[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2662 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2662

               To respond to a Medicare funding warning.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 25, 2008

  Mr. Baucus (for himself and Mr. Gregg) (by request) introduced the 
     following bill; which was referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
               To respond to a Medicare funding warning.

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

SECTION 1. SHORT TITLE; REFERENCES; PURPOSE OF LEGISLATION.

    (a) Short Title.--This Act may be cited as the ``Medicare Funding 
Warning Response Act of 2008''.
    (b) References.--In this Act:
            (1) Except where otherwise specifically provided, 
        references in this Act shall be considered to be made to the 
        Social Security Act, or to a section or other provision 
        thereof.
            (2) The term ``Secretary'' shall be deemed a reference to 
        the Secretary of Health and Human Services.
            (3) The terms ``Medicare'' and ``Medicare program'' mean 
        the program under title XVIII of the Social Security Act (42 
        U.S.C. 1395 et seq.).
            (4) The Medicare Prescription Drug, Improvement, and 
        Modernization Act of 2003 (Public Law 108-173) shall be 
        referred to as the ``MMA''.
            (5) The term ``excess general revenue medicare funding'' 
        has the meaning given such term by section 801(c) of the MMA.
            (6) The term ``Trustees Report'' means the annual report 
        submitted under subsection (b)(2) of sections 1817 and 1841 of 
        the Social Security Act (42 U.S.C. 1395i(b)(2) and 1395t(b)(2), 
        respectively).
    (c) Purpose.--It is the purpose of this Act to respond to the 
medicare funding warning currently in effect under section 801(a)(2) of 
the MMA.

  TITLE I--INTRODUCING PRINCIPLES OF VALUE-BASED HEALTH CARE INTO THE 
                            MEDICARE PROGRAM

SEC. 101. INTRODUCING PRINCIPLES OF VALUE-BASED HEALTH CARE INTO THE 
              MEDICARE PROGRAM.

    (a) Electronic Health Records.--The Secretary shall develop and 
implement a system for encouraging nationwide adoption and use of 
interoperable electronic health records and to make available personal 
health records for Medicare beneficiaries.
    (b) Pricing Transparency.--The Secretary shall make publicly 
available information on prices and payments under the Medicare program 
for treatments (including episodes of care), items, and services to 
assist Medicare beneficiaries in making choices among providers, plans, 
and treatment options.
    (c) Quality Transparency.--The Secretary shall make publicly 
available information on the quality of care provided to Medicare 
beneficiaries to assist them in making choices among providers, plans, 
and treatments. To ensure the continued development and evolution of 
quality measures, the Secretary shall develop and implement a plan for 
ensuring that, by the year 2013, quality measures are available and 
reported with respect to at least 50 percent of the care provided under 
the Medicare program (determined according to the amount of payment 
made under such program for items and services with respect to which 
such measures are available). The Secretary shall report to the 
Committees on Ways and Means and Energy and Commerce in the House of 
Representatives and the Committee on Finance in the Senate annually on 
the progress of the goal specified in the preceding sentence.
    (d) Incentives for Value.--
            (1) Incentives for providers and suppliers.--
                    (A) In general.--The Secretary shall design and 
                implement a system for use in the Medicare program 
                under which a portion of the payments that would 
                otherwise be made under such program to some or all 
                classes of individuals and entities furnishing items or 
                services to beneficiaries of such program would be 
                based on the quality and efficiency of their 
                performance.
                    (B) Implementation.--The Secretary shall first 
                implement such system in settings where measures are 
                well-accepted and already collected, including 
                hospitals, physicians' offices, home health agencies, 
                skilled nursing facilities, and renal dialysis 
                facilities. The initial focus of such efforts shall be 
                on quality, but the Secretary shall add measures of 
                efficiency as they are identified. The system shall 
                also include incentives for reducing unwarranted 
                geographic variations in quality and efficiency.
                    (C) Secretary's authority.--The Secretary may 
                implement the system described in this paragraph 
                without regard to any provision of title XVIII of the 
                Social Security Act that would, in the absence of 
                subparagraphs (A) and (B), apply with respect to 
                payment to an individual or entity furnishing items or 
                services for which payment may be made under the 
                Medicare program.
            (2) Beneficiary incentives.--
                    (A) In general.--The Secretary shall implement 
                incentives for Medicare beneficiaries to use more 
                efficient providers and preventive services known to 
                reduce costs.
                    (B) Access to health savings accounts.--The 
                Secretary shall assure a transition into the Medicare 
                program for individuals who are not yet enrolled in 
                such program who own health savings accounts, and shall 
                provide for the availability of high deductible health 
                plan options in the Medicare program.
    (e) Broadly Transforming the Private Health Care Marketplace.--The 
Secretary shall use and release Medicare data for quality improvement, 
performance measurement, public reporting, and treatment-related 
purposes. In implementing the preceding sentence, the Secretary shall 
apply risk adjustment techniques where appropriate and shall determine 
the circumstances under which it is appropriate to release such data.
    (f) Protecting Individually Identifiable Health Information.--In 
implementing this title, the Secretary shall ensure that individually 
identifiable beneficiary health information is protected (in accordance 
with the regulations adopted under section 264(c) of the Health 
Insurance Portability and Accountability Act of 1996 and such other 
laws and regulations as may apply).
    (g) Regulations.--The Secretary may implement a system described in 
this section by regulation, but only if such regulation is issued after 
public notice and an opportunity for public comment.
    (h) Definitions.--As used in this section:
            (1) The term ``efficiency'' means the delivery of health 
        care in a manner that reduces the costs of providing care for 
        Medicare beneficiaries while maintaining or improving the 
        quality of such care.
            (2) The term ``information on quality of care'' means such 
        measures of--
                    (A) the use of clinical processes and structures 
                known to improve care;
                    (B) health outcomes; and
                    (C) patient perceptions of their care,
        as the Secretary may select with preference given to those 
        measures that have been recognized through a consensus-based 
        process.
    (i) Savings Requirement.--
            (1) In general.--The Secretary may implement the provisions 
        of subsections (a) through (e) of section 101 and section 102 
        for a year only to the extent that the Secretary determines 
        (and the Chief Actuary of the Centers for Medicare & Medicaid 
        Services certifies) that--
                    (A) the total amount of payment made under title 
                XVIII of the Social Security Act over the five and ten 
                year periods that begin with January 1 of such year as 
                a result of the implementation of such subsections (a) 
                through (e) and section 102 is less than the amount 
                that would have been made over such periods if such 
                implementation had not occurred; and
                    (B) the total amount of payment made under each of 
                titles XIX and XXI of such Act over such periods as a 
                result of such implementation is no greater than the 
                amount that would have been made under each such title 
                over such periods if such implementation had not 
                occurred.
            (2) Availability of appropriations.--The Secretary shall 
        carry out the provisions of this section subject to the 
        availability of appropriations and to the extent permitted 
        consistent with paragraph (1).

SEC. 102. RELEASE OF PHYSICIAN PERFORMANCE MEASUREMENTS.

    Section 1848(k) (42 U.S.C. 1395w-4(k)) is amended by adding at the 
end the following new paragraph:
            ``(9) Release of quality measurements.--
                    ``(A) In general.--Notwithstanding section 552a of 
                title 5, United States Code, the Secretary may--
                            ``(i) release to the public physician-
                        specific measurements of the quality or 
                        efficiency of physician performance against a 
                        standard (reflecting measurements that have 
                        been recognized through a consensus-based 
                        process) that has been endorsed by the 
                        Secretary; and
                            ``(ii) release, to an entity that will 
                        generate or calculate such measurements, data 
                        that the entity may use to perform such task.
                    ``(B) Endorsement of standards.--The Secretary may 
                make an endorsement under subparagraph (A) by 
                publication of a notice in the Federal Register.''.

TITLE II--REDUCING THE EXCESSIVE BURDEN THE LIABILITY SYSTEM PLACES ON 
                    THE HEALTH CARE DELIVERY SYSTEM

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Help Efficient, Accessible, Low-
cost, Timely Healthcare (HEALTH) Act of 2008''.

SEC. 202. FINDINGS AND PURPOSE.

    (a) Findings.--
            (1) Effect on health care access and costs.--Congress finds 
        that our current civil justice system is adversely affecting 
        patient access to health care services, better patient care, 
        and cost-efficient health care, in that the health care 
        liability system is a costly and ineffective mechanism for 
        resolving claims of health care liability and compensating 
        injured patients, and is a deterrent to the sharing of 
        information among health care professionals which impedes 
        efforts to improve patient safety and quality of care.
            (2) Effect on interstate commerce.--Congress finds that the 
        health care and insurance industries are industries affecting 
        interstate commerce and the health care liability litigation 
        systems existing throughout the United States are activities 
        that affect interstate commerce by contributing to the high 
        costs of health care and premiums for health care liability 
        insurance purchased by health care system providers.
            (3) Effect on federal spending.--Congress finds that the 
        health care liability litigation systems existing throughout 
        the United States have a significant effect on the amount, 
        distribution, and use of Federal funds because of--
                    (A) the large number of individuals who receive 
                health care benefits under programs operated or 
                financed by the Federal Government;
                    (B) the large number of individuals who benefit 
                because of the exclusion from Federal taxes of the 
                amounts spent to provide them with health insurance 
                benefits; and
                    (C) the large number of health care providers who 
                provide items or services for which the Federal 
                Government makes payments.
    (b) Purpose.--It is the purpose of this title to implement 
reasonable, comprehensive, and effective health care liability reforms 
designed to--
            (1) improve the availability of health care services in 
        cases in which health care liability actions have been shown to 
        be a factor in the decreased availability of services;
            (2) reduce the incidence of ``defensive medicine'' and 
        lower the cost of health care liability insurance, all of which 
        contribute to the escalation of health care costs;
            (3) ensure that persons with meritorious health care injury 
        claims receive fair and adequate compensation, including 
        reasonable noneconomic damages;
            (4) improve the fairness and cost-effectiveness of our 
        current health care liability system to resolve disputes over, 
        and provide compensation for, health care liability by reducing 
        uncertainty in the amount of compensation provided to injured 
        individuals; and
            (5) provide an increased sharing of information in the 
        health care system which will reduce unintended injury and 
        improve patient care.

SEC. 203. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

    The time for the commencement of a health care lawsuit shall be 3 
years after the date of manifestation of injury or 1 year after the 
claimant discovers, or through the use of reasonable diligence should 
have discovered, the injury, whichever occurs first. In no event shall 
the time for commencement of a health care lawsuit exceed 3 years after 
the date of manifestation of injury unless tolled for any of the 
following--
            (1) upon proof of fraud;
            (2) intentional concealment; or
            (3) the presence of a foreign body, which has no 
        therapeutic or diagnostic purpose or effect, in the person of 
        the injured person.
Actions by a minor shall be commenced within 3 years from the date of 
the alleged manifestation of injury except that actions by a minor 
under the full age of 6 years shall be commenced within 3 years of 
manifestation of injury or prior to the minor's 8th birthday, whichever 
provides a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian and a health 
care provider or health care organization have committed fraud or 
collusion in the failure to bring an action on behalf of the injured 
minor.

SEC. 204. COMPENSATING PATIENT INJURY.

    (a) Unlimited Amount of Damages for Actual Economic Losses in 
Health Care Lawsuits.--In any health care lawsuit, nothing in this 
title shall limit a claimant's recovery of the full amount of the 
available economic damages, notwithstanding the limitation in 
subsection (b).
    (b) Additional Noneconomic Damages.--In any health care lawsuit, 
the amount of noneconomic damages, if available, may be as much as 
$250,000, regardless of the number of parties against whom the action 
is brought or the number of separate claims or actions brought with 
respect to the same injury.
    (c) No Discount of Award for Noneconomic Damages.--For purposes of 
applying the limitation in subsection (b), future noneconomic damages 
shall not be discounted to present value. The jury shall not be 
informed about the maximum award for noneconomic damages. An award for 
noneconomic damages in excess of $250,000 shall be reduced either 
before the entry of judgment, or by amendment of the judgment after 
entry of judgment, and such reduction shall be made before accounting 
for any other reduction in damages required by law. If separate awards 
are rendered for past and future noneconomic damages and the combined 
awards exceed $250,000, the future noneconomic damages shall be reduced 
first.
    (d) Fair Share Rule.--In any health care lawsuit, each party shall 
be liable for that party's several share of any damages only and not 
for the share of any other person. Each party shall be liable only for 
the amount of damages allocated to such party in direct proportion to 
such party's percentage of responsibility. Whenever a judgment of 
liability is rendered as to any party, a separate judgment shall be 
rendered against each such party for the amount allocated to such 
party. For purposes of this section, the trier of fact shall determine 
the proportion of responsibility of each party for the claimant's harm.

SEC. 205. MAXIMIZING PATIENT RECOVERY.

    (a) Court Supervision of Share of Damages Actually Paid to 
Claimants.--In any health care lawsuit, the court shall supervise the 
arrangements for payment of damages to protect against conflicts of 
interest that may have the effect of reducing the amount of damages 
awarded that are actually paid to claimants. In particular, in any 
health care lawsuit in which the attorney for a party claims a 
financial stake in the outcome by virtue of a contingent fee, the court 
shall have the power to restrict the payment of a claimant's damage 
recovery to such attorney, and to redirect such damages to the claimant 
based upon the interests of justice and principles of equity. In no 
event shall the total of all contingent fees for representing all 
claimants in a health care lawsuit exceed the following limits:
            (1) 40 percent of the first $50,000 recovered by the 
        claimant(s).
            (2) 33\1/3\ percent of the next $50,000 recovered by the 
        claimant(s).
            (3) 25 percent of the next $500,000 recovered by the 
        claimant(s).
            (4) 15 percent of any amount by which the recovery by the 
        claimant(s) is in excess of $600,000.
    (b) Applicability.--The limitations in this section shall apply 
whether the recovery is by judgment, settlement, mediation, 
arbitration, or any other form of alternative dispute resolution. In a 
health care lawsuit involving a minor or incompetent person, a court 
retains the authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The requirement for court 
supervision in the first two sentences of subsection (a) applies only 
in civil actions.

SEC. 206. ADDITIONAL HEALTH BENEFITS.

    In any health care lawsuit involving injury or wrongful death, any 
party may introduce evidence of collateral source benefits. If a party 
elects to introduce such evidence, any opposing party may introduce 
evidence of any amount paid or contributed or reasonably likely to be 
paid or contributed in the future by or on behalf of the opposing party 
to secure the right to such collateral source benefits. No provider of 
collateral source benefits shall recover any amount against the 
claimant or receive any lien or credit against the claimant's recovery 
or be equitably or legally subrogated to the right of the claimant in a 
health care lawsuit involving injury or wrongful death. This section 
shall apply to any health care lawsuit that is settled as well as a 
health care lawsuit that is resolved by a fact finder. This section 
shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section 
1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act, or to 
section 8131 or section 8132 of title 5, United States Code. This 
section shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or 
section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security 
Act, or to section 8131 or section 8132 of title 5, United States Code, 
or to a collateral source provider that is an employee benefit plan 
under section 3(3) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(3)).

SEC. 207. PUNITIVE DAMAGES.

    (a) In General.--Punitive damages may, if otherwise permitted by 
applicable State or Federal law, be awarded against any person in a 
health care lawsuit only if it is proven by clear and convincing 
evidence that such person acted with malicious intent to injure the 
claimant, or that such person deliberately failed to avoid unnecessary 
injury that such person knew the claimant was substantially certain to 
suffer. In any health care lawsuit where no judgment for compensatory 
damages is rendered against such person, no punitive damages may be 
awarded with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit as 
initially filed. A court may allow a claimant to file an amended 
pleading for punitive damages only upon a motion by the claimant and 
after a finding by the court, upon review of supporting and opposing 
affidavits or after a hearing, after weighing the evidence, that the 
claimant has established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the request of any 
party in a health care lawsuit, the trier of fact shall consider in a 
separate proceeding--
            (1) whether punitive damages are to be awarded and the 
        amount of such award; and
            (2) the amount of punitive damages following a 
        determination of punitive liability.
If a separate proceeding is requested, evidence relevant only to the 
claim for punitive damages, as determined by applicable State law, 
shall be inadmissible in any proceeding to determine whether 
compensatory damages are to be awarded.
    (b) Determining Amount of Punitive Damages.--
            (1) Factors considered.--In determining the amount of 
        punitive damages, if awarded, in a health care lawsuit, the 
        trier of fact shall consider only the following--
                    (A) the severity of the harm caused by the conduct 
                of such party;
                    (B) the duration of the conduct or any concealment 
                of it by such party;
                    (C) the profitability of the conduct to such party;
                    (D) the number of products sold or medical 
                procedures rendered for compensation, as the case may 
                be, by such party, of the kind causing the harm 
                complained of by the claimant;
                    (E) any criminal penalties imposed on such party, 
                as a result of the conduct complained of by the 
                claimant; and
                    (F) the amount of any civil fines assessed against 
                such party as a result of the conduct complained of by 
                the claimant.
            (2) Maximum award.--The amount of punitive damages, if 
        awarded, in a health care lawsuit may be as much as $250,000 or 
        as much as two times the amount of economic damages awarded, 
        whichever is greater. The jury shall not be informed of this 
        limitation.
    (c) No Punitive Damages for Products That Comply With FDA 
Standards.--
            (1) In general.--
                    (A) No punitive damages may be awarded against the 
                manufacturer or distributor of a medical product, or a 
                supplier of any component or raw material of such 
                medical product, based on a claim that such product 
                caused the claimant's harm where--
                            (i)(I) such medical product was subject to 
                        premarket approval, clearance, or licensure by 
                        the Food and Drug Administration with respect 
                        to the safety of the formulation or performance 
                        of the aspect of such medical product which 
                        caused the claimant's harm or the adequacy of 
                        the packaging or labeling of such medical 
                        product; and
                            (II) such medical product was so approved, 
                        cleared, or licensed; or
                            (ii) such medical product is generally 
                        recognized among qualified experts as safe and 
                        effective pursuant to conditions established by 
                        the Food and Drug Administration and applicable 
                        Food and Drug Administration regulations, 
                        including without limitation those related to 
                        packaging and labeling, unless the Food and 
                        Drug Administration has determined that such 
                        medical product was not manufactured or 
                        distributed in substantial compliance with 
                        applicable Food and Drug Administration 
                        statutes and regulations.
                    (B) Rule of construction.--Subparagraph (A) may not 
                be construed as establishing the obligation of the Food 
                and Drug Administration to demonstrate affirmatively 
                that a manufacturer, distributor, or supplier referred 
                to in such subparagraph meets any of the conditions 
                described in such subparagraph.
            (2) Liability of health care providers.--A health care 
        provider who prescribes, or who dispenses pursuant to a 
        prescription, a medical product approved, licensed, or cleared 
        by the Food and Drug Administration shall not be named as a 
        party to a product liability lawsuit involving such product and 
        shall not be liable to a claimant in a class action lawsuit 
        against the manufacturer, distributor, or seller of such 
        product. Nothing in this paragraph prevents a court from 
        consolidating cases involving health care providers and cases 
        involving products liability claims against the manufacturer, 
        distributor, or product seller of such medical product.
            (3) Packaging.--In a health care lawsuit for harm which is 
        alleged to relate to the adequacy of the packaging or labeling 
        of a drug which is required to have tamper-resistant packaging 
        under regulations of the Secretary of Health and Human Services 
        (including labeling regulations related to such packaging), the 
        manufacturer or product seller of the drug shall not be held 
        liable for punitive damages unless such packaging or labeling 
        is found by the trier of fact by clear and convincing evidence 
        to be substantially out of compliance with such regulations.
            (4) Exception.--Paragraph (1) shall not apply in any health 
        care lawsuit in which--
                    (A) a person, before or after premarket approval, 
                clearance, or licensure of such medical product, 
                knowingly misrepresented to or withheld from the Food 
                and Drug Administration information that is required to 
                be submitted under the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 301 et seq.) or section 351 of the 
                Public Health Service Act (42 U.S.C. 262) that is 
                material and is causally related to the harm which the 
                claimant allegedly suffered; or
                    (B) a person made an illegal payment to an official 
                of the Food and Drug Administration for the purpose of 
                either securing or maintaining approval, clearance, or 
                licensure of such medical product.

SEC. 208. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN 
              HEALTH CARE LAWSUITS.

    (a) In General.--In any health care lawsuit, if an award of future 
damages, without reduction to present value, equaling or exceeding 
$50,000 is made against a party with sufficient insurance or other 
assets to fund a periodic payment of such a judgment, the court shall, 
at the request of any party, enter a judgment ordering that the future 
damages be paid by periodic payments. In any health care lawsuit, the 
court may be guided by the Uniform Periodic Payment of Judgments Act 
promulgated by the National Conference of Commissioners on Uniform 
State Laws.
    (b) Applicability.--This section applies to all actions which have 
not been first set for trial or retrial before the effective date of 
this Act.

SEC. 209. DEFINITIONS.

    In this title:
            (1) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system that provides for the resolution of health care lawsuits 
        in a manner other than through a civil action brought in a 
        State or Federal court.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care lawsuit, including a person who asserts or 
        claims a right to legal or equitable contribution, indemnity or 
        subrogation, arising out of a health care liability claim or 
        action, and any person on whose behalf such a claim is asserted 
        or such an action is brought, whether deceased, incompetent, or 
        a minor.
            (3) Collateral source benefits.--The term ``collateral 
        source benefits'' means any amount paid or reasonably likely to 
        be paid in the future to or on behalf of the claimant, or any 
        service, product or other benefit provided or reasonably likely 
        to be provided in the future to or on behalf of the claimant, 
        as a result of the injury or wrongful death, pursuant to--
                    (A) any State or Federal health, sickness, income-
                disability, accident, or workers' compensation law 
                (except the Federal Employees' Compensation Act (5 
                U.S.C. 8101 et seq.));
                    (B) any health, sickness, income-disability, or 
                accident insurance that provides health benefits or 
                income-disability coverage;
                    (C) any contract or agreement of any group, 
                organization, partnership, or corporation to provide, 
                pay for, or reimburse the cost of medical, hospital, 
                dental, or income disability benefits; and
                    (D) any other publicly or privately funded program.
            (4) Compensatory damages.--The term ``compensatory 
        damages'' means objectively verifiable monetary losses incurred 
        as a result of the provision of, use of, or payment for (or 
        failure to provide, use, or pay for) health care services or 
        medical products, such as past and future medical expenses, 
        loss of past and future earnings, cost of obtaining domestic 
        services, loss of employment, and loss of business or 
        employment opportunities, damages for physical and emotional 
        pain, suffering, inconvenience, physical impairment, mental 
        anguish, disfigurement, loss of enjoyment of life, loss of 
        society and companionship, loss of consortium (other than loss 
        of domestic service), hedonic damages, injury to reputation, 
        and all other nonpecuniary losses of any kind or nature. The 
        term ``compensatory damages'' includes economic damages and 
        noneconomic damages, as such terms are defined in this section.
            (5) Contingent fee.--The term ``contingent fee'' includes 
        all compensation to any person or persons which is payable only 
        if a recovery is effected on behalf of one or more claimants.
            (6) Economic damages.--The term ``economic damages'' means 
        objectively verifiable monetary losses incurred as a result of 
        the provision of, use of, or payment for (or failure to 
        provide, use, or pay for) health care services or medical 
        products, such as past and future medical expenses, loss of 
        past and future earnings, cost of obtaining domestic services, 
        loss of employment, and loss of business or employment 
        opportunities.
            (7) Health care lawsuit.--The term ``health care lawsuit'' 
        means any health care liability claim concerning the provision 
        of health care goods or services or any medical product 
        affecting interstate commerce, or any health care liability 
        action concerning the provision of health care goods or 
        services or any medical product affecting interstate commerce, 
        brought in a State or Federal court or pursuant to an 
        alternative dispute resolution system, against a health care 
        provider, a health care organization, or the manufacturer, 
        distributor, supplier, marketer, promoter, or seller of a 
        medical product, regardless of the theory of liability on which 
        the claim is based, or the number of claimants, plaintiffs, 
        defendants, or other parties, or the number of claims or causes 
        of action, in which the claimant alleges a health care 
        liability claim. Such term does not include a claim brought by 
        the United States Government or a relator under the False 
        Claims Act (31 U.S.C. 3729 et seq.) or a claim or action which 
        is based on criminal liability; which seeks civil fines or 
        penalties paid to Federal, State, or local government; or which 
        is grounded in antitrust.
            (8) Health care liability action.--The term ``health care 
        liability action'' means a civil action brought in a State or 
        Federal Court or pursuant to an alternative dispute resolution 
        system, against a health care provider, a health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, regardless 
        of the theory of liability on which the claim is based, or the 
        number of plaintiffs, defendants, or other parties, or the 
        number of causes of action, in which the claimant alleges a 
        health care liability claim.
            (9) Health care liability claim.--The term ``health care 
        liability claim'' means a demand by any person, whether or not 
        pursuant to ADR, against a health care provider, health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, including, 
        but not limited to, third-party claims, cross-claims, counter-
        claims, or contribution claims, which are based upon the 
        provision of, use of, or payment for (or the failure to 
        provide, use, or pay for) health care services or medical 
        products, regardless of the theory of liability on which the 
        claim is based, or the number of plaintiffs, defendants, or 
        other parties, or the number of causes of action.
            (10) Health care organization.--The term ``health care 
        organization'' means any person or entity which is obligated to 
        provide or pay for health benefits under any health plan, 
        including any person or entity acting under a contract or 
        arrangement with a health care organization to provide or 
        administer any health benefit.
            (11) Health care provider.--The term ``health care 
        provider'' means any person or entity required by State or 
        Federal laws or regulations to be licensed, registered, or 
        certified to provide health care services, and being either so 
        licensed, registered, or certified, or exempted from such 
        requirement by other statute or regulation.
            (12) Health care goods or services.--The term ``health care 
        goods or services'' means any goods or services provided by a 
        health care organization, provider, or by any individual 
        working under the supervision of a health care provider, that 
        relates to the diagnosis, prevention, or treatment of any human 
        disease or impairment, or the assessment or care of the health 
        of human beings.
            (13) Malicious intent to injure.--The term ``malicious 
        intent to injure'' means intentionally causing or attempting to 
        cause physical injury other than providing health care goods or 
        services.
            (14) Medical product.--The term ``medical product'' means a 
        drug, device, or biological product intended for humans, and 
        the terms ``drug'', ``device'', and ``biological product'' have 
        the meanings given such terms in sections 201(g)(1) and 201(h) 
        of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321) and 
        section 351(a) of the Public Health Service Act (42 U.S.C. 
        262(a)), respectively, including any component or raw material 
        used therein, but excluding health care services.
            (15) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages for physical and emotional pain, suffering, 
        inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), hedonic damages, injury to reputation, and all other 
        nonpecuniary losses of any kind or nature.
            (16) Punitive damages.--The term ``punitive damages'' means 
        damages awarded, for the purpose of punishment or deterrence, 
        and not solely for compensatory purposes, against a health care 
        provider, health care organization, or a manufacturer, 
        distributor, or supplier of a medical product. Punitive damages 
        are neither economic nor noneconomic damages.
            (17) Recovery.--The term ``recovery'' means the net sum 
        recovered after deducting any disbursements or costs incurred 
        in connection with prosecution or settlement of the claim, 
        including all costs paid or advanced by any person. Costs of 
        health care incurred by the plaintiff and the attorneys' office 
        overhead costs or charges for legal services are not deductible 
        disbursements or costs for such purpose.
            (18) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the Northern 
        Mariana Islands, the Trust Territory of the Pacific Islands, 
        and any other territory or possession of the United States, or 
        any political subdivision thereof.

SEC. 210. EFFECT ON OTHER LAWS.

    (a) Vaccine Injury.--
            (1) To the extent that title XXI of the Public Health 
        Service Act establishes a Federal rule of law applicable to a 
        civil action brought for a vaccine-related injury or death--
                    (A) this title does not affect the application of 
                the rule of law to such an action; and
                    (B) any rule of law prescribed by this title in 
                conflict with a rule of law of such title XXI shall not 
                apply to such action.
            (2) If there is an aspect of a civil action brought for a 
        vaccine-related injury or death to which a Federal rule of law 
        under title XXI of the Public Health Service Act does not 
        apply, then this title or otherwise applicable law (as 
        determined under this title) will apply to such aspect of such 
        action.
    (b) Other Federal Law.--Except as provided in this section, nothing 
in this title shall be deemed to affect any defense available to a 
defendant in a health care lawsuit or action under any other provision 
of Federal law.

SEC. 211. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

    (a) Health Care Lawsuits.--The provisions governing health care 
lawsuits set forth in this title preempt, subject to subsections (b) 
and (c), State law to the extent that State law prevents the 
application of any provisions of law established by or under this 
title. The provisions governing health care lawsuits set forth in this 
title supersede chapter 171 of title 28, United States Code, to the 
extent that such chapter--
            (1) provides or allows for a greater amount of damages or 
        contingent fees, or a longer period in which a health care 
        lawsuit may be commenced, than provided in this title;
            (2) precludes or reduces the applicability or scope of 
        periodic payment of future damages as provided in this title; 
        or
            (3) through application of State law, conflicts with 
        provisions of this title concerning joint liability, collateral 
        source benefits, subrogation, or liens.
    (b) Protection of States' Rights and Other Laws.--
            (1) Any issue that is not governed by any provision of law 
        established by or under this title (including State standards 
        of negligence) shall be governed by otherwise applicable State 
        or Federal law.
            (2) This title shall not preempt or supersede any State or 
        Federal law that imposes greater procedural or substantive 
        protections for health care providers and health care 
        organizations from liability, loss, or damages than those 
        provided by this title or create a cause of action.
    (c) State Flexibility.--No provision of this title shall be 
construed to preempt--
            (1) any State law (whether effective before, on, or after 
        the date of the enactment of this title) that specifies a 
        particular monetary amount of compensatory or punitive damages 
        (or the total amount of damages) that may be awarded in a 
        health care lawsuit, regardless of whether such monetary amount 
        is greater or lesser than is provided for under this title, 
        notwithstanding section 204(a); or
            (2) any defense available to a party in a health care 
        lawsuit under any other provision of State or Federal law.

SEC. 212. APPLICABILITY; EFFECTIVE DATE.

    This title shall apply to any health care lawsuit brought in a 
Federal or State court, or subject to an alternative dispute resolution 
system, that is initiated on or after the date of the enactment of this 
title, except that any health care lawsuit arising from an injury 
occurring prior to the date of the enactment of this title shall be 
governed by the applicable statute of limitations provisions in effect 
at the time the injury occurred.

      TITLE III--INCREASING HIGH-INCOME BENEFICIARY AWARENESS AND 
                  RESPONSIBILITY FOR HEALTH CARE COSTS

SEC. 301. INCOME-RELATED REDUCTION IN PART D PREMIUM SUBSIDY.

    (a) Income-Related Reduction in Part D Premium Subsidy.--
            (1) In general.--Section 1860D-13(a) (42 U.S.C. 1395w-
        113(a)) is amended by adding at the end the following new 
        paragraph:
            ``(7) Reduction in premium subsidy based on income.--
                    ``(A) In general.--In the case of an individual 
                whose modified adjusted gross income exceeds the 
                threshold amount applicable under subparagraph (B) for 
                the calendar year, the monthly amount of the premium 
                subsidy applicable to the premium under this section 
                for a month after December 2008 shall be reduced (and 
                the monthly beneficiary premium shall be increased) by 
                the monthly adjustment amount specified in subparagraph 
                (C).
                    ``(B) Threshold amount.--For purposes of this 
                paragraph, the threshold amount is--
                            ``(i) except as provided in clause (ii), 
                        $82,000; and
                            ``(ii) in the case of a joint return, twice 
                        the amount applicable under clause (i) for the 
                        calendar year.
                    ``(C) Monthly adjustment amount.--
                            ``(i) In general.--The monthly adjustment 
                        amount specified in this subparagraph for an 
                        individual for a month in a year is equal to 
                        the product of--
                                    ``(I) the quotient obtained by 
                                dividing--
                                            ``(aa) the applicable 
                                        percentage specified in the 
                                        table in clause (ii) for the 
                                        individual for the calendar 
                                        year reduced by 25.5 percent; 
                                        by
                                            ``(bb) 25.5 percent; and
                                    ``(II) the base beneficiary premium 
                                (as computed under paragraph (2)).
                            ``(ii) Applicable percentage.--
                                    ``(I) In general.--

                                                         The applicable
``If the modified adjusted gross                         percentage is:
        income is:
        More than $82,000 but not more than $102,000.       35 percent 
        More than $102,000 but not more than $153,000       50 percent 
        More than $153,000 but not more than $205,000       65 percent 
        More than $205,000...........................       80 percent.
                                    ``(II) Joint returns.--In the case 
                                of a joint return, subclause (I) shall 
                                be applied by substituting dollar 
                                amounts which are twice the dollar 
                                amounts otherwise applicable under 
                                subclause (I) for the calendar year.
                                    ``(III) Married individuals filing 
                                separate returns.--In the case of an 
                                individual who--
                                            ``(aa) is married as of the 
                                        close of the taxable year 
                                        (within the meaning of section 
                                        7703 of the Internal Revenue 
                                        Code of 1986) but does not file 
                                        a joint return for such year, 
                                        and
                                            ``(bb) does not live apart 
                                        from such individual's spouse 
                                        at all times during the taxable 
                                        year,
                                subclause (I) shall be applied by 
                                reducing each of the dollar amounts 
                                otherwise applicable under such 
                                subclause for the calendar year by the 
                                threshold amount for such year 
                                applicable to an unmarried individual.
                    ``(D) Determination by commissioner of social 
                security.--The Commissioner of Social Security shall 
                have the authority to make initial and reconsideration 
                determinations necessary to carry out the income-
                related reduction in premium subsidy under this 
                paragraph.
                    ``(E) Modified adjusted gross income.--For purposes 
                of this paragraph, the term `modified adjusted gross 
                income' has the meaning given such term in subparagraph 
                (A) of section 1839(i)(4), determined for the taxable 
                year applicable under subparagraphs (B) and (C) of such 
                section.
                    ``(F) Joint return defined.--For purposes of this 
                paragraph, the term `joint return' has the meaning 
                given to such term by section 7701(a)(38) of the 
                Internal Revenue Code of 1986.
                    ``(G) Procedures to assure correct income-related 
                reduction in premium subsidy.--
                            ``(i) Disclosure of base beneficiary 
                        premium.--Not later than September 15 of each 
                        year beginning with 2008, the Secretary shall 
                        disclose to the Commissioner of Social Security 
                        the amount of the base beneficiary premium (as 
                        computed under paragraph (2)) for the purpose 
                        of carrying out the income-related reduction in 
                        premium subsidy under this paragraph with 
                        respect to the following year.
                            ``(ii) Additional disclosure.--Not later 
                        than October 15 of each year beginning with 
                        2008, the Secretary shall disclose to the 
                        Commissioner of Social Security the following 
                        information for the purpose of carrying out the 
                        income-related reduction in premium subsidy 
                        under this paragraph with respect to the 
                        following year:
                                    ``(I) The monthly adjustment amount 
                                specified in subparagraph (C).
                                    ``(II) Any other information the 
                                Commissioner of Social Security 
                                determines necessary to carry out the 
                                income-related reduction in premium 
                                subsidy under this paragraph.
                    ``(H) Rule of construction.--The formula used to 
                determine the monthly adjustment amount specified under 
                subparagraph (C) shall only be used for the purpose of 
                determining such monthly adjustment amount under such 
                subparagraph.''.
            (2) Collection of monthly adjustment amount.--Section 
        1860D-13(c) (42 U.S.C. 1395w-113(c)) is amended--
                    (A) in paragraph (1), by striking ``(2) and (3)'' 
                and inserting ``(2), (3), and (4)''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Collection of monthly adjustment amount.--
                    ``(A) In general.--Notwithstanding any provision of 
                this subsection or section 1854(d)(2), subject to 
                subparagraph (B), the amount of the income-related 
                reduction in premium subsidy for an individual for a 
                month (as determined under subsection (a)(7)) shall be 
                paid through withholding from benefit payments in the 
                manner provided under section 1840.
                    ``(B) Agreements.--In the case where the monthly 
                benefit payments of an individual that are withheld 
                under subparagraph (A) are insufficient to pay the 
                amount described in such subparagraph, the Commissioner 
                of Social Security shall enter into agreements with the 
                Secretary, the Director of the Office of Personnel 
                Management, and the Railroad Retirement Board as 
                necessary in order to allow other agencies to collect 
                the amount described in subparagraph (A) that was not 
                withheld under such subparagraph.''.
    (b) Conforming Amendments.--
            (1) Medicare.--Part D of title XVIII (42 U.S.C. 1395w-101 
        et seq.) is amended--
                    (A) in section 1860D-13(a)(1)--
                            (i) by redesignating subparagraph (F) as 
                        subparagraph (G);
                            (ii) in subparagraph (G), as redesignated 
                        by subparagraph (A), by striking ``(D) and 
                        (E)'' and inserting ``(D), (E), and (F)''; and
                            (iii) by inserting after subparagraph (E) 
                        the following new subparagraph:
                    ``(F) Increase based on income.--The monthly 
                beneficiary premium shall be increased pursuant to 
                paragraph (7).''; and
                    (B) in section 1860D-15(a)(1)(B), by striking 
                ``paragraph (1)(B)'' and inserting ``paragraphs (1)(B) 
                and (1)(F)''.
            (2) Internal revenue code.--Section 6103(l)(20) of the 
        Internal Revenue Code of 1986 (relating to disclosure of return 
        information to carry out Medicare part B premium subsidy 
        adjustment) is amended--
                    (A) in the heading, by striking ``part b premium 
                subsidy adjustment'' and inserting ``parts b and d 
                premium subsidy adjustments'';
                    (B) in subparagraph (A)--
                            (i) in the matter preceding clause (i), by 
                        inserting ``or 1860D-13(a)(7)'' after 
                        ``1839(i)''; and
                            (ii) in clause (vii), by inserting after 
                        ``subsection (i) of such section'' the 
                        following: ``or under section 1860D-13(a)(7) of 
                        such Act''; and
                    (C) in subparagraph (B)--
                            (i) by inserting ``or such section 1860D-
                        13(a)(7)'' before the period at the end;
                            (ii) as amended by clause (i), by adding at 
                        the end the following new sentence: ``Such 
                        return information may be disclosed to officers 
                        and employees of the Departments of Health and 
                        Human Services and Justice, to the extent 
                        necessary, and solely for their use, in any 
                        administrative or judicial proceeding ensuing 
                        from an adjustment to any such premium.''; and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(C) Timing of disclosure.--Return information 
                shall be disclosed to officers, employees, and 
                contractors of the Social Security Administration under 
                subparagraph (A):
                            ``(i) for taxpayers currently entitled to 
                        benefits under title II of the Social Security 
                        Act, or as qualified railroad retirement 
                        beneficiaries within the meaning of section 
                        7(d) of the Railroad Retirement Act of 1974, 
                        within 4 months preceding the month in which 
                        the taxpayer first becomes entitled to benefits 
                        under part A or is eligible to enroll in part B 
                        or part D of title XVIII of the Social Security 
                        Act; and
                            ``(ii) for taxpayers not currently 
                        receiving benefits under title II of the Social 
                        Security Act, or as qualified railroad 
                        retirement beneficiaries within the meaning of 
                        section 7(d) of the Railroad Retirement Act of 
                        1974, or who have participated in Medicare 
                        qualified government employment as defined in 
                        section 210(p) of the Social Security Act, 
                        after the taxpayer applies for a benefit under 
                        part A or part B and is eligible to enroll in 
                        part D of title XVIII of the Social Security 
                        Act.''.
    (c) Implementation.--Notwithstanding any other provision of law, 
the Secretary, in consultation with the Commissioner of Social Security 
may implement this section, and the amendments made by this section, by 
program instruction or otherwise.
                                 <all>