[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4872 Engrossed in House (EH)]
111th CONGRESS
2d Session
H. R. 4872
_______________________________________________________________________
AN ACT
To provide for reconciliation pursuant to Title II of the concurrent
resolution on the budget for fiscal year 2010 (S. Con. Res. 13).
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Health Care and
Education Reconciliation Act of 2010''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--COVERAGE, MEDICARE, MEDICAID, AND REVENUES
Subtitle A--Coverage
Sec. 1001. Tax credits.
Sec. 1002. Individual responsibility.
Sec. 1003. Employer responsibility.
Sec. 1004. Income definitions.
Sec. 1005. Implementation funding.
Subtitle B--Medicare
Sec. 1101. Closing the medicare prescription drug ``donut hole''.
Sec. 1102. Medicare Advantage payments.
Sec. 1103. Savings from limits on MA plan administrative costs.
Sec. 1104. Disproportionate share hospital (DSH) payments.
Sec. 1105. Market basket updates.
Sec. 1106. Physician ownership-referral.
Sec. 1107. Payment for imaging services.
Sec. 1108. PE GPCI adjustment for 2010.
Sec. 1109. Payment for qualifying hospitals.
Subtitle C--Medicaid
Sec. 1201. Federal funding for States.
Sec. 1202. Payments to primary care physicians.
Sec. 1203. Disproportionate share hospital payments.
Sec. 1204. Funding for the territories.
Sec. 1205. Delay in Community First Choice option.
Sec. 1206. Drug rebates for new formulations of existing drugs.
Subtitle D--Reducing Fraud, Waste, and Abuse
Sec. 1301. Community mental health centers.
Sec. 1302. Medicare prepayment medical review limitations.
Sec. 1303. Funding to fight fraud, waste, and abuse.
Sec. 1304. 90-day period of enhanced oversight for initial claims of
DME suppliers.
Subtitle E--Provisions Relating to Revenue
Sec. 1401. High-cost plan excise tax.
Sec. 1402. Unearned income Medicare contribution.
Sec. 1403. Delay of limitation on health flexible spending arrangements
under cafeteria plans.
Sec. 1404. Brand name pharmaceuticals.
Sec. 1405. Excise tax on medical device manufacturers.
Sec. 1406. Health insurance providers.
Sec. 1407. Delay of elimination of deduction for expenses allocable to
medicare part D subsidy.
Sec. 1408. Elimination of unintended application of cellulosic biofuel
producer credit.
Sec. 1409. Codification of economic substance doctrine and penalties.
Sec. 1410. Time for payment of corporate estimated taxes.
Subtitle F--Other Provisions
Sec. 1501. Community college and career training grant program.
TITLE II--EDUCATION AND HEALTH
Subtitle A--Education
Sec. 2001. Short title; references.
Part I--Investing in Students and Families
Sec. 2101. Federal Pell Grants.
Sec. 2102. College access challenge grant program.
Sec. 2103. Investment in historically black colleges and universities
and minority-serving institutions.
Part II--Student Loan Reform
Sec. 2201. Termination of Federal Family Education Loan appropriations.
Sec. 2202. Termination of Federal loan insurance program.
Sec. 2203. Termination of applicable interest rates.
Sec. 2204. Termination of Federal payments to reduce student interest
costs.
Sec. 2205. Termination of FFEL PLUS Loans.
Sec. 2206. Federal Consolidation Loans.
Sec. 2207. Termination of Unsubsidized Stafford Loans for middle-income
borrowers.
Sec. 2208. Termination of special allowances.
Sec. 2209. Origination of Direct Loans at institutions outside the
United States.
Sec. 2210. Conforming amendments.
Sec. 2211. Terms and conditions of loans.
Sec. 2212. Contracts; mandatory funds.
Sec. 2213. Income-based repayment.
Subtitle B--Health
Sec. 2301. Insurance reforms.
Sec. 2302. Drugs purchased by covered entities.
Sec. 2303. Community health centers.
TITLE I--COVERAGE, MEDICARE, MEDICAID, AND REVENUES
Subtitle A--Coverage
SEC. 1001. TAX CREDITS.
(a) Premium Tax Credits.--Section 36B of the Internal Revenue Code
of 1986, as added by section 1401 of the Patient Protection and
Affordable Care Act and amended by section 10105 of such Act, is
amended--
(1) in subsection (b)(3)(A)--
(A) in clause (i), by striking ``with respect to
any taxpayer'' and all that follows up to the end
period and inserting: ``for any taxable year shall be
the percentage such that the applicable percentage for
any taxpayer whose household income is within an income
tier specified in the following table shall increase,
on a sliding scale in a linear manner, from the initial
premium percentage to the final premium percentage
specified in such table for such income tier:
``In the case of household
income (expressed as a
percent of poverty line) The initial premium The final premium
within the following income percentage is-- percentage is--
tier:
Up to 133% 2.0% 2.0%
133% up to 150% 3.0% 4.0%
150% up to 200% 4.0% 6.3%
200% up to 250% 6.3% 8.05%
250% up to 300% 8.05% 9.5%
300% up to 400% 9.5% 9.5%''; and
(B) by striking clauses (ii) and (iii), and
inserting the following:
``(ii) Indexing.--
``(I) In general.--Subject to
subclause (II), in the case of taxable
years beginning in any calendar year
after 2014, the initial and final
applicable percentages under clause (i)
(as in effect for the preceding
calendar year after application of this
clause) shall be adjusted to reflect
the excess of the rate of premium
growth for the preceding calendar year
over the rate of income growth for the
preceding calendar year.
``(II) Additional adjustment.--
Except as provided in subclause (III),
in the case of any calendar year after
2018, the percentages described in
subclause (I) shall, in addition to the
adjustment under subclause (I), be
adjusted to reflect the excess (if any)
of the rate of premium growth estimated
under subclause (I) for the preceding
calendar year over the rate of growth
in the consumer price index for the
preceding calendar year.
``(III) Failsafe.--Subclause (II)
shall apply for any calendar year only
if the aggregate amount of premium tax
credits under this section and cost-
sharing reductions under section 1402
of the Patient Protection and
Affordable Care Act for the preceding
calendar year exceeds an amount equal
to 0.504 percent of the gross domestic
product for the preceding calendar
year.''; and
(2) in subsection (c)(2)(C)--
(A) by striking ``9.8 percent'' in clauses (i)(II)
and (iv) and inserting ``9.5 percent''; and
(B) by striking ``(b)(3)(A)(iii)'' in clause (iv)
and inserting ``(b)(3)(A)(ii)''.
(b) Cost Sharing.--Section 1402(c) of the Patient Protection and
Affordable Care Act is amended--
(1) in paragraph (1)(B)(i)--
(A) in subclause (I), by striking ``90'' and
inserting ``94'';
(B) in subclause (II)--
(i) by striking ``80'' and inserting
``87''; and
(ii) by striking ``and''; and
(C) by striking subclause (III) and inserting the
following:
``(III) 73 percent in the case of
an eligible insured whose household
income is more than 200 percent but not
more than 250 percent of the poverty
line for a family of the size involved;
and
``(IV) 70 percent in the case of an
eligible insured whose household income
is more than 250 percent but not more
than 400 percent of the poverty line
for a family of the size involved.'';
and
(2) in paragraph (2)--
(A) in subparagraph (A)--
(i) by striking ``90'' and inserting
``94''; and
(ii) by striking ``and'';
(B) in subparagraph (B)--
(i) by striking ``80'' and inserting
``87''; and
(ii) by striking the period and inserting
``; and''; and
(C) by inserting after subparagraph (B) the
following new subparagraph:
``(C) in the case of an eligible insured whose
household income is more than 200 percent but not more
than 250 percent of the poverty line for a family of
the size involved, increase the plan's share of the
total allowed costs of benefits provided under the plan
to 73 percent of such costs.''.
SEC. 1002. INDIVIDUAL RESPONSIBILITY.
(a) Amounts.--Section 5000A(c) of the Internal Revenue Code of
1986, as added by section 1501(b) of the Patient Protection and
Affordable Care Act and amended by section 10106 of such Act, is
amended--
(1) in paragraph (2)(B)--
(A) in the matter preceding clause (i), by--
(i) inserting ``the excess of'' before
``the taxpayer's household income''; and
(ii) inserting ``for the taxable year over
the amount of gross income specified in section
6012(a)(1) with respect to the taxpayer''
before ``for the taxable year'';
(B) in clause (i), by striking ``0.5'' and
inserting ``1.0'';
(C) in clause (ii), by striking ``1.0'' and
inserting ``2.0''; and
(D) in clause (iii), by striking ``2.0'' and
inserting ``2.5''; and
(2) in paragraph (3)--
(A) in subparagraph (A), by striking ``$750'' and
inserting ``$695'';
(B) in subparagraph (B), by striking ``$495'' and
inserting ``$325''; and
(C) in subparagraph (D)--
(i) in the matter preceding clause (i), by
striking ``$750'' and inserting ``$695''; and
(ii) in clause (i), by striking ``$750''
and inserting ``$695''.
(b) Threshold.--Section 5000A of such Code, as so added and
amended, is amended--
(1) by striking subsection (c)(4)(D); and
(2) in subsection (e)(2)--
(A) by striking ``under 100 percent of poverty
line'' and inserting ``below filing threshold''; and
(B) by striking all that follows ``less than'' and
inserting ``the amount of gross income specified in
section 6012(a)(1) with respect to the taxpayer.''.
SEC. 1003. EMPLOYER RESPONSIBILITY.
(a) Payment Calculation.--Subparagraph (D) of subsection (d)(2) of
section 4980H of the Internal Revenue Code of 1986, as added by section
1513 of the Patient Protection and Affordable Care Act and amended by
section 10106 of such Act, is amended to read as follows:
``(D) Application of employer size to assessable
penalties.--
``(i) In general.--The number of
individuals employed by an applicable large
employer as full-time employees during any
month shall be reduced by 30 solely for
purposes of calculating--
``(I) the assessable payment under
subsection (a), or
``(II) the overall limitation under
subsection (b)(2).
``(ii) Aggregation.--In the case of persons
treated as 1 employer under subparagraph
(C)(i), only 1 reduction under subclause (I) or
(II) shall be allowed with respect to such
persons and such reduction shall be allocated
among such persons ratably on the basis of the
number of full-time employees employed by each
such person.''.
(b) Applicable Payment Amount.--Section 4980H of such Code, as so
added and amended, is amended--
(1) in the flush text following subsection (c)(1)(B), by
striking ``400 percent of the applicable payment amount'' and
inserting ``an amount equal to \1/12\ of $3,000'';
(2) in subsection (d)(1), by striking ``$750'' and
inserting ``$2,000''; and
(3) in subsection (d)(5)(A), in the matter preceding clause
(i), by striking ``subsection (b)(2) and (d)(1)'' and inserting
``subsection (b) and paragraph (1)''.
(c) Counting Part-time Workers in Setting the Threshold for
Employer Responsibility.--Section 4980H(d)(2) of such Code, as so added
and amended and as amended by subsection (a), is amended by adding at
the end the following new subparagraph:
``(E) Full-time equivalents treated as full-time
employees.--Solely for purposes of determining whether
an employer is an applicable large employer under this
paragraph, an employer shall, in addition to the number
of full-time employees for any month otherwise
determined, include for such month a number of full-
time employees determined by dividing the aggregate
number of hours of service of employees who are not
full-time employees for the month by 120.''.
(d) Eliminating Waiting Period Assessment.--Section 4980H of such
Code, as so added and amended and as amended by the preceding
subsections, is amended by striking subsection (b) and redesignating
subsections (c), (d), and (e) as subsections (b), (c), and (d),
respectively.
SEC. 1004. INCOME DEFINITIONS.
(a) Modified Adjusted Gross Income.--
(1) In general.--The following provisions of the Internal
Revenue Code of 1986 are each amended by striking ``modified
gross'' each place it appears and inserting ``modified adjusted
gross'':
(A) Clauses (i) and (ii) of section 36B(d)(2)(A),
as added by section 1401 of the Patient Protection and
Affordable Care Act.
(B) Section 6103(l)(21)(A)(iv), as added by section
1414 of such Act.
(C) Clauses (i) and (ii) of section 5000A(c)(4), as
added by section 1501(b) of such Act.
(2) Definition.--
(A) Section 36B(d)(2)(B) of such Code, as so added,
is amended to read as follows:
``(B) Modified adjusted gross income.--The term
`modified adjusted gross income' means adjusted gross
income increased by--
``(i) any amount excluded from gross income
under section 911, and
``(ii) any amount of interest received or
accrued by the taxpayer during the taxable year
which is exempt from tax.''.
(B) Section 5000A(c)(4)(C) of such Code, as so
added, is amended to read as follows:
``(C) Modified adjusted gross income.--The term
`modified adjusted gross income' means adjusted gross
income increased by--
``(i) any amount excluded from gross income
under section 911, and
``(ii) any amount of interest received or
accrued by the taxpayer during the taxable year
which is exempt from tax.''.
(b) Modified Adjusted Gross Income Definition.--
(1) Medicaid.--Section 1902 of the Social Security Act (42
U.S.C. 1396a) is amended by striking ``modified gross income''
each place it appears in the text and headings of the following
provisions and inserting ``modified adjusted gross income'':
(A) Paragraph (14) of subsection (e), as added by
section 2002(a) of the Patient Protection and
Affordable Care Act.
(B) Subsection (gg)(4)(A), as added by section
2001(b) of such Act.
(2) Chip.--
(A) State plan requirements.--Section
2102(b)(1)(B)(v) of the Social Security Act (42 U.S.C.
1397bb(b)(1)(B)(v)), as added by section 2101(d)(1) of
the Patient Protection and Affordable Care Act, is
amended by striking ``modified gross income'' and
inserting ``modified adjusted gross income''.
(B) Plan administration.--Section 2107(e)(1)(E) of
the Social Security Act (42 U.S.C. 1397gg(e)(1)(E)), as
added by section 2101(d)(2) of the Patient Protection
and Affordable Care Act, is amended by striking
``modified gross income'' and inserting ``modified
adjusted gross income''.
(c) No Excess Payments.--Section 36B(f) of the Internal Revenue
Code of 1986, as added by section 1401(a) of the Patient Protection and
Affordable Care Act, is amended by adding at the end the following new
paragraph:
``(3) Information requirement.--Each Exchange (or any
person carrying out 1 or more responsibilities of an Exchange
under section 1311(f)(3) or 1321(c) of the Patient Protection
and Affordable Care Act) shall provide the following
information to the Secretary and to the taxpayer with respect
to any health plan provided through the Exchange:
``(A) The level of coverage described in section
1302(d) of the Patient Protection and Affordable Care
Act and the period such coverage was in effect.
``(B) The total premium for the coverage without
regard to the credit under this section or cost-sharing
reductions under section 1402 of such Act.
``(C) The aggregate amount of any advance payment
of such credit or reductions under section 1412 of such
Act.
``(D) The name, address, and TIN of the primary
insured and the name and TIN of each other individual
obtaining coverage under the policy.
``(E) Any information provided to the Exchange,
including any change of circumstances, necessary to
determine eligibility for, and the amount of, such
credit.
``(F) Information necessary to determine whether a
taxpayer has received excess advance payments.''.
(d) Adult Dependents.--
(1) Exclusion of amounts expended for medical care.--The
first sentence of section 105(b) of the Internal Revenue Code
of 1986 (relating to amounts expended for medical care) is
amended--
(A) by striking ``and his dependents'' and
inserting ``his dependents''; and
(B) by inserting before the period the following:
``, and any child (as defined in section 152(f)(1)) of
the taxpayer who as of the end of the taxable year has
not attained age 27''.
(2) Self-employed health insurance deduction.--Section
162(l)(1) of such Code is amended to read as follows:
``(1) Allowance of deduction.--In the case of a taxpayer
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to the amount paid during the taxable year for
insurance which constitutes medical care for--
``(A) the taxpayer,
``(B) the taxpayer's spouse,
``(C) the taxpayer's dependents, and
``(D) any child (as defined in section 152(f)(1))
of the taxpayer who as of the end of the taxable year
has not attained age 27.''.
(3) Coverage under self-employed deduction.--Section
162(l)(2)(B) of such Code is amended by inserting ``, or any
dependent, or individual described in subparagraph (D) of
paragraph (1) with respect to,'' after ``spouse of''.
(4) Sick and accident benefits provided to members of a
voluntary employees' beneficiary association and their
dependents.--Section 501(c)(9) of such Code is amended by
adding at the end the following new sentence: ``For purposes of
providing for the payment of sick and accident benefits to
members of such an association and their dependents, the term
`dependent' shall include any individual who is a child (as
defined in section 152(f)(1)) of a member who as of the end of
the calendar year has not attained age 27.''.
(5) Medical and other benefits for retired employees.--
Section 401(h) of such Code is amended by adding at the end the
following: ``For purposes of this subsection, the term
`dependent' shall include any individual who is a child (as
defined in section 152(f)(1)) of a retired employee who as of
the end of the calendar year has not attained age 27.''.
(e) Five Percent Income Disregard for Certain Individuals.--Section
1902(e)(14) of the Social Security Act (42 U.S.C. 1396a(e)(14)), as
amended by subsection (b)(1), is further amended--
(1) in subparagraph (B), by striking ``No type'' and
inserting ``Subject to subparagraph (I), no type''; and
(2) by adding at the end the following new subparagraph:
``(I) Treatment of portion of modified adjusted
gross income.--For purposes of determining the income
eligibility of an individual for medical assistance
whose eligibility is determined based on the
application of modified adjusted gross income under
subparagraph (A), the State shall--
``(i) determine the dollar equivalent of
the difference between the upper income limit
on eligibility for such an individual
(expressed as a percentage of the poverty line)
and such upper income limit increased by 5
percentage points; and
``(ii) notwithstanding the requirement in
subparagraph (A) with respect to use of
modified adjusted gross income, utilize as the
applicable income of such individual, in
determining such income eligibility, an amount
equal to the modified adjusted gross income
applicable to such individual reduced by such
dollar equivalent amount.''.
SEC. 1005. IMPLEMENTATION FUNDING.
(a) In General.--There is hereby established a Health Insurance
Reform Implementation Fund (referred to in this section as the
``Fund'') within the Department of Health and Human Services to carry
out the Patient Protection and Affordable Care Act and this Act (and
the amendments made by such Acts).
(b) Funding.--There is appropriated to the Fund, out of any funds
in the Treasury not otherwise appropriated, $1,000,000,000 for Federal
administrative expenses to carry out such Act (and the amendments made
by such Acts).
Subtitle B--Medicare
SEC. 1101. CLOSING THE MEDICARE PRESCRIPTION DRUG ``DONUT HOLE''.
(a) Coverage Gap Rebate for 2010.--
(1) In general.--Section 1860D-42 of the Social Security
Act (42 U.S.C. 1395w-152) is amended by adding at the end the
following new subsection:
``(c) Coverage Gap Rebate for 2010.--
``(1) In general.--In the case of an individual described
in subparagraphs (A) through (D) of section 1860D-14A(g)(1) who
as of the last day of a calendar quarter in 2010 has incurred
costs for covered part D drugs so that the individual has
exceeded the initial coverage limit under section 1860D-2(b)(3)
for 2010, the Secretary shall provide for payment from the
Medicare Prescription Drug Account of $250 to the individual by
not later than the 15th day of the third month following the
end of such quarter.
``(2) Limitation.--The Secretary shall provide only 1
payment under this subsection with respect to any
individual.''.
(2) Repeal of provision.--Section 3315 of the Patient
Protection and Affordable Care Act (including the amendments
made by such section) is repealed, and any provision of law
amended or repealed by such sections is hereby restored or
revived as if such section had not been enacted into law.
(b) Closing the Donut Hole.--Part D of title XVIII of the Social
Security Act (42 U.S.C. 1395w-101 et seq.), as amended by section 3301
of the Patient Protection and Affordable Care Act, is further amended--
(1) in section 1860D-43--
(A) in subsection (b), by striking ``July 1, 2010''
and inserting ``January 1, 2011''; and
(B) in subsection (c)(2), by striking ``July 1,
2010, and ending on December 31, 2010,'' and inserting
``January 1, 2011, and December 31, 2011,'';
(2) in section 1860D-14A--
(A) in subsection (a)--
(i) by striking ``July 1, 2010'' and
inserting ``January 1, 2011''; and
(ii) by striking ``April 1, 2010'' and
inserting ``180 days after the date of the
enactment of this section'';
(B) in subsection (b)(1)(C)--
(i) in the heading, by striking ``2010
and'';
(ii) by striking ``July 1, 2010'' and
inserting ``January 1, 2011''; and
(iii) by striking ``May 1, 2010'' and
inserting ``not later than 30 days after the
date of the establishment of a model agreement
under subsection (a)'';
(C) in subsection (c)--
(i) in paragraph (1)(A)(iii), by striking
``July 1, 2010, and ending on December 31,
2011'' and inserting ``January 1, 2011, and
ending on December 31, 2011''; and
(ii) in paragraph (2), by striking ``2010''
and inserting ``2011'';
(D) in subsection (d)(2)(B), by striking ``July 1,
2010, and ending on December 31, 2010'' and inserting
``January 1, 2011, and ending on December 31, 2011'';
and
(E) in subsection (g)(1)--
(i) in the matter before subparagraph (A),
by striking ``an applicable drug'' and
inserting ``a covered part D drug'';
(ii) by adding ``and'' at the end of
subparagraph (C);
(iii) by striking subparagraph (D); and
(iv) by redesignating subparagraph (E) as
subparagraph (D); and
(3) in section 1860D-2(b)--
(A) in paragraph (2)(A), by striking ``The
coverage'' and inserting ``Subject to subparagraphs (C)
and (D), the coverage'';
(B) in paragraph (2)(B), by striking ``subparagraph
(A)(ii)'' and inserting ``subparagraphs (A)(ii), (C),
and (D)'';
(C) by adding at the end of paragraph (2) the
following new subparagraphs:
``(C) Coverage for generic drugs in coverage gap.--
``(i) In general.--Except as provided in
paragraph (4), the coverage for an applicable
beneficiary (as defined in section 1860D-
14A(g)(1)) has coinsurance (for costs above the
initial coverage limit under paragraph (3) and
below the out-of-pocket threshold) for covered
part D drugs that are not applicable drugs
under section 1860D-14A(g)(2) that is--
``(I) equal to the generic-gap
coinsurance percentage (specified in
clause (ii)) for the year; or
``(II) actuarially equivalent
(using processes and methods
established under section 1860D-11(c))
to an average expected payment of such
percentage of such costs for covered
part D drugs that are not applicable
drugs under section 1860D-14A(g)(2).
``(ii) Generic-gap coinsurance
percentage.--The generic-gap coinsurance
percentage specified in this clause for--
``(I) 2011 is 93 percent;
``(II) 2012 and each succeeding
year before 2020 is the generic-gap
coinsurance percentage under this
clause for the previous year decreased
by 7 percentage points; and
``(III) 2020 and each subsequent
year is 25 percent.
``(D) Coverage for applicable drugs in coverage
gap.--
``(i) In general.--Except as provided in
paragraph (4), the coverage for an applicable
beneficiary (as defined in section 1860D-
14A(g)(1)) has coinsurance (for costs above the
initial coverage limit under paragraph (3) and
below the out-of-pocket threshold) for the
negotiated price (as defined in section 1860D-
14A(g)(6)) of covered part D drugs that are
applicable drugs under section 1860D-14A(g)(2)
that is--
``(I) equal to the difference
between the applicable gap percentage
(specified in clause (ii) for the year)
and the discount percentage specified
in section 1860D-14A(g)(4)(A) for such
applicable drugs; or
``(II) actuarially equivalent
(using processes and methods
established under section 1860D-11(c))
to an average expected payment of such
percentage of such costs, for covered
part D drugs that are applicable drugs
under section 1860D-14A(g)(2).
``(ii) Applicable gap percentage.--The
applicable gap percentage specified in this
clause for--
``(I) 2013 and 2014 is 97.5
percent;
``(II) 2015 and 2016 is 95 percent;
``(III) 2017 is 90 percent;
``(IV) 2018 is 85 percent;
``(V) 2019 is 80 percent; and
``(VI) 2020 and each subsequent
year is 75 percent.'';
(D) in paragraph (3)(A), as restored under
subsection (a)(2), by striking ``paragraph (4)'' and
inserting ``paragraphs (2)(C), (2)(D), and (4)'';
(E) in paragraph (4)(E), by inserting before the
period at the end the following: ``, except that
incurred costs shall not include the portion of the
negotiated price that represents the reduction in
coinsurance resulting from the application of paragraph
(2)(D)''; and
(4) in section 1860D-22(a)(2)(A), by inserting before the
period at the end the following: ``, not taking into account
the value of any discount or coverage provided during the gap
in prescription drug coverage that occurs between the initial
coverage limit under section 1860D-2(b)(3) during the year and
the out-of-pocket threshold specified in section 1860D-
2(b)(4)(B)''.
(c) Conforming Amendment to AMP Under Medicaid.--Section
1927(k)(1)(B)(i) of the Social Security Act (42 U.S.C. 1396r-
8(k)(1)(B)(i)), as amended by section 2503(a)(2)(B) of the Patient
Protection and Affordable Care Act, is amended--
(1) by striking ``and'' at the end of subclause (III);
(2) by striking the period at the end of subclause (IV);
and
(3) by adding at the end the following new subclause:
``(V) discounts provided by
manufacturers under section 1860D-
14A.''.
(d) Reducing Growth Rate of Out-of-pocket Cost Threshold.--Section
1860D-2(b) of the Social Security Act (42 U.S.C. 1395w-102(b)) is
amended--
(1) in paragraph (4)(B)(i)--
(A) in subclause (I), by striking ``or'' at the
end;
(B) by redesignating subclause (II) as subclause
(VI); and
(C) by inserting after subclause (I) the following
new subclauses:
``(II) for each of years 2007
through 2013, is equal to the amount
specified in this subparagraph for the
previous year, increased by the annual
percentage increase described in
paragraph (6) for the year involved;
``(III) for 2014 and 2015, is equal
to the amount specified in this
subparagraph for the previous year,
increased by the annual percentage
increase described in paragraph (6) for
the year involved, minus 0.25
percentage point;
``(IV) for each of years 2016
through 2019, is equal to the amount
specified in this subparagraph for the
previous year, increased by the lesser
of--
``(aa) the annual
percentage increase described
in paragraph (7) for the year
involved, plus 2 percentage
points; or
``(bb) the annual
percentage increase described
in paragraph (6) for the year;
``(V) for 2020, is equal to the
amount that would have been applied
under this subparagraph for 2020 if the
amendments made by section 1101(d)(1)
of the Health Care and Education
Reconciliation Act of 2010 had not been
enacted; or''; and
(2) by adding at the end the following new paragraph:
``(7) Additional annual percentage increase.--The annual
percentage increase specified in this paragraph for a year is
equal to the annual percentage increase in the consumer price
index for all urban consumers (United States city average) for
the 12-month period ending in July of the previous year.''.
SEC. 1102. MEDICARE ADVANTAGE PAYMENTS.
(a) Repeal.--Effective as if included in the enactment of the
Patient Protection and Affordable Care Act, sections 3201 and 3203 of
such Act (and the amendments made by such sections) are repealed.
(b) Phase-in of Modified Benchmarks.--Section 1853 of the Social
Security Act (42 U.S.C. 1395w-23) is amended--
(1) in subsection (j)(1)(A), by striking ``(or, beginning
with 2007, \1/12\ of the applicable amount determined under
subsection (k)(1)) for the area for the year'' and inserting
``for the area for the year (or, for 2007, 2008, 2009, and
2010, \1/12\ of the applicable amount determined under
subsection (k)(1) for the area for the year; for 2011, \1/12\
of the applicable amount determined under subsection (k)(1) for
the area for 2010; and, beginning with 2012, \1/12\ of the
blended benchmark amount determined under subsection (n)(1) for
the area for the year)''; and
(2) by adding at the end the following new subsection:
``(n) Determination of Blended Benchmark Amount.--
``(1) In general.--For purposes of subsection (j), subject
to paragraphs (3), (4), and (5), the term `blended benchmark
amount' means for an area--
``(A) for 2012 the sum of--
``(i) \1/2\ of the applicable amount for
the area and year; and
``(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area and year; and
``(B) for a subsequent year the amount specified in
paragraph (2)(A) for the area and year.
``(2) Specified amount.--
``(A) In general.--The amount specified in this
subparagraph for an area and year is the product of--
``(i) the base payment amount specified in
subparagraph (E) for the area and year adjusted
to take into account the phase-out in the
indirect costs of medical education from
capitation rates described in subsection
(k)(4); and
``(ii) the applicable percentage for the
area for the year specified under subparagraph
(B).
``(B) Applicable percentage.--Subject to
subparagraph (D), the applicable percentage specified
in this subparagraph for an area for a year in the case
of an area that is ranked--
``(i) in the highest quartile under
subparagraph (C) for the previous year is 95
percent;
``(ii) in the second highest quartile under
such subparagraph for the previous year is 100
percent;
``(iii) in the third highest quartile under
such subparagraph for the previous year is
107.5 percent; or
``(iv) in the lowest quartile under such
subparagraph for the previous year is 115
percent.
``(C) Periodic ranking.--For purposes of this
paragraph in the case of an area located--
``(i) in 1 of the 50 States or the District
of Columbia, the Secretary shall rank such area
in each year specified under subsection
(c)(1)(D)(ii) based upon the level of the
amount specified in subparagraph (A)(i) for
such areas; or
``(ii) in a territory, the Secretary shall
rank such areas in each such year based upon
the level of the amount specified in
subparagraph (A)(i) for such area relative to
quartile rankings computed under clause (i).
``(D) 1-year transition for changes in applicable
percentage.--If, for a year after 2012, there is a
change in the quartile in which an area is ranked
compared to the previous year, the applicable
percentage for the area in the year shall be the
average of--
``(i) the applicable percentage for the
area for the previous year; and
``(ii) the applicable percentage that would
otherwise apply for the area for the year.
``(E) Base payment amount.--Subject to subparagraph
(F), the base payment amount specified in this
subparagraph--
``(i) for 2012 is the amount specified in
subsection (c)(1)(D) for the area for the year;
or
``(ii) for a subsequent year that--
``(I) is not specified under
subsection (c)(1)(D)(ii), is the base
amount specified in this subparagraph
for the area for the previous year,
increased by the national per capita MA
growth percentage, described in
subsection (c)(6) for that succeeding
year, but not taking into account any
adjustment under subparagraph (C) of
such subsection for a year before 2004;
and
``(II) is specified under
subsection (c)(1)(D)(ii), is the amount
specified in subsection (c)(1)(D) for
the area for the year.
``(F) Application of indirect medical education
phase-out.--The base payment amount specified in
subparagraph (E) for a year shall be adjusted in the
same manner under paragraph (4) of subsection (k) as
the applicable amount is adjusted under such
subsection.
``(3) Alternative phase-ins.--
``(A) 4-year phase-in for certain areas.--If the
difference between the applicable amount (as defined in
subsection (k)) for an area for 2010 and the projected
2010 benchmark amount (as defined in subparagraph (C))
for the area is at least $30 but less than $50, the
blended benchmark amount for the area is--
``(i) for 2012 the sum of--
``(I) \3/4\ of the applicable
amount for the area and year; and
``(II) \1/4\ of the amount
specified in paragraph (2)(A) for the
area and year;
``(ii) for 2013 the sum of--
``(I) \1/2\ of the applicable
amount for the area and year; and
``(II) \1/2\ of the amount
specified in paragraph (2)(A) for the
area and year;
``(iii) for 2014 the sum of--
``(I) \1/4\ of the applicable
amount for the area and year; and
``(II) \3/4\ of the amount
specified in paragraph (2)(A) for the
area and year; and
``(iv) for a subsequent year the amount
specified in paragraph (2)(A) for the area and
year.
``(B) 6-year phase-in for certain areas.--If the
difference between the applicable amount (as defined in
subsection (k)) for an area for 2010 and the projected
2010 benchmark amount (as defined in subparagraph (C))
for the area is at least $50, the blended benchmark
amount for the area is--
``(i) for 2012 the sum of--
``(I) \5/6\ of the applicable
amount for the area and year; and
``(II) \1/6\ of the amount
specified in paragraph (2)(A) for the
area and year;
``(ii) for 2013 the sum of--
``(I) \2/3\ of the applicable
amount for the area and year; and
``(II) \1/3\ of the amount
specified in paragraph (2)(A) for the
area and year;
``(iii) for 2014 the sum of--
``(I) \1/2\ of the applicable
amount for the area and year; and
``(II) \1/2\ of the amount
specified in paragraph (2)(A) for the
area and year;
``(iv) for 2015 the sum of--
``(I) \1/3\ of the applicable
amount for the area and year; and
``(II) \2/3\ of the amount
specified in paragraph (2)(A) for the
area and year; and
``(v) for 2016 the sum of--
``(I) \1/6\ of the applicable
amount for the area and year; and
``(II) \5/6\ of the amount
specified in paragraph (2)(A) for the
area and year; and
``(vi) for a subsequent year the amount
specified in paragraph (2)(A) for the area and
year.
``(C) Projected 2010 benchmark amount.--The
projected 2010 benchmark amount described in this
subparagraph for an area is equal to the sum of--
``(i) \1/2\ of the applicable amount (as
defined in subsection (k)) for the area for
2010; and
``(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area for 2010 but
determined as if there were substituted for the
applicable percentage specified in clause (ii)
of such paragraph the sum of--
``(I) the applicable percent that
would be specified under subparagraph
(B) of paragraph (2) (determined
without regard to subparagraph (D) of
such paragraph) for the area for 2010
if any reference in such paragraph to
`the previous year' were deemed a
reference to 2010; and
``(II) the applicable percentage
increase that would apply to a
qualifying plan in the area under
subsection (o) as if any reference in
such subsection to 2012 were deemed a
reference to 2010 and as if the
determination of a qualifying county
under paragraph (3)(B) of such
subsection were made for 2010.
``(4) Cap on benchmark amount.--In no case shall the
blended benchmark amount for an area for a year (determined
taking into account subsection (o)) be greater than the
applicable amount that would (but for the application of this
subsection) be determined under subsection (k)(1) for the area
for the year.
``(5) Non-application to pace plans.--This subsection shall
not apply to payments to a PACE program under section 1894.''.
(c) Applicable Percentage Quality Increases.--Section 1853 of such
Act (42 U.S.C. 1395w-23), as amended by subsection (b), is amended--
(1) in subsection (j), by inserting ``subject to subsection
(o),'' after ``For purposes of this part,'';
(2) in subsection (n)(2)(B), as added by subsection (b), by
inserting ``, subject to subsection (o)'' after ``as follows'';
and
(3) by adding at the end the following new subsection:
``(o) Applicable Percentage Quality Increases.--
``(1) In general.--Subject to the succeeding paragraphs, in
the case of a qualifying plan with respect to a year beginning
with 2012, the applicable percentage under subsection (n)(2)(B)
shall be increased on a plan or contract level, as determined
by the Secretary--
``(A) for 2012, by 1.5 percentage points;
``(B) for 2013, by 3.0 percentage points; and
``(C) for 2014 or a subsequent year, by 5.0
percentage points.
``(2) Increase for qualifying plans in qualifying
counties.--The increase applied under paragraph (1) for a
qualifying plan located in a qualifying county for a year shall
be doubled.
``(3) Qualifying plans and qualifying county defined;
application of increases to low enrollment and new plans.--For
purposes of this subsection:
``(A) Qualifying plan.--
``(i) In general.--The term `qualifying
plan' means, for a year and subject to
paragraph (4), a plan that had a quality rating
under paragraph (4) of 4 stars or higher based
on the most recent data available for such
year.
``(ii) Application of increases to low
enrollment plans.--
``(I) 2012.--For 2012, the term
`qualifying plan' includes an MA plan
that the Secretary determines is not
able to have a quality rating under
paragraph (4) because of low
enrollment.
``(II) 2013 and subsequent years.--
For 2013 and subsequent years, for
purposes of determining whether an MA
plan with low enrollment (as defined by
the Secretary) is included as a
qualifying plan, the Secretary shall
establish a method to apply to MA plans
with low enrollment (as defined by the
Secretary) the computation of quality
rating and the rating system under
paragraph (4).
``(iii) Application of increases to new
plans.--
``(I) In general.--A new MA plan
that meets criteria specified by the
Secretary shall be treated as a
qualifying plan, except that in
applying paragraph (1), the applicable
percentage under subsection (n)(2)(B)
shall be increased--
``(aa) for 2012, by 1.5
percentage points;
``(bb) for 2013, by 2.5
percentage points; and
``(cc) for 2014 or a
subsequent year, by 3.5
percentage points.
``(II) New ma plan defined.--The
term `new MA plan' means, with respect
to a year, a plan offered by an
organization or sponsor that has not
had a contract as a Medicare Advantage
organization in the preceding 3-year
period.
``(B) Qualifying county.--The term `qualifying
county' means, for a year, a county--
``(i) that has an MA capitation rate that,
in 2004, was based on the amount specified in
subsection (c)(1)(B) for a Metropolitan
Statistical Area with a population of more than
250,000;
``(ii) for which, as of December 2009, of
the Medicare Advantage eligible individuals
residing in the county at least 25 percent of
such individuals were enrolled in Medicare
Advantage plans; and
``(iii) that has per capita fee-for-service
spending that is lower than the national
monthly per capita cost for expenditures for
individuals enrolled under the original
medicare fee-for-service program for the year.
``(4) Quality determinations for application of increase.--
``(A) Quality determination.--The quality rating
for a plan shall be determined according to a 5-star
rating system (based on the data collected under
section 1852(e)).
``(B) Plans that failed to report.--An MA plan
which does not report data that enables the Secretary
to rate the plan for purposes of this paragraph shall
be counted as having a rating of fewer than 3.5 stars.
``(5) Exception for pace plans.--This subsection shall not
apply to payments to a PACE program under section 1894.''.
(4) Determination of medicare part d low-income benchmark
premium.--Section 1860D-14(b)(2)(B)(iii) of the Social Security
Act (42 U.S.C. 1395w-114(b)(2)(B)(iii)) as amended by section
3302 of the Patient Protection and Affordable Care Act, is
amended by striking ``, determined without regard to any
reduction in such premium as a result of any beneficiary rebate
under section 1854(b)(1)(C) or bonus payment under section
1853(n)'' and inserting the following: ``and determined before
the application of the monthly rebate computed under section
1854(b)(1)(C)(i) for that plan and year involved and, in the
case of a qualifying plan, before the application of the
increase under section 1853(o) for that plan and year
involved''.
(d) Beneficiary Rebates.--Section 1854(b)(1)(C) of such Act (42
U.S.C. 1395w-24(b)(1)(C)), as amended by section 3202(b) of the Patient
Protection and Affordable Care Act, is further amended--
(1) in clause (i), by inserting ``(or the applicable rebate
percentage specified in clause (iii) in the case of plan years
beginning on or after January 1, 2012)'' after ``75 percent'';
and
(2) by striking clause (iii), by redesignating clauses (iv)
and (v) as clauses (vii) and (viii), respectively, and by
inserting after clause (ii) the following new clauses:
``(iii) Applicable rebate percentage.--The
applicable rebate percentage specified in this
clause for a plan for a year, based on the
system under section 1853(o)(4)(A), is the sum
of--
``(I) the product of the old phase-
in proportion for the year under clause
(iv) and 75 percent; and
``(II) the product of the new
phase-in proportion for the year under
clause (iv) and the final applicable
rebate percentage under clause (v).
``(iv) Old and new phase-in proportions.--
For purposes of clause (iv)--
``(I) for 2012, the old phase-in
proportion is \2/3\ and the new phase-
in proportion is \1/3\;
``(II) for 2013, the old phase-in
proportion is \1/3\ and the new phase-
in proportion is \2/3\; and
``(III) for 2014 and any subsequent
year, the old phase-in proportion is 0
and the new phase-in proportion is 1.
``(v) Final applicable rebate percentage.--
Subject to clause (vi), the final applicable
rebate percentage under this clause is--
``(I) in the case of a plan with a
quality rating under such system of at
least 4.5 stars, 70 percent;
``(II) in the case of a plan with a
quality rating under such system of at
least 3.5 stars and less than 4.5
stars, 65 percent; and
``(III) in the case of a plan with
a quality rating under such system of
less than 3.5 stars, 50 percent.
``(vi) Treatment of low enrollment and new
plans.--For purposes of clause (v)--
``(I) for 2012, in the case of a
plan described in subclause (I) of
subsection (o)(3)(A)(ii), the plan
shall be treated as having a rating of
4.5 stars; and
``(II) for 2012 or a subsequent
year, in the case of a new MA plan (as
defined under subclause (III) of
subsection (o)(3)(A)(iii))) that is
treated as a qualifying plan pursuant
to subclause (I) of such subsection,
the plan shall be treated as having a
rating of 3.5 stars.''.
(e) Coding Intensity Adjustment.--Section 1853(a)(1)(C)(ii) of such
Act (42 U.S.C. 1395w-23(a)(1)(C)(ii)) is amended--
(1) in the heading, by striking ``during phaseout of budget
neutrality factor'' and inserting ``of coding adjustment'';
(2) in the matter before subclause (I), by striking
``through 2010'' and inserting ``and each subsequent year'';
and
(3) in subclause (II)--
(A) in the first sentence, by inserting
``annually'' before ``conduct an analysis'';
(B) in the second sentence--
(i) by inserting ``on a timely basis''
after ``are incorporated''; and
(ii) by striking ``only for 2008, 2009, and
2010'' and inserting ``for 2008 and subsequent
years'';
(C) in the third sentence, by inserting ``and
updated as appropriate'' before the period at the end;
and
(D) by adding at the end the following new
subclauses:
``(III) In calculating each year's
adjustment, the adjustment factor shall
be for 2014, not less than the
adjustment factor applied for 2010,
plus 1.3 percentage points; for each of
years 2015 through 2018, not less than
the adjustment factor applied for the
previous year, plus 0.25 percentage
point; and for 2019 and each subsequent
year, not less than 5.7 percent.
``(IV) Such adjustment shall be
applied to risk scores until the
Secretary implements risk adjustment
using Medicare Advantage diagnostic,
cost, and use data.''.
(f) Repeal of Comparative Cost Adjustment Program.--Section 1860C-1
of the Social Security Act (42 U.S.C. 1395w-29), as added by section
241(a) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173), is repealed.
SEC. 1103. SAVINGS FROM LIMITS ON MA PLAN ADMINISTRATIVE COSTS.
Section 1857(e) of the Social Security Act (42 U.S.C. 1395w-27(e))
is amended by adding at the end the following new paragraph:
``(4) Requirement for minimum medical loss ratio.--If the
Secretary determines for a contract year (beginning with 2014)
that an MA plan has failed to have a medical loss ratio of at
least .85--
``(A) the MA plan shall remit to the Secretary an
amount equal to the product of--
``(i) the total revenue of the MA plan
under this part for the contract year; and
``(ii) the difference between .85 and the
medical loss ratio;
``(B) for 3 consecutive contract years, the
Secretary shall not permit the enrollment of new
enrollees under the plan for coverage during the second
succeeding contract year; and
``(C) the Secretary shall terminate the plan
contract if the plan fails to have such a medical loss
ratio for 5 consecutive contract years.''.
SEC. 1104. DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS.
Section 1886(r) of the Social Security Act (42 U.S.C. 1395ww(r)),
as added by section 3133 of the Patient Protection and Affordable Care
Act and as amended by section 10316 of such Act, is amended--
(1) in paragraph (1), by striking ``2015'' and inserting
``2014''; and
(2) in paragraph (2)--
(A) in the matter preceding subparagraph (A), by
striking ``2015'' and inserting ``2014'';
(B) in subparagraph (B)(i)--
(i) in the heading, by inserting ``2014,''
after ``years'';
(ii) in the matter preceding subclause (I),
by inserting ``2014,'' after ``each of fiscal
years'';
(iii) in subclause (I), by striking ``on
such Act'' and inserting ``on the Health Care
and Education Reconciliation Act of 2010''; and
(iv) in the matter following subclause
(II), by striking ``minus 1.5 percentage
points'' and inserting ``minus 0.1 percentage
points for fiscal year 2014 and minus 0.2
percentage points for each of fiscal years
2015, 2016, and 2017''; and
(C) in subparagraph (B)(ii), in the matter
following subclause (II), by striking ``and, for each
of 2018 and 2019, minus 1.5 percentage points'' and
inserting ``minus 0.2 percentage points for each of
fiscal years 2018 and 2019''.
SEC. 1105. MARKET BASKET UPDATES.
(a) IPPS.--Section 1886(b)(3)(B) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)), as amended by sections 3401(a)(4) and 10319(a)
of the Patient Protection and Affordable Care Act, is amended--
(1) in clause (xii)--
(A) by placing the subclause (II) (inserted by
section 10319(a)(3) of the Patient Protection and
Affordable Care Act) immediately after subclause (I)
and, in such subclause (II), by striking ``and'' at the
end; and
(B) by striking subclause (III) and inserting the
following:
``(III) for fiscal year 2014, by 0.3 percentage point;
``(IV) for each of fiscal years 2015 and 2016, by 0.2
percentage point; and
``(V) for each of fiscal years 2017, 2018, and 2019, by
0.75 percentage point.''; and
(2) by striking clause (xiii).
(b) Long-term Care Hospitals.--Section 1886(m)(4) of the Social
Security Act (42 U.S.C. 1395ww(m)(4)), as added by section 3401(c) of
the Patient Protection and Affordable Care Act and amended by section
10319(b) of such Act, is amended--
(1) in subparagraph (A)--
(A) in clause (iii), by striking ``and'' at the
end; and
(B) by striking clause (iv) and inserting the
following:
``(iv) for rate year 2014, 0.3 percentage
point;
``(v) for each of rate years 2015 and 2016,
0.2 percentage point; and
``(vi) for each of rate years 2017, 2018,
and 2019, 0.75 percentage point.'';
(2) by striking subparagraph (B); and
(3) by striking ``(4) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(4) Other
adjustment.--For purposes'' (and redesignating clauses (i)
through (vi) as subparagraphs (A) through (F), respectively,
with appropriate indentation).
(c) Inpatient Rehabilitation Facilities.--Section 1886(j)(3)(D) of
the Social Security Act (42 U.S.C. 1395ww(j)(3)(D)), as added by
section 3401(d)(2) of the Patient Protection and Affordable Care Act
and amended by section 10319(c) of such Act, is amended--
(1) in clause (i)--
(A) by placing the subclause (II) (inserted by
section 10319(c)(3) of the Patient Protection and
Affordable Care Act) immediately after subclause (I)
and, in such subclause (II), by striking ``and'' at the
end; and
(B) by striking subclause (III) and inserting the
following:
``(III) for fiscal year 2014, 0.3
percentage point;
``(IV) for each of fiscal years
2015 and 2016, 0.2 percentage point;
and
``(V) for each of fiscal years
2017, 2018, and 2019, 0.75 percentage
point.'';
(2) by striking clause (ii); and
(3) by striking ``(D) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(D) Other
adjustment.--For purposes'' (and redesignating subclauses (I)
through (V) as clauses (i) through (v), respectively, with
appropriate indentation).
(d) Psychiatric Hospitals.--Section 1886(s)(3) of the Social
Security Act, as added by section 3401(f) of the Patient Protection and
Affordable Care Act and amended by section 10319(e) of such Act, is
amended--
(1) in subparagraph (A)--
(A) by placing the clause (ii) (inserted by section
10319(e)(3) of the Patient Protection and Affordable
Care Act) immediately after clause (i) and, in such
clause (ii), by striking ``and'' at the end; and
(B) by striking clause (iii) and inserting the
following:
``(iii) for the rate year beginning in
2014, 0.3 percentage point;
``(iv) for each of the rate years beginning
in 2015 and 2016, 0.2 percentage point; and
``(v) for each of the rate years beginning
in 2017, 2018, and 2019, 0.75 percentage
point.'';
(2) by striking subparagraph (B); and
(3) by striking ``(3) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(3) Other
adjustment.--For purposes'' (and redesignating clauses (i)
through (v) as subparagraphs (A) through (E), respectively,
with appropriate indentation).
(e) Outpatient Hospitals.--Section 1833(t)(3)(G) of the Social
Security Act (42 U.S.C. 1395l(t)(3)(G)), as added by section 3401(i)(2)
of the Patient Protection and Affordable Care Act and amended by
section 10319(g) of such Act, is amended--
(1) in clause (i)--
(A) by placing the subclause (II) (inserted by
section 10319(g)(3) of the Patient Protection and
Affordable Care Act) immediately after subclause (I)
and, in such subclause (II), by striking ``and'' at the
end; and
(B) by striking subclause (III) and inserting the
following:
``(III) for 2014, 0.3 percentage
point;
``(IV) for each of 2015 and 2016,
0.2 percentage point; and
``(V) for each of 2017, 2018, and
2019, 0.75 percentage point.'';
(2) by striking clause (ii); and
(3) by striking ``(G) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(G) Other
adjustment.--For purposes'' (and redesignating subclauses (I)
through (V) as clauses (i) through (v), respectively, with
appropriate indentation).
SEC. 1106. PHYSICIAN OWNERSHIP-REFERRAL.
Section 1877(i) of the Social Security Act (42 U.S.C. 1395nn(i)),
as added by section 6001(a)(3) of the Patient Protection and Affordable
Care Act and as amended by section 10601(a) of such Act, is amended--
(1) in paragraph (1)(A)(i), by striking ``August 1, 2010''
and inserting ``December 31, 2010''; and
(2) in paragraph (3)--
(A) in subparagraph (A)(i), by striking ``an
applicable hospital (as defined in subparagraph (E))''
and inserting ``a hospital that is an applicable
hospital (as defined in subparagraph (E)) or is a high
Medicaid facility described in subparagraph (F)'';
(B) in subparagraph (C)(iii), by inserting after
``date of enactment of this subsection'' the following:
``(or, in the case of a hospital that did not have a
provider agreement in effect as of such date but does
have such an agreement in effect on December 31, 2010,
the effective date of such provider agreement)'';
(C) by redesignating subparagraphs (F) through (H)
as subparagraphs (G) through (I), respectively; and
(D) by inserting after subparagraph (E) the
following new subparagraph:
``(F) High medicaid facility described.--A high
Medicaid facility described in this subparagraph is a
hospital that--
``(i) is not the sole hospital in a county;
``(ii) with respect to each of the 3 most
recent years for which data are available, has
an annual percent of total inpatient admissions
that represent inpatient admissions under title
XIX that is estimated to be greater than such
percent with respect to such admissions for any
other hospital located in the county in which
the hospital is located; and
``(iii) meets the conditions described in
subparagraph (E)(iii).''.
SEC. 1107. PAYMENT FOR IMAGING SERVICES.
Section 1848 of the Social Security Act (42 U.S.C. 1395w-4), as
amended by section 3135(a) of the Patient Protection and Affordable
Care Act, is amended--
(1) in subsection (b)(4)--
(A) in subparagraph (B), by striking ``this
paragraph'' and inserting ``subparagraph (A)''; and
(B) by amending subparagraph (C) to read as
follows:
``(C) Adjustment in imaging utilization rate.--With
respect to fee schedules established for 2011 and
subsequent years, in the methodology for determining
practice expense relative value units for expensive
diagnostic imaging equipment under the final rule
published by the Secretary in the Federal Register on
November 25, 2009 (42 CFR 410 et al.), the Secretary
shall use a 75 percent assumption instead of the
utilization rates otherwise established in such final
rule.''; and
(2) in subsection (c)(2)(B)(v), by striking subclauses
(III), (IV), and (V) and inserting the following new subclause:
``(III) Change in utilization rate
for certain imaging services.--
Effective for fee schedules established
beginning with 2011, reduced
expenditures attributable to the change
in the utilization rate applicable to
2011, as described in subsection
(b)(4)(C).''.
SEC. 1108. PE GPCI ADJUSTMENT FOR 2010.
Effective as if included in the enactment of the Patient Protection
and Affordable Care Act, section 1848(e)(1)(H)(i) of the Social
Security Act (42 U.S.C. 1395w-4(e)(1)(H)(i)), as added by section
3102(b)(2) of the Patient Protection and Affordable Care Act, is
amended by striking ``\3/4\'' and inserting ``\1/2\''.
SEC. 1109. PAYMENT FOR QUALIFYING HOSPITALS.
(a) In General.--From the amount available under subsection (b),
the Secretary of Health and Human Services shall provide for a payment
to qualifying hospitals (as defined in subsection (d)) for fiscal years
2011 and 2012 of the amount determined under subsection (c).
(b) Amounts Available.--There shall be available from the Federal
Hospital Insurance Trust Fund $400,000,000 for payments under this
section for fiscal years 2011 and 2012.
(c) Payment Amount.--The amount of payment under this section for a
qualifying hospital shall be determined, in a manner consistent with
the amount available under subsection (b), in proportion to the portion
of the amount of the aggregate payments under section 1886(d) of the
Social Security Act to the hospital for fiscal year 2009 bears to the
sum of all such payments to all qualifying hospitals for such fiscal
year.
(d) Qualifying Hospital Defined.--In this section, the term
``qualifying hospital'' means a subsection (d) hospital (as defined for
purposes of section 1886(d) of the Social Security Act) that is located
in a county that ranks, based upon its ranking in age, sex, and race
adjusted spending for benefits under parts A and B under title XVIII of
such Act per enrollee, within the lowest quartile of such counties in
the United States.
Subtitle C--Medicaid
SEC. 1201. FEDERAL FUNDING FOR STATES.
Section 1905 of the Social Security Act (42 U.S.C. 1396d), as
amended by sections 2001(a)(3) and 10201(c) of the Patient Protection
and Affordable Care Act, is amended--
(1) in subsection (y)--
(A) by redesignating subclause (II) of paragraph
(1)(B)(ii) as paragraph (5) of subsection (z) and
realigning the left margins accordingly; and
(B) by striking paragraph (1) and inserting the
following:
``(1) Amount of increase.--Notwithstanding subsection (b),
the Federal medical assistance percentage for a State that is
one of the 50 States or the District of Columbia, with respect
to amounts expended by such State for medical assistance for
newly eligible individuals described in subclause (VIII) of
section 1902(a)(10)(A)(i), shall be equal to--
``(A) 100 percent for calendar quarters in 2014,
2015, and 2016;
``(B) 95 percent for calendar quarters in 2017;
``(C) 94 percent for calendar quarters in 2018;
``(D) 93 percent for calendar quarters in 2019; and
``(E) 90 percent for calendar quarters in 2020 and
each year thereafter.''; and
(2) in subsection (z)--
(A) in paragraph (1), by striking ``September 30,
2019'' and inserting ``December 31, 2015'' and by
striking ``subsection (y)(1)(B)(ii)(II)'' and inserting
``paragraph (3)'';
(B) by striking paragraphs (2) through (4) and
inserting the following:
``(2)(A) For calendar quarters in 2014 and each year
thereafter, the Federal medical assistance percentage otherwise
determined under subsection (b) for an expansion State
described in paragraph (3) with respect to medical assistance
for individuals described in section 1902(a)(10)(A)(i)(VIII)
who are nonpregnant childless adults with respect to whom the
State may require enrollment in benchmark coverage under
section 1937 shall be equal to the percent specified in
subparagraph (B)(i) for such year.
``(B)(i) The percent specified in this subparagraph for a
State for a year is equal to the Federal medical assistance
percentage (as defined in the first sentence of subsection (b))
for the State increased by a number of percentage points equal
to the transition percentage (specified in clause (ii) for the
year) of the number of percentage points by which--
``(I) such Federal medical assistance percentage
for the State, is less than
``(II) the percent specified in subsection (y)(1)
for the year.
``(ii) The transition percentage specified in this clause
for--
``(I) 2014 is 50 percent;
``(II) 2015 is 60 percent;
``(III) 2016 is 70 percent;
``(IV) 2017 is 80 percent;
``(V) 2018 is 90 percent; and
``(VI) 2019 and each subsequent year is 100
percent.''; and
(C) by redesignating paragraph (5) (as added by
paragraph (1)(A) of this section) as paragraph (3),
realigning the left margins to align with paragraph
(2), and striking the heading and all that follows
through ``a State is'' and inserting ``A State is''.
SEC. 1202. PAYMENTS TO PRIMARY CARE PHYSICIANS.
(a) In General.--
(1) Fee-for-service payments.--Section 1902 of the Social
Security Act (42 U.S.C. 1396a), as amended by section
2303(a)(2) of the Patient Protection and Affordable Care Act,
is amended--
(A) in subsection (a)(13)--
(i) by striking ``and'' at the end of
subparagraph (A);
(ii) by adding ``and'' at the end of
subparagraph (B); and
(iii) by adding at the end the following
new subparagraph:
``(C) payment for primary care services (as defined
in subsection (jj)) furnished in 2013 and 2014 by a
physician with a primary specialty designation of
family medicine, general internal medicine, or
pediatric medicine at a rate not less than 100 percent
of the payment rate that applies to such services and
physician under part B of title XVIII (or, if greater,
the payment rate that would be applicable under such
part if the conversion factor under section 1848(d) for
the year involved were the conversion factor under such
section for 2009);''; and
(B) by adding at the end the following new
subsection:
``(jj) Primary Care Services Defined.--For purposes of subsection
(a)(13)(C), the term `primary care services' means--
``(1) evaluation and management services that are procedure
codes (for services covered under title XVIII) for services in
the category designated Evaluation and Management in the
Healthcare Common Procedure Coding System (established by the
Secretary under section 1848(c)(5) as of December 31, 2009, and
as subsequently modified); and
``(2) services related to immunization administration for
vaccines and toxoids for which CPT codes 90465, 90466, 90467,
90468, 90471, 90472, 90473, or 90474 (as subsequently modified)
apply under such System.''.
(2) Under medicaid managed care plans.--Section 1932(f) of
such Act (42 U.S.C. 1396u-2(f)) is amended--
(A) in the heading, by adding at the end the
following: ``; Adequacy of Payment for Primary Care
Services''; and
(B) by inserting before the period at the end the
following: ``and, in the case of primary care services
described in section 1902(a)(13)(C), consistent with
the minimum payment rates specified in such section
(regardless of the manner in which such payments are
made, including in the form of capitation or partial
capitation)''.
(b) Increase in Payment Using Increased FMAP.--Section 1905 of the
Social Security Act, as amended by section 1004(b) of this Act and
section 10201(c)(6) of the Patient Protection and Affordable Care Act,
is amended by adding at the end the following new subsection:
``(dd) Increased FMAP for Additional Expenditures for Primary Care
Services.--Notwithstanding subsection (b), with respect to the portion
of the amounts expended for medical assistance for services described
in section 1902(a)(13)(C) furnished on or after January 1, 2013, and
before January 1, 2015, that is attributable to the amount by which the
minimum payment rate required under such section (or, by application,
section 1932(f)) exceeds the payment rate applicable to such services
under the State plan as of July 1, 2009, the Federal medical assistance
percentage for a State that is one of the 50 States or the District of
Columbia shall be equal to 100 percent. The preceding sentence does not
prohibit the payment of Federal financial participation based on the
Federal medical assistance percentage for amounts in excess of those
specified in such sentence.''.
SEC. 1203. DISPROPORTIONATE SHARE HOSPITAL PAYMENTS.
(a) In General.--Section 1923(f) of the Social Security Act (42
U.S.C. 1396r-4(f)), as amended by sections 2551(a)(4) and 10201(e)(1)
of the Patient Protection and Affordable Care Act, is amended--
(1) in paragraph (6)(B)(iii), in the matter preceding
subclause (I), by striking ``or paragraph (7)''; and
(2) by striking paragraph (7) and inserting the following:
``(7) Medicaid dsh reductions.--
``(A) Reductions.--
``(i) In general.--For each of fiscal years
2014 through 2020 the Secretary shall effect
the following reductions:
``(I) Reduction in dsh
allotments.--The Secretary shall reduce
DSH allotments to States in the amount
specified under the DSH health reform
methodology under subparagraph (B) for
the State for the fiscal year.
``(II) Reductions in payments.--The
Secretary shall reduce payments to
States under section 1903(a) for each
calendar quarter in the fiscal year, in
the manner specified in clause (iii),
in an amount equal to \1/4\ of the DSH
allotment reduction under subclause (I)
for the State for the fiscal year.
``(ii) Aggregate reductions.--The aggregate
reductions in DSH allotments for all States
under clause (i)(I) shall be equal to--
``(I) $500,000,000 for fiscal year
2014;
``(II) $600,000,000 for fiscal year
2015;
``(III) $600,000,000 for fiscal
year 2016;
``(IV) $1,800,000,000 for fiscal
year 2017;
``(V) $5,000,000,000 for fiscal
year 2018;
``(VI) $5,600,000,000 for fiscal
year 2019; and
``(VII) $4,000,000,000 for fiscal
year 2020.
The Secretary shall distribute such aggregate
reductions among States in accordance with
subparagraph (B).
``(iii) Manner of payment reduction.--The
amount of the payment reduction under clause
(i)(II) for a State for a quarter shall be
deemed an overpayment to the State under this
title to be disallowed against the State's
regular quarterly draw for all spending under
section 1903(d)(2). Such a disallowance is not
subject to a reconsideration under subsections
(d) and (e) of section 1116.
``(iv) Definition.--In this paragraph, the
term `State' means the 50 States and the
District of Columbia.
``(B) DSH health reform methodology.--The Secretary
shall carry out subparagraph (A) through use of a DSH
Health Reform methodology that meets the following
requirements:
``(i) The methodology imposes the largest
percentage reductions on the States that--
``(I) have the lowest percentages
of uninsured individuals (determined on
the basis of data from the Bureau of
the Census, audited hospital cost
reports, and other information likely
to yield accurate data) during the most
recent year for which such data are
available; or
``(II) do not target their DSH
payments on--
``(aa) hospitals with high
volumes of Medicaid inpatients
(as defined in subsection
(b)(1)(A)); and
``(bb) hospitals that have
high levels of uncompensated
care (excluding bad debt).
``(ii) The methodology imposes a smaller
percentage reduction on low DSH States
described in paragraph (5)(B).
``(iii) The methodology takes into account
the extent to which the DSH allotment for a
State was included in the budget neutrality
calculation for a coverage expansion approved
under section 1115 as of July 31, 2009.''.
(b) Extension of DSH Allotment.--Section 1923(f)(6)(A) of the
Social Security Act (42 U.S.C. 1396r-4(f)(6)(A)) is amended by adding
at the end the following:
``(v) Allotment for 2d, 3rd, and 4th
quarters of fiscal year 2012 and for fiscal
year 2013.--Notwithstanding the table set forth
in paragraph (2):
``(I) 2d, 3rd, and 4th quarters of
fiscal year 2012.--In the case of a
State that has a DSH allotment of $0
for the 2d, 3rd, and 4th quarters of
fiscal year 2012, the DSH allotment
shall be $47,200,000 for such quarters.
``(II) Fiscal year 2013.--In the
case of a State that has a DSH
allotment of $0 for fiscal year 2013,
the DSH allotment shall be $53,100,000
for such fiscal year.''.
SEC. 1204. FUNDING FOR THE TERRITORIES.
(a) In General.--Part III of subtitle D of title I of the Patient
Protection and Affordable Care Act, as amended by section 10104(m) of
such Act, is amended by inserting after section 1322 the following
section:
``SEC. 1323. FUNDING FOR THE TERRITORIES.
``(a) In General.--A territory that--
``(1) elects consistent with subsection (b) to establish an
Exchange in accordance with part II of this subtitle and
establishes such an Exchange in accordance with such part shall
be treated as a State for purposes of such part and shall be
entitled to payment from the amount allocated to the territory
under subsection (c); or
``(2) does not make such election shall be entitled to an
increase in the dollar limitation applicable to the territory
under subsections (f) and (g) of section 1108 of the Social
Security Act (42 U.S.C. 1308) for such period in such amount
for such territory and such increase shall not be taken into
account in computing any other amount under such subsections.
``(b) Terms and Conditions.--An election under subsection (a)(1)
shall--
``(1) not be effective unless the election is consistent
with section 1321 and is received not later than October 1,
2013; and
``(2) be contingent upon entering into an agreement between
the territory and the Secretary that requires that--
``(A) funds provided under the agreement shall be
used only to provide premium and cost-sharing
assistance to residents of the territory obtaining
health insurance coverage through the Exchange; and
``(B) the premium and cost-sharing assistance
provided under such agreement shall be structured in
such a manner so as to prevent any gap in assistance
for individuals between the income level at which
medical assistance is available through the territory's
Medicaid plan under title XIX of the Social Security
Act and the income level at which premium and cost-
sharing assistance is available under the agreement.
``(c) Appropriation and Allocation.--
``(1) Appropriation.--Out of any funds in the Treasury not
otherwise appropriated, there is appropriated for purposes of
payment pursuant to subsection (a) $1,000,000,000, to be
available during the period beginning with 2014 and ending with
2019.
``(2) Allocation.--The Secretary shall allocate the amount
appropriated under paragraph (1) among the territories for
purposes of carrying out this section as follows:
``(A) For Puerto Rico, $925,000,000.
``(B) For another territory, the portion of
$75,000,000 specified by the Secretary.''.
(b) Medicaid Funding.--
(1) Increase in funding caps.--Section 1108(g) of the
Social Security Act (42 U.S.C. 1308(g)), as amended by section
2005(a) of the Patient Protection and Affordable Care Act, is
amended--
(A) in paragraph (2), by inserting ``and section
1323(a)(2) of the Patient Protection and Affordable
Care Act'' after ``subject to''; and
(B) by striking paragraph (5) and inserting the
following:
``(5) Additional increase.--The Secretary shall increase
the amounts otherwise determined under this subsection for
Puerto Rico, the Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa (after the application of
subsection (f) and the preceding paragraphs of this subsection)
for the period beginning July 1, 2011, and ending on September
30, 2019, by such amounts that the total additional payments
under title XIX to such territories equals $6,300,000,000 for
such period. The Secretary shall increase such amounts in
proportion to the amounts applicable to such territories under
this subsection and subsection (f) on the date of enactment of
this paragraph.''.
(2) Disregard of payments; increased fmap.--Section 2005 of
the Patient Protection and Affordable Care Act is amended--
(A) by repealing subsection (b) (and the amendments
made by that subsection) and section 1108(g)(4) of the
Social Security Act shall be applied as if such
amendments had never been enacted; and
(B) in subsection (c)(2), by striking ``January''
and inserting ``July''.
SEC. 1205. DELAY IN COMMUNITY FIRST CHOICE OPTION.
Section 1915(k)(1) of the Social Security Act (42 U.S.C. 1396n(k)),
as added by section 2401 of the Patient Protection and Affordable Care
Act, is amended by striking ``October 1, 2010'' and inserting ``October
1, 2011''.
SEC. 1206. DRUG REBATES FOR NEW FORMULATIONS OF EXISTING DRUGS.
(a) Treatment of New Formulations.--Subparagraph (C) of section
1927(c)(2) of the Social Security Act (42 U.S.C. 1396r-8(c)(2)), as
added by section 2501(d) of the Patient Protection and Affordable Care
Act, is amended to read as follows:
``(C) Treatment of new formulations.--In the case
of a drug that is a line extension of a single source
drug or an innovator multiple source drug that is an
oral solid dosage form, the rebate obligation with
respect to such drug under this section shall be the
amount computed under this section for such new drug
or, if greater, the product of--
``(i) the average manufacturer price of the
line extension of a single source drug or an
innovator multiple source drug that is an oral
solid dosage form;
``(ii) the highest additional rebate
(calculated as a percentage of average
manufacturer price) under this section for any
strength of the original single source drug or
innovator multiple source drug; and
``(iii) the total number of units of each
dosage form and strength of the line extension
product paid for under the State plan in the
rebate period (as reported by the State).
In this subparagraph, the term `line extension' means,
with respect to a drug, a new formulation of the drug,
such as an extended release formulation.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as if included in the enactment of the Patient Protection
and Affordable Care Act.
Subtitle D--Reducing Fraud, Waste, and Abuse
SEC. 1301. COMMUNITY MENTAL HEALTH CENTERS.
(a) In General.--Section 1861(ff)(3)(B) of the Social Security Act
(42 U.S.C. 1395x(ff)(3)(B)) is amended--
(1) in clause (ii), by striking ``and'' at the end;
(2) by redesignating clause (iii) as clause (iv); and
(3) by inserting after clause (ii) the following:
``(iii) provides at least 40 percent of its services to
individuals who are not eligible for benefits under this title;
and''.
(b) Restriction.--Section 1861(ff)(3)(A) of such Act (42 U.S.C.
1395x(ff)(3)(A)) is amended by inserting ``other than in an
individual's home or in an inpatient or residential setting'' before
the period.
(c) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after the first day of the
first calendar quarter that begins at least 12 months after the date of
the enactment of this Act.
SEC. 1302. MEDICARE PREPAYMENT MEDICAL REVIEW LIMITATIONS.
Section 1874A(h) of the Social Security Act (42 U.S.C. 1395w-3a(h))
is repealed.
SEC. 1303. FUNDING TO FIGHT FRAUD, WASTE, AND ABUSE.
(a) Funding to Fight Fraud, Waste, and Abuse.--
(1) In general.--Section 1817(k) of the Social Security Act
(42 U.S.C. 1395i(k)), as amended by section 6402(i) of the
Patient Protection and Affordable Care Act, is further
amended--
(A) by adding at the end the following new
paragraph:
``(8) Additional funding.--
``(A) In general.--In addition to the funds
otherwise appropriated to the Account from the Trust
Fund under paragraphs (3)(C) and (4)(A) and for
purposes described in paragraphs (3)(C) and (4)(A),
there are hereby appropriated to such Account from such
Trust Fund the following additional amounts:
``(i) For fiscal year 2011, $95,000,000.
``(ii) For fiscal year 2012, $55,000,000.
``(iii) For each of fiscal years 2013 and
2014, $30,000,000.
``(iv) For each of fiscal years 2015 and
2016, $20,000,000.
``(B) Allocation.--The funds appropriated under
this paragraph shall be allocated in the same
proportion as the total funding appropriated with
respect to paragraphs (3)(A) and (4)(A) was allocated
with respect to fiscal year 2010, and shall be
available without further appropriation until
expended.''; and
(B) in paragraph (4)(A), by inserting ``for
activities described in paragraph (3)(C) and'' after
``necessary''.
(b) Medicaid Integrity Program.--Section 1936(e)(1) of such Act (42
U.S.C. 1396-u6(e)(1)) is amended--
(1) in subparagraph (B), by striking at the end ``and'';
(2) in subparagraph (C)--
(A) by striking ``for each fiscal year thereafter''
and inserting ``for each of fiscal years 2009 and
2010''; and
(B) by striking the period and inserting ``; and'';
and
(3) by adding at the end the following new subparagraph:
``(D) for each fiscal year after fiscal year 2010,
the amount appropriated under this paragraph for the
previous fiscal year, increased by the percentage
increase in the consumer price index for all urban
consumers (all items; United States city average) over
the previous year.''.
SEC. 1304. 90-DAY PERIOD OF ENHANCED OVERSIGHT FOR INITIAL CLAIMS OF
DME SUPPLIERS.
Section 1866(j), as amended by section 6401 of the Patient
Protection and Affordable Care Act, is further amended--
(1) by redesignating paragraphs (4) through (7) as
paragraphs (5) through (8), respectively; and
(2) by inserting after paragraph (3) the following new
paragraph:
``(4) 90-day period of enhanced oversight for initial
claims of dme suppliers.--For periods beginning after January
1, 2011, if the Secretary determines that there is a
significant risk of fraudulent activity among suppliers of
durable medical equipment, in the case of a supplier of durable
medical equipment who is within a category or geographic area
under title XVIII identified pursuant to such determination and
who is initially enrolling under such title, the Secretary
shall, notwithstanding sections 1816(c), 1842(c), and
1869(a)(2), withhold payment under such title with respect to
durable medical equipment furnished by such supplier during the
90-day period beginning on the date of the first submission of
a claim under such title for durable medical equipment
furnished by such supplier.''.
Subtitle E--Provisions Relating to Revenue
SEC. 1401. HIGH-COST PLAN EXCISE TAX.
(a) In General.--Section 4980I of the Internal Revenue Code of
1986, as added by section 9001 of the Patient Protection and Affordable
Care Act and amended by section 10901 of such Act, is amended--
(1) in subsection (b)(3)(B)--
(A) by striking ``The annual'' and inserting the
following:
``(i) In general.--Except as provided in
clause (ii), the annual''; and
(B) by adding at the end the following new clause:
``(ii) Multiemployer plan coverage.--Any
coverage provided under a multiemployer plan
(as defined in section 414(f)) shall be treated
as coverage other than self-only coverage.'';
(2) in subsection (b)(3)(C)--
(A) by striking ``Except as provided in
subparagraph (D)--'';
(B) in clause (i)--
(i) by striking ``2013'' each place it
appears in the heading and the text and
inserting ``2018'';
(ii) by striking ``$8,500'' in subclause
(I) and inserting ``$10,200 multiplied by the
health cost adjustment percentage (determined
by only taking into account self-only
coverage)''; and
(iii) by striking ``$23,000'' in subclause
(II) and inserting ``$27,500 multiplied by the
health cost adjustment percentage (determined
by only taking into account coverage other than
self-only coverage)'';
(C) by redesignating clauses (ii) and (iii) as
clauses (iv) and (v), respectively, and by inserting
after clause (i) the following new clauses:
``(ii) Health cost adjustment percentage.--
For purposes of clause (i), the health cost
adjustment percentage is equal to 100 percent
plus the excess (if any) of--
``(I) the percentage by which the
per employee cost for providing
coverage under the Blue Cross/Blue
Shield standard benefit option under
the Federal Employees Health Benefits
Plan for plan year 2018 (determined by
using the benefit package for such
coverage in 2010) exceeds such cost for
plan year 2010, over
``(II) 55 percent.
``(iii) Age and gender adjustment.--
``(I) In general.--The amount
determined under subclause (I) or (II)
of clause (i), whichever is applicable,
for any taxable period shall be
increased by the amount determined
under subclause (II).
``(II) Amount determined.--The
amount determined under this subclause
is an amount equal to the excess (if
any) of--
``(aa) the premium cost of
the Blue Cross/Blue Shield
standard benefit option under
the Federal Employees Health
Benefits Plan for the type of
coverage provided such
individual in such taxable
period if priced for the age
and gender characteristics of
all employees of the
individual's employer, over
``(bb) that premium cost
for the provision of such
coverage under such option in
such taxable period if priced
for the age and gender
characteristics of the national
workforce.''.
(D) in clause (iv), as redesignated by subparagraph
(C)--
(i) by inserting ``covered by the plan''
after ``whose employees''; and
(ii) by striking subclauses (I) and (II)
and inserting the following:
``(I) the dollar amount in clause
(i)(I) shall be increased by $1,650,
and
``(II) the dollar amount in clause
(i)(II) shall be increased by
$3,450,'', and
(E) in clause (v), as redesignated by subparagraph
(C)--
(i) by striking ``2013'' and inserting
``2018'';
(ii) by striking ``clauses (i) and (ii)''
and inserting ``clauses (i) (after the
application of clause (ii)) and (iv)''; and
(iii) by inserting ``in the case of
determinations for calendar years beginning
before 2020'' after ``1 percentage point'' in
subclause (II) thereof;
(3) by striking subparagraph (D) of subsection (b)(3);
(4) in subsection (d)(1)(B), by redesignating clause (ii)
as clause (iii) and by inserting after clause (i) the following
new clause:
``(ii) any coverage under a separate
policy, certificate, or contract of insurance
which provides benefits substantially all of
which are for treatment of the mouth (including
any organ or structure within the mouth) or for
treatment of the eye, or''; and
(5) in subsection (d), by adding at the end the following
new paragraph:
``(3) Employee.--The term `employee' includes any former
employee, surviving spouse, or other primary insured
individual.''.
(b) Effective Dates.--
(1) Section 9001(c) of the Patient Protection and
Affordable Care Act is amended by striking ``2012'' and
inserting ``2017''.
(2) Section 10901(c) of the Patient Protection and
Affordable Care Act is amended by striking ``2012'' and
inserting ``2017''.
SEC. 1402. UNEARNED INCOME MEDICARE CONTRIBUTION.
(a) Investment Income.--
(1) In general.--Subtitle A of the Internal Revenue Code of
1986 is amended by inserting after chapter 2 the following new
chapter:
``CHAPTER 2A--UNEARNED INCOME MEDICARE CONTRIBUTION
``Sec. 1411. Imposition of tax.
``SEC. 1411. IMPOSITION OF TAX.
``(a) In General.--Except as provided in subsection (e)--
``(1) Application to individuals.--In the case of an
individual, there is hereby imposed (in addition to any other
tax imposed by this subtitle) for each taxable year a tax equal
to 3.8 percent of the lesser of--
``(A) net investment income for such taxable year,
or
``(B) the excess (if any) of--
``(i) the modified adjusted gross income
for such taxable year, over
``(ii) the threshold amount.
``(2) Application to estates and trusts.--In the case of an
estate or trust, there is hereby imposed (in addition to any
other tax imposed by this subtitle) for each taxable year a tax
of 3.8 percent of the lesser of--
``(A) the undistributed net investment income for
such taxable year, or
``(B) the excess (if any) of--
``(i) the adjusted gross income (as defined
in section 67(e)) for such taxable year, over
``(ii) the dollar amount at which the
highest tax bracket in section 1(e) begins for
such taxable year.
``(b) Threshold Amount.--For purposes of this chapter, the term
`threshold amount' means--
``(1) in the case of a taxpayer making a joint return under
section 6013 or a surviving spouse (as defined in section
2(a)), $250,000,
``(2) in the case of a married taxpayer (as defined in
section 7703) filing a separate return, \1/2\ of the dollar
amount determined under paragraph (1), and
``(3) in any other case, $200,000.
``(c) Net Investment Income.--For purposes of this chapter--
``(1) In general.--The term `net investment income' means
the excess (if any) of--
``(A) the sum of--
``(i) gross income from interest,
dividends, annuities, royalties, and rents,
other than such income which is derived in the
ordinary course of a trade or business not
described in paragraph (2),
``(ii) other gross income derived from a
trade or business described in paragraph (2),
and
``(iii) net gain (to the extent taken into
account in computing taxable income)
attributable to the disposition of property
other than property held in a trade or business
not described in paragraph (2), over
``(B) the deductions allowed by this subtitle which
are properly allocable to such gross income or net
gain.
``(2) Trades and businesses to which tax applies.--A trade
or business is described in this paragraph if such trade or
business is--
``(A) a passive activity (within the meaning of
section 469) with respect to the taxpayer, or
``(B) a trade or business of trading in financial
instruments or commodities (as defined in section
475(e)(2)).
``(3) Income on investment of working capital subject to
tax.--A rule similar to the rule of section 469(e)(1)(B) shall
apply for purposes of this subsection.
``(4) Exception for certain active interests in
partnerships and s corporations.--In the case of a disposition
of an interest in a partnership or S corporation--
``(A) gain from such disposition shall be taken
into account under clause (iii) of paragraph (1)(A)
only to the extent of the net gain which would be so
taken into account by the transferor if all property of
the partnership or S corporation were sold for fair
market value immediately before the disposition of such
interest, and
``(B) a rule similar to the rule of subparagraph
(A) shall apply to a loss from such disposition.
``(5) Exception for distributions from qualified plans.--
The term `net investment income' shall not include any
distribution from a plan or arrangement described in section
401(a), 403(a), 403(b), 408, 408A, or 457(b).
``(6) Special rule.--Net investment income shall not
include any item taken into account in determining self-
employment income for such taxable year on which a tax is
imposed by section 1401(b).
``(d) Modified Adjusted Gross Income.--For purposes of this
chapter, the term `modified adjusted gross income' means adjusted gross
income increased by the excess of--
``(1) the amount excluded from gross income under section
911(a)(1), over
``(2) the amount of any deductions (taken into account in
computing adjusted gross income) or exclusions disallowed under
section 911(d)(6) with respect to the amounts described in
paragraph (1).
``(e) Nonapplication of Section.--This section shall not apply to--
``(1) a nonresident alien, or
``(2) a trust all of the unexpired interests in which are
devoted to one or more of the purposes described in section
170(c)(2)(B).''.
(2) Estimated taxes.--Section 6654 of the Internal Revenue
Code of 1986 is amended--
(A) in subsection (a), by striking ``and the tax
under chapter 2'' and inserting ``the tax under chapter
2, and the tax under chapter 2A''; and
(B) in subsection (f)--
(i) by striking ``minus'' at the end of
paragraph (2) and inserting ``plus''; and
(ii) by redesignating paragraph (3) as
paragraph (4) and inserting after paragraph (2)
the following new paragraph:
``(3) the taxes imposed by chapter 2A, minus''.
(3) Clerical amendment.--The table of chapters for subtitle
A of chapter 1 of the Internal Revenue Code of 1986 is amended
by inserting after the item relating to chapter 2 the following
new item:
``Chapter 2A--Unearned Income Medicare Contribution''.
(4) Effective dates.--The amendments made by this
subsection shall apply to taxable years beginning after
December 31, 2012.
(b) Earned Income.--
(1) Threshold.--
(A) FICA.--Paragraph (2) of section 3101(b) of the
Internal Revenue Code of 1986, as added by section 9015
of the Patient Protection and Affordable Care Act and
amended by section 10906 of such Act, is amended by
striking ``and'' at the end of subparagraph (A), by
redesignating subparagraph (B) as subparagraph (C), and
by inserting after subparagraph (A) the following new
subparagraph:
``(B) in the case of a married taxpayer (as defined
in section 7703) filing a separate return, \1/2\ of the
dollar amount determined under subparagraph (A), and''.
(B) SECA.--Section 1401(b)(2) of the Internal
Revenue Code of 1986, as added by section 9015 of the
Patient Protection and Affordable Care Act and amended
by section 10906 of such Act, is amended--
(i) in subparagraph (A), by striking
``and'' at the end of clause (i), by
redesignating clause (ii) as clause (iii), and
by inserting after clause (i) the following new
clause:
``(ii) in the case of a married taxpayer
(as defined in section 7703) filing a separate
return, \1/2\ of the dollar amount determined
under clause (i), and''; and
(ii) in subparagraph (B), by striking
``under clauses (i) and (ii)'' and inserting
``under clause (i), (ii), or (iii) (whichever
is applicable)''.
(2) Estimated taxes.--Section 6654 of the Internal Revenue
Code of 1986 is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the
following new subsection:
``(m) Special Rule for Medicare Tax.--For purposes of this section,
the tax imposed under section 3101(b)(2) (to the extent not withheld)
shall be treated as a tax imposed under chapter 2.''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to remuneration received, and taxable
years beginning after, December 31, 2012.
SEC. 1403. DELAY OF LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS
UNDER CAFETERIA PLANS.
(a) In General.--Section 10902(b) of the Patient Protection and
Affordable Care Act is amended by striking ``December 31, 2010'' and
inserting ``December 31, 2012''.
(b) Inflation Adjustment.--Paragraph (2) of section 125(i) of the
Internal Revenue Code of 1986, as added by section 9005 of the Patient
Protection and Affordable Care Act and amended by section 10902 of such
Act, is amended--
(1) in the matter preceding subparagraph (A), by striking
``December 31, 2011'' and inserting ``December 31, 2013''; and
(2) in subparagraph (B), by striking ``2010'' and inserting
``2012''.
SEC. 1404. BRAND NAME PHARMACEUTICALS.
(a) In General.--Section 9008 of the Patient Protection and
Affordable Care Act is amended--
(1) in subsection (a)(1), by striking ``2009'' and
inserting ``2010'';
(2) in subsection (b)--
(A) by striking ``$2,300,000,000'' in paragraph (1)
and inserting ``the applicable amount''; and
(B) by adding at the end the following new
paragraph:
``(4) Applicable amount.--For purposes of paragraph (1),
the applicable amount shall be determined in accordance with
the following table:
``Calendar year Applicable amount
2011................................. $2,500,000,000
2012................................. $2,800,000,000
2013................................. $2,800,000,000
2014................................. $3,000,000,000
2015................................. $3,000,000,000
2016................................. $3,000,000,000
2017................................. $4,000,000,000
2018................................. $4,100,000,000
2019 and thereafter.................. $2,800,000,000.'';
(3) in subsection (d), by adding at the end the following
new paragraph:
``(3) Joint and several liability.--If more than one person
is liable for payment of the fee under subsection (a) with
respect to a single covered entity by reason of the application
of paragraph (2), all such persons shall be jointly and
severally liable for payment of such fee.''; and
(4) by striking subsection (j) and inserting the following
new subsection:
``(j) Effective Date.--This section shall apply to calendar years
beginning after December 31, 2010.''.
(b) Effective Date.--The amendments made by this section shall take
effect as if included in section 9008 of the Patient Protection and
Affordable Care Act.
SEC. 1405. EXCISE TAX ON MEDICAL DEVICE MANUFACTURERS.
(a) In General.--Chapter 32 of the Internal Revenue Code of 1986 is
amended--
(1) by inserting after subchapter D the following new
subchapter:
``Subchapter E--Medical Devices
``Sec. 4191. Medical devices.
``SEC. 4191. MEDICAL DEVICES.
``(a) In General.--There is hereby imposed on the sale of any
taxable medical device by the manufacturer, producer, or importer a tax
equal to 2.3 percent of the price for which so sold.
``(b) Taxable Medical Device.--For purposes of this section--
``(1) In general.--The term `taxable medical device' means
any device (as defined in section 201(h) of the Federal Food,
Drug, and Cosmetic Act) intended for humans.
``(2) Exemptions.--Such term shall not include--
``(A) eyeglasses,
``(B) contact lenses,
``(C) hearing aids, and
``(D) any other medical device determined by the
Secretary to be of a type which is generally purchased
by the general public at retail for individual use.'',
and
(2) by inserting after the item relating to subchapter D in
the table of subchapters for such chapter the following new
item:
``subchapter e. medical devices''.
(b) Certain Exemptions Not to Apply.--
(1) Section 4221(a) of the Internal Revenue Code of 1986 is
amended by adding at the end the following new sentence: ``In
the case of the tax imposed by section 4191, paragraphs (3),
(4), (5), and (6) shall not apply.''.
(2) Section 6416(b)(2) of such Code is amended by adding at
the end the following: ``In the case of the tax imposed by
section 4191, subparagraphs (B), (C), (D), and (E) shall not
apply.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales after December 31, 2012.
(d) Repeal of Section 9009 of the Patient Protection and Affordable
Care Act.--Section 9009 of the Patient Protection and Affordable Care
Act, as amended by section 10904 of such Act, is repealed effective as
of the date of enactment of that Act.
SEC. 1406. HEALTH INSURANCE PROVIDERS.
(a) In General.--Section 9010 of the Patient Protection and
Affordable Care Act, as amended by section 10905 of such Act, is
amended--
(1) in subsection (a)(1), by striking ``2010'' and
inserting ``2013'';
(2) in subsection (b)(2)--
(A) by striking ``For purposes of paragraph (1),
the net premiums'' and inserting ``For purposes of
paragraph (1)--
``(A) In general.--The net premiums''; and
(B) by adding at the end the following
subparagraph:
``(B) Partial exclusion for certain exempt
activities.--After the application of subparagraph (A),
only 50 percent of the remaining net premiums written
with respect to health insurance for any United States
health risk that are attributable to the activities
(other than activities of an unrelated trade or
business as defined in section 513 of the Internal
Revenue Code of 1986) of any covered entity qualifying
under paragraph (3), (4), (26), or (29) of section
501(c) of such Code and exempt from tax under section
501(a) of such Code shall be taken into account.'';
(3) in subsection (c)--
(A) by inserting ``during the calendar year in
which the fee under this section is due'' in paragraph
(1) after ``risk'';
(B) in paragraph (2), by striking subparagraphs
(C), (D), and (E) and inserting the following new
subparagraphs:
``(C) any entity--
``(i) which is incorporated as a nonprofit
corporation under a State law,
``(ii) no part of the net earnings of which
inures to the benefit of any private
shareholder or individual, no substantial part
of the activities of which is carrying on
propaganda, or otherwise attempting, to
influence legislation (except as otherwise
provided in section 501(h) of the Internal
Revenue Code of 1986), and which does not
participate in, or intervene in (including the
publishing or distributing of statements), any
political campaign on behalf of (or in
opposition to) any candidate for public office,
and
``(iii) more than 80 percent of the gross
revenues of which is received from government
programs that target low-income, elderly, or
disabled populations under titles XVIII, XIX,
and XXI of the Social Security Act, and
``(D) any entity which is described in section
501(c)(9) of such Code and which is established by an
entity (other than by an employer or employers) for
purposes of providing health care benefits.'';
(C) in paragraph (3)(A), by striking ``subparagraph
(C)(i)(I), (D)(i)(I), or (E)(i)'' and inserting
``subparagraph (C) or (D)''; and
(D) by adding at the end the following new
paragraph:
``(4) Joint and several liability.--If more than one person
is liable for payment of the fee under subsection (a) with
respect to a single covered entity by reason of the application
of paragraph (3), all such persons shall be jointly and
severally liable for payment of such fee.'';
(4) by striking subsection (e) and inserting the following:
``(e) Applicable Amount.--For purposes of subsection (b)(1)--
``(1) Years before 2019.--In the case of calendar years
beginning before 2019, the applicable amount shall be
determined in accordance with the following table:
``Calendar year Applicable amount
2014................................. $8,000,000,000
2015................................. $11,300,000,000
2016................................. $11,300,000,000
2017................................. $13,900,000,000
2018................................. $14,300,000,000.
``(2) Years after 2018.--In the case of any calendar year
beginning after 2018, the applicable amount shall be the
applicable amount for the preceding calendar year increased by
the rate of premium growth (within the meaning of section
36B(b)(3)(A)(ii) of the Internal Revenue Code of 1986) for such
preceding calendar year.'';
(5) in subsection (g), by adding at the end the following
new paragraphs:
``(3) Accuracy-related penalty.--
``(A) In general.--In the case of any
understatement of a covered entity's net premiums
written with respect to health insurance for any United
States health risk for any calendar year, there shall
be paid by the covered entity making such
understatement, an amount equal to the excess of--
``(i) the amount of the covered entity's
fee under this section for the calendar year
the Secretary determines should have been paid
in the absence of any such understatement, over
``(ii) the amount of such fee the Secretary
determined based on such understatement.
``(B) Understatement.--For purposes of this
paragraph, an understatement of a covered entity's net
premiums written with respect to health insurance for
any United States health risk for any calendar year is
the difference between the amount of such net premiums
written as reported on the return filed by the covered
entity under paragraph (1) and the amount of such net
premiums written that should have been reported on such
return.
``(C) Treatment of penalty.--The penalty imposed
under subparagraph (A) shall be subject to the
provisions of subtitle F of the Internal Revenue Code
of 1986 that apply to assessable penalties imposed
under chapter 68 of such Code.
``(4) Treatment of information.--Section 6103 of the
Internal Revenue Code of 1986 shall not apply to any
information reported under this subsection.''; and
(6) by striking subsection (j) and inserting the following
new subsection:
``(j) Effective Date.--This section shall apply to calendar years
beginning after December 31, 2013.''.
(b) Effective Date.--The amendments made by this section shall take
effect as if included in section 9010 of the Patient Protection and
Affordable Care Act.
SEC. 1407. DELAY OF ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO
MEDICARE PART D SUBSIDY.
Section 9012(b) of the Patient Protection and Affordable Care Act
is amended by striking ``2010'' and inserting ``2012''.
SEC. 1408. ELIMINATION OF UNINTENDED APPLICATION OF CELLULOSIC BIOFUEL
PRODUCER CREDIT.
(a) In General.--Section 40(b)(6)(E) of the Internal Revenue Code
of 1986 is amended by adding at the end the following new clause:
``(iii) Exclusion of unprocessed fuels.--
The term `cellulosic biofuel' shall not include
any fuel if--
``(I) more than 4 percent of such
fuel (determined by weight) is any
combination of water and sediment, or
``(II) the ash content of such fuel
is more than 1 percent (determined by
weight).''.
(b) Effective Date.--The amendment made by this section shall apply
to fuels sold or used on or after January 1, 2010.
SEC. 1409. CODIFICATION OF ECONOMIC SUBSTANCE DOCTRINE AND PENALTIES.
(a) In General.--Section 7701 of the Internal Revenue Code of 1986
is amended by redesignating subsection (o) as subsection (p) and by
inserting after subsection (n) the following new subsection:
``(o) Clarification of Economic Substance Doctrine.--
``(1) Application of doctrine.--In the case of any
transaction to which the economic substance doctrine is
relevant, such transaction shall be treated as having economic
substance only if--
``(A) the transaction changes in a meaningful way
(apart from Federal income tax effects) the taxpayer's
economic position, and
``(B) the taxpayer has a substantial purpose (apart
from Federal income tax effects) for entering into such
transaction.
``(2) Special rule where taxpayer relies on profit
potential.--
``(A) In general.--The potential for profit of a
transaction shall be taken into account in determining
whether the requirements of subparagraphs (A) and (B)
of paragraph (1) are met with respect to the
transaction only if the present value of the reasonably
expected pre-tax profit from the transaction is
substantial in relation to the present value of the
expected net tax benefits that would be allowed if the
transaction were respected.
``(B) Treatment of fees and foreign taxes.--Fees
and other transaction expenses shall be taken into
account as expenses in determining pre-tax profit under
subparagraph (A). The Secretary shall issue regulations
requiring foreign taxes to be treated as expenses in
determining pre-tax profit in appropriate cases.
``(3) State and local tax benefits.--For purposes of
paragraph (1), any State or local income tax effect which is
related to a Federal income tax effect shall be treated in the
same manner as a Federal income tax effect.
``(4) Financial accounting benefits.--For purposes of
paragraph (1)(B), achieving a financial accounting benefit
shall not be taken into account as a purpose for entering into
a transaction if the origin of such financial accounting
benefit is a reduction of Federal income tax.
``(5) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term
`economic substance doctrine' means the common law
doctrine under which tax benefits under subtitle A with
respect to a transaction are not allowable if the
transaction does not have economic substance or lacks a
business purpose.
``(B) Exception for personal transactions of
individuals.--In the case of an individual, paragraph
(1) shall apply only to transactions entered into in
connection with a trade or business or an activity
engaged in for the production of income.
``(C) Determination of application of doctrine not
affected.--The determination of whether the economic
substance doctrine is relevant to a transaction shall
be made in the same manner as if this subsection had
never been enacted.
``(D) Transaction.--The term `transaction' includes
a series of transactions.''.
(b) Penalty for Underpayments Attributable to Transactions Lacking
Economic Substance.--
(1) In general.--Subsection (b) of section 6662 is amended
by inserting after paragraph (5) the following new paragraph:
``(6) Any disallowance of claimed tax benefits by reason of
a transaction lacking economic substance (within the meaning of
section 7701(o)) or failing to meet the requirements of any
similar rule of law.''.
(2) Increased penalty for nondisclosed transactions.--
Section 6662 is amended by adding at the end the following new
subsection:
``(i) Increase in Penalty in Case of Nondisclosed Noneconomic
Substance Transactions.--
``(1) In general.--In the case of any portion of an
underpayment which is attributable to one or more nondisclosed
noneconomic substance transactions, subsection (a) shall be
applied with respect to such portion by substituting `40
percent' for `20 percent'.
``(2) Nondisclosed noneconomic substance transactions.--For
purposes of this subsection, the term `nondisclosed noneconomic
substance transaction' means any portion of a transaction
described in subsection (b)(6) with respect to which the
relevant facts affecting the tax treatment are not adequately
disclosed in the return nor in a statement attached to the
return.
``(3) Special rule for amended returns.--In no event shall
any amendment or supplement to a return of tax be taken into
account for purposes of this subsection if the amendment or
supplement is filed after the earlier of the date the taxpayer
is first contacted by the Secretary regarding the examination
of the return or such other date as is specified by the
Secretary.''.
(3) Conforming amendment.--Subparagraph (B) of section
6662A(e)(2) is amended--
(A) by striking ``section 6662(h)'' and inserting
``subsections (h) or (i) of section 6662''; and
(B) by striking ``gross valuation misstatement
penalty'' in the heading and inserting ``certain
increased underpayment penalties''.
(c) Reasonable Cause Exception Not Applicable to Noneconomic
Substance Transactions.--
(1) Reasonable cause exception for underpayments.--
Subsection (c) of section 6664 is amended--
(A) by redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively;
(B) by striking ``paragraph (2)'' in paragraph
(4)(A), as so redesignated, and inserting ``paragraph
(3)''; and
(C) by inserting after paragraph (1) the following
new paragraph:
``(2) Exception.--Paragraph (1) shall not apply to any
portion of an underpayment which is attributable to one or more
transactions described in section 6662(b)(6).''.
(2) Reasonable cause exception for reportable transaction
understatements.--Subsection (d) of section 6664 is amended--
(A) by redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively;
(B) by striking ``paragraph (2)(C)'' in paragraph
(4), as so redesignated, and inserting ``paragraph
(3)(C)''; and
(C) by inserting after paragraph (1) the following
new paragraph:
``(2) Exception.--Paragraph (1) shall not apply to any
portion of a reportable transaction understatement which is
attributable to one or more transactions described in section
6662(b)(6).''.
(d) Application of Penalty for Erroneous Claim for Refund or Credit
to Noneconomic Substance Transactions.--Section 6676 is amended by
redesignating subsection (c) as subsection (d) and inserting after
subsection (b) the following new subsection:
``(c) Noneconomic Substance Transactions Treated as Lacking
Reasonable Basis.--For purposes of this section, any excessive amount
which is attributable to any transaction described in section
6662(b)(6) shall not be treated as having a reasonable basis.''.
(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
transactions entered into after the date of the enactment of
this Act.
(2) Underpayments.--The amendments made by subsections (b)
and (c)(1) shall apply to underpayments attributable to
transactions entered into after the date of the enactment of
this Act.
(3) Understatements.--The amendments made by subsection
(c)(2) shall apply to understatements attributable to
transactions entered into after the date of the enactment of
this Act.
(4) Refunds and credits.--The amendment made by subsection
(d) shall apply to refunds and credits attributable to
transactions entered into after the date of the enactment of
this Act.
SEC. 1410. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
The percentage under paragraph (1) of section 202(b) of the
Corporate Estimated Tax Shift Act of 2009 in effect on the date of the
enactment of this Act is increased by 15.75 percentage points.
Subtitle F--Other Provisions
SEC. 1501. COMMUNITY COLLEGE AND CAREER TRAINING GRANT PROGRAM.
Section 279(b) of the Trade Act of 1974 (19 U.S.C. 2372a(b)) is
amended by striking ``Supplement'' and all that follows through
``Funds'' and inserting ``There are'' and by striking ``pursuant'' and
all that follows and inserting ``$500,000,000 for each of fiscal years
2011, 2012, 2013, and 2014 to carry out this subchapter, except that
the limitations contained in section 278(a)(2) shall not apply to such
funds and each State shall receive not less than 0.5 percent of the
amount appropriated pursuant to this subsection for each such fiscal
year.''.
TITLE II--EDUCATION AND HEALTH
Subtitle A--Education
SEC. 2001. SHORT TITLE; REFERENCES.
(a) Short Title.--This subtitle may be cited as the ``SAFRA Act''.
(b) References.--Except as otherwise expressly provided, whenever
in this subtitle 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
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
PART I--INVESTING IN STUDENTS AND FAMILIES
SEC. 2101. FEDERAL PELL GRANTS.
(a) Amount of Grants.--Section 401(b) (20 U.S.C. 1070a(b)) is
amended--
(1) by amending paragraph (2)(A) to read as follows:
``(A) The amount of the Federal Pell Grant for a
student eligible under this part shall be--
``(i) the maximum Federal Pell Grant, as
specified in the last enacted appropriation Act
applicable to that award year, plus
``(ii) the amount of the increase
calculated under paragraph (8)(B) for that
year, less
``(iii) an amount equal to the amount
determined to be the expected family
contribution with respect to that student for
that year.''; and
(2) in paragraph (8)--
(A) in subparagraph (A)--
(i) in the matter preceding clause (i), by
striking ``, to carry out subparagraph (B) of
this paragraph''; and
(ii) by striking clauses (iii) through (x)
and inserting the following:
``(iii) to carry out subparagraph (B) of
this paragraph, such sums as may be necessary
for fiscal year 2010 and each subsequent fiscal
year to provide the amount of increase of the
maximum Federal Pell Grant required by clauses
(ii) and (iii) of subparagraph (B); and
``(iv) to carry out this section,
$13,500,000,000 for fiscal year 2011.'';
(B) in subparagraph (B)--
(i) in the matter preceding clause (i), by
striking ``subparagraph (A)'' and inserting
``clauses (i) through (iii) of subparagraph
(A)'';
(ii) in clause (ii), by striking ``and
2011-2012'' and inserting ``, 2011-2012, and
2012-2013''; and
(iii) by striking clause (iii) and
inserting the following:
``(iii) the amount determined under
subparagraph (C) for each succeeding award
year.'';
(C) by striking subparagraph (C) and inserting the
following:
``(C) Adjustment amounts.--
``(i) Award year 2013-2014.--For award year
2013-2014, the amount determined under this
subparagraph for purposes of subparagraph
(B)(iii) shall be equal to--
``(I) $5,550 or the total maximum
Federal Pell Grant for the preceding
award year (as determined under clause
(v)(II)), whichever is greater,
increased by a percentage equal to the
annual adjustment percentage for award
year 2013-2014, reduced by
``(II) $4,860 or the maximum
Federal Pell Grant for which a student
was eligible for the preceding award
year, as specified in the last enacted
appropriation Act applicable to that
year, whichever is greater; and
``(III) rounded to the nearest $5.
``(ii) Award years 2014-2015 through 2017-
2018.--For each of the award years 2014-2015
through 2017-2018, the amount determined under
this subparagraph for purposes of subparagraph
(B)(iii) shall be equal to--
``(I) the total maximum Federal
Pell Grant for the preceding award year
(as determined under clause (v)(II)),
increased by a percentage equal to the
annual adjustment percentage for the
award year for which the amount under
this subparagraph is being determined,
reduced by
``(II) $4,860 or the maximum
Federal Pell Grant for which a student
was eligible for the preceding award
year, as specified in the last enacted
appropriation Act applicable to that
year, whichever is greater; and
``(III) rounded to the nearest $5.
``(iii) Subsequent award years.--For award
year 2018-2019 and each subsequent award year,
the amount determined under this subparagraph
for purposes of subparagraph (B)(iii) shall be
equal to the amount determined under clause
(ii) for award year 2017-2018.
``(iv) Limitation on decreases.--
Notwithstanding clauses (i), (ii), and (iii),
if the amount determined under clause (i),
(ii), or (iii) for a particular award year is
less than the amount determined under this
paragraph for the award year preceding that
particular award year, then the amount
determined under such clause for that
particular award year shall be the amount
determined under this paragraph for the
preceding award year.
``(v) Definitions.--For purposes of this
subparagraph--
``(I) the term `annual adjustment
percentage' as applied to an award
year, is equal to the estimated
percentage change in the Consumer Price
Index (as determined by the Secretary,
using the definition in section 478(f))
for the most recent calendar year
ending prior to the beginning of that
award year; and
``(II) the term `total maximum
Federal Pell Grant' as applied to a
preceding award year, is equal to the
sum of--
``(aa) the maximum Federal
Pell Grant for which a student
is eligible during an award
year, as specified in the last
enacted appropriation Act
applicable to that preceding
award year; and
``(bb) the amount of the
increase in the maximum Federal
Pell Grant required by this
paragraph for that preceding
award year.'';
(D) by striking subparagraph (E); and
(E) by redesignating subparagraph (F) as
subparagraph (E).
(b) Conforming Amendments.--Title IV (20 U.S.C. 1070 et seq.) is
further amended--
(1) in section 401(b) (20 U.S.C. 1070a(b))--
(A) in paragraph (4)--
(i) by striking ``maximum basic grant level
specified in the appropriate appropriation
Act'' and inserting ``maximum amount of a
Federal Pell Grant award determined under
paragraph (2)(A)''; and
(ii) by striking ``such level'' each place
it appears and inserting ``such Federal Pell
Grant amount'' in each such place; and
(B) in paragraph (6), by striking ``the grant level
specified in the appropriate Appropriation Act for this
subpart for such year'' and inserting ``the maximum
amount of a Federal Pell Grant award determined under
paragraph (2)(A), for which a student is eligible
during such award year'';
(2) in section 402D(d)(1) (20 U.S.C. 1070a-14(d)(1)), by
striking ``exceed the maximum'' and all that follows through
``Grant, for'' and inserting ``exceed the Federal Pell Grant
amount, determined under section 401(b)(2)(A), for which a
student is eligible, or be less than the minimum Federal Pell
Grant amount described in section 401(b)(4), for'';
(3) in section 435(a)(5)(A)(i)(I) (20 U.S.C.
1085(a)(5)(A)(i)(I)), by striking ``one-half the maximum
Federal Pell Grant award for which a student would be
eligible'' and inserting ``one-half the Federal Pell Grant
amount, determined under section 401(b)(2)(A), for which a
student would be eligible'';
(4) in section 483(e)(3)(A)(ii) (20 U.S.C.
1090(e)(3)(A)(ii)), by striking ``based on the maximum Federal
Pell Grant award at the time of application'' and inserting
``based on the Federal Pell Grant amount, determined under
section 401(b)(2)(A), for which a student is eligible at the
time of application'';
(5) in section 485E(b)(1)(A) (20 U.S.C. 1092f(b)(1)(A)), by
striking ``of such students' potential eligibility for a
maximum Federal Pell Grant under subpart 1 of part A'' and
inserting ``of such students' potential eligibility for the
Federal Pell Grant amount, determined under section
401(b)(2)(A), for which the student would be eligible''; and
(6) in section 894(f)(2)(C)(ii)(I) (20 U.S.C.
1161y(f)(2)(C)(ii)(I)), by striking ``the maximum Federal Pell
Grant for each award year'' and inserting ``the Federal Pell
Grant amount, determined under section 401(b)(2)(A), for which
a student may be eligible for each award year''.
(c) Effective Date.--The amendments made by subsections (a) and (b)
shall take effect on July 1, 2010.
SEC. 2102. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.
Section 781 (20 U.S.C. 1141) is amended--
(1) in the first sentence of subsection (a), by striking
``$66,000,000'' and all that follows through the period and
inserting ``$150,000,000 for each of the fiscal years 2010
through 2014. The authority to award grants under this section
shall expire at the end of fiscal year 2014.''; and
(2) in subsection (c)(2), by striking ``0.5 percent'' and
inserting ``1.0 percent''.
SEC. 2103. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND MINORITY-SERVING INSTITUTIONS.
Section 371(b)(1)(A) (20 U.S.C. 1067q(b)(1)(A)) is amended by
striking ``and 2009.'' and all that follows and inserting ``through
2019. The authority to award grants under this section shall expire at
the end of fiscal year 2019.''.
PART II--STUDENT LOAN REFORM
SEC. 2201. TERMINATION OF FEDERAL FAMILY EDUCATION LOAN APPROPRIATIONS.
Section 421 (20 U.S.C. 1071) is amended--
(1) in subsection (b), in the first sentence of the matter
following paragraph (6), by inserting ``, except that no sums
may be expended after June 30, 2010, with respect to loans
under this part for which the first disbursement is after such
date'' after ``expended''; and
(2) by adding at the end the following new subsection:
``(d) Termination of Authority to Make or Insure New Loans.--
Notwithstanding paragraphs (1) through (6) of subsection (b) or any
other provision of law--
``(1) no new loans (including consolidation loans) may be
made or insured under this part after June 30, 2010; and
``(2) no funds are authorized to be appropriated, or may be
expended, under this Act or any other Act to make or insure
loans under this part (including consolidation loans) for which
the first disbursement is after June 30, 2010,
except as expressly authorized by an Act of Congress enacted after the
date of enactment of the SAFRA Act.''.
SEC. 2202. TERMINATION OF FEDERAL LOAN INSURANCE PROGRAM.
Section 424(a) (20 U.S.C. 1074(a)) is amended by striking
``September 30, 1976,'' and all that follows and inserting ``September
30, 1976, for each of the succeeding fiscal years ending prior to
October 1, 2009, and for the period from October 1, 2009, to June 30,
2010, for loans first disbursed on or before June 30, 2010.''.
SEC. 2203. TERMINATION OF APPLICABLE INTEREST RATES.
Section 427A(l) (20 U.S.C. 1077a(l)) is amended--
(1) in the subsection heading, by inserting ``and Before
July 1, 2010'' after ``2006'';
(2) in paragraph (1), by inserting ``and before July 1,
2010,'' after ``July 1, 2006,'';
(3) in paragraph (2), by inserting ``and before July 1,
2010,'' after ``July 1, 2006,'';
(4) in paragraph (3), by inserting ``and that was disbursed
before July 1, 2010,'' after ``July 1, 2006,''; and
(5) in paragraph (4)--
(A) in the matter preceding subparagraph (A), by
striking ``July 1, 2012'' and inserting ``July 1,
2010''; and
(B) by repealing subparagraphs (D) and (E).
SEC. 2204. TERMINATION OF FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST
COSTS.
(a) Higher Education Act of 1965.--Section 428 (20 U.S.C. 1078) is
amended--
(1) in subsection (a)--
(A) in paragraph (1), in the matter preceding
subparagraph (A), by inserting ``for which the first
disbursement is made before July 1, 2010, and'' after
``eligible institution''; and
(B) in paragraph (5), by striking ``September 30,
2014,'' and all that follows through the period and
inserting ``June 30, 2010.'';
(2) in subsection (b)(1)--
(A) in subparagraph (G)(ii), by inserting ``and
before July 1, 2010,'' after ``July 1, 2006,''; and
(B) in subparagraph (H)(ii), by inserting ``and
that are first disbursed before July 1, 2010,'' after
``July 1, 2006,'';
(3) in subsection (f)(1)(A)(ii)--
(A) by striking ``during fiscal years beginning'';
and
(B) by inserting ``and first disbursed before July
1, 2010,'' after ``October 1, 2003,''; and
(4) in subsection (j)(1), by inserting ``, before July 1,
2010,'' after ``section 435(d)(1)(D) of this Act shall''.
(b) College Cost Reduction and Access Act.--Section 303 of the
College Cost Reduction and Access Act (Public Law 110-84) is repealed.
SEC. 2205. TERMINATION OF FFEL PLUS LOANS.
Section 428B(a)(1) (20 U.S.C. 1078-2(a)(1)) is amended by striking
``A graduate'' and inserting ``Prior to July 1, 2010, a graduate''.
SEC. 2206. FEDERAL CONSOLIDATION LOANS.
(a) In General.--Section 428C (20 U.S.C. 1078-3) is amended--
(1) in subsection (a)(4)(A), by inserting ``, and first
disbursed before July 1, 2010'' after ``under this part'';
(2) in subsection (b)--
(A) in paragraph (1)(E), by inserting before the
semicolon ``, and before July 1, 2010''; and
(B) in paragraph (5), by striking ``In the event
that'' and inserting ``If, before July 1, 2010,'';
(3) in subsection (c)(1)--
(A) in subparagraph (A)(ii), by inserting ``and
that is disbursed before July 1, 2010,'' after
``2006,''; and
(B) in subparagraph (C), by inserting ``and
disbursed before July 1, 2010,'' after ``1994,''; and
(4) in subsection (e), by striking ``September 30, 2014.''
and inserting ``June 30, 2010. No loan may be made under this
section for which the disbursement is on or after July 1,
2010.''.
(b) Temporary Loan Consolidation Authority.--Part D of title IV (20
U.S.C. 1087a et seq.) is amended by inserting after section 459A (20
U.S.C. 1087i) the following:
``SEC. 459B. TEMPORARY LOAN CONSOLIDATION AUTHORITY.
``(a) Temporary Loan Consolidation Authority.--
``(1) In general.--A borrower who has 1 or more loans in 2
or more of the categories described in paragraph (2), and who
has not yet entered repayment on 1 or more of those loans in
any of the categories, may consolidate all of the loans of the
borrower that are described in paragraph (2) into a Federal
Direct Consolidation Loan during the period described in
paragraph (3).
``(2) Categories of loans that may be consolidated.--The
categories of loans that may be consolidated under paragraph
(1) are--
``(A) loans made under this part;
``(B) loans purchased by the Secretary pursuant to
section 459A; and
``(C) loans made under part B that are held by an
eligible lender, as such term is defined in section
435(d).
``(3) Time period in which loans may be consolidated.--The
Secretary may make a Federal Direct Consolidation Loan under
this section to a borrower whose application for such Federal
Direct Consolidation Loan is received on or after July 1, 2010,
and before July 1, 2011.
``(b) Terms of Loans.--A Federal Direct Consolidation Loan made
under this section shall have the same terms and conditions as a
Federal Direct Consolidation Loan made under section 455(g), except
that--
``(1) in determining the applicable rate of interest on the
Federal Direct Consolidation Loan made under this section
(other than on a Federal Direct Consolidation Loan described in
paragraph (2)), section 427A(l)(3) shall be applied without
rounding the weighted average of the interest rate on the loans
consolidated to the nearest higher one-eighth of 1 percent as
described in subparagraph (A) of section 427A(l)(3); and
``(2) if a Federal Direct Consolidation Loan made under
this section that repays a loan which is subject to an interest
rate determined under section 427A(g)(2), (j)(2), or (k)(2),
then the interest rate for such Federal Direct Consolidation
Loan shall be calculated--
``(A) by using the applicable rate of interest
described in section 427A(g)(2), (j)(2), or (k)(2),
respectively; and
``(B) in accordance with section 427A(l)(3).''.
SEC. 2207. TERMINATION OF UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE-INCOME
BORROWERS.
Section 428H (20 U.S.C. 1078-8) is amended--
(1) in subsection (a), by inserting ``that are first
disbursed before July 1, 2010,'' after ``under this part'';
(2) in subsection (b)--
(A) by striking ``Any student'' and inserting
``Prior to July 1, 2010, any student''; and
(B) by inserting ``for which the first disbursement
is made before such date'' after ``unsubsidized Federal
Stafford Loan''; and
(3) in subsection (h), by inserting ``and that are first
disbursed before July 1, 2010,'' after ``July 1, 2006,''.
SEC. 2208. TERMINATION OF SPECIAL ALLOWANCES.
Section 438 (20 U.S.C. 1087-1) is amended--
(1) in subsection (b)(2)(I)--
(A) in the subclause heading, by inserting ``, and
before july 1, 2010'' after ``2000'';
(B) in clause (i), by inserting ``and before July
1, 2010,'' after ``2000,'';
(C) in clause (ii)(II), by inserting ``and before
July 1, 2010,'' after ``2006,'';
(D) in clause (iii), by inserting ``and before July
1, 2010,'' after ``2000,'';
(E) in clause (iv), by inserting ``and that is
disbursed before July 1, 2010,'' after ``2000,'';
(F) in clause (v)(I), by inserting ``and before
July 1, 2010,'' after ``2006,''; and
(G) in clause (vi)--
(i) in the clause heading, by inserting ``,
and before july 1, 2010'' after ``2007''; and
(ii) in the matter preceding subclause (I),
by inserting ``and before July 1, 2010,'' after
``2007,'';
(2) in subsection (c)--
(A) in paragraph (2)(B)--
(i) in clause (iii), by inserting ``and''
after the semicolon;
(ii) in clause (iv), by striking ``; and''
and inserting a period; and
(iii) by striking clause (v); and
(B) in paragraph (6), by inserting ``and first
disbursed before July 1, 2010,'' after ``1992,''; and
(3) in subsection (d)(2)(B), by inserting ``, and before
July 1, 2010'' after ``2007''.
SEC. 2209. ORIGINATION OF DIRECT LOANS AT INSTITUTIONS OUTSIDE THE
UNITED STATES.
(a) Loans for Students Attending Institutions Outside the United
States.--Section 452 (20 U.S.C. 1087b) is amended by adding at the end
the following:
``(d) Institutions Outside the United States.--Loan funds for
students (and parents of students) attending institutions outside the
United States shall be disbursed through a financial institution
located or operating in the United States and designated by the
Secretary to serve as the agent of such institutions with respect to
the receipt of the disbursements of such loan funds and the transfer of
such funds to such institutions. To be eligible to receive funds under
this part, an institution outside the United States shall make
arrangements with the agent designated by the Secretary under this
subsection to receive funds under this part.''.
(b) Conforming Amendments.--
(1) Amendments.--Section 102 (20 U.S.C. 1002), as amended
by section 102 of the Higher Education Opportunity Act (Public
Law 110-315) and section 101 of Public Law 111-39, is amended--
(A) by striking ``part B'' each place the term
appears and inserting ``part D'';
(B) in subsection (a)(1)(C), by inserting ``,
consistent with the requirements of section 452(d)''
before the period at the end; and
(C) in subsection (a)(2)(A)--
(i) in the second sentence of the matter
preceding clause (i), by striking ``made,
insured, or guaranteed'' and inserting
``made''; and
(ii) in clause (iii)--
(I) in subclause (III), by striking
``only Federal Stafford'' and all that
follows through ``section 428B'' and
inserting ``only Federal Direct
Stafford Loans under section
455(a)(2)(A), Federal Direct
Unsubsidized Stafford Loans under
section 455(a)(2)(D), or Federal Direct
PLUS Loans under section
455(a)(2)(B)''; and
(II) in subclause (V), by striking
``a Federal Stafford'' and all that
follows through ``section 428B'' and
inserting ``a Federal Direct Stafford
Loan under section 455(a)(2)(A), a
Federal Direct Unsubsidized Stafford
Loan under section 455(a)(2)(D), or a
Federal Direct PLUS Loan under section
455(a)(2)(B)''.
(2) Effective date.--The amendments made by subparagraph
(C) of paragraph (1) shall be effective on July 1, 2010, as if
enacted as part of section 102(a)(1) of the Higher Education
Opportunity Act (Public Law 110-315) and subject to section
102(e) of such Act as amended by section 101(a)(2) of Public
Law 111-39 (20 U.S.C. 1002 note).
SEC. 2210. CONFORMING AMENDMENTS.
(a) Amendments.--Section 454 (20 U.S.C. 1087d) is amended--
(1) in subsection (a)--
(A) by striking paragraph (4); and
(B) by redesignating paragraphs (5) through (7) as
paragraphs (4) through (6), respectively; and
(2) in subsection (b)(2), by striking ``(5), (6), and (7)''
and inserting ``(5), and (6)''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on July 1, 2010.
SEC. 2211. TERMS AND CONDITIONS OF LOANS.
(a) In General.--Section 455 (20 U.S.C. 1087e) is amended--
(1) in subsection (a)(1), by inserting ``, and first
disbursed on June 30, 2010,'' before ``under sections 428'';
and
(2) in subsection (g)--
(A) by inserting ``, including any loan made under
part B and first disbursed before July 1, 2010'' after
``section 428C(a)(4)''; and
(B) by striking the third sentence.
(b) Effective Date.--The amendment made by subsection (a)(1) shall
apply with respect to loans first disbursed under part D of title IV of
the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) on or after
July 1, 2010.
SEC. 2212. CONTRACTS; MANDATORY FUNDS.
(a) Contracts.--Section 456 (20 U.S.C. 1087f) is amended--
(1) in subsection (a)--
(A) by inserting after paragraph (3) the following
new paragraph:
``(4) Servicing by eligible not-for-profit servicers.--
``(A) Servicing contracts.--
``(i) In general.--The Secretary shall
contract with each eligible not-for-profit
servicer to service loans originated under this
part, if the servicer--
``(I) meets the standards for
servicing Federal assets that apply to
contracts awarded pursuant to paragraph
(1); and
``(II) has the capacity to service
the applicable loan volume allocation
described in subparagraph (B).
``(ii) Competitive market rate
determination for first 100,000 borrower
accounts.--The Secretary shall establish a
separate pricing tier for each of the first
100,000 borrower loan accounts at a competitive
market rate.
``(iii) Ineligibility.--An eligible not-
for-profit servicer shall no longer be eligible
for a contract under this paragraph after July
1, 2014, if--
``(I) the servicer has not been
awarded such a contract before that
date; or
``(II) the servicer's contract was
terminated, and the servicer had not
reapplied for, and been awarded, a
contract under this paragraph.
``(B) Allocations.--
``(i) In general.--The Secretary shall
(except as provided in clause (ii)) allocate to
an eligible not-for-profit servicer, subject to
the contract of such servicer described in
subparagraph (A), the servicing rights for the
loan accounts of 100,000 borrowers (including
borrowers who borrowed loans in a prior year
that were serviced by the servicer).
``(ii) Servicer allocation.--The Secretary
may reallocate, increase, reduce, or terminate
an eligible not-for-profit servicer's
allocation of servicing rights under clause (i)
based on the performance of such servicer, on
the same terms as loan allocations provided by
contracts awarded pursuant to paragraph (1).'';
and
(2) by adding at the end the following:
``(c) Definition of Eligible Not-for-profit Servicer.--In this
section:
``(1) In general.--The term `eligible not-for-profit
servicer' means an entity--
``(A) that is not owned or controlled in whole or
in part by--
``(i) a for profit entity; or
``(ii) a nonprofit entity having its
principal place of business in another State;
and
``(B) that--
``(i) as of July 1, 2009--
``(I) meets the definition of an
eligible not-for-profit holder under
section 435(p), except that such term
does not include eligible lenders
described in paragraph (1)(D) of such
section; and
``(II) was performing, or had
entered into a contract with a third
party servicer (as such term is defined
in section 481(c)) who was performing,
student loan servicing functions for
loans made under part B of this title;
``(ii) notwithstanding clause (i), as of
July 1, 2009--
``(I) is the sole beneficial owner
of a loan for which the special
allowance rate is calculated under
section 438(b)(2)(I)(vi)(II) because
the loan is held by an eligible lender
trustee that is an eligible not-for-
profit holder as defined under section
435(p)(1)(D); and
``(II) was performing, or had
entered into a contract with a third
party servicer (as such term is defined
in section 481(c)) who was performing,
student loan servicing functions for
loans made under part B of this title;
or
``(iii) is an affiliated entity of an
eligible not-for-profit servicer described in
clause (i) or (ii) that--
``(I) directly employs, or will
directly employ (on or before the date
the entity begins servicing loans under
a contract awarded by the Secretary
pursuant to subsection (a)(3)(A)), the
majority of individuals who perform
borrower-specific student loan
servicing functions; and
``(II) as of July 1, 2009, was
performing, or had entered into a
contract with a third party servicer
(as such term is defined in section
481(c)) who was performing, student
loan servicing functions for loans made
under part B of this title.
``(2) Affiliated entity.--For the purposes of paragraph
(1), the term `affiliated entity'--
``(A) means an entity contracted to perform
services for an eligible not-for-profit servicer that--
``(i) is a nonprofit entity or is wholly
owned by a nonprofit entity; and
``(ii) is not owned or controlled, in whole
or in part, by--
``(I) a for-profit entity; or
``(II) an entity having its
principal place of business in another
State; and
``(B) may include an affiliated entity that is
established by an eligible not-for-profit servicer
after the date of enactment of the SAFRA Act, if such
affiliated entity is otherwise described in paragraph
(1)(B)(iii)(I) and subparagraph (A) of this
paragraph.''.
(b) Mandatory Funds.--
(1) Amendments.--Section 458(a) (20 U.S.C. 1087h(a)) is
amended--
(A) by redesignating paragraph (5) as paragraph
(8);
(B) by redesignating paragraphs (2) through (4) as
paragraphs (3) through (5), respectively;
(C) by inserting after paragraph (1) the following
new paragraph:
``(2) Mandatory funds for eligible not-for-profit-
servicers.--For fiscal years 2010 through 2019, there shall be
available to the Secretary, in addition to any other amounts
appropriated to carry out this paragraph and out of any money
in the Treasury not otherwise appropriated, funds to be
obligated for administrative costs of servicing contracts with
eligible not-for-profit servicers as described in section
456.''; and
(D) by inserting after paragraph (5), as
redesignated by subparagraph (B) of this paragraph, the
following:
``(6) Technical assistance to institutions of higher
education.--
``(A) Provision of assistance.--The Secretary shall
provide institutions of higher education participating,
or seeking to participate, in the loan programs under
this part with technical assistance in establishing and
administering such programs.
``(B) Funds.--There are authorized to be
appropriated, and there are appropriated, to carry out
this paragraph (in addition to any other amounts
appropriated to carry out this paragraph and out of any
money in the Treasury not otherwise appropriated),
$50,000,000 for fiscal year 2010.
``(C) Definition.--In this paragraph, the term
`assistance' means the provision of technical support,
training, materials, technical assistance, and
financial assistance.
``(7) Additional payments.--
``(A) Provision of assistance.--The Secretary shall
provide payments to loan servicers for retaining jobs
at locations in the United States where such servicers
were operating under part B on January 1, 2010.
``(B) Funds.--There are authorized to be
appropriated, and there are appropriated, to carry out
this paragraph (in addition to any other amounts
appropriated to carry out this paragraph and out of any
money in the Treasury not otherwise appropriated),
$25,000,000 for each of the fiscal years 2010 and
2011.''.
(2) Conforming amendment.--Section 458 (20 U.S.C. 1087h) is
further amended by striking ``subsection (a)(3)'' in subsection
(b) and inserting ``subsection (a)(4)''.
SEC. 2213. INCOME-BASED REPAYMENT.
Section 493C (20 U.S.C. 1098e) is amended by adding at the end the
following new subsection:
``(e) Special Terms for New Borrowers on and After July 1, 2014.--
With respect to any loan made to a new borrower on or after July 1,
2014--
``(1) subsection (a)(3)(B) shall be applied by substituting
`10 percent' for `15 percent'; and
``(2) subsection (b)(7)(B) shall be applied by substituting
`20 years' for `25 years'.''.
Subtitle B--Health
SEC. 2301. INSURANCE REFORMS.
(a) Extending Certain Insurance Reforms to Grandfathered Plans.--
Section 1251(a) of the Patient Protection and Affordable Care Act, as
added by section 10103(d) of such Act, is amended by adding at the end
the following:
``(4) Application of certain provisions.--
``(A) In general.--The following provisions of the
Public Health Service Act (as added by this title)
shall apply to grandfathered health plans for plan
years beginning with the first plan year to which such
provisions would otherwise apply:
``(i) Section 2708 (relating to excessive
waiting periods).
``(ii) Those provisions of section 2711
relating to lifetime limits.
``(iii) Section 2712 (relating to
rescissions).
``(iv) Section 2714 (relating to extension
of dependent coverage).
``(B) Provisions applicable only to group health
plans.--
``(i) Provisions described.--Those
provisions of section 2711 relating to annual
limits and the provisions of section 2704
(relating to pre-existing condition exclusions)
of the Public Health Service Act (as added by
this subtitle) shall apply to grandfathered
health plans that are group health plans for
plan years beginning with the first plan year
to which such provisions otherwise apply.
``(ii) Adult child coverage.--For plan
years beginning before January 1, 2014, the
provisions of section 2714 of the Public Health
Service Act (as added by this subtitle) shall
apply in the case of an adult child with
respect to a grandfathered health plan that is
a group health plan only if such adult child is
not eligible to enroll in an eligible employer-
sponsored health plan (as defined in section
5000A(f)(2) of the Internal Revenue Code of
1986) other than such grandfathered health
plan.''.
(b) Clarification Regarding Dependent Coverage.--Section 2714(a) of
the Public Health Service Act, as added by section 1001(5) of the
Patient Protection and Affordable Care Act, is amended by striking
``(who is not married)''.
SEC. 2302. DRUGS PURCHASED BY COVERED ENTITIES.
Section 340B of the Public Health Service Act (42 U.S.C. 256b), as
amended by sections 7101 and 7102 of the Patient Protection and
Affordable Care Act, is amended--
(1) in subsection (a)--
(A) in paragraphs (1), (2), (5), (7), and (9), by
striking the terms ``covered drug'' and ``covered
drugs'' each place either term appears and inserting
``covered outpatient drug'' or ``covered outpatient
drugs'', respectively;
(B) in paragraph (4)(L)--
(i) in clause (i), by striking ``and'' at
the end;
(ii) in clause (ii), by striking the period
and inserting ``; and''; and
(iii) by inserting after clause (ii), the
following:
``(iii) does not obtain covered outpatient
drugs through a group purchasing organization
or other group purchasing arrangement.''; and
(C) in paragraph (5)--
(i) by striking subparagraph (C);
(ii) by redesignating subparagraphs (D) and
(E) as subparagraphs (C) and (D), respectively;
and
(iii) in subparagraph (D), as so
redesignated, by striking ``subparagraph (D)''
and inserting ``subparagraph (C)'';
(2) by striking subsection (c);
(3) in subsection (d)--
(A) by striking ``covered drugs'' each place it
appears and inserting ``covered outpatient drugs'';
(B) by striking ``(a)(5)(D)'' each place it appears
and inserting ``(a)(5)(C)''; and
(C) by striking ``(a)(5)(E)'' each place it appears
and inserting ``(a)(5)(D)''; and
(4) by inserting after subsection (d) the following:
``(e) Exclusion of Orphan Drugs for Certain Covered Entities.--For
covered entities described in subparagraph (M), (N), or (O) of
subsection (a)(4), the term `covered outpatient drug' shall not include
a drug designated by the Secretary under section 526 of the Federal
Food, Drug, and Cosmetic Act for a rare disease or condition.''.
SEC. 2303. COMMUNITY HEALTH CENTERS.
Section 10503(b)(1) of the Patient Protection and Affordable Care
Act is amended--
(1) in subparagraph (A), by striking ``700,000,000'' and
inserting ``1,000,000,000'';
(2) in subparagraph (B), by striking ``800,000,000'' and
inserting ``1,200,000,000'';
(3) in subparagraph (C), by striking ``1,000,000,000'' and
inserting ``1,500,000,000'';
(4) in subparagraph (D), by striking ``1,600,000,000'' and
inserting ``2,200,000,000''; and
(5) in subparagraph (E), by striking ``2,900,000,000'' and
inserting ``3,600,000,000''.
Passed the House of Representatives March 21, 2010.
Attest:
Clerk.
111th CONGRESS
2d Session
H. R. 4872
_______________________________________________________________________
AN ACT
To provide for reconciliation pursuant to Title II of the concurrent
resolution on the budget for fiscal year 2010 (S. Con. Res. 13).