of health information.

`(B) IMPLEMENTATION REPORT- The National Coordinator shall prepare a report that identifies lessons learned from major public and private health care systems in their implementation of health information technology, including information on whether the technologies and practices developed by such systems may be applicable to and usable in whole or in part by other health care providers.

`(C) ASSESSMENT OF IMPACT OF HIT ON COMMUNITIES WITH HEALTH DISPARITIES AND UNINSURED, UNDERINSURED, AND MEDICALLY UNDERSERVED AREAS- The National Coordinator shall assess and publish the impact of health information technology in communities with health disparities and in areas with a high proportion of individuals who are uninsured, underinsured, and medically underserved individuals (including urban and rural areas) and identify practices to increase the adoption of such technology by health care providers in such communities.

`(D) EVALUATION OF BENEFITS AND COSTS OF THE ELECTRONIC USE AND EXCHANGE OF HEALTH INFORMATION- The National Coordinator shall evaluate and publish evidence on the benefits and costs of the electronic use and exchange of health information and assess to whom these benefits and costs accrue.

`(E) RESOURCE REQUIREMENTS- The National Coordinator shall estimate and publish resources required annually to reach the goal of utilization of an electronic health record for each person in the United States by 2014, including the required level of Federal funding, expectations for regional, State, and private investment, and the expected contributions by volunteers to activities for the utilization of such records.

`(7) ASSISTANCE- The National Coordinator may provide financial assistance to consumer advocacy groups and not-for-profit entities that work in the public interest for purposes of defraying the cost to such groups and entities to participate under, whether in whole or in part, the National Technology Transfer Act of 1995 (15 U.S.C. 272 note).

`(8) GOVERNANCE FOR NATIONWIDE HEALTH INFORMATION NETWORK- The National Coordinator shall establish a governance mechanism for the nationwide health information network.

`(d) Detail of Federal Employees-

`(1) IN GENERAL- Upon the request of the National Coordinator, the head of any Federal agency is authorized to detail, with or 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.

`(2) EFFECT OF DETAIL- Any detail of personnel under paragraph (1) shall--

`(A) not interrupt or otherwise affect the civil service status or privileges of the Federal employee; and

`(B) be in addition to any other staff of the Department employed by the National Coordinator.

`(3) ACCEPTANCE OF DETAILEES- Notwithstanding any other provision of law, the Office may accept detailed personnel from other Federal agencies without regard to whether the agency described under paragraph (1) is reimbursed.

`(e) Chief Privacy Officer of the Office of the National Coordinator- Not later than 12 months after the date of the enactment of this title, the Secretary shall appoint a Chief Privacy Officer of the Office of the National Coordinator, whose duty it shall be to advise the National Coordinator on privacy, security, and data stewardship of electronic health information and to coordinate with other Federal agencies (and similar privacy officers in such agencies), with State and regional efforts, and with foreign countries with regard to the privacy, security, and data stewardship of electronic individually identifiable health information.

`SEC. 3002. HIT POLICY COMMITTEE.

`(a) Establishment- There is established a HIT Policy Committee to make policy recommendations to the National Coordinator relating to the implementation of a nationwide health information technology infrastructure, including implementation of the strategic plan described in section 3001(c)(3).

`(b) Duties-

`(1) RECOMMENDATIONS ON HEALTH INFORMATION TECHNOLOGY INFRASTRUCTURE- The HIT Policy Committee shall recommend a policy framework for the development and adoption of a nationwide health information technology infrastructure that permits the electronic exchange and use of health information as is consistent with the strategic plan under section 3001(c)(3) and that includes the recommendations under paragraph (2). The Committee shall update such recommendations and make new recommendations as appropriate.

`(2) SPECIFIC AREAS OF STANDARD DEVELOPMENT-

`(A) IN GENERAL- The HIT Policy Committee shall recommend the areas in which standards, implementation specifications, and certification criteria are needed for the electronic exchange and use of health information for purposes of adoption under section 3004 and shall recommend an order of priority for the development, harmonization, and recognition of such standards, specifications, and certification criteria among the areas so recommended. Such standards and implementation specifications shall include named standards, architectures, and software schemes for the authentication and security of individually identifiable health information and other information as needed to ensure the reproducible development of common solutions across disparate entities.

`(B) AREAS REQUIRED FOR CONSIDERATION- For purposes of subparagraph (A), the HIT Policy Committee shall make recommendations for at least the following areas:

`(i) Technologies that protect the privacy of health information and promote security in a qualified electronic health record, including for the segmentation and protection from disclosure of specific and sensitive individually identifiable health information with the goal of minimizing the reluctance of patients to seek care (or disclose information about a condition) because of privacy concerns, in accordance with applicable law, and for the use and disclosure of limited data sets of such information.

`(ii) A nationwide health information technology infrastructure that allows for the electronic use and accurate exchange of health information.

`(iii) The utilization of a certified electronic health record for each person in the United States by 2014.

`(iv) Technologies that as a part of a qualified electronic health record allow for an accounting of disclosures made by a covered entity (as defined for purposes of regulations promulgated under section 264(c) of the Health Insurance Portability and Accountability Act of 1996) for purposes of treatment, payment, and health care operations (as such terms are defined for purposes of such regulations).

`(v) The use of certified electronic health records to improve the quality of health care, such as by promoting the coordination of health care and improving continuity of health care among health care providers, by reducing medical errors, by improving population health, and by advancing research and education.

`(C) OTHER AREAS FOR CONSIDERATION- In making recommendations under subparagraph (A), the HIT Policy Committee may consider the following additional areas:

`(i) The appropriate uses of a nationwide health information infrastructure, including for purposes of--

`(I) the collection of quality data and public reporting;

`(II) biosurveillance and public health;

`(III) medical and clinical research; and

`(IV) drug safety.

`(ii) Self-service technologies that facilitate the use and exchange of patient information and reduce wait times.

`(iii) Telemedicine technologies, in order to reduce travel requirements for patients in remote areas.

`(iv) Technologies that facilitate home health care and the monitoring of patients recuperating at home.

`(v) Technologies that help reduce medical errors.

`(vi) Technologies that facilitate the continuity of care among health settings.

`(vii) Technologies that meet the needs of diverse populations.

`(viii) Any other technology that the HIT Policy Committee finds to be among the technologies with the greatest potential to improve the quality and efficiency of health care.

`(3) FORUM- The HIT Policy Committee shall serve as a forum for broad stakeholder input with specific expertise in policies relating to the matters described in paragraphs (1) and (2).

`(c) Membership and Operations-

`(1) IN GENERAL- The National Coordinator shall provide leadership in the establishment and operations of the HIT Policy Committee.

`(2) MEMBERSHIP- The membership of the HIT Policy Committee shall at least reflect providers, ancillary healthcare workers, consumers, purchasers, health plans, technology vendors, researchers, relevant Federal agencies, and individuals with technical expertise on health care quality, privacy and security, and on the electronic exchange and use of health information.

`(3) CONSIDERATION- The National Coordinator shall ensure that the relevant recommendations and comments from the National Committee on Vital and Health Statistics are considered in the development of policies.

`(d) Application of FACA- The Federal Advisory Committee Act (5 U.S.C. App.), other than section 14 of such Act, shall apply to the HIT Policy Committee.

`(e) Publication- The Secretary shall provide for publication in the Federal Register and the posting on the Internet website of the Office of the National Coordinator for Health Information Technology of all policy recommendations made by the HIT Policy Committee under this section.

`SEC. 3003. HIT STANDARDS COMMITTEE.

`(a) Establishment- There is established a committee to be known as the HIT Standards Committee to recommend to the National Coordinator standards, implementation specifications, and certification criteria for the electronic exchange and use of health information for purposes of adoption under section 3004, consistent with the implementation of the strategic plan described in section 3001(c)(3) and beginning with the areas listed in section 3002(b)(2)(B) in accordance with policies developed by the HIT Policy Committee.

`(b) Duties-

`(1) STANDARD DEVELOPMENT-

`(A) IN GENERAL- The HIT Standards Committee shall recommend to the National Coordinator standards, implementation specifications, and certification criteria described in subsection (a) that have been developed, harmonized, or recognized by the HIT Standards Committee. The HIT Standards Committee shall update such recommendations and make new recommendations as appropriate, including in response to a notification sent under section 3004(b)(2). Such recommendations shall be consistent with the latest recommendations made by the HIT Policy Committee.

`(B) PILOT TESTING OF STANDARDS AND IMPLEMENTATION SPECIFICATIONS- In the development, harmonization, or recognition of standards and implementation specifications, the HIT Standards Committee shall, as appropriate, provide for the testing of such standards and specifications by the National Institute for Standards and Technology under section 4201 of the HITECH Act.

`(C) CONSISTENCY- The standards, implementation specifications, and certification criteria recommended under this subsection shall be consistent with the standards for information transactions and data elements adopted pursuant to section 1173 of the Social Security Act.

`(2) FORUM- The HIT Standards Committee shall serve as a forum for the participation of a broad range of stakeholders to provide input on the development, harmonization, and recognition of standards, implementation specifications, and certification criteria necessary for the development and adoption of a nationwide health information technology infrastructure that allows for the electronic use and exchange of health information.

`(3) SCHEDULE- Not later than 90 days after the date of the enactment of this title, the HIT Standards Committee shall develop a schedule for the assessment of policy recommendations developed by the HIT Policy Committee under section 3002. The HIT Standards Committee shall update such schedule annually. The Secretary shall publish such schedule in the Federal Register.

`(4) PUBLIC INPUT- The HIT Standards Committee shall conduct open public meetings and develop a process to allow for public comment on the schedule described in paragraph (3) and recommendations described in this subsection. Under such process comments shall be submitted in a timely manner after the date of publication of a recommendation under this subsection.

`(c) Membership and Operations-

`(1) IN GENERAL- The National Coordinator shall provide leadership in the establishment and operations of the HIT Standards Committee.

`(2) MEMBERSHIP- The membership of the HIT Standards Committee shall at least reflect providers, ancillary healthcare workers, consumers, purchasers, health plans, technology vendors, researchers, relevant Federal agencies, and individuals with technical expertise on health care quality, privacy and security, and on the electronic exchange and use of health information.

`(3) CONSIDERATION- The National Coordinator shall ensure that the relevant recommendations and comments from the National Committee on Vital and Health Statistics are considered in the development of standards.

`(4) ASSISTANCE- For the purposes of carrying out this section, the Secretary may provide or ensure that financial assistance is provided by the HIT Standards Committee to defray in whole or in part any membership fees or dues charged by such Committee to those consumer advocacy groups and not for profit entities that work in the public interest as a part of their mission.

`(d) Application of FACA- The Federal Advisory Committee Act (5 U.S.C. App.), other than section 14, shall apply to the HIT Standards Committee.

`(e) Publication- The Secretary shall provide for publication in the Federal Register and the posting on the Internet website of the Office of the National Coordinator for Health Information Technology of all recommendations made by the HIT Standards Committee under this section.

`SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED RECOMMENDATIONS; ADOPTION OF INITIAL SET OF STANDARDS, IMPLEMENTATION SPECIFICATIONS, AND CERTIFICATION CRITERIA.

`(a) Process for Adoption of Endorsed Recommendations-

`(1) REVIEW OF ENDORSED STANDARDS, IMPLEMENTATION SPECIFICATIONS, AND CERTIFICATION CRITERIA- Not later than 90 days after the date of receipt of standards, implementation specifications, or certification criteria endorsed under section 3001(c), the Secretary, in consultation with representatives of other relevant Federal agencies, shall jointly review such standards, implementation specifications, or certification criteria and shall determine whether or not to propose adoption of such standards, implementation specifications, or certification criteria.

`(2) DETERMINATION TO ADOPT STANDARDS, IMPLEMENTATION SPECIFICATIONS, AND CERTIFICATION CRITERIA- If the Secretary determines--

`(A) to propose adoption of any grouping of such standards, implementation specifications, or certification criteria, the Secretary shall, by regulation, determine whether or not to adopt such grouping of standards, implementation specifications, or certification criteria; or

`(B) not to propose adoption of any grouping of standards, implementation specifications, or certification criteria, the Secretary shall notify the National Coordinator and the HIT Standards Committee in writing of such determination and the reasons for not proposing the adoption of such recommendation.

`(3) PUBLICATION- The Secretary shall provide for publication in the Federal Register of all determinations made by the Secretary under paragraph (1).

`(b) Adoption of Initial Set of Standards, Implementation Specifications, and Certification Criteria-

`(1) IN GENERAL- Not later than December 31, 2009, the Secretary shall, through the rulemaking process described in section 3003, adopt an initial set of standards, implementation specifications, and certification criteria for the areas required for consideration under section 3002(b)(2)(B).

`(2) APPLICATION OF CURRENT STANDARDS, IMPLEMENTATION SPECIFICATIONS, AND CERTIFICATION CRITERIA- The standards, implementation specifications, and certification criteria adopted before the date of the enactment of this title through the process existing through the Office of the National Coordinator for Health Information Technology may be applied towards meeting the requirement of paragraph (1).

`SEC. 3005. APPLICATION AND USE OF ADOPTED STANDARDS AND IMPLEMENTATION SPECIFICATIONS BY FEDERAL AGENCIES.

`For requirements relating to the application and use by Federal agencies of the standards and implementation specifications adopted under section 3004, see section 4111 of the HITECH Act.

`SEC. 3006. VOLUNTARY APPLICATION AND USE OF ADOPTED STANDARDS AND IMPLEMENTATION SPECIFICATIONS BY PRIVATE ENTITIES.

`(a) In General- Except as provided under section 4112 of the HITECH Act, any standard or implementation specification adopted under section 3004 shall be voluntary with respect to private entities.

`(b) Rule of Construction- Nothing in this subtitle shall be construed to require that a private entity that enters into a contract with the Federal Government apply or use the standards and implementation specifications adopted under section 3004 with respect to activities not related to the contract.

`SEC. 3007. FEDERAL HEALTH INFORMATION TECHNOLOGY.

`(a) In General- The National Coordinator shall support the development, routine updating and provision of qualified EHR technology (as defined in section 3000) consistent with subsections (b) and (c) unless the Secretary determines that the needs and demands of providers are being substantially and adequately met through the marketplace.

`(b) Certification- In making such EHR technology publicly available, the National Coordinator shall ensure that the qualified EHR technology described in subsection (a) is certified under the program developed under section 3001(c)(3) to be in compliance with applicable standards adopted under section 3003(a).

`(c) Authorization to Charge a Nominal Fee- The National Coordinator may impose a nominal fee for the adoption by a health care provider of the health information technology system developed or approved under subsection (a) and (b). Such fee shall take into account the financial circumstances of smaller providers, low income providers, and providers located in rural or other medically underserved areas.

`(d) Rule of Construction- Nothing in this section shall be construed to require that a private or government entity adopt or use the technology provided under this section.

`SEC. 3008. TRANSITIONS.

`(a) ONCHIT- To the extent consistent with section 3001, all functions, personnel, assets, liabilities, and administrative actions applicable to the National Coordinator for Health Information Technology appointed under Executive Order 13335 or the Office of such National Coordinator on the date before the date of the enactment of this title shall be transferred to the National Coordinator appointed under section 3001(a) and the Office of such National Coordinator as of the date of the enactment of this title.

`(b) AHIC-

`(1) To the extent consistent with sections 3002 and 3003, all functions, personnel, assets, and liabilities applicable to the AHIC Successor, Inc. doing business as the National eHealth Collaborative as of the day before the date of the enactment of this title shall be transferred to the HIT Policy Committee or the HIT Standards Committee, established under section 3002(a) or 3003(a), as appropriate, as of the date of the enactment of this title.

`(2) In carrying out section 3003(b)(1)(A), until recommendations are made by the HIT Policy Committee, recommendations of the HIT Standards Committee shall be consistent with the most recent recommendations made by such AHIC Successor, Inc.

`(c) Rules of Construction-

`(1) ONCHIT- Nothing in section 3001 or subsection (a) shall be construed as requiring the creation of a new entity to the extent that the Office of the National Coordinator for Health Information Technology established pursuant to Executive Order 13335 is consistent with the provisions of section 3001.

`(2) AHIC- Nothing in sections 3002 or 3003 or subsection (b) shall be construed as prohibiting the AHIC Successor, Inc. doing business as the National eHealth Collaborative from modifying its charter, duties, membership, and any other structure or function required to be consistent with section 3002 and 3003 in a manner that would permit the Secretary to choose to recognize such Community as the HIT Policy Committee or the HIT Standards Committee.

`SEC. 3009. RELATION TO HIPAA PRIVACY AND SECURITY LAW.

`(a) In General- With respect to the relation of this title to HIPAA privacy and security law:

`(1) This title may not be construed as having any effect on the authorities of the Secretary under HIPAA privacy and security law.

`(2) The purposes of this title include ensuring that the health information technology standards and implementation specifications adopted under section 3004 take into account the requirements of HIPAA privacy and security law.

`(b) Definition- For purposes of this section, the term `HIPAA privacy and security law' means--

`(1) the provisions of part C of title XI of the Social Security Act, section 264 of the Health Insurance Portability and Accountability Act of 1996, and subtitle D of title IV of the HITECH Act; and

`(2) regulations under such provisions.

`SEC. 3010. AUTHORIZATION FOR APPROPRIATIONS.

`There is authorized to be appropriated to the Office of the National Coordinator for Health Information Technology to carry out this subtitle $250,000,000 for fiscal year 2009.'.

SEC. 4102. TECHNICAL AMENDMENT.

Section 1171(5) of the Social Security Act (42 U.S.C. 1320d) is amended by striking `or C' and inserting `C, or D'.

PART II--APPLICATION AND USE OF ADOPTED HEALTH INFORMATION TECHNOLOGY STANDARDS; REPORTS

SEC. 4111. COORDINATION OF FEDERAL ACTIVITIES WITH ADOPTED STANDARDS AND IMPLEMENTATION SPECIFICATIONS.

(a) Spending on Health Information Technology Systems- As each agency (as defined in the Executive Order issued on August 22, 2006, relating to promoting quality and efficient health care in Federal Government administered or sponsored health care programs) implements, acquires, or upgrades health information technology systems used for the direct exchange of individually identifiable health information between agencies and with non-Federal entities, it shall utilize, where available, health information technology systems and products that meet standards and implementation specifications adopted under section 3004(b) of the Public Health Service Act, as added by section 4101.

(b) Federal Information Collection Activities- With respect to a standard or implementation specification adopted under section 3004(b) of the Public Health Service Act, as added by section 4101, the President shall take measures to ensure that Federal activities involving the broad collection and submission of health information are consistent with such standard or implementation specification, respectively, within three years after the date of such adoption.

(c) Application of Definitions- The definitions contained in section 3000 of the Public Health Service Act, as added by section 4101, shall apply for purposes of this part.

SEC. 4112. APPLICATION TO PRIVATE ENTITIES.

Each agency (as defined in such Executive Order issued on August 22, 2006, relating to promoting quality and efficient health care in Federal Government administered or sponsored health care programs) shall require in contracts or agreements with health care providers, health plans, or health insurance issuers that as each provider, plan, or issuer implements, acquires, or upgrades health information technology systems, it shall utilize, where available, health information technology systems and products that meet standards and implementation specifications adopted under section 3004(b) of the Public Health Service Act, as added by section 4101.

SEC. 4113. STUDY AND REPORTS.

(a) Report on Adoption of Nationwide System- Not later than 2 years after the date of the enactment of this Act and annually thereafter, the Secretary of Health and Human Services shall submit to the appropriate committees of jurisdiction of the House of Representatives and the Senate a report that--

(1) describes the specific actions that have been taken by the Federal Government and private entities to facilitate the adoption of a nationwide system for the electronic use and exchange of health information;

(2) describes barriers to the adoption of such a nationwide system; and

(3) contains recommendations to achieve full implementation of such a nationwide system.

(b) Reimbursement Incentive Study and Report-

(1) STUDY- The Secretary of Health and Human Services shall carry out, or contract with a private entity to carry out, a study that examines methods to create efficient reimbursement incentives for improving health care quality in federally qualified health centers, rural health clinics, and free clinics.

(2) REPORT- Not later than 2 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall submit to the appropriate committees of jurisdiction of the House of Representatives and the Senate a report on the study carried out under paragraph (1).

(c) Aging Services Technology Study and Report-

(1) IN GENERAL- The Secretary of Health and Human Services shall carry out, or contract with a private entity to carry out, a study of matters relating to the potential use of new aging services technology to assist seniors, individuals with disabilities, and their caregivers throughout the aging process.

(2) MATTERS TO BE STUDIED- The study under paragraph (1) shall include--

(A) an evaluation of--

(i) methods for identifying current, emerging, and future health technology that can be used to meet the needs of seniors and individuals with disabilities and their caregivers across all aging services settings, as specified by the Secretary;

(ii) methods for fostering scientific innovation with respect to aging services technology within the business and academic communities; and

(iii) developments in aging services technology in other countries that may be applied in the United States; and

(B) identification of--

(i) barriers to innovation in aging services technology and devising strategies for removing such barriers; and

(ii) barriers to the adoption of aging services technology by health care providers and consumers and devising strategies to removing such barriers.

(3) REPORT- Not later than 24 months after the date of the enactment of this Act, the Secretary shall submit to the appropriate committees of jurisdiction of the House of Representatives and of the Senate a report on the study carried out under paragraph (1).

(4) DEFINITIONS- For purposes of this subsection:

(A) AGING SERVICES TECHNOLOGY- The term `aging services technology' means health technology that meets the health care needs of seniors, individuals with disabilities, and the caregivers of such seniors and individuals.

(B) SENIOR- The term `senior' has such meaning as specified by the Secretary.

SEC. 4201. NATIONAL INSTITUTE FOR STANDARDS AND TECHNOLOGY TESTING.

(a) Pilot Testing of Standards and Implementation Specifications- In coordination with the HIT Standards Committee established under section 3003 of the Public Health Service Act, as added by section 4101, with respect to the development of standards and implementation specifications under such section, the Director of the National Institute for Standards and Technology shall test such standards and implementation specifications, as appropriate, in order to assure the efficient implementation and use of such standards and implementation specifications.

(b) Voluntary Testing Program- In coordination with the HIT Standards Committee established under section 3003 of the Public Health Service Act, as added by section 4101, with respect to the development of standards and implementation specifications under such section, the Director of the National Institute of Standards and Technology shall support the establishment of a conformance testing infrastructure, including the development of technical test beds. The development of this conformance testing infrastructure may include a program to accredit independent, non-Federal laboratories to perform testing.

SEC. 4202. RESEARCH AND DEVELOPMENT PROGRAMS.

(a) Health Care Information Enterprise Integration Research Centers-

(1) IN GENERAL- The Director of the National Institute of Standards and Technology, in consultation with the Director of the National Science Foundation and other appropriate Federal agencies, shall establish a program of assistance to institutions of higher education (or consortia thereof which may include nonprofit entities and Federal Government laboratories) to establish multidisciplinary Centers for Health Care Information Enterprise Integration.

(2) REVIEW; COMPETITION- Grants shall be awarded under this subsection on a merit-reviewed, competitive basis.

(3) PURPOSE- The purposes of the Centers described in paragraph (1) shall be--

(A) to generate innovative approaches to health care information enterprise integration by conducting cutting-edge, multidisciplinary research on the systems challenges to health care delivery; and

(B) the development and use of health information technologies and other complementary fields.

(4) RESEARCH AREAS- Research areas may include--

(A) interfaces between human information and communications technology systems;

(B) voice-recognition systems;

(C) software that improves interoperability and connectivity among health information systems;

(D) software dependability in systems critical to health care delivery;

(E) measurement of the impact of information technologies on the quality and productivity of health care;

(F) health information enterprise management;

(G) health information technology security and integrity; and

(H) relevant health information technology to reduce medical errors.

(5) APPLICATIONS- An institution of higher education (or a consortium thereof) seeking funding under this subsection shall submit an application to the Director of the National Institute of Standards and Technology at such time, in such manner, and containing such information as the Director may require. The application shall include, at a minimum, a description of--

(A) the research projects that will be undertaken by the Center established pursuant to assistance under paragraph (1) and the respective contributions of the participating entities;

(B) how the Center will promote active collaboration among scientists and engineers from different disciplines, such as information technology, biologic sciences, management, social sciences, and other appropriate disciplines;

(C) technology transfer activities to demonstrate and diffuse the research results, technologies, and knowledge; and

(D) how the Center will contribute to the education and training of researchers and other professionals in fields relevant to health information enterprise integration.

(b) National Information Technology Research and Development Program- The National High-Performance Computing Program established by section 101 of the High-Performance Computing Act of 1991 (15 U.S.C. 5511) shall coordinate Federal research and development programs related to the development and deployment of health information technology, including activities related to--

(1) computer infrastructure;

(2) data security;

(3) development of large-scale, distributed, reliable computing systems;

(4) wired, wireless, and hybrid high-speed networking;

(5) development of software and software-intensive systems;

(6) human-computer interaction and information management technologies; and

(7) the social and economic implications of information technology.

PART I--GRANTS AND LOANS FUNDING

SEC. 4301. GRANT, LOAN, AND DEMONSTRATION PROGRAMS.

Title XXX of the Public Health Service Act, as added by section 4101, is amended by adding at the end the following new subtitle:

`SEC. 3011. IMMEDIATE FUNDING TO STRENGTHEN THE HEALTH INFORMATION TECHNOLOGY INFRASTRUCTURE.

`(a) In General- The Secretary of Health and Human Services shall, using amounts appropriated under section 3018, invest in the infrastructure necessary to allow for and promote the electronic exchange and use of health information for each individual in the United States consistent with the goals outlined in the strategic plan developed by the National Coordinator (and as available) under section 3001. To the greatest extent practicable, the Secretary shall ensure that any funds so appropriated shall be used for the acquisition of health information technology that meets standards and certification criteria adopted before the date of the enactment of this title until such date as the standards are adopted under section 3004. The Secretary shall invest funds through the different agencies with expertise in such goals, such as the Office of the National Coordinator for Health Information Technology, the Health Resources and Services Administration, the Agency for Healthcare Research and Quality, the Centers of Medicare & Medicaid Services, the Centers for Disease Control and Prevention, and the Indian Health Service to support the following:

`(1) Health information technology architecture that will support the nationwide electronic exchange and use of health information in a secure, private, and accurate manner, including connecting health information exchanges, and which may include updating and implementing the infrastructure necessary within different agencies of the Department of Health and Human Services to support the electronic use and exchange of health information.

`(2) Development and adoption of appropriate certified electronic health records for categories of providers not eligible for support under title XVIII or XIX of the Social Security Act for the adoption of such records.

`(3) Training on and dissemination of information on best practices to integrate health information technology, including electronic health records, into a provider's delivery of care, consistent with best practices learned from the Health Information Technology Research Center developed under section 302, including community health centers receiving assistance under section 330 of the Public Health Service Act, covered entities under section 340B of such Act, and providers participating in one or more of the programs under titles XVIII, XIX, and XXI of the Social Security Act (relating to Medicare, Medicaid, and the State Children's Health Insurance Program).

`(4) Infrastructure and tools for the promotion of telemedicine, including coordination among Federal agencies in the promotion of telemedicine.

`(5) Promotion of the interoperability of clinical data repositories or registries.

`(6) Promotion of technologies and best practices that enhance the protection of health information by all holders of individually identifiable health information.

`(7) Improve and expand the use of health information technology by public health departments.

`(8) Provide $300 million to support regional or sub-national efforts towards health information exchange.

`(b) Coordination- The Secretary shall ensure funds under this section are used in a coordinated manner with other health information promotion activities.

`(c) Additional Use of Funds- In addition to using funds as provided in subsection (a), the Secretary may use amounts appropriated under section 3018 to carry out activities that are provided for under laws in effect on the date of the enactment of this title.

`SEC. 3012. HEALTH INFORMATION TECHNOLOGY IMPLEMENTATION ASSISTANCE.

`(a) Health Information Technology Extension Program- To assist health care providers to adopt, implement, and effectively use certified EHR technology that allows for the electronic exchange and use of health information, the Secretary, acting through the Office of the National Coordinator, shall establish a health information technology extension program to provide health information technology assistance services to be carried out through the Department of Health and Human Services. The National Coordinator shall consult with other Federal agencies with demonstrated experience and expertise in information technology services, such as the National Institute of Standards and Technology, in developing and implementing this program.

`(b) Health Information Technology Research Center-

`(1) IN GENERAL- The Secretary shall create a Health Information Technology Research Center (in this section referred to as the `Center') to provide technical assistance and develop or recognize best practices to support and accelerate efforts to adopt, implement, and effectively utilize health information technology that allows for the electronic exchange and use of information in compliance with standards, implementation specifications, and certification criteria adopted under section 3004(b).

`(2) INPUT- The Center shall incorporate input from--

`(A) other Federal agencies with demonstrated experience and expertise in information technology services such as the National Institute of Standards and Technology;

`(B) users of health information technology, such as providers and their support and clerical staff and others involved in the care and care coordination of patients, from the health care and health information technology industry; and

`(C) others as appropriate.

`(3) PURPOSES- The purposes of the Center are to--

`(A) provide a forum for the exchange of knowledge and experience;

`(B) accelerate the transfer of lessons learned from existing public and private sector initiatives, including those currently receiving Federal financial support;

`(C) assemble, analyze, and widely disseminate evidence and experience related to the adoption, implementation, and effective use of health information technology that allows for the electronic exchange and use of information including through the regional centers described in subsection (c);

`(D) provide technical assistance for the establishment and evaluation of regional and local health information networks to facilitate the electronic exchange of information across health care settings and improve the quality of health care;

`(E) provide technical assistance for the development and dissemination of solutions to barriers to the exchange of electronic health information; and

`(F) learn about effective strategies to adopt and utilize health information technology in medically underserved communities.

`(c) Health Information Technology Regional Extension Centers-

`(1) IN GENERAL- The Secretary shall provide assistance for the creation and support of regional centers (in this subsection referred to as `regional centers') to provide technical assistance and disseminate best practices and other information learned from the Center to support and accelerate efforts to adopt, implement, and effectively utilize health information technology that allows for the electronic exchange and use of information in compliance with standards, implementation specifications, and certification criteria adopted under section 3004. Activities conducted under this subsection shall be consistent with the strategic plan developed by the National Coordinator, (and, as available) under section 3001.

`(2) AFFILIATION- Regional centers shall be affiliated with any U.S.-based nonprofit institution or organization, or group thereof, that applies and is awarded financial assistance under this section. Individual awards shall be decided on the basis of merit.

`(3) OBJECTIVE- The objective of the regional centers is to enhance and promote the adoption of health information technology through--

`(A) assistance with the implementation, effective use, upgrading, and ongoing maintenance of health information technology, including electronic health records, to healthcare providers nationwide;

`(B) broad participation of individuals from industry, universities, and State governments;

`(C) active dissemination of best practices and research on the implementation, effective use, upgrading, and ongoing maintenance of health information technology, including electronic health records, to health care providers in order to improve the quality of healthcare and protect the privacy and security of health information;

`(D) participation, to the extent practicable, in health information exchanges; and

`(E) utilization, when appropriate, of the expertise and capability that exists in Federal agencies other than the Department; and

`(F) integration of health information technology, including electronic health records, into the initial and ongoing training of health professionals and others in the healthcare industry that would be instrumental to improving the quality of healthcare through the smooth and accurate electronic use and exchange of health information.

`(4) REGIONAL ASSISTANCE- Each regional center shall aim to provide assistance and education to all providers in a region, but shall prioritize any direct assistance first to the following:

`(A) Public or not-for-profit hospitals or critical access hospitals.

`(B) Federally qualified health centers (as defined in section 1861(aa)(4) of the Social Security Act).

`(C) Entities that are located in rural and other areas that serve uninsured, underinsured, and medically underserved individuals (regardless of whether such area is urban or rural).

`(D) Individual or small group practices (or a consortium thereof) that are primarily focused on primary care.

`(5) FINANCIAL SUPPORT- The Secretary may provide financial support to any regional center created under this subsection for a period not to exceed four years. The Secretary may not provide more than 50 percent of the capital and annual operating and maintenance funds required to create and maintain such a center, except in an instance of national economic conditions which would render this cost-share requirement detrimental to the program and upon notification to Congress as to the justification to waive the cost-share requirement.

`(6) NOTICE OF PROGRAM DESCRIPTION AND AVAILABILITY OF FUNDS- The Secretary shall publish in the Federal Register, not later than 90 days after the date of the enactment of this Act, a draft description of the program for establishing regional centers under this subsection. Such description shall include the following:

`(A) A detailed explanation of the program and the programs goals.

`(B) Procedures to be followed by the applicants.

`(C) Criteria for determining qualified applicants.

`(D) Maximum support levels expected to be available to centers under the program.

`(7) APPLICATION REVIEW- The Secretary shall subject each application under this subsection to merit review. In making a decision whether to approve such application and provide financial support, the Secretary shall consider at a minimum the merits of the application, including those portions of the application regarding--

`(A) the ability of the applicant to provide assistance under this subsection and utilization of health information technology appropriate to the needs of particular categories of health care providers;

`(B) the types of service to be provided to health care providers;

`(C) geographical diversity and extent of service area; and

`(D) the percentage of funding and amount of in-kind commitment from other sources.

`(8) BIENNIAL EVALUATION- Each regional center which receives financial assistance under this subsection shall be evaluated biennially by an evaluation panel appointed by the Secretary. Each evaluation panel shall be composed of private experts, none of whom shall be connected with the center involved, and of Federal officials. Each evaluation panel shall measure the involved center's performance against the objective specified in paragraph (3). The Secretary shall not continue to provide funding to a regional center unless its evaluation is overall positive.

`(9) CONTINUING SUPPORT- After the second year of assistance under this subsection a regional center may receive additional support under this subsection if it has received positive evaluations and a finding by the Secretary that continuation of Federal funding to the center was in the best interest of provision of health information technology extension services.

`SEC. 3013. STATE GRANTS TO PROMOTE HEALTH INFORMATION TECHNOLOGY.

`(a) In General- The Secretary, acting through the National Coordinator, shall establish a program in accordance with this section to facilitate and expand the electronic movement and use of health information among organizations according to nationally recognized standards.

`(b) Planning Grants- The Secretary may award a grant to a State or qualified State-designated entity (as described in subsection (d)) that submits an application to the Secretary at such time, in such manner, and containing such information as the Secretary may specify, for the purpose of planning activities described in subsection (b).

`(c) Implementation Grants- The Secretary may award a grant to a State or qualified State-designated entity that--

`(1) has submitted, and the Secretary has approved, a plan described in subsection (c) (regardless of whether such plan was prepared using amounts awarded under paragraph (1)); and

`(2) submits an application at such time, in such manner, and containing such information as the Secretary may specify.

`(d) Use of Funds- Amounts received under a grant under subsection (a)(3) shall be used to conduct activities to facilitate and expand the electronic movement and use of health information among organizations according to nationally recognized standards through activities that include--

`(1) enhancing broad and varied participation in the authorized and secure nationwide electronic use and exchange of health information;

`(2) identifying State or local resources available towards a nationwide effort to promote health information technology;

`(3) complementing other Federal grants, programs, and efforts towards the promotion of health information technology;

`(4) providing technical assistance for the development and dissemination of solutions to barriers to the exchange of electronic health information;

`(5) promoting effective strategies to adopt and utilize health information technology in medically underserved communities;

`(6) assisting patients in utilizing health information technology;

`(7) encouraging clinicians to work with Health Information Technology Regional Extension Centers as described in section 3012, to the extent they are available and valuable;

`(8) supporting public health agencies' authorized use of and access to electronic health information;

`(9) promoting the use of electronic health records for quality improvement including through quality measures reporting; and

`(10) such other activities as the Secretary may specify.

`(e) Plan-

`(1) IN GENERAL- A plan described in this subsection is a plan that describes the activities to be carried out by a State or by the qualified State-designated entity within such State to facilitate and expand the electronic movement and use of health information among organizations according to nationally recognized standards and implementation specifications.

`(2) REQUIRED ELEMENTS- A plan described in paragraph (1) shall--

`(A) be pursued in the public interest;

`(B) be consistent with the strategic plan developed by the National Coordinator, (and, as available) under section 3001;

`(C) include a description of the ways the State or qualified State-designated entity will carry out the activities described in subsection (b); and

`(D) contain such elements as the Secretary may require.

`(f) Qualified State-Designated Entity- For purposes of this section, to be a qualified State-designated entity, with respect to a State, an entity shall--

`(1) be designated by the State as eligible to receive awards under this section;

`(2) be a not-for-profit entity with broad stakeholder representation on its governing board;

`(3) demonstrate that one of its principal goals is to use information technology to improve health care quality and efficiency through the authorized and secure electronic exchange and use of health information;

`(4) adopt nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair, and nondiscriminatory participation by stakeholders; and

`(5) conform to such other requirements as the Secretary may establish.

`(g) Required Consultation- In carrying out activities described in subsections (a)(2) and (a)(3), a State or qualified State-designated entity shall consult with and consider the recommendations of--

`(1) health care providers (including providers that provide services to low income and underserved populations);

`(2) health plans;

`(3) patient or consumer organizations that represent the population to be served;

`(4) health information technology vendors;

`(5) health care purchasers and employers;

`(6) public health agencies;

`(7) health professions schools, universities and colleges;

`(8) clinical researchers;

`(9) other users of health information technology such as the support and clerical staff of providers and others involved in the care and care coordination of patients; and

`(10) such other entities, as may be determined appropriate by the Secretary.

`(h) Continuous Improvement- The Secretary shall annually evaluate the activities conducted under this section and shall, in awarding grants under this section, implement the lessons learned from such evaluation in a manner so that awards made subsequent to each such evaluation are made in a manner that, in the determination of the Secretary, will lead towards the greatest improvement in quality of care, decrease in costs, and the most effective authorized and secure electronic exchange of health information.

`(i) Required Match-

`(1) IN GENERAL- For a fiscal year (beginning with fiscal year 2011), the Secretary may not make a grant under subsection (a) to a State unless the State agrees to make available non-Federal contributions (which may include in-kind contributions) toward the costs of a grant awarded under subsection (a)(3) in an amount equal to--

`(A) for fiscal year 2011, not less than $1 for each $10 of Federal funds provided under the grant;

`(B) for fiscal year 2012, not less than $1 for each $7 of Federal funds provided under the grant; and

`(C) for fiscal year 2013 and each subsequent fiscal year, not less than $1 for each $3 of Federal funds provided under the grant.

`(2) AUTHORITY TO REQUIRE STATE MATCH FOR FISCAL YEARS BEFORE FISCAL YEAR 2011- For any fiscal year during the grant program under this section before fiscal year 2011, the Secretary may determine the extent to which there shall be required a non-Federal contribution from a State receiving a grant under this section.

`SEC. 3014. COMPETITIVE GRANTS TO STATES AND INDIAN TRIBES FOR THE DEVELOPMENT OF LOAN PROGRAMS TO FACILITATE THE WIDESPREAD ADOPTION OF CERTIFIED EHR TECHNOLOGY.

`(a) In General- The National Coordinator may award competitive grants to eligible entities for the establishment of programs for loans to health care providers to conduct the activities described in subsection (e).

`(b) Eligible Entity Defined- For purposes of this subsection, the term `eligible entity' means a State or Indian tribe (as defined in the Indian Self-Determination and Education Assistance Act) that--

`(1) submits to the National Coordinator an application at such time, in such manner, and containing such information as the National Coordinator may require;

`(2) submits to the National Coordinator a strategic plan in accordance with subsection (d) and provides to the National Coordinator assurances that the entity will update such plan annually in accordance with such subsection;

`(3) provides assurances to the National Coordinator that the entity will establish a Loan Fund in accordance with subsection (c);

`(4) provides assurances to the National Coordinator that the entity will not provide a loan from the Loan Fund to a health care provider unless the provider agrees to--

`(A) submit reports on quality measures adopted by the Federal Government (by not later than 90 days after the date on which such measures are adopted), to--

`(i) the Director of the Centers for Medicare & Medicaid Services (or his or her designee), in the case of an entity participating in the Medicare program under title XVIII of the Social Security Act or the Medicaid program under title XIX of such Act; or

`(ii) the Secretary in the case of other entities;

`(B) demonstrate to the satisfaction of the Secretary (through criteria established by the Secretary) that any certified EHR technology purchased, improved, or otherwise financially supported under a loan under this section is used to exchange health information in a manner that, in accordance with law and standards (as adopted under section 3005) applicable to the exchange of information, improves the quality of health care, such as promoting care coordination; and

`(C) comply with such other requirements as the entity or the Secretary may require;

`(D) include a plan on how health care providers involved intend to maintain and support the certified EHR technology over time;

`(E) include a plan on how the health care providers involved intend to maintain and support the certified EHR technology that would be purchased with such loan, including the type of resources expected to be involved and any such other information as the State or Indian tribe, respectively, may require; and

`(5) agrees to provide matching funds in accordance with subsection (i).

`(c) Establishment of Fund- For purposes of subsection (b)(3), an eligible entity shall establish a certified EHR technology loan fund (referred to in this subsection as a `Loan Fund') and comply with the other requirements contained in this section. A grant to an eligible entity under this section shall be deposited in the Loan Fund established by the eligible entity. No funds authorized by other provisions of this title to be used for other purposes specified in this title shall be deposited in any Loan Fund.

`(d) Strategic Plan-

`(1) IN GENERAL- For purposes of subsection (b)(2), a strategic plan of an eligible entity under this subsection shall identify the intended uses of amounts available to the Loan Fund of such entity.

`(2) CONTENTS- A strategic plan under paragraph (1), with respect to a Loan Fund of an eligible entity, shall include for a year the following:

`(A) A list of the projects to be assisted through the Loan Fund during such year.

`(B) A description of the criteria and methods established for the distribution of funds from the Loan Fund during the year.

`(C) A description of the financial status of the Loan Fund as of the date of submission of the plan.

`(D) The short-term and long-term goals of the Loan Fund.

`(e) Use of Funds- Amounts deposited in a Loan Fund, including loan repayments and interest earned on such amounts, shall be used only for awarding loans or loan guarantees, making reimbursements described in subsection (g)(4)(A), or as a source of reserve and security for leveraged loans, the proceeds of which are deposited in the Loan Fund established under subsection (a). Loans under this section may be used by a health care provider to--

`(1) facilitate the purchase of certified EHR technology;

`(2) enhance the utilization of certified EHR technology;

`(3) train personnel in the use of such technology; or

`(4) improve the secure electronic exchange of health information.

`(f) Types of Assistance- Except as otherwise limited by applicable State law, amounts deposited into a Loan Fund under this subsection may only be used for the following:

`(1) To award loans that comply with the following:

`(A) The interest rate for each loan shall not exceed the market interest rate.

`(B) The principal and interest payments on each loan shall commence not later than 1 year after the date the loan was awarded, and each loan shall be fully amortized not later than 10 years after the date of the loan.

`(C) The Loan Fund shall be credited with all payments of principal and interest on each loan awarded from the Loan Fund.

`(2) To guarantee, or purchase insurance for, a local obligation (all of the proceeds of which finance a project eligible for assistance under this subsection) if the guarantee or purchase would improve credit market access or reduce the interest rate applicable to the obligation involved.

`(3) As a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the eligible entity if the proceeds of the sale of the bonds will be deposited into the Loan Fund.

`(4) To earn interest on the amounts deposited into the Loan Fund.

`(5) To make reimbursements described in subsection (g)(4)(A).

`(g) Administration of Loan Funds-

`(1) COMBINED FINANCIAL ADMINISTRATION- An eligible entity may (as a convenience and to avoid unnecessary administrative costs) combine, in accordance with applicable State law, the financial administration of a Loan Fund established under this subsection with the financial administration of any other revolving fund established by the entity if otherwise not prohibited by the law under which the Loan Fund was established.

`(2) COST OF ADMINISTERING FUND- Each eligible entity may annually use not to exceed 4 percent of the funds provided to the entity under a grant under this subsection to pay the reasonable costs of the administration of the programs under this section, including the recovery of reasonable costs expended to establish a Loan Fund which are incurred after the date of the enactment of this title.

`(3) GUIDANCE AND REGULATIONS- The National Coordinator shall publish guidance and promulgate regulations as may be necessary to carry out the provisions of this section, including--

`(A) provisions to ensure that each eligible entity commits and expends funds allotted to the entity under this subsection as efficiently as possible in accordance with this title and applicable State laws; and

`(B) guidance to prevent waste, fraud, and abuse.

`(4) PRIVATE SECTOR CONTRIBUTIONS-

`(A) IN GENERAL- A Loan Fund established under this subsection may accept contributions from private sector entities, except that such entities may not specify the recipient or recipients of any loan issued under this subsection. An eligible entity may agree to reimburse a private sector entity for any contribution made under this subparagraph, except that the amount of such reimbursement may not be greater than the principal amount of the contribution made.

`(B) AVAILABILITY OF INFORMATION- An eligible entity shall make publicly available the identity of, and amount contributed by, any private sector entity under subparagraph (A) and may issue letters of commendation or make other awards (that have no financial value) to any such entity.

`(h) Matching Requirements-

`(1) IN GENERAL- The National Coordinator may not make a grant under subsection (a) to an eligible entity unless the entity agrees to make available (directly or through donations from public or private entities) non-Federal contributions in cash to the costs of carrying out the activities for which the grant is awarded in an amount equal to not less than $1 for each $5 of Federal funds provided under the grant.

`(2) DETERMINATION OF AMOUNT OF NON-FEDERAL CONTRIBUTION- In determining the amount of non-Federal contributions that an eligible entity has provided pursuant to subparagraph (A), the National Coordinator may not include any amounts provided to the entity by the Federal Government.

`(i) Effective Date- The Secretary may not make an award under this section prior to January 1, 2010.

`SEC. 3015. DEMONSTRATION PROGRAM TO INTEGRATE INFORMATION TECHNOLOGY INTO CLINICAL EDUCATION.

`(a) In General- The Secretary may award grants under this section to carry out demonstration projects to develop academic curricula integrating certified EHR technology in the clinical education of health professionals. Such awards shall be made on a competitive basis and pursuant to peer review.

`(b) Eligibility- To be eligible to receive a grant under subsection (a), an entity shall--

`(1) submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require;

`(2) submit to the Secretary a strategic plan for integrating certified EHR technology in the clinical education of health professionals to reduce medical errors and enhance health care quality;

`(3) be--

`(A) a school of medicine, osteopathic medicine, dentistry, or pharmacy, a graduate program in behavioral or mental health, or any other graduate health professions school;

`(B) a graduate school of nursing or physician assistant studies;

`(C) a consortium of two or more schools described in subparagraph (A) or (B); or

`(D) an institution with a graduate medical education program in medicine, osteopathic medicine, dentistry, pharmacy, nursing, or physician assistance studies.

`(4) provide for the collection of data regarding the effectiveness of the demonstration project to be funded under the grant in improving the safety of patients, the efficiency of health care delivery, and in increasing the likelihood that graduates of the grantee will adopt and incorporate certified EHR technology, in the delivery of health care services; and

`(5) provide matching funds in accordance with subsection (d).

`(c) Use of Funds-

`(1) IN GENERAL- With respect to a grant under subsection (a), an eligible entity shall--

`(A) use grant funds in collaboration with 2 or more disciplines; and

`(B) use grant funds to integrate certified EHR technology into community-based clinical education.

`(2) LIMITATION- An eligible entity shall not use amounts received under a grant under subsection (a) to purchase hardware, software, or services.

`(d) Financial Support- The Secretary may not provide more than 50 percent of the costs of any activity for which assistance is provided under subsection (a), except in an instance of national economic conditions which would render the cost-share requirement under this subsection detrimental to the program and upon notification to Congress as to the justification to waive the cost-share requirement.

`(e) Evaluation- The Secretary shall take such action as may be necessary to evaluate the projects funded under this section and publish, make available, and disseminate the results of such evaluations on as wide a basis as is practicable.

`(f) Reports- Not later than 1 year after the date of enactment of this title, and annually thereafter, the Secretary shall submit to the Committee on Health, Education, Labor, and Pensions and the Committee on Finance of the Senate, and the Committee on Energy and Commerce of the House of Representatives a report that--

`(1) describes the specific projects established under this section; and

`(2) contains recommendations for Congress based on the evaluation conducted under subsection (e).

`SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS ON HEALTH CARE.

`(a) In General- The Secretary, in consultation with the Director of the National Science Foundation, shall provide assistance to institutions of higher education (or consortia thereof) to establish or expand medical health informatics education programs, including certification, undergraduate, and masters degree programs, for both health care and information technology students to ensure the rapid and effective utilization and development of health information technologies (in the United States health care infrastructure).

`(b) Activities- Activities for which assistance may be provided under subsection (a) may include the following:

`(1) Developing and revising curricula in medical health informatics and related disciplines.

`(2) Recruiting and retaining students to the program involved.

`(3) Acquiring equipment necessary for student instruction in these programs, including the installation of testbed networks for student use.

`(4) Establishing or enhancing bridge programs in the health informatics fields between community colleges and universities.

`(c) Priority- In providing assistance under subsection (a), the Secretary shall give preference to the following:

`(1) Existing education and training programs.

`(2) Programs designed to be completed in less than six months.

`(d) Financial Support- The Secretary may not provide more than 50 percent of the costs of any activity for which assistance is provided under subsection (a), except in an instance of national economic conditions which would render the cost-share requirement under this subsection detrimental to the program and upon notification to Congress as to the justification to waive the cost-share requirement.

`SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS.

`(a) Reports- The Secretary may require that an entity receiving assistance under this title shall submit to the Secretary, not later than the date that is 1 year after the date of receipt of such assistance, a report that includes--

`(1) an analysis of the effectiveness of the activities for which the entity receives such assistance, as compared to the goals for such activities; and

`(2) an analysis of the impact of the project on health care quality and safety.

`(b) Requirement To Improve Quality of Care and Decrease in Costs- The National Coordinator shall annually evaluate the activities conducted under this title and shall, in awarding grants, implement the lessons learned from such evaluation in a manner so that awards made subsequent to each such evaluation are made in a manner that, in the determination of the National Coordinator, will result in the greatest improvement in the quality and efficiency of health care.

`SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS.

`For the purposes of carrying out this subtitle, there is authorized to be appropriated such sums as may be necessary for each of the fiscal years 2009 through 2013. Amounts so appropriated shall remain available until expended.'.

PART II--MEDICARE PROGRAM

SEC. 4311. INCENTIVES FOR ELIGIBLE PROFESSIONALS.

(a) Incentive Payments- Section 1848 of the Social Security Act (42 U.S.C. 1395w-4) is amended by adding at the end the following new subsection:

`(o) Incentives for Adoption and Meaningful Use of Certified EHR Technology-

`(1) INCENTIVE PAYMENTS-

`(A) IN GENERAL- Subject to the succeeding subparagraphs of this paragraph, with respect to covered professional services furnished by an eligible professional during a payment year (as defined in subparagraph (E)), if the eligible professional is a meaningful EHR user (as determined under paragraph (2)) for the reporting period with respect to such year, in addition to the amount otherwise paid under this part, there also shall be paid to the eligible professional (or to an employer or facility in the cases described in clause (A) of section 1842(b)(6)), from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 an amount equal to 75 percent of the Secretary's estimate (based on claims submitted not later than 2 months after the end of the payment year) of the allowed charges under this part for all such covered professional services furnished by the eligible professional during such year.

`(B) LIMITATIONS ON AMOUNTS OF INCENTIVE PAYMENTS-

`(i) IN GENERAL- In no case shall the amount of the incentive payment provided under this paragraph for an eligible professional for a payment year exceed the applicable amount specified under this subparagraph with respect to such eligible professional and such year.

`(ii) AMOUNT- Subject to clause (iii), the applicable amount specified in this subparagraph for an eligible professional is as follows:

`(I) For the first payment year for such professional, $15,000.

`(II) For the second payment year for such professional, $12,000.

`(III) For the third payment year for such professional, $8,000.

`(IV) For the fourth payment year for such professional, $4,000.

`(V) For the fifth payment year for such professional, $2,000.

`(VI) For any succeeding payment year for such professional, $0.

`(iii) PHASE DOWN FOR ELIGIBLE PROFESSIONALS FIRST ADOPTING EHR AFTER 2013- If the first payment year for an eligible professional is after 2013, then the amount specified in this subparagraph for a payment year for such professional is the same as the amount specified in clause (ii) for such payment year for an eligible professional whose first payment year is 2013. If the first payment year for an eligible professional is after 2015 then the applicable amount specified in this subparagraph for such professional for such year and any subsequent year shall be $0.

`(C) NON-APPLICATION TO HOSPITAL-BASED ELIGIBLE PROFESSIONALS-

`(i) IN GENERAL- No incentive payment may be made under this paragraph in the case of a hospital-based eligible professional.

`(ii) HOSPITAL-BASED ELIGIBLE PROFESSIONAL- For purposes of clause (i), the term `hospital-based eligible professional' means, with respect to covered professional services furnished by an eligible professional during the reporting period for a payment year, an eligible professional, such as a pathologist, anesthesiologist, or emergency physician, who furnishes substantially all of such services in a hospital setting (whether inpatient or outpatient) and through the use of the facilities and equipment, including computer equipment, of the hospital.

`(D) PAYMENT-

`(i) FORM OF PAYMENT- The payment under this paragraph may be in the form of a single consolidated payment or in the form of such periodic installments as the Secretary may specify.

`(ii) COORDINATION OF APPLICATION OF LIMITATION FOR PROFESSIONALS IN DIFFERENT PRACTICES- In the case of an eligible professional furnishing covered professional services in more than one practice (as specified by the Secretary), the Secretary shall establish rules to coordinate the incentive payments, including the application of the limitation on amounts of such incentive payments under this paragraph, among such practices.

`(iii) COORDINATION WITH MEDICAID- The Secretary shall seek, to the maximum extent practicable, to avoid duplicative requirements from Federal and State Governments to demonstrate meaningful use of certified EHR technology under this title and title XIX. In doing so, the Secretary may deem satisfaction of State requirements for such meaningful use for a payment year under title XIX to be sufficient to qualify as meaningful use under this subsection and subsection (a)(7) and vice versa. The Secretary may also adjust the reporting periods under such title and such subsections in order to carry out this clause.

`(E) PAYMENT YEAR DEFINED-

`(i) IN GENERAL- For purposes of this subsection, the term `payment year' means a year beginning with 2011.

`(ii) FIRST, SECOND, ETC. PAYMENT YEAR- The term `first payment year' means, with respect to covered professional services furnished by an eligible professional, the first year for which an incentive payment is made for such services under this subsection. The terms `second payment year', `third payment year', `fourth payment year', and `fifth payment year' mean, with respect to covered professional services furnished by such eligible professional, each successive year immediately following the first payment year for such professional.

`(2) MEANINGFUL EHR USER-

`(A) IN GENERAL- For purposes of paragraph (1), an eligible professional shall be treated as a meaningful EHR user for a reporting period for a payment year (or, for purposes of subsection (a)(7), for a reporting period under such subsection for a year) if each of the following requirements is met:

`(i) MEANINGFUL USE OF CERTIFIED EHR TECHNOLOGY- The eligible professional demonstrates to the satisfaction of the Secretary, in accordance with subparagraph (C)(i), that during such period the professional is using certified EHR technology in a meaningful manner, which shall include the use of electronic prescribing as determined to be appropriate by the Secretary.

`(ii) INFORMATION EXCHANGE- The eligible professional demonstrates to the satisfaction of the Secretary, in accordance with subparagraph (C)(i), that during such period such certified EHR technology is connected in a manner that provides, in accordance with law and standards applicable to the exchange of information, for the electronic exchange of health information to improve the quality of health care, such as promoting care coordination.

`(iii) REPORTING ON MEASURES USING EHR- Subject to subparagraph (B)(ii) and using such certified EHR technology, the eligible professional submits information for such period, in a form and manner specified by the Secretary, on such clinical quality measures and such other measures as selected by the Secretary under subparagraph (B)(i).

The Secretary may provide for the use of alternative means for meeting the requirements of clauses (i), (ii), and (iii) in the case of an eligible professional furnishing covered professional services in a group practice (as defined by the Secretary). The Secretary shall seek to improve the use of electronic health records and health care quality over time by requiring more stringent measures of meaningful use selected under this paragraph.

`(B) REPORTING ON MEASURES-

`(i) SELECTION- The Secretary shall select measures for purposes of subparagraph (A)(iii) but only consistent with the following:

`(I) The Secretary shall provide preference to clinical quality measures that have been endorsed by the entity with a contract with the Secretary under section 1890(a).

`(II) Prior to any measure being selected under this subparagraph, the Secretary shall publish in the Federal Register such measure and provide for a period of public comment on such measure.

`(ii) LIMITATION- The Secretary may not require the electronic reporting of information on clinical quality measures under subparagraph (A)(iii) unless the Secretary has the capacity to accept the information electronically, which may be on a pilot basis.

`(iii) COORDINATION OF REPORTING OF INFORMATION- In selecting such measures, and in establishing the form and manner for reporting measures under subparagraph (A)(iii), the Secretary shall seek to avoid redundant or duplicative reporting otherwise required, including reporting under subsection (k)(2)(C).

`(C) DEMONSTRATION OF MEANINGFUL USE OF CERTIFIED EHR TECHNOLOGY AND INFORMATION EXCHANGE-

`(i) IN GENERAL- A professional may satisfy the demonstration requirement of clauses (i) and (ii) of subparagraph (A) through means specified by the Secretary, which may include--

`(I) an attestation;

`(II) the submission of claims with appropriate coding (such as a code indicating that a patient encounter was documented using certified EHR technology);

`(III) a survey response;

`(IV) reporting under subparagraph (A)(iii); and

`(V) other means specified by the Secretary.

`(ii) USE OF PART D DATA- Notwithstanding sections 1860D-15(d)(2)(B) and 1860D-15(f)(2), the Secretary may use data regarding drug claims submitted for purposes of section 1860D-15 that are necessary for purposes of subparagraph (A).

`(3) APPLICATION-

`(A) PHYSICIAN REPORTING SYSTEM RULES- Paragraphs (5), (6), and (8) of subsection (k) shall apply for purposes of this subsection in the same manner as they apply for purposes of such subsection.

`(B) COORDINATION WITH OTHER PAYMENTS- The provisions of this subsection shall not be taken into account in applying the provisions of subsection (m) of this section and of section 1833(m) and any payment under such provisions shall not be taken into account in computing allowable charges under this subsection.

`(C) LIMITATIONS ON REVIEW- There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the determination of any incentive payment under this subsection and the payment adjustment under subsection (a)(7), including the determination of a meaningful EHR user under paragraph (2), a limitation under paragraph (1)(B), and the exception under subsection (a)(7)(B).

`(D) POSTING ON WEBSITE- The Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services, in an easily understandable format, a list of the names, business addresses, and business phone numbers of the eligible professionals who are meaningful EHR users and, as determined appropriate by the Secretary, of group practices receiving incentive payments under paragraph (1).

`(4) CERTIFIED EHR TECHNOLOGY DEFINED- For purposes of this section, the term `certified EHR technology' means a qualified electronic health record (as defined in 3000(13) of the Public Health Service Act) that is certified pursuant to section 3001(c)(5) of such Act as meeting standards adopted under section 3004 of such Act that are applicable to the type of record involved (as determined by the Secretary, such as an ambulatory electronic health record for office-based physicians or an inpatient hospital electronic health record for hospitals).

`(5) DEFINITIONS- For purposes of this subsection:

`(A) COVERED PROFESSIONAL SERVICES- The term `covered professional services' has the meaning given such term in subsection (k)(3).

`(B) ELIGIBLE PROFESSIONAL- The term `eligible professional' means a physician, as defined in section 1861(r).

`(C) REPORTING PERIOD- The term `reporting period' means any period (or periods), with respect to a payment year, as specified by the Secretary.'.

(b) Incentive Payment Adjustment- Section 1848(a) of the Social Security Act (42 U.S.C. 1395w-4(a)) is amended by adding at the end the following new paragraph:

`(7) INCENTIVES FOR MEANINGFUL USE OF CERTIFIED EHR TECHNOLOGY-

`(A) ADJUSTMENT-

`(i) IN GENERAL- Subject to subparagraphs (B) and (D), with respect to covered professional services furnished by an eligible professional during 2016 or any subsequent payment year, if the eligible professional is not a meaningful EHR user (as determined under subsection (o)(2)) for a reporting period for the year, the fee schedule amount for such services furnished by such professional during the year (including the fee schedule amount for purposes of determining a payment based on such amount) shall be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services under this subsection (determined after application of paragraph (3) but without regard to this paragraph).

`(ii) APPLICABLE PERCENT- Subject to clause (iii), for purposes of clause (i), the term `applicable percent' means--

`(I) for 2016, 99 percent;

`(II) for 2017, 98 percent; and

`(III) for 2018 and each subsequent year, 97 percent.

`(iii) AUTHORITY TO DECREASE APPLICABLE PERCENTAGE FOR 2019 AND SUBSEQUENT YEARS- For 2019 and each subsequent year, if the Secretary finds that the proportion of eligible professionals who are meaningful EHR users (as determined under subsection (o)(2)) is less than 75 percent, the applicable percent shall be decreased by 1 percentage point from the applicable percent in the preceding year, but in no case shall the applicable percent be less than 95 percent.

`(B) SIGNIFICANT HARDSHIP EXCEPTION- The Secretary may, on a case-by-case basis, exempt an eligible professional from the application of the payment adjustment under subparagraph (A) if the Secretary determines, subject to annual renewal, that compliance with the requirement for being a meaningful EHR user would result in a significant hardship, such as in the case of an eligible professional who practices in a rural area without sufficient Internet access. In no case may an eligible professional be granted an exemption under this subparagraph for more than 5 years.

`(C) APPLICATION OF PHYSICIAN REPORTING SYSTEM RULES- Paragraphs (5), (6), and (8) of subsection (k) shall apply for purposes of this paragraph in the same manner as they apply for purposes of such subsection.

`(D) NON-APPLICATION TO HOSPITAL-BASED ELIGIBLE PROFESSIONALS- No payment adjustment may be made under subparagraph (A) in the case of hospital-based eligible professionals (as defined in subsection (o)(1)(C)(ii)).

`(E) DEFINITIONS- For purposes of this paragraph:

`(i) COVERED PROFESSIONAL SERVICES- The term `covered professional services' has the meaning given such term in subsection (k)(3).

`(ii) ELIGIBLE PROFESSIONAL- The term `eligible professional' means a physician, as defined in section 1861(r).

`(iii) REPORTING PERIOD- The term `reporting period' means, with respect to a year, a period specified by the Secretary.'.

(c) Application to Certain HMO-Affiliated Eligible Professionals- Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) is amended by adding at the end the following new subsection:

`(l) Application of Eligible Professional Incentives for Certain MA Organizations for Adoption and Meaningful Use of Certified EHR Technology-

`(1) IN GENERAL- Subject to paragraphs (3) and (4), in the case of a qualifying MA organization, the provisions of sections 1848(o) and 1848(a)(7) shall apply with respect to eligible professionals described in paragraph (2) of the organization who the organization attests under paragraph (6) to be meaningful EHR users in a similar manner as they apply to eligible professionals under such sections. Incentive payments under paragraph (3) shall be made to and payment adjustments under paragraph (4) shall apply to such qualifying organizations.

`(2) ELIGIBLE PROFESSIONAL DESCRIBED- With respect to a qualifying MA organization, an eligible professional described in this paragraph is an eligible professional (as defined for purposes of section 1848(o)) who--

`(A)(i) is employed by the organization; or

`(ii)(I) is employed by, or is a partner of, an entity that through contract with the organization furnishes at least 80 percent of the entity's patient care services to enrollees of such organization; and

`(II) furnishes at least 75 percent of the professional services of the eligible professional to enrollees of the organization; and

`(B) furnishes, on average, at least 20 hours per week of patient care services.

`(3) ELIGIBLE PROFESSIONAL INCENTIVE PAYMENTS-

`(A) IN GENERAL- In applying section 1848(o) under paragraph (1), instead of the additional payment amount under section 1848(o)(1)(A) and subject to subparagraph (B), the Secretary may substitute an amount determined by the Secretary to the extent feasible and practical to be similar to the estimated amount in the aggregate that would be payable if payment for services furnished by such professionals was payable under part B instead of this part.

`(B) AVOIDING DUPLICATION OF PAYMENTS-

`(i) IN GENERAL- If an eligible professional described in paragraph (2) is eligible for the maximum incentive payment under section 1848(o)(1)(A) for the same payment period, the payment incentive shall be made only under such section and not under this subsection.

`(ii) METHODS- In the case of an eligible professional described in paragraph (2) who is eligible for an incentive payment under section 1848(o)(1)(A) but is not described in clause (i) for the same payment period, the Secretary shall develop a process--

`(I) to ensure that duplicate payments are not made with respect to an eligible professional both under this subsection and under section 1848(o)(1)(A); and

`(II) to collect data from Medicare Advantage organizations to ensure against such duplicate payments.

`(C) FIXED SCHEDULE FOR APPLICATION OF LIMITATION ON INCENTIVE PAYMENTS FOR ALL ELIGIBLE PROFESSIONALS- In applying section 1848(o)(1)(B)(ii) under subparagraph (A), in accordance with rules specified by the Secretary, a qualifying MA organization shall specify a year (not earlier than 2011) that shall be treated as the first payment year for all eligible professionals with respect to such organization.

`(4) PAYMENT ADJUSTMENT-

`(A) IN GENERAL- In applying section 1848(a)(7) under paragraph (1), instead of the payment adjustment being an applicable percent of the fee schedule amount for a year under such section, subject to subparagraph (D), the payment adjustment under paragraph (1) shall be equal to the percent specified in subparagraph (B) for such year of the payment amount otherwise provided under this section for such year.

`(B) SPECIFIED PERCENT- The percent specified under this subparagraph for a year is 100 percent minus a number of percentage points equal to the product of--

`(i) the number of percentage points by which the applicable percent (under section 1848(a)(7)(A)(ii)) for the year is less than 100 percent; and

`(ii) the Medicare physician expenditure proportion specified in subparagraph (C) for the year.

`(C) MEDICARE PHYSICIAN EXPENDITURE PROPORTION- The Medicare physician expenditure proportion under this subparagraph for a year is the Secretary's estimate of the proportion, of the expenditures under parts A and B that are not attributable to this part, that are attributable to expenditures for physicians' services.

`(D) APPLICATION OF PAYMENT ADJUSTMENT- In the case that a qualifying MA organization attests that not all eligible professionals are meaningful EHR users with respect to a year, the Secretary shall apply the payment adjustment under this paragraph based on the proportion of such eligible professionals that are not meaningful EHR users for such year.

`(5) QUALIFYING MA ORGANIZATION DEFINED- In this subsection and subsection (m), the term `qualifying MA organization' means a Medicare Advantage organization that is organized as a health maintenance organization (as defined in section 2791(b)(3) of the Public Health Service Act).

`(6) MEANINGFUL EHR USER ATTESTATION- For purposes of this subsection and subsection (m), a qualifying MA organization shall submit an attestation, in a form and manner specified by the Secretary which may include the submission of such attestation as part of submission of the initial bid under section 1854(a)(1)(A)(iv), identifying--

`(A) whether each eligible professional described in paragraph (2), with respect to such organization is a meaningful EHR user (as defined in section 1848(o)(2)) for a year specified by the Secretary; and

`(B) whether each eligible hospital described in subsection (m)(1), with respect to such organization, is a meaningful EHR user (as defined in section 1886(n)(3)) for an applicable period specified by the Secretary.'.

(d) Conforming Amendments- Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) is amended--

(1) in subsection (a)(1)(A), by striking `and (i)' and inserting `(i), and (l)';

(2) in subsection (c)--

(A) in paragraph (1)(D)(i), by striking `section 1886(h)' and inserting `sections 1848(o) and 1886(h)'; and

(B) in paragraph (6)(A), by inserting after `under part B,' the following: `excluding expenditures attributable to subsections (a)(7) and (o) of section 1848,'; and

(3) in subsection (f), by inserting `and for payments under subsection (l)' after `with the organization'.

(e) Conforming Amendments to e-Prescribing-

(1) Section 1848(a)(5)(A) of the Social Security Act (42 U.S.C. 1395w-4(a)(5)(A)) is amended--

(A) in clause (i), by striking `or any subsequent year' and inserting `, 2013, 2014, or 2015'; and

(B) in clause (ii), by striking `and each subsequent year' and inserting `and 2015'.

(2) Section 1848(m)(2) of such Act (42 U.S.C. 1395w-4(m)(2)) is amended--

(A) in subparagraph (A), by striking `For 2009' and inserting `Subject to subparagraph (D), for 2009'; and

(B) by adding at the end the following new subparagraph:

`(D) LIMITATION WITH RESPECT TO EHR INCENTIVE PAYMENTS- The provisions of this paragraph shall not apply to an eligible professional (or, in the case of a group practice under paragraph (3)(C), to the group practice) if, for the reporting period the eligible professional (or group practice) receives an incentive payment under subsection (o)(1)(A) with respect to a certified EHR technology (as defined in subsection (o)(4)) that has the capability of electronic prescribing.'.

SEC. 4312. INCENTIVES FOR HOSPITALS.

(a) Incentive Payment- Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection:

`(n) Incentives for Adoption and Meaningful Use of Certified EHR Technology-

`(1) IN GENERAL- Subject to the succeeding provisions of this subsection, with respect to inpatient hospital services furnished by an eligible hospital during a payment year (as defined in paragraph (2)(G)), if the eligible hospital is a meaningful EHR user (as determined under paragraph (3)) for the reporting period with respect to such year, in addition to the amount otherwise paid under this section, there also shall be paid to the eligible hospital, from the Federal Hospital Insurance Trust Fund established under section 1817, an amount equal to the applicable amount specified in paragraph (2)(A) for the hospital for such payment year.

`(2) PAYMENT AMOUNT-

`(A) IN GENERAL- Subject to the succeeding subparagraphs of this paragraph, the applicable amount specified in this subparagraph for an eligible hospital for a payment year is equal to the product of the following:

`(i) INITIAL AMOUNT- The sum of--

`(I) the base amount specified in subparagraph (B); plus

`(II) the discharge related amount specified in subparagraph (C) for a 12-month period selected by the Secretary with respect to such payment year.

`(ii) MEDICARE SHARE- The Medicare share as specified in subparagraph (D) for the hospital for a period selected by the Secretary with respect to such payment year.

`(iii) TRANSITION FACTOR- The transition factor specified in subparagraph (E) for the hospital for the payment year.

`(B) BASE AMOUNT- The base amount specified in this subparagraph is $2,000,000.

`(C) DISCHARGE RELATED AMOUNT- The discharge related amount specified in this subparagraph for a 12-month period selected by the Secretary shall be determined as the sum of the amount, based upon total discharges (regardless of any source of payment) for the period, for each discharge up to the 23,000th discharge as follows:

`(i) For the 1,150th through the 9,200th discharge, $200.

`(ii) For the 9,201st through the 13,800th discharge, 50 percent of the amount specified in clause (i).

`(iii) For the 13,801st through the 23,000th discharge, 30 percent of the amount specified in clause (i).

`(D) MEDICARE SHARE- The Medicare share specified under this subparagraph for a hospital for a period selected by the Secretary for a payment year is equal to the fraction--

`(i) the numerator of which is the sum (for such period and with respect to the hospital) of--

`(I) the number of inpatient-bed-days (as established by the Secretary) which are attributable to individuals with respect to whom payment may be made under part A; and

`(II) the number of inpatient-bed-days (as so established) which are attributable to individuals who are enrolled with a Medicare Advantage organization under part C; and

`(ii) the denominator of which is the product of--

`(I) the total number of inpatient-bed-days with respect to the hospital during such period; and

`(II) the total amount of the hospital's charges during such period, not including any charges that are attributable to charity care (as such term is used for purposes of hospital cost reporting under this title), divided by the total amount of the hospital's charges during such period.

Insofar as the Secretary determines that data are not available on charity care necessary to calculate the portion of the formula specified in clause (ii)(II), the Secretary shall use data on uncompensated care and may adjust such data so as to be an appropriate proxy for charity care including a downward adjustment to eliminate bad debt data from uncompensated care data. In the absence of the data necessary, with respect to a hospital, for the Secretary to compute the amount described in clause (ii)(II), the amount under such clause shall be deemed to be 1. In the absence of data, with respect to a hospital, necessary to compute the amount described in clause (i)(II), the amount under such clause shall be deemed to be 0.

`(E) TRANSITION FACTOR SPECIFIED-

`(i) IN GENERAL- Subject to clause (ii), the transition factor specified in this subparagraph for an eligible hospital for a payment year is as follows:

`(I) For the first payment year for such hospital, 1.

`(II) For the second payment year for such hospital, 3/4 .

`(III) For the third payment year for such hospital, 1/2 .

`(IV) For the fourth payment year for such hospital, 1/4 .

`(V) For any succeeding payment year for such hospital, 0.

`(ii) PHASE DOWN FOR ELIGIBLE HOSPITALS FIRST ADOPTING EHR AFTER 2013- If the first payment year for an eligible hospital is after 2013, then the transition factor specified in this subparagraph for a payment year for such hospital is the same as the amount specified in clause (i) for such payment year for an eligible hospital for which the first payment year is 2013. If the first payment year for an eligible hospital is after 2015 then the transition factor specified in this subparagraph for such hospital and for such year and any subsequent year shall be 0.

`(F) FORM OF PAYMENT- The payment under this subsection for a payment year may be in the form of a single consolidated payment or in the form of such periodic installments as the Secretary may specify.

`(G) PAYMENT YEAR DEFINED-

`(i) IN GENERAL- For purposes of this subsection, the term `payment year' means a fiscal year beginning with fiscal year 2011.

`(ii) FIRST, SECOND, ETC. PAYMENT YEAR- The term `first payment year' means, with respect to inpatient hospital services furnished by an eligible hospital, the first fiscal year for which an incentive payment is made for such services under this subsection. The terms `second payment year', `third payment year', and `fourth payment year' mean, with respect to an eligible hospital, each successive year immediately following the first payment year for that hospital.

`(3) MEANINGFUL EHR USER-

`(A) IN GENERAL- For purposes of paragraph (1), an eligible hospital shall be treated as a meaningful EHR user for a reporting period for a payment year (or, for purposes of subsection (b)(3)(B)(ix), for a reporting period under such subsection for a fiscal year) if each of the following requirements are met:

`(i) MEANINGFUL USE OF CERTIFIED EHR TECHNOLOGY- The eligible hospital demonstrates to the satisfaction of the Secretary, in accordance with subparagraph (C)(i), that during such period the hospital is using certified EHR technology in a meaningful manner.

`(ii) INFORMATION EXCHANGE- The eligible hospital demonstrates to the satisfaction of the Secretary, in accordance with subparagraph (C)(i), that during such period such certified EHR technology is connected in a manner that provides, in accordance with law and standards applicable to the exchange of information, for the electronic exchange of health information to improve the quality of health care, such as promoting care coordination.

`(iii) REPORTING ON MEASURES USING EHR- Subject to subparagraph (B)(ii) and using such certified EHR technology, the eligible hospital submits information for such period, in a form and manner specified by the Secretary, on such clinical quality measures and such other measures as selected by the Secretary under subparagraph (B)(i).

The Secretary shall seek to improve the use of electronic health records and health care quality over time by requiring more stringent measures of meaningful use selected under this paragraph.

`(B) REPORTING ON MEASURES-

`(i) SELECTION- The Secretary shall select measures for purposes of subparagraph (A)(iii) but only consistent with the following:

`(I) The Secretary shall provide preference to clinical quality measures that have been selected for purposes of applying subsection (b)(3)(B)(viii) or that have been endorsed by the entity with a contract with the Secretary under section 1890(a).

`(II) Prior to any measure (other than a clinical quality measure that has been selected for purposes of applying subsection (b)(3)(B)(viii)) being selected under this subparagraph, the Secretary shall publish in the Federal Register such measure and provide for a period of public comment on such measure.

`(ii) LIMITATIONS- The Secretary may not require the electronic reporting of information on clinical quality measures under subparagraph (A)(iii) unless the Secretary has the capacity to accept the information electronically, which may be on a pilot basis.

`(iii) COORDINATION OF REPORTING OF INFORMATION- In selecting such measures, and in establishing the form and manner for reporting measures under subparagraph (A)(iii), the Secretary shall seek to avoid redundant or duplicative reporting with reporting otherwise required, including reporting under subsection (b)(3)(B)(viii).

`(C) DEMONSTRATION OF MEANINGFUL USE OF CERTIFIED EHR TECHNOLOGY AND INFORMATION EXCHANGE-