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Establish a commissioned Regular Corps and a Ready Reserve Corps for service in time of a national emergency.

Support comparative effectiveness research by establishing a non-profit Patient-Centered Outcomes Research Institute.

Authorize the Food and Drug Administration to approve generic versions of biologic drugs and grant biologics manufacturers 12 years of exclusive use before generics can be developed.

Require the Secretary of HHS to issue regulations to establish a process for public notice and comment for section 1115 waivers in Medicaid and CHIP.

Increase the Medicaid drug rebate percentage for brand name drugs to 23.1% (except the rebate for clotting factors and drugs approved exclusively for pediatric use increases to 17.1%); increase the Medicaid rebate for non-innovator, multiple source drugs to 13% of average manufacturer price; and extend the drug rebate to Medicaid managed care plans.

Creates a new option for states to provide CHIP coverage to children of state employees eligible for health benefits if certain conditions are met.

Creates a state option to provide Medicaid coverage for family planning services to certain low-income individuals through a Medicaid State Plan Amendment up to the highest level of eligibility for pregnant women.

Creates a state option to cover childless adults though a Medicaid State Plan Amendment.

Ban new physician-owned hospitals in Medicare, requiring hospitals to have a provider agreement in effect by December 31; limit the growth of certain grandfathered physician-owned hospitals.

Initiate $157 billion in cuts over 10 years to Medicare and Medicaid payments for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers, and adjust for productivity.