The decision was made this week to reinstate the furloughs after Controller John Chiang stated that he would start issuing IOU’s in August or September in attempts to conserve funds. The states funds could run out as soon as October.

Like the previous furlough policy the new policy laid out in Executive Order S-12-10 requires state employees to take three unpaid days off per month with no termination date set. Furloughs could end when lawmakers pass the 2010-2011 budget which could be weeks or months after the legislature reconvenes next week. Around 156,000 state employees are covered by the new program which will reduce that staes monthly payroll costs around $147 million per month , around $80 million of that being general fund savings.

As with the last furlough policy GOV. Arnold Schwarzenegger exempted employees with the Department of Forestry , Fire Protection , and California Highway Patrol. Also exempted are employees at the Board of Equalization , Franchise Tax Board , State Compensation Insurance Fund , Employment Development Board , California Housing Finance Authority, and California Earthquake Authority. The order also excludes around 37,000 state workers in six unions , also including those representing Firefighters ands Highway Patrol Officers that recently reached tentative labor agreements with the Schwarzenegger administration.

So once again state employees will make up for the shortcomings of the failed budget and pay for it out of there own pockets.

No related posts.

We will see about making some graphs / reports out of the data soon.

For now.

Historical_Expenditures_May_2010_Source.csv
Historical_Expenditures_Source.xls
Historical_Revenues.html
Historical_Expenditures_May_2010_Source.html
Historical_Personnel_Years.csv
Historical_Revenues.xls
Historical_Expenditures_May_2010_Source.xls
Historical_Personnel_Years.html
Historical_Expenditures_Pivot.xls
Historical_Personnel_Years.xls
Historical_Expenditures_Source.csv
Historical_Revenues.csv

No related posts.

Tuesday a CalPERS committee suggested an assortment of health care premium increases as well as other measures to rein in its rising health care costs to its 1.3 million public employees , retirees , and there families. The state and its unions are fighting for new contracts to find out how much of the $6.7 billion premium costs will be passed on to them. These new costs are sure to bring some already struggling families down even farther.

The rates for basic plans for preferred provider organizations (PPO’s) are going to increase 8.7 percent and rates for a basic plan through the health maintenance organizations (HMO’s) will rise 10.6 percent. The premiums for medicare beneficiaries are set to go up 3.4 percent. For the people that are electing to use some Blue Shield policies these times can be even harder for them as the rates for the company’s Access Plan will rise 16.4 percent and even higher in some areas.

CalPERS is expected to put measures in place to encourage beneficiaries to help cut costs such as using lower cost hospitals and also by filling more prescriptions by mail.

The committee declined some of the recommended staff changes , such as penalizing those who opt to buy name brand drugs instead of generics. Though the changes in the the benefits will save many millions of dollars , how much was being determined Tuesday night in preparation for today’s meeting for the CalPERS Board Of Administration. The board will then decide whether or not to accept the recommendations of the committee.

It was predicted earlier this week that most workers and companies will see a 9 percent increase to there health care premiums next year. Once again kicking the state employee while they are already down and taking money from there pockets.

No related posts.

California schools have been seeing more and more cuts over the past few years and it is getting worse. These cuts are affecting your child’s current well being and future to close a minor gap in the current budget deficit and take more from your pocket.

A survey was recently taken in the California school districts , county offices and charter schools to see how they are managing there budgets. This survey was returned by 387 of those agencies which represents 26 percent of the statewide enrollment.

Almost half of these surveys indicated that they reduced the number of teachers , increasing the evermore growing class sizes reducing the effectiveness of your child’s education. The current unemployment rate is already at a historical high of 12.6 percent and growing. Laying off all these teachers is leaving them nowhere to go , no jobs for them to obtain , and forcing them to obtain unemployment. This is not completely solving the budget deficit merely shifting it from one category to another at the expense of our children.

They also have reduced and in some cases eliminated school nurses causing the low income families that are already struggling , to seek medical attention for there children from local hospitals that could have otherwise been administered at school costing parents more money that they already do not have. Also forcing some of these nurses and medical staff to obtain unemployment while searching for jobs.

They have also reported they have had to cut art classes , music classes , and electives. These are very important classes for shaping the future of your child which now have to be obtained publicly at the expense of the parent and taking even more from your pocket. Most of the lower and middle class citizens will not be able to afford to obtain the classes for there children hurting not only the kids currently but also hurting our future.

We need to re-evaluate these budget cut decisions to our children’s education , teachers , staff , and our futures and find a solution that will help solve the budget not displace it.

The top five cuts are as follows:

• Building, grounds maintenance: 65 percent
• District administration: 58 percent
• Instructional materials: 58 percent
• Counselors, Nurses, Psychologists:
  48 percent
• Art, music and drama: 48 percent

No related posts.

The maximum grant that two children and a mother can receive in Sacramento is currently $661. This is already less than it was in 1988.

Effective in July adults that are showing no sings of improving or the initiative will be dropped from the program in three months. Also to the parents that do not comply with the programs rules there children’s grants will be cut 25 percent after six months and 50 percent after nine months.

The elimination of Calwork’s would save the states budget 1.6 billion dollars that makes up roughly 2.4 percent of the states budget which is already lower than the 3 percent that it was in 1999. This will shift as much as 1 billion in costs to the local counties which are required by law to provide assistance to low income families. The elimination of Calwork’s is estimated to cost roughly 14,000 county employees who administer Calworks to loose there jobs and around 90,000 Calwork’s clients to loose there jobs.

No related posts.

How many people out there do not have adobe acrobat these days?

I have converted the document to word and pasted it below for those who don’t have acrobat.

◊Americas Health Care 111 hr4872 Word Doc

Currently working through the prescription section.

TO H.R. 4872, AS REPORTED

Strike all after the enacting clause and insert the

following:

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Health Care and Education Affordability Reconciliation

4 Act of 2010’’.

5 (b) TABLE OF CONTENTS.—The table of contents of

6 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—COVERAGE, MEDICARE, MEDICAID, AND REVENUES

Subtitle A—Coverage

Sec. 1001. Affordability. 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. 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. CMS–IRS data match to identify fraudulent providers.

Sec. 1304. Funding to fight fraud, waste, and abuse.

Sec. 1305. 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. Medicare tax.

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.

Sec. 1411. No impact on Social Security trust funds.

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. Student financial assistance.

Sec. 2103. College access challenge grant program.

Sec. 2104. 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. Agreements with State-owned banks. Sec. 2214. Income-based repayment.

Subtitle B—Health

Sec. 2301. Insurance reforms. Sec. 2302. Drugs purchased by covered entities. Sec. 2303. Community health centers.

1 TITLE I—COVERAGE, MEDICARE, 2 MEDICAID, AND REVENUES 3 Subtitle A—Coverage 4 SEC. 1001. AFFORDABILITY. 5 (a) PREMIUM TAX CREDITS.—Section 36B of the In­6 ternal Revenue Code of 1986, as added by section 1401 7 of the Patient Protection and Affordable Care Act and 8 amended by section 10105 of such Act, is amended— 9 (1) in subsection (b)(3)(A)— 10 (A) in clause (i), by striking ‘‘with respect 11 to any taxpayer’’ and all that follows up to the 12 end period and inserting ‘‘for any taxable year 13 shall be the percentage such that the applicable 14 percentage for any taxpayer whose household 15

income is within an income tier specified in the

16

following table shall increase, on a sliding scale

19

specified in such table for such income tier:

‘‘In the case of household in­come (expressed as a percent of The initial premium The final premium poverty line) within the fol-percentage is— percentage is— lowing income 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

1 (B) by striking clauses (ii) and (iii), and 2 inserting the following: 3 ‘‘(ii) INDEXING.— 4 ‘‘(I) IN GENERAL.—Subject to 5 subclause (II), in the case of taxable 6 years beginning in any calendar year 7 after 2014, the initial and final appli­8 cable percentages under clause (i) (as 9 in effect for the preceding calendar 10 year after application of this clause) 11 shall be adjusted to reflect the excess 12 of the rate of premium growth for the 13 preceding calendar year over the rate 14 of income growth for the preceding 15 calendar year. 16 ‘‘(II) ADDITIONAL ADJUST­17

MENT.—Except as provided in sub­

20

ages described in subclause (I) shall,

mium growth estimated under sub­

5

clause (I) for the preceding calendar 6 year over the rate of growth in the 7 consumer price index for the pre­8 ceding calendar year. 9 ‘‘(III) FAILSAFE.—Subclause (II) 10 shall apply for any calendar year only 11 if the aggregate amount of premium 12 tax credits under this section and 13 cost-sharing reductions under section 14 1402 of the Patient Protection and 15 Affordable Care Act for the preceding 16 calendar year exceeds an amount 17 equal to 0.504 percent of the gross 18 domestic product for the preceding 19 calendar year.’’; and 20 (2) in subsection (c)(2)(C)— 21

(A) by striking ‘‘9.8 percent’’ in clauses

22

(i)(II) and (iv) and inserting ‘‘9.5 percent’’, and

23

(B) by striking ‘‘(b)(3)(A)(iii)’’ in clause

24

(iv) and inserting ‘‘(b)(3)(A)(ii)’’.

(b) COST SHARING.—Section 1402(c) of the Patient 2 Protection and Affordable Care Act is amended— 3

(1) in paragraph (1)(B)(i)—

4

(A) in subclause (I), by striking ‘‘90’’ and inserting ‘‘94’’; 6 (B) in subclause (II)— 7 (i) by striking ‘‘80’’ and inserting 8 ‘‘87’’; and 9 (ii) by striking ‘‘and’’; and

(C) by striking subclause (III) and insert­11 ing the following: 12 ‘‘(III) 73 percent in the case of 13 an eligible insured whose household 14 income is more than 200 percent but not more than 250 percent of the pov­16 erty line for a family of the size in­17 volved; and 18 ‘‘(IV) 70 percent in the case of 19 an eligible insured whose household income is more than 250 percent but

21

not more than 400 percent of the pov­

22

erty line for a family of the size in­

23

volved.’’; and

24

(2) in paragraph (2)—

(A) in subparagraph (A)—

(i) by striking ‘‘90’’ and inserting

2

‘‘94’’; and

3

(ii) by striking ‘‘and’’;

4

(B) in subparagraph (B)—

(i) by striking ‘‘80’’ and inserting 6 ‘‘87’’; and 7 (ii) by striking the period and insert­8 ing ‘‘; and’’; and 9 (C) by inserting after subparagraph (B) the following new subparagraph: 11 ‘‘(C) in the case of an eligible insured 12 whose household income is more than 200 per­13 cent but not more than 250 percent of the pov­14 erty line for a family of the size involved, in­crease the plan’s share of the total allowed 16 costs of benefits provided under the plan to 73 17 percent of such costs.’’. 18 SEC. 1002. INDIVIDUAL RESPONSIBILITY. 19 (a) AMOUNTS.—Section 5000A(c) of the Internal Revenue Code of 1986, as added by section 1501(b) of 21 the Patient Protection and Affordable Care Act and 22 amended by section 10106 of such Act, is amended— 23

(1) in paragraph (2)(B)—

24

(A) in the matter preceding clause (i), by—

(i) inserting ‘‘the excess of’’ before

2

‘‘the taxpayer’s household income’’; and

3

(ii) inserting ‘‘for the taxable year

4

over the amount of gross income specified in section 6012(a)(1) with respect to the 6 taxpayer’’ before ‘‘for the taxable year’’; 7 (B) in clause (i), by striking ‘‘0.5’’ and in­8 serting ‘‘1.0’’; 9 (C) in clause (ii), by striking ‘‘1.0’’ and in­serting ‘‘2.0’’; and 11 (D) in clause (iii), by striking ‘‘2.0’’ and 12 inserting ‘‘2.5’’; and 13 (2) in paragraph (3)— 14 (A) in subparagraph (A), by striking ‘‘$750’’ and inserting ‘‘$695’’; 16 (B) in subparagraph (B), by striking 17 ‘‘$495’’ and inserting ‘‘$325’’; and 18 (C) in subparagraph (D)— 19 (i) in the matter preceding clause (i), by striking ‘‘$750’’ and inserting ‘‘$695’’; 21 and 22

(ii) in clause (i), by striking ‘‘$750’’

23

and inserting ‘‘$695’’.

24

(b) THRESHOLD.—Section 5000A of such Code, as so added and amended, is amended—

(1) by striking subsection (c)(4)(D); and

2

(2) in subsection (e)(2)—

3

(A) by striking ‘‘UNDER 100 PERCENT OF

4

POVERTY LINE’’ and inserting ‘‘BELOW FILING

5

THRESHOLD’’; and 6 (B) by striking all that follows ‘‘less than’’ 7 and inserting ‘‘the amount of gross income 8 specified in section 6012(a)(1) with respect to 9 the taxpayer.’’. 10 SEC. 1003. EMPLOYER RESPONSIBILITY. 11 (a) PAYMENT CALCULATION.—Subparagraph (D) of 12 subsection (d)(2) of section 4980H of the Internal Rev­13 enue Code of 1986, as added by section 1513 of the Pa­14 tient Protection and Affordable Care Act and amended by 15 section 10106 of such Act, is amended to read as follows: 16 ‘‘(D) APPLICATION OF EMPLOYER SIZE TO 17 ASSESSABLE PENALTIES.— 18 ‘‘(i) IN GENERAL.—The number of in­19 dividuals employed by an applicable large 20 employer as full-time employees during any 21

month shall be reduced by 30 solely for

22

purposes of calculating—

under subsection (a), or

persons treated as 1 employer under sub­

5

paragraph (C)(i), only 1 reduction under 6 subclause (I) or (II) shall be allowed with 7 respect to such persons and such reduction 8 shall be allocated among such persons rat­9 ably on the basis of the number of full-10 time employees employed by each such per­11 son.’’. 12 (b) APPLICABLE PAYMENT AMOUNT.—Section 13 4980H of such Code, as so added and amended, is amend­14 ed— 15 (1) in the flush text following subsection 16 (c)(1)(B), by striking ‘‘400 percent of the applicable 17 payment amount’’ and inserting ‘‘an amount equal 18 to ¹⁄12 of $3,000’’; 19 (2) in subsection (d)(1), by striking ‘‘$750’’ 20 and inserting ‘‘$2,000’’; and 21

(3) in subsection (d)(5)(A), in the matter pre­

22

ceding clause (i), by striking ‘‘subsection (b)(2) and

11 1 (c) COUNTING PART-TIME WORKERS IN SETTING 2 THE THRESHOLD FOR EMPLOYER RESPONSIBILITY.— 3 Section 4980H(d)(2) of such Code, as so added and 4 amended and as amended by subsection (a), is amended 5 by adding at the end the following new subparagraph: 6 ‘‘(E) FULL-TIME EQUIVALENTS TREATED 7 AS FULL-TIME EMPLOYEES.—Solely for pur­8 poses of determining whether an employer is an 9 applicable large employer under this paragraph, 10 an employer shall, in addition to the number of 11 full-time employees for any month otherwise de­12 termined, include for such month a number of 13 full-time employees determined by dividing the 14 aggregate number of hours of service of employ­15 ees who are not full-time employees for the 16 month by 120.’’. 17 (d) ELIMINATING WAITING PERIOD ASSESSMENT.— 18 Section 4980H of such Code, as so added and amended 19 and as amended by the preceding subsections, is amended 20 by striking subsection (b) and redesignating subsections 21 (c), (d), and (e) as subsections (b), (c), and (d), respec­22 tively. 23 SEC. 1004. INCOME DEFINITIONS. 24

(a) MODIFIED ADJUSTED GROSS INCOME.—

(1) IN GENERAL.—The following provisions of

2

the Internal Revenue Code of 1986 are each amend­

3

ed by striking ‘‘modified gross’’ each place it ap­

4

pears and inserting ‘‘modified adjusted gross’’: 5 (A) Clauses (i) and (ii) of section 6 36B(d)(2)(A), as added by section 1401 of the 7 Patient Protection and Affordable Care Act. 8 (B) Section 6103(l)(21)(A)(iv), as added 9 by section 1414 of such Act. 10 (C) Clauses (i) and (ii) of section 11 5000A(c)(4), as added by section 1501(b) of 12 such Act. 13 (2) DEFINITION.— 14 (A) Section 36B(d)(2)(B) of such Code, as 15 so added, is amended to read as follows: 16 ‘‘(B) MODIFIED ADJUSTED GROSS IN­17 COME.—The term ‘modified adjusted gross in­18 come’ means adjusted gross income increased 19 by— 20 ‘‘(i) any amount excluded from gross 21

income under section 911, and

22

‘‘(ii) any amount of interest received

able year which is exempt from tax.’’.

(B) Section 5000A(c)(4)(C) of such Code,

2

as so added, is amended to read as follows: 3 ‘‘(C) MODIFIED ADJUSTED GROSS IN­4

COME.—The term ‘modified adjusted gross in­

5

come’ means adjusted gross income increased 6 by— 7 ‘‘(i) any amount excluded from gross 8 income under section 911, and 9 ‘‘(ii) any amount of interest received 10 or accrued by the taxpayer during the tax­11 able year which is exempt from tax.’’. 12 (b) MODIFIED ADJUSTED GROSS INCOME DEFINI­13 TION.— 14 (1) MEDICAID.—Section 1902 of the Social Se­15 curity Act (42 U.S.C. 1396a) is amended by striking 16 ‘‘modified gross income’’ each place it appears in the 17 text and headings of the following provisions and in­18 serting ‘‘modified adjusted gross income’’: 19 (A) Paragraph (14) of subsection (e), as 20 added by section 2002(a) of the Patient Protec­21

tion and Affordable Care Act.

22

(B) Subsection (gg)(4)(A), as added by

23

section 2001(b) of such Act.

24

(2) CHIP.—

(A) STATE PLAN REQUIREMENTS.—Section

2

2102(b)(1)(B)(v) of the Social Security Act (42

3

U.S.C. 1397bb(b)(1)(B)(v)), as added by sec­

4

tion 2101(d)(1) of the Patient Protection and

5

Affordable Care Act, is amended by striking 6 ‘‘modified gross income’’ and inserting ‘‘modi­7 fied adjusted gross income’’. 8 (B) PLAN ADMINISTRATION.—Section 9 2107(e)(1)(E) of the Social Security Act (42 10 U.S.C. 1397gg(e)(1)(E)), as added by section 11 2101(d)(2) of the Patient Protection and Af­12 fordable Care Act, is amended by striking 13 ‘‘modified gross income’’ and inserting ‘‘modi­14 fied adjusted gross income’’. 15 (c) NO EXCESS PAYMENTS.—Section 36B(f) of the 16 Internal Revenue Code of 1986, as added by section 17 1401(a) of the Patient Protection and Affordable Care 18 Act, is amended by adding at the end the following new 19 paragraph: 20 ‘‘(3) INFORMATION REQUIREMENT.—Each Ex­21

change (and any other person specified by the Sec­

22

retary) shall provide the following information to the

was in effect.

5

‘‘(B) The total premium for the coverage 6 without regard to the credit under this section 7 or cost-sharing reductions under section 1402 8 of such Act. 9 ‘‘(C) The aggregate amount of any ad­10 vance payment of such credit or reductions 11 under section 1412 of such Act. 12 ‘‘(D) The name, address, and TIN of the 13 primary insured and the name and TIN of each 14 other individual obtaining coverage under the 15 policy. 16 ‘‘(E) Any information provided to the Ex­17 change, including any change of circumstances, 18 necessary to determine eligibility for, and the 19 amount of, such credit. 20 ‘‘(F) Any other similar information nec­21

essary to carry out this subsection and deter­

22

mine whether a taxpayer has received excess

23

advance payments.’’.

24

(d) ADULT DEPENDENTS.—

16 1 (1) EXCLUSION OF AMOUNTS EXPENDED FOR 2

ing to amounts expended for medical care) is amend­5 ed— 6 (A) by striking ‘‘and his dependents’’ and 7 inserting ‘‘his dependents’’; and 8 (B) by inserting before the period the fol­9 lowing: ‘‘, and any child (as defined in section 10 152(f)(1)) of the taxpayer who as of the end of 11 the taxable year has not attained age 27’’. 12 (2) SELF-EMPLOYED HEALTH INSURANCE DE­13 DUCTION.—Section 162(l)(1) of such Code is 14 amended to read as follows: 15 ‘‘(1) ALLOWANCE OF DEDUCTION.—In the case 16 of a taxpayer who is an employee within the mean­17 ing of section 401(c)(1), there shall be allowed as a 18 deduction under this section an amount equal to the 19 amount paid during the taxable year for insurance 20 which constitutes medical care for— 21

‘‘(A) the taxpayer,

22

‘‘(B) the taxpayer’s spouse,

‘‘(C) the taxpayer’s dependents, and

2

152(f)(1)) of the taxpayer who as of the end of

3

the taxable year has not attained age 27.’’.

4

(3) CONFORMING AMENDMENTS.—

(A) INTERNAL REVENUE CODE.—Section 6 162(l)(2)(B) of such Code is amended by in­7 serting ‘‘, or any dependent, or individual de­8 scribed in subparagraph (D) of paragraph (1) 9 with respect to,’’ after ‘‘spouse of’’.

(B) PUBLIC HEALTH SERVICE ACT.—Sec­11 tion 2714 of the Public Health Service Act, as 12 added by section 1001(5) of the Patient Protec­13 tion and Affordable Care Act, is amended by 14 striking subsection (c).

(4) SICK AND ACCIDENT BENEFITS PROVIDED 16 TO MEMBERS OF A VOLUNTARY EMPLOYEES’ BENE­17 FICIARY ASSOCIATION AND THEIR DEPENDENTS.— 18 Section 501(c)(9) of such Code is amended by add­19 ing at the end the following new sentence: ‘‘For pur­poses of providing for the payment of sick and acci­

21

dent benefits to members of such an association and

22

their dependents, the term ‘dependent’ shall include

24 152(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 RE­

2

TIRED EMPLOYEES.—Section 401(h) of such Code is

3

amended by adding at the end the following: ‘‘For

4

purposes of this subsection, the term ‘dependent’

5

shall include any individual who is a child (as de­6 fined in section 152(f)(1)) of a retired employee who 7 as of the end of the calendar year has not attained 8 age 27.’’. 9 (e) FIVE PERCENT INCOME DISREGARD FOR CER­10 TAIN INDIVIDUALS.—Section 1902(e)(14) of the Social 11 Security Act (42 U.S.C. 1396a(e)(14)), as amended by 12 subsection (b)(1), is further amended— 13 (1) in subparagraph (B), by striking ‘‘No type’’ 14 and inserting ‘‘Subject to subparagraph (I), no 15 type’’; and 16 (2) by adding at the end the following new sub­17 paragraph: 18 ‘‘(I) TREATMENT OF PORTION OF MODI­19 FIED ADJUSTED GROSS INCOME.—For purposes 20 of determining the income eligibility of an indi­21

vidual for medical assistance whose eligibility is

22

determined based on the application of modified

the State shall—

(expressed as a percentage of the poverty line) and such upper income limit in­6 creased by 5 percentage points; and 7 ‘‘(ii) notwithstanding the requirement 8 in subparagraph (A) with respect to use of 9 modified adjusted gross income, utilize as the applicable income of such individual, in 11 determining such income eligibility, an 12 amount equal to the modified adjusted 13 gross income applicable to such individual 14 reduced by such dollar equivalent amount.’’.

16 SEC. 1005. IMPLEMENTATION FUNDING. 17 (a) IN GENERAL.—There is hereby established a 18 Health Insurance Reform Implementation Fund (referred 19 to in this section as the ‘‘Fund’’) within the Department of Health and Human Services to carry out the Patient 21 Protection and Affordable Care Act and this Act (and the 22 amendments made by such Acts). 23

(b) FUNDING.—There is appropriated to the Fund, 24 out of any funds in the Treasury not otherwise appro­priated, $1,000,000,000 for Federal administrative ex-

20 1 penses to carry out such Act (and the amendments made 2 by such Acts). 3

Subtitle B—Medicare

4 SEC. 1101. CLOSING THE MEDICARE PRESCRIPTION DRUG

‘‘DONUT HOLE’’.

6 (a) COVERAGE GAP REBATE FOR 2010.— 7 (1) IN GENERAL.—Section 1860D–42 of the 8 Social Security Act (42 U.S.C. 1395w–152) is 9 amended by adding at the end the following new subsection: 11 ‘‘(c) COVERAGE GAP REBATE FOR 2010.— 12 ‘‘(1) IN GENERAL.—In the case of an individual 13 described in subparagraphs (A) through (D) of sec­14 tion 1860D–14A(g)(1) who as of the last day of a calendar quarter in 2010 has incurred costs for cov­16 ered part D drugs so that the individual has exceed­17 ed the initial coverage limit under section 1860D– 18 2(b)(3) for 2010, the Secretary shall provide for 19 payment from the Medicare Prescription Drug Ac­count of $250 to the individual by not later than the

21

15th day of the third month following the end of

22

such quarter.

only 1 payment under this subsection with respect to any individual.’’.

21 1 (2) REPEAL OF PROVISION.—Section 3315 of 2

pealed, and any provision of law amended or re­pealed by such sections is hereby restored or revived 6 as if such section had not been enacted into law. 7 (b) CLOSING THE DONUT HOLE.—Part D of title 8 XVIII of the Social Security Act (42 U.S.C. 1395w–101 9 et seq.), as amended by section 3301 of the Patient Pro­tection and Affordable Care Act, is further amended— 11 (1) in section 1860D–43— 12 (A) in subsection (b), by striking ‘‘July 1, 13 2010’’ and inserting ‘‘January 1, 2011’’; and 14 (B) in subsection (c)(2), by striking ‘‘July 1, 2010, and ending on December 31, 2010,’’ 16 and inserting ‘‘January 1, 2011, and December 17 31, 2011,’’; 18 (2) in section 1860D–14A— 19 (A) in subsection (a)—

(i) by striking ‘‘July 1, 2010’’ and in­

21

serting ‘‘January 1, 2011’’; and

22

(ii) by striking ‘‘April 1, 2010’’ and

23

inserting ‘‘180 days after the date of the

24

enactment of this section’’;

(B) in subsection (b)(1)(C)—

(i) in the heading, by striking ‘‘2010

2

AND’’;

3

(ii) by striking ‘‘July 1, 2010’’ and in­

4

serting ‘‘January 1, 2011’’; and

5

(iii) by striking ‘‘May 1, 2010’’ and 6 inserting ‘‘not later than 30 days after the 7 date of the establishment of a model agree­8 ment under subsection (a)’’; 9 (C) in subsection (c)— 10 (i) in paragraph (1)(A)(iii), by strik­11 ing ‘‘July 1, 2010, and ending on Decem­12 ber 31, 2011’’ and inserting ‘‘January 1, 13 2011, and ending on December 31, 2011’’; 14 and 15 (ii) in paragraph (2), by striking 16 ‘‘2010’’ and inserting ‘‘2011’’; 17 (D) in subsection (d)(2)(B), by striking 18 ‘‘July 1, 2010, and ending on December 31, 19 2010’’ and inserting ‘‘January 1, 2011, and 20 ending on December 31, 2011’’; and 21

(E) in subsection (g)(1)—

22

(i) in the matter before subparagraph

inserting ‘‘a covered part D drug’’;

(ii) by adding ‘‘and’’ at the end of

2

subparagraph (C);

3

(iii) by striking subparagraph (D); 4 and 5

(iv) by redesignating subparagraph 6 (E) as subparagraph (D); and 7 (3) in section 1860D–2(b) — 8 (A) in paragraph (2)(A), by striking ‘‘The 9 coverage’’ and inserting ‘‘Subject to subpara­10 graphs (C) and (D), the coverage’’; 11 (B) in paragraph (2)(B), by striking ‘‘sub­12 paragraph (A)(ii)’’ and inserting ‘‘subpara­13 graphs (A)(ii), (C), and (D)’’; 14 (C) by adding at the end of paragraph (2) 15 the following new subparagraphs: 16 ‘‘(C) COVERAGE FOR GENERIC DRUGS IN 17 COVERAGE GAP.— 18 ‘‘(i) IN GENERAL.—Except as pro­19 vided in paragraph (4), the coverage for an 20 applicable beneficiary (as defined in section 21

1860D–14A(g)(1)) has coinsurance (for

22

costs above the initial coverage limit under

insurance percentage (specified in clause (ii)) for the year, or 6 ‘‘(II) actuarially equivalent 7 (using processes and methods estab­8 lished under section 1860D–11(c)) to 9 an average expected payment of such percentage of such costs for covered 11 part D drugs that are not applicable 12 drugs under section 1860D– 13 14A(g)(2). 14 ‘‘(ii) GENERIC-GAP COINSURANCE PERCENTAGE.—The generic-gap coinsur­16 ance percentage specified in this clause 17 for— 18 ‘‘(I) 2011 is 93 percent; 19 ‘‘(II) 2012 and each succeeding year before 2020 is the generic-gap 21 coinsurance percentage under this 22

clause for the previous year decreased

by 7 percentage points; and

‘‘(III) 2020 and each subsequent year is 25 percent.

IN COVERAGE GAP.—

vided in paragraph (4), the coverage for an applicable beneficiary (as defined in section 6 1860D–14A(g)(1)) has coinsurance (for 7 costs above the initial coverage limit under 8 paragraph (3) and below the out-of-pocket 9 threshold) for the negotiated price (as de­fined in section 1860D–14A(g)(6)) of cov­11 ered part D drugs that are applicable 12 drugs under section 1860D–14A(g)(2) that 13 is— 14 ‘‘(I) equal to the difference be­tween the applicable gap percentage 16 (specified in clause (ii) for the year) 17 and the discount percentage specified 18 in section 1860D–14A(g)(4)(A) for 19 such applicable drugs, or ‘‘(II) actuarially equivalent

21

(using processes and methods estab­

22

lished under section 1860D–11(c)) to

percentage of such costs, for covered part D drugs that are applicable

14A(g)(2). 3 ‘‘(ii) APPLICABLE GAP PERCENT­4

AGE.—The applicable gap percentage spec­

5

ified in this clause for— 6 ‘‘(I) 2013 and 2014 is 97.5 per­7 cent; 8 ‘‘(II) 2015 and 2016 is 95 per­9 cent; 10 ‘‘(III) 2017 is 90 percent; 11 ‘‘(IV) 2018 is 85 percent; 12 ‘‘(V) 2019 is 80 percent; and 13 ‘‘(VI) 2020 and each subsequent 14 year is 75 percent.’’; 15 (D) in paragraph (3)(A), as restored under 16 subsection (a)(2), by striking ‘‘paragraph (4)’’ 17 and inserting ‘‘paragraphs (2)(C), (2)(D), and 18 (4)’’; 19 (E) in paragraph (4)(E), by inserting be­20 fore the period at the end the following: ‘‘, ex­21

cept that incurred costs shall not include the

22

portion of the negotiated price that represents

(4) in section 1860D–22(a)(2)(A), by inserting

2

before the period at the end the following: ‘‘, not

3

taking into account the value of any discount or cov­

4

erage provided during the gap in prescription drug coverage that occurs between the initial coverage 6 limit under section 1860D–2(b)(3) during the year 7 and the out-of-pocket threshold specified in section 8 1860D–2(b)(4)(B)’’. 9 (c) CONFORMING AMENDMENT TO AMP UNDER MEDICAID.—Section 1927(k)(1)(B)(i) of the Social Secu­11 rity Act (42 U.S.C. 1396r–8(k)(1)(B)(i)), as amended by 12 section 2503(a)(2)(B) of the Patient Protection and Af­13 fordable Care Act, is amended— 14 (1) by striking ‘‘and’’ at the end of subclause (III); 16 (2) by striking the period at the end of sub­17 clause (IV); and 18 (3) by adding at the end the following new sub­19 clause: ‘‘(V) discounts provided by man­21 ufacturers under section 1860D– 22 14A.’’. 23 SEC. 1102. MEDICARE ADVANTAGE PAYMENTS. 24

(a) REPEAL.—Effective as if included in the enact­ment of the Patient Protection and Affordable Care Act,

28 1 sections 3201 and 3203 of such Act (and the amendments 2 made by such sections) are repealed. 3

(b) PHASE-IN OF MODIFIED BENCHMARKS.—Section 4 1853 of the Social Security Act (42 U.S.C. 1395w–23) 5 is amended— 6 (1) in subsection (j)(1)(A), by striking ‘‘(or, be­7 ginning with 2007, ¹⁄12 of the applicable amount de­8 termined under subsection (k)(1)) for the area for 9 the year’’ and inserting ‘‘ for the area for the year 10 (or, for 2007, 2008, 2009, and 2010, ¹⁄12 of the ap­11 plicable amount determined under subsection (k)(1) 12 for the area for the year; for 2011, ¹⁄12 of the appli­13 cable amount determined under subsection (k)(1) for 14 the area for 2010; and, beginning with 2012, ¹⁄12 of 15 the blended benchmark amount determined under 16 subsection (n)(1) for the area for the year)’’; and 17 (2) by adding at the end the following new sub­18 section: 19 ‘‘(n) DETERMINATION OF BLENDED BENCHMARK 20 AMOUNT.— 21

‘‘(1) IN GENERAL.—For purposes of subsection

22

(j), subject to paragraphs (3), (4), and (5), the term

‘blended benchmark amount’ means for an area—

paragraph (2)(A) for the area and year; and 6 ‘‘(B) for a subsequent year the amount 7 specified in paragraph (2)(A) for the area and 8 year. 9 ‘‘(2) SPECIFIED AMOUNT.— ‘‘(A) IN GENERAL.—The amount specified 11 in this subparagraph for an area and year is 12 the product of— 13 ‘‘(i) the base payment amount speci­14 fied in subparagraph (E) for the area and year adjusted to take into account the 16 phase-out in the indirect costs of medical 17 education from capitation rates described 18 in subsection (k)(4); and 19 ‘‘(ii) the applicable percentage for the area for the year specified under subpara­

21

graph (B).

22

‘‘(B) APPLICABLE PERCENTAGE.—Subject

specified in this subparagraph for an area for a year in the case of an area that is ranked—

percent;

‘‘(ii) in the second highest quartile under such subparagraph for the previous 6 year is 100 percent; 7 ‘‘(iii) in the third highest quartile 8 under such subparagraph for the previous 9 year is 107.5 percent; or ‘‘(iv) in the lowest quartile under such 11 subparagraph for the previous year is 115 12 percent. 13 ‘‘(C) PERIODIC RANKING.—For purposes 14 of this paragraph in the case of an area lo­cated— 16 ‘‘(i) in 1 of the 50 States or the Dis­17 trict of Columbia, the Secretary shall rank 18 such area in each year specified under sub­19 section (c)(1)(D)(ii) based upon the level of the amount specified in subparagraph

21

(A)(i) for such areas; or

22

‘‘(ii) in a territory, the Secretary shall

upon the level of the amount specified in subparagraph (A)(i) for such area relative

to quartile rankings computed under clause 2 (i). 3

APPLICABLE PERCENTAGE.—If, for a year after 2012, there is a change in the quartile in which 6 an area is ranked compared to the previous 7 year, the applicable percentage for the area in 8 the year shall be the average of— 9 ‘‘(i) the applicable percentage for the area for the previous year; and 11 ‘‘(ii) the applicable percentage that 12 would otherwise apply for the area for the 13 year. 14 ‘‘(E) BASE PAYMENT AMOUNT.—Subject to subparagraph (F), the base payment amount 16 specified in this subparagraph— 17 ‘‘(i) for 2012 is the amount specified 18 in subsection (c)(1)(D) for the area for the 19 year; or ‘‘(ii) for a subsequent year that—

21

‘‘(I) is not specified under sub­22 section (c)(1)(D)(ii), is the base 23

for the area for the previous year, in­creased by the national per capita MA

growth percentage, described in sub­2 section (c)(6) for that succeeding 3

adjustment under subparagraph (C)

5

of such subsection for a year before 6 2004; and 7 ‘‘(II) is specified under sub­8 section (c)(1)(D)(ii), is the amount 9 specified in subsection (c)(1)(D) for 10 the area for the year. 11 ‘‘(F) APPLICATION OF INDIRECT MEDICAL 12 EDUCATION PHASE-OUT.—The base payment 13 amount specified in subparagraph (E) for a 14 year shall be adjusted in the same manner 15 under paragraph (4) of subsection (k) as the 16 applicable amount is adjusted under such sub­17 section. 18 ‘‘(3) ALTERNATIVE PHASE-INS.— 19 ‘‘(A) 4-YEAR PHASE-IN FOR CERTAIN 20 AREAS.—If the difference between the applica­21

ble amount (as defined in subsection (k)) for an

22

area for 2010 and the projected 2010 bench­

the blended benchmark amount for the area 2 is— 3

‘‘(i) for 2012 the sum of—

‘‘(I) ³⁄4 of the applicable amount for the area and year; and 6 ‘‘(II) ¹⁄4 of the amount specified 7 in paragraph (2)(A) for the area and 8 year; 9 ‘‘(ii) for 2013 the sum of— ‘‘(I) ¹⁄2 of the applicable amount 11 for the area and year; and 12 ‘‘(II) ¹⁄2 of the amount specified 13 in paragraph (2)(A) for the area and 14 year; ‘‘(iii) for 2014 the sum of— 16 ‘‘(I) ¹⁄4 of the applicable amount 17 for the area and year; and 18 ‘‘(II) ³⁄4 of the amount specified 19 in paragraph (2)(A) for the area and year; and

21

‘‘(iv) for a subsequent year the

22

amount specified in paragraph (2)(A) for

the area and year. 24 ‘‘(B) 6-YEAR PHASE-IN FOR CERTAIN AREAS.—If the difference between the applica­

for the area is at least $50, the blended bench­

5

mark amount for the area is— 6 ‘‘(i) for 2012 the sum of— 7 ‘‘(I) ⁵⁄6 of the applicable amount 8 for the area and year; and 9 ‘‘(II) ¹⁄6 of the amount specified 10 in paragraph (2)(A) for the area and 11 year; 12 ‘‘(ii) for 2013 the sum of— 13 ‘‘(I) ²⁄3 of the applicable amount 14 for the area and year; and 15 ‘‘(II) ¹⁄3 of the amount specified 16 in paragraph (2)(A) for the area and 17 year; 18 ‘‘(iii) for 2014 the sum of— 19 ‘‘(I) ¹⁄2 of the applicable amount 20 for the area and year; and 21

‘‘(II) ¹⁄2 of the amount specified

22

in paragraph (2)(A) for the area and 23 year; 24

‘‘(iv) for 2015 the sum of—

for the area and year; and

in paragraph (2)(A) for the area and

5

year; and 6 ‘‘(v) for 2016 the sum of— 7 ‘‘(I) ¹⁄6 of the applicable amount 8 for the area and year; and 9 ‘‘(II) ⁵⁄6 of the amount specified 10 in paragraph (2)(A) for the area and 11 year; and 12 ‘‘(vi) for a subsequent year the 13 amount specified in paragraph (2)(A) for 14 the area and year. 15 ‘‘(C) PROJECTED 2010 BENCHMARK 16 AMOUNT.—The projected 2010 benchmark 17 amount described in this subparagraph for an 18 area is equal to the sum of— 19 ‘‘(i) ¹⁄2 of the applicable amount (as 20 defined in subsection (k)) for the area for 21

2010; and

22

‘‘(ii) ¹⁄2 of the amount specified in

would be specified under subpara­

5

graph (B) of paragraph (2) (deter­6 mined without regard to subpara­7 graph (D) of such paragraph) for the 8 area for 2010 if any reference in such 9 paragraph to ‘the previous year’ were 10 deemed a reference to 2010; and 11 ‘‘(II) the applicable percentage 12 increase that would apply to a quali­13 fying plan in the area under sub­14 section (o) as if any reference in such 15 subsection to 2012 were deemed a ref­16 erence to 2010 and as if the deter­17 mination of a qualifying county under 18 paragraph (3)(B) of such subsection 19 were made for 2010. 20 ‘‘(4) CAP ON BENCHMARK AMOUNT.—In no 21

case shall the blended benchmark amount for an

22

area for a year (determined taking into account sub­

the area for the year.

subsection shall not apply to payments to a PACE

5

program under section 1894.’’. 6 (c) APPLICABLE PERCENTAGE QUALITY IN­7 CREASES.—Section 1853 of such Act (42 U.S.C. 1395w– 8 23), as amended by subsection (b), is amended— 9 (1) in subsection (j), by inserting ‘‘subject to 10 subsection (o),’’ after ‘‘For purposes of this part,’’; 11 (2) in subsection (n)(2)(B), as added by sub­12 section (b), by inserting ‘‘, subject to subsection (o)’’ 13 after ‘‘as follows’’; and 14 (3) by adding at the end the following new sub­15 section: 16 ‘‘(o) APPLICABLE PERCENTAGE QUALITY IN­17 CREASES.— 18 ‘‘(1) IN GENERAL.—Subject to the succeeding 19 paragraphs, in the case of a qualifying plan with re­20 spect to a year beginning with 2012, the applicable 21

percentage under subsection (n)(2)(B) shall be in­

22

creased 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; 2 and 3

percentage points. ‘‘(2) INCREASE FOR QUALIFYING PLANS IN 6 QUALIFYING COUNTIES.—The increase applied under 7 paragraph (1) for a qualifying plan located in a 8 qualifying county for a year shall be doubled. 9 ‘‘(3) QUALIFYING PLANS AND QUALIFYING COUNTY DEFINED; APPLICATION OF INCREASES TO 11 LOW ENROLLMENT AND NEW PLANS.—For purposes 12 of this subsection: 13 ‘‘(A) QUALIFYING PLAN.— 14 ‘‘(i) IN GENERAL.—The term ‘quali­fying plan’ means, for a year and subject 16 to paragraph (4), a plan that had a quality 17 rating under paragraph (4) of 4 stars or 18 higher based on the most recent data avail­19 able for such year. ‘‘(ii) APPLICATION OF INCREASES TO

21

LOW ENROLLMENT PLANS.—

22

‘‘(I) 2012.—For 2012, the term

that the Secretary determines is not able to have a quality rating under

ment. 3 ‘‘(II) 2013 AND SUBSEQUENT 4

YEARS.—For 2013 and subsequent years, for purposes of determining 6 whether an MA plan with low enroll­7 ment (as defined by the Secretary) is 8 included as a qualifying plan, the Sec­9 retary shall establish a method to apply to MA plans with low enroll­11 ment (as defined by the Secretary) 12 the computation of quality rating and 13 the rating system under paragraph 14 (4). ‘‘(iii) APPLICATION OF INCREASES TO 16 NEW PLANS.— 17 ‘‘(I) IN GENERAL.—A new MA 18 plan that meets criteria specified by 19 the Secretary shall be treated as a qualifying plan, except that in apply­

21

ing paragraph (1), the applicable per­

22

centage under subsection (n)(2)(B)

‘‘(aa) for 2012, by 1.5 per­centage points;

centage points; and

quent year, by 3.5 percentage points. 6 ‘‘(II) NEW MA PLAN DEFINED.— 7 The term ‘new MA plan’ means, with 8 respect to a year, a plan offered by an 9 organization or sponsor that has not had a contract as a Medicare Advan­11 tage organization in the preceding 3-12 year period. 13 ‘‘(B) QUALIFYING COUNTY.—The term 14 ‘qualifying county’ means, for a year, a coun­ty— 16 ‘‘(i) that has an MA capitation rate 17 that, in 2004, was based on the amount 18 specified in subsection (c)(1)(B) for a Met­19 ropolitan Statistical Area with a population of more than 250,000;

21

‘‘(ii) for which, as of December 2009,

22

of the Medicare Advantage eligible individ­

cent of such individuals were enrolled in Medicare Advantage plans; and

tures for individuals enrolled under the original medicare fee-for-service program 6 for the year. 7 ‘‘(4) QUALITY DETERMINATIONS FOR APPLICA­8 TION OF INCREASE.— 9 ‘‘(A) QUALITY DETERMINATION.—The quality rating for a plan shall be determined ac­11 cording to a 5-star rating system (based on the 12 data collected under section 1852(e)). 13 ‘‘(B) PLANS THAT FAILED TO REPORT.— 14 An MA plan which does not report data that enables the Secretary to rate the plan for pur­16 poses of this paragraph shall be counted as hav­17 ing a rating of fewer than 3.5 stars. 18 ‘‘(5) EXCEPTION FOR PACE PLANS.—This sub­19 section shall not apply to payments to a PACE pro­gram under section 1894.’’. 21 (4) DETERMINATION OF MEDICARE PART D 22

LOW-INCOME BENCHMARK PREMIUM.—Section

(42 U.S.C. 1395w–114(b)(2)(B)(iii)) as amended by section 3302 of the Patient Protection and Afford-

1854(b)(1)(C) or bonus payment under section 1853(n)’’ and inserting the following: ‘‘and deter­6 mined before the application of the monthly rebate 7 computed under section 1854(b)(1)(C)(i) for that 8 plan and year involved and, in the case of a quali­9 fying plan, before the application of the increase under section 1853(o) for that plan and year in­11 volved’’. 12 (d) BENEFICIARY REBATES.—Section 1854(b)(1)(C) 13 of such Act (42 U.S.C. 1395w–24(b)(1)(C)), as amended 14 by section 3202(b) of the Patient Protection and Afford­able Care Act, is further amended— 16 (1) in clause (i), by inserting ‘‘(or the applica­17 ble rebate percentage specified in clause (iii) in the 18 case of plan years beginning on or after January 1, 19 2012)’’ after ‘‘75 percent’’; and

(2) by striking clause (iii), by redesignating

21

clauses (iv) and (v) as clauses (vii) and (viii), respec­

22

tively, and by inserting after clause (ii) the following

new clauses:

‘‘(iii) APPLICABLE REBATE PERCENT-AGE.—The applicable rebate percentage

1853(o)(4)(A), is the sum of—

‘‘(I) the product of the old phase-

5

in proportion for the year under 6 clause (iv) and 75 percent; and 7 ‘‘(II) the product of the new 8 phase-in proportion for the year under 9 clause (iv) and the final applicable re­10 bate percentage under clause (v). 11 ‘‘(iv) OLD AND NEW PHASE-IN PRO­12 PORTIONS.—For purposes of clause (iv)— 13 ‘‘(I) for 2012, the old phase-in 14 proportion is ²⁄3 and the new phase-in 15 proportion is ¹⁄3; 16 ‘‘(II) for 2013, the old phase-in 17 proportion is ¹⁄3 and the new phase-in 18 proportion is ²⁄3; and 19 ‘‘(III) for 2014 and any subse­20 quent year, the old phase-in propor­21

tion is 0 and the new phase-in propor­22 tion is 1. 23

clause is—

quality rating under such system of at least 4.5 stars, 70 percent; 6 ‘‘(II) in the case of a plan with 7 a quality rating under such system of 8 at least 3.5 stars and less than 4.5 9 stars, 65 percent; and ‘‘(III) in the case of a plan with 11 a quality rating under such system of 12 less than 3.5 stars, 50 percent. 13 ‘‘(vi) TREATMENT OF LOW ENROLL­14 MENT AND NEW PLANS.—For purposes of clause (v)— 16 ‘‘(I) for 2012, in the case of a 17 plan described in subclause (I) of sub­18 section (o)(3)(A)(ii), the plan shall be 19 treated as having a rating of 4.5 stars; and

21

‘‘(II) for 2012 or a subsequent

22

year, in the case of a new MA plan

(as defined under subclause (III) of 24 subsection (o)(3)(A)(iii))) that is treated as a qualifying plan pursuant

(e) CODING INTENSITY ADJUSTMENT.—Section 5 1853(a)(1)(C)(ii) of such Act (42 U.S.C. 1395w– 6 23(a)(1)(C)(ii)) is amended— 7 (1) in the heading, by striking ‘‘DURING PHASE­8 OUT OF BUDGET NEUTRALITY FACTOR’’ and insert­9 ing ‘‘OF CODING ADJUSTMENT’’; 10 (2) in the matter before subclause (I), by strik­11 ing ‘‘through 2010’’ and inserting ‘‘and each subse­12 quent year’’; and 13 (3) in subclause (II)— 14 (A) in the first sentence, by inserting ‘‘an­15 nually’’ before ‘‘conduct an analysis’’; 16 (B) in the second sentence— 17 (i) by inserting ‘‘on a timely basis’’ 18 after ‘‘are incorporated’’; and 19 (ii) by striking ‘‘only for 2008, 2009, 20 and 2010’’ and inserting ‘‘for 2008 and 21

subsequent years’’;

22

(C) in the third sentence, by inserting

at the end; and

(D) by adding at the end the following new

2

subclauses:

3

‘‘(III) In calculating each year’s

4

adjustment for 2019 and subsequent

5

years, the adjustment factor shall be 6 no less than 5.7 percent. 7 ‘‘(IV) Such adjustment shall be 8 applied to risk scores until the Sec­9 retary implements risk adjustment 10 using Medicare Advantage diagnostic, 11 cost, and use data.’’. 12 (f) REPEAL OF COMPARATIVE COST ADJUSTMENT 13 PROGRAM.—Section 1860C–1 of the Social Security Act 14 (42 U.S.C. 1395w–29), as added by section 241(a) of the 15 Medicare Prescription Drug, Improvement, and Mod­16 ernization Act of 2003 (Public Law 108–173), is repealed. 17 SEC. 1103. SAVINGS FROM LIMITS ON MA PLAN ADMINIS­18 TRATIVE COSTS. 19 Section 1857(e) of the Social Security Act (42 U.S.C. 20 1395w–27(e)) is amended by adding at the end the fol­21 lowing new paragraph: 22 ‘‘(4) REQUIREMENT FOR MINIMUM MEDICAL 23

LOSS RATIO.—If the Secretary determines for a con­

.85—

3

‘‘(A) the MA plan shall remit to the Sec­

4

retary an amount equal to the product of— ‘‘(i) the total revenue of the MA plan 6 under this part for the contract year; and 7 ‘‘(ii) the difference between .85 and 8 the medical loss ratio; 9 ‘‘(B) for 3 consecutive contract years, the Secretary shall not permit the enrollment of 11 new enrollees under the plan for coverage dur­12 ing the second succeeding contract year; and 13 ‘‘(C) the Secretary shall terminate the plan 14 contract if the plan fails to have such a medical loss ratio for 5 consecutive contract years. 16 Amounts collected pursuant to subparagraph (A) 17 shall be deposited into the Centers for Medicare & 18 Medicaid Program Management Account to be avail­19 able until expended.’’.

SEC. 1104. DISPROPORTIONATE SHARE HOSPITAL (DSH)

21

PAYMENTS.

22

Section 1886(r) of the Social Security Act (42 U.S.C. 23 1395ww(r)), as added by section 3133 of the Patient Pro­24 tection and Affordable Care Act and as amended by sec­tion 10316 of such Act, is amended—

(1) in paragraph (1), by striking ‘‘2015’’ and

2

inserting ‘‘2014’’; and

3

(2) in paragraph (2)—

4

(A) in the matter preceding subparagraph

5

(A), by striking ‘‘2015’’ and inserting ‘‘2014’’; 6 (B) in subparagraph (B)(i)— 7 (i) in the heading, by inserting ‘‘2014,’’ 8 after ‘‘YEARS’’; 9 (ii) in the matter preceding subclause 10 (I), by inserting ‘‘2014,’’ after ‘‘each of fis­11 cal years’’; 12 (iii) in subclause (I), by striking ‘‘on 13 such Act’’ and inserting ‘‘on the Health 14 Care and Education Affordability Rec­15 onciliation Act of 2010’’; and 16 (iv) in the matter following subclause 17 (II), by striking ‘‘minus 1.5 percentage 18 points’’ and inserting ‘‘minus 0.1 percent­19 age points for fiscal year 2014 and minus

20 0.2 percentage points for each of fiscal 21

years 2015, 2016, and 2017’’; and

22

(C) in subparagraph (B)(ii), in the matter

(a) IPPS.—Section 1886(b)(3)(B) of the Social Se­curity Act (42 U.S.C. 1395ww(b)(3)(B)), as amended by 6 sections 3401(a)(4) and 10319(a) of the Patient Protec­7 tion and Affordable Care Act, is amended— 8 (1) in clause (xii)— 9 (A) by placing the subclause (II) (inserted by section 10319(a)(3) of the Patient Protec­11 tion and Affordable Care Act) immediately after 12 subclause (I) and, in such subclause (II), by 13 striking ‘‘and’’ at the end; and 14 (B) by striking subclause (III) and insert­ing the following: 16 ‘‘(III) for fiscal year 2014, by 0.3 percentage 17 point; 18 ‘‘(IV) for each of fiscal years 2015 and 2016, 19 by 0.2 percentage point; and ‘‘(V) for each of fiscal years 2017, 2018, and

21

2019, by 0.75 percentage point.’’; and

22

(2) by striking clause (xiii). 23 (b) LONG-TERM CARE HOSPITALS.—Section 24 1886(m)(4) of the Social Security Act (42 U.S.C. 1395ww(m)(4)), as added by section 3401(c) of the Pa­

50 1 tient Protection and Affordable Care Act and amended by 2 section 10319(b) of such Act, is amended— 3

(1) in subparagraph (A)—

4

(A) in clause (iii), by striking ‘‘and’’ at the end; and 6 (B) by striking clause (iv) and inserting 7 the following: 8 ‘‘(iv) for rate year 2014, 0.3 percent­9 age point; ‘‘(v) for each of rate years 2015 and 11 2016, 0.2 percentage point; and 12 ‘‘(vi) for each of rate years 2017, 13 2018, and 2019, 0.75 percentage point.’’; 14 (2) by striking subparagraph (B); and

(3) by striking ‘‘(4) OTHER ADJUSTMENT.—’’ 16 and all that follows through ‘‘For purposes’’ and in­17 serting ‘‘(4) OTHER ADJUSTMENT.—For purposes’’ 18 (and redesignating clauses (i) through (vi) as sub­19 paragraphs (A) through (F), respectively, with ap­propriate indentation).

21

(c) INPATIENT REHABILITATION FACILITIES.—Sec­22 tion 1886(j)(3)(D) of the Social Security Act (42 U.S.C. 23 1395ww(j)(3)(D)), as added by section 3401(d)(2) of the 24 Patient Protection and Affordable Care Act and amended by section 10319(c) of such Act, is amended—

(1) in clause (i)—

2

(A) by placing the subclause (II) (inserted

3

by section 10319(c)(3) of the Patient Protec­

4

tion and Affordable Care Act) immediately after subclause (I) and, in such subclause (II), by 6 striking ‘‘and’’ at the end; and 7 (B) by striking subclause (III) and insert­8 ing the following: 9 ‘‘(III) for fiscal year 2014, 0.3 percentage point; 11 ‘‘(IV) for each of fiscal years 12 2015 and 2016, 0.2 percentage point; 13 and 14 ‘‘(V) for each of fiscal years 2017, 2018, and 2019, 0.75 percent­16 age point.’’; 17 (2) by striking clause (ii); and 18 (3) by striking ‘‘(D) OTHER ADJUSTMENT.—’’ 19 and all that follows through ‘‘For purposes’’ and in­serting ‘‘(D) OTHER ADJUSTMENT.—For purposes’’

21

(and redesignating subclauses (I) through (V) as

22

clauses (i) through (v), respectively, with appropriate

23

indentation).

24

(d) PSYCHIATRIC HOSPITALS.—Section 1886(s)(3) of the Social Security Act, as added by section 3401(f) of

52 1 the Patient Protection and Affordable Care Act and 2 amended by section 10319(e) of such Act, is amended— 3

(1) in subparagraph (A)—

4

(A) by placing the clause (ii) (inserted by section 10319(e)(3) of the Patient Protection 6 and Affordable Care Act) immediately after 7 clause (i) and, in such clause (ii), by striking 8 ‘‘and’’ at the end; and 9 (B) by striking clause (iii) and inserting the following: 11 ‘‘(iii) for the rate year beginning in 12 2014, 0.3 percentage point; 13 ‘‘(iv) for each of the rate years begin­14 ning in 2015 and 2016, 0.2 percentage point; and 16 ‘‘(v) for each of the rate years begin­17 ning in 2017, 2018, and 2019, 0.75 per­18 centage point.’’; 19 (2) by striking subparagraph (B); and

(3) by striking ‘‘(3) OTHER ADJUSTMENT.—’’

21

and all that follows through ‘‘For purposes’’ and in­

22

serting ‘‘(3) OTHER ADJUSTMENT.—For purposes’’

paragraphs (A) through (E), respectively, with ap­propriate indentation).

1 (e) OUTPATIENT HOSPITALS.—Section 2 1833(t)(3)(G) of the Social Security Act (42 U.S.C. 3 1395l(t)(3)(G)), as added by section 3401(i)(2) of the Pa­4 tient Protection and Affordable Care Act and amended by 5 section 10319(g) of such Act, is amended— 6 (1) in clause (i)— 7 (A) by placing the subclause (II) (inserted 8 by section 10319(g)(3) of the Patient Protec­9 tion and Affordable Care Act) immediately after 10 subclause (I) and, in such subclause (II), by 11 striking ‘‘and’’ at the end; and 12 (B) by striking subclause (III) and insert­13 ing the following: 14 ‘‘(III) for 2014, 0.3 percentage 15 point; 16 ‘‘(IV) for each of 2015 and 2016,

17 0.2 percentage point; and 18 ‘‘(V) for each of 2017, 2018, and 19 2019, 0.75 percentage point.’’; 20 (2) by striking clause (ii); and 21

(3) by striking ‘‘(G) OTHER ADJUSTMENT.—’’

22

and all that follows through ‘‘For purposes’’ and in­

indentation).

Section 1877(i) of the Social Security Act (42 U.S.C. 5 1395nn(i)), as added by section 6001(a)(3) of the Patient 6 Protection and Affordable Care Act and as amended by 7 section 10601(a) of such Act, is amended— 8 (1) in paragraph (1)(A)(i), by striking ‘‘August 9 1, 2010’’ and inserting ‘‘December 31, 2010’’; and 10 (2) in paragraph (3)— 11 (A) in subparagraph (A)(i), by striking 12 ‘‘an applicable hospital (as defined in subpara­13 graph (E))’’ and inserting ‘‘a hospital that is an 14 applicable hospital (as defined in subparagraph 15 (E)) or is a high Medicaid facility described in 16 subparagraph (F)’’; 17 (B) in subparagraph (C)(iii), by inserting 18 after ‘‘date of enactment of this subsection’’ the 19 following: ‘‘(or, in the case of a hospital that 20 did not have a provider agreement in effect as 21

of such date but does have such an agreement

22

in effect on December 31, 2010, the effective

(C) by redesignating subparagraphs (F)

2

through (H) as subparagraphs (G) through (I),

3

respectively; and

4

(D) by inserting after subparagraph (E) the following new subparagraph: 6 ‘‘(F) HIGH MEDICAID FACILITY DE­7 SCRIBED.—A high Medicaid facility described in 8 this subparagraph is a hospital that— 9 ‘‘(i) is not the sole hospital in a coun­ty; 11 ‘‘(ii) with respect to each of the 3 12 most recent years for which data are avail­13 able, has an annual percent of total inpa­14 tient admissions that represent inpatient admissions under title XIX that is esti­16 mated to be greater than such percent with 17 respect to such admissions for any other 18 hospital located in the county in which the 19 hospital is located; and ‘‘(iii) meets the conditions described

21

in subparagraph (E)(iii).’’.

Section 1848 of the Social Security Act (42 U.S.C. 24 1395w–4), as amended by section 3135(a) of the Patient Protection and Affordable Care Act, is amended—

(1) in subsection (b)(4)—

2

(A) in subparagraph (B), by striking ‘‘this

3

paragraph’’ and inserting ‘‘subparagraph (A)’’; 4 and

(B) by amending subparagraph (C) to read 6 as follows: 7 ‘‘(C) ADJUSTMENT IN IMAGING UTILIZA­8 TION RATE.—With respect to fee schedules es­9 tablished for 2011 and subsequent years, in the methodology for determining practice expense 11 relative value units for expensive diagnostic im­12 aging equipment under the final rule published 13 by the Secretary in the Federal Register on No­14 vember 25, 2009 (42 CFR 410, et al.), the Sec­retary shall use a 75 percent assumption in­16 stead of the utilization rates otherwise estab­17 lished in such final rule.’’; and 18 (2) in subsection (c)(2)(B)(v), by striking sub­19 clauses (III), (IV), and (V) and inserting the fol­lowing new subclause: 21 ‘‘(III) CHANGE IN UTILIZATION 22 RATE FOR CERTAIN IMAGING SERV­23

ICES.—Effective for fee schedules es­

tablished beginning with 2011, re­duced expenditures attributable to the

Subtitle C—Medicaid

5 SEC. 1201. FEDERAL FUNDING FOR STATES. 6 Section 1905 of the Social Security Act (42 U.S.C. 7 1396d), as amended by sections 2001(a)(3) and 10201(c) 8 of the Patient Protection and Affordable Care Act, is 9 amended— 10 (1) in subsection (y)— 11 (A) by redesignating subclause (II) of 12 paragraph (1)(B)(ii) as paragraph (5) of sub­13 section (z) and realigning the left margins ac­14 cordingly; and 15 (B) by striking paragraph (1) and insert­16 ing the following: 17 ‘‘(1) AMOUNT OF INCREASE.—Notwithstanding 18 subsection (b), the Federal medical assistance per­19 centage for a State that is one of the 50 States or 20 the District of Columbia, with respect to amounts 21

expended by such State for medical assistance for

22

newly eligible individuals described in subclause

23

(VIII) of section 1902(a)(10)(A)(i), shall be equal 24 to—

2014, 2015, and 2016;

2017; ‘‘(C) 94 percent for calendar quarters in 6 2018; 7 ‘‘(D) 93 percent for calendar quarters in 8 2019; and 9 ‘‘(E) 90 percent for calendar quarters in 2020 and each year thereafter.’’; and 11 (2) in subsection (z)— 12 (A) in paragraph (1), by striking ‘‘Sep­13 tember 30, 2019’’ and inserting ‘‘December 31, 14 2015’’ and by striking ‘‘subsection (y)(1)(B)(ii)(II)’’ and inserting ‘‘paragraph 16 (3)’’; 17 (B) by striking paragraphs (2) through (4) 18 and inserting the following: 19 ‘‘(2)(A) For calendar quarters in 2014 and each year thereafter, the Federal medical assistance

21

percentage otherwise determined under subsection

22

(b) for an expansion State described in paragraph

23

(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

‘‘(B)(i) The percent specified in this subpara­graph for a State for a year is equal to the Federal 6 medical assistance percentage (as defined in the first 7 sentence of subsection (b)) for the State increased 8 by a number of percentage points equal to the tran­9 sition percentage (specified in clause (ii) for the year) of the number of percentage points by which— 11 ‘‘(I) such Federal medical assistance per­12 centage for the State, is less than 13 ‘‘(II) the percent specified in subsection 14 (y)(1) for the year. ‘‘(ii) The transition percentage specified in this 16 clause for— 17 ‘‘(I) 2014 is 50 percent; 18 ‘‘(II) 2015 is 60 percent; 19 ‘‘(III) 2016 is 70 percent; ‘‘(IV) 2017 is 80 percent;

21

‘‘(V) 2018 is 90 percent; and

22

‘‘(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

SEC. 1202. PAYMENTS TO PRIMARY CARE PHYSICIANS.

6 (a) IN GENERAL.— 7 (1) FEE-FOR-SERVICE PAYMENTS.—Section 8 1902 of the Social Security Act (42 U.S.C. 1396a), 9 as amended by section 2303(a)(2) of the Patient Protection and Affordable Care Act, is amended— 11 (A) in subsection (a)(13)— 12 (i) by striking ‘‘and’’ at the end of 13 subparagraph (A); 14 (ii) by adding ‘‘and’’ at the end of subparagraph (B); and 16 (iii) by adding at the end the fol­17 lowing new subparagraph: 18 ‘‘(C) payment for primary care services (as 19 defined in subsection (jj)) furnished in 2013 and 2014 by a physician with a primary spe­

21

cialty designation of family medicine, general

22

internal medicine, or pediatric medicine at a

rate that applies to such services and physician under part B of title XVIII (or, if greater, the

sion factor under such section for 2009);’’; and

5

(B) by adding at the end the following new 6 subsection: 7 ‘‘(jj) PRIMARY CARE SERVICES DEFINED.—For pur­8 poses of subsection (a)(13)(C), the term ‘primary care 9 services’ means— 10 ‘‘(1) evaluation and management services that 11 are procedure codes (for services covered under title 12 XVIII) for services in the category designated Eval­13 uation and Management in the Healthcare Common 14 Procedure Coding System (established by the Sec­15 retary under section 1848(c)(5) as of December 31, 16 2009, and as subsequently modified); and 17 ‘‘(2) services related to immunization adminis­18 tration for vaccines and toxoids for which CPT codes 19 90465, 90466, 90467, 90468, 90471, 90472, 90473, 20 or 90474 (as subsequently modified) apply under 21

such System.’’. 22 (2) UNDER MEDICAID MANAGED CARE 23

1396u–2(f)) is amended—

(A) in the heading, by adding at the end

2

the following: ‘‘; ADEQUACY OF PAYMENT FOR

3

PRIMARY CARE SERVICES’’; and

4

(B) by inserting before the period at the end the following: ‘‘and, in the case of primary 6 care services described in section 7 1902(a)(13)(C), consistent with the minimum 8 payment rates specified in such section (regard­9 less of the manner in which such payments are made, including in the form of capitation or 11 partial capitation)’’. 12 (b) INCREASE IN PAYMENT USING INCREASED 13 FMAP.—Section 1905 of the Social Security Act, as 14 amended by section 1004(b) of this Act and section 10201(c)(6) of the Patient Protection and Affordable Care 16 Act, is amended by adding at the end the following new 17 subsection: 18 ‘‘(dd) INCREASED FMAP FOR ADDITIONAL EXPEND­19 ITURES FOR PRIMARY CARE SERVICES.—Notwithstanding subsection (b), with respect to the portion of the amounts 21 expended for medical assistance for services described in 22 section 1902(a)(13)(C) furnished on or after January 1, 23 2013, and before January 1, 2015, that is attributable to 24 the amount by which the minimum payment rate required under such section (or, by application, section 1932(f)) ex-

63 1 ceeds the payment rate applicable to such services under 2 the State plan as of July 1, 2009, the Federal medical 3 assistance percentage for a State that is one of the 50 4 States or the District of Columbia shall be equal to 100 5 percent. The preceding sentence does not prohibit the pay­6 ment of Federal financial participation based on the Fed­7 eral medical assistance percentage for amounts in excess 8 of those specified in such sentence.’’. 9 SEC. 1203. DISPROPORTIONATE SHARE HOSPITAL PAY­10 MENTS. 11 (a) IN GENERAL.—Section 1923(f) of the Social Se­12 curity Act (42 U.S.C. 1396r–4(f)), as amended by sections 13 2551(a)(4) and 10201(e)(1) of the Patient Protection and 14 Affordable Care Act, is amended— 15 (1) in paragraph (6)(B)(iii), in the matter pre­16 ceding subclause (I), by striking ‘‘or paragraph (7)’’; 17 and 18 (2) by striking paragraph (7) and inserting the 19 following: 20 ‘‘(7) MEDICAID DSH REDUCTIONS.— 21

‘‘(A) REDUCTIONS.—

22

‘‘(i) IN GENERAL.—For each of fiscal

shall effect the following reductions:

DSH allotments to States in the 4 amount specified under the DSH 5

health reform methodology under sub­6 paragraph (B) for the State for the 7 fiscal year. 8 ‘‘(II) REDUCTIONS IN PAY­9 MENTS.—The Secretary shall reduce 10 payments to States under section 11 1903(a) for each calendar quarter in 12 the fiscal year, in the manner speci­13 fied in clause (iii), in an amount equal 14 to ¹⁄4 of the DSH allotment reduction 15 under subclause (I) for the State for 16 the fiscal year. 17 ‘‘(ii) AGGREGATE REDUCTIONS.—The 18 aggregate reductions in DSH allotments 19 for all States under clause (i)(I) shall be 20 equal to— 21

‘‘(I) $500,000,000 for fiscal year 22 2014; 23 ‘‘(II) $600,000,000 for fiscal 24

year 2015;

year 2016;

year 2017;

5

‘‘(V) $5,000,000,000 for fiscal 6 year 2018; 7 ‘‘(VI) $5,600,000,000 for fiscal 8 year 2019; and 9 ‘‘(VII) $4,000,000,000 for fiscal 10 year 2020. 11 The Secretary shall distribute such aggre­12 gate reductions among States in accord­13 ance with subparagraph (B). 14 ‘‘(iii) MANNER OF PAYMENT REDUC­15 TION.—The amount of the payment reduc­16 tion under clause (i)(II) for a State for a 17 quarter shall be deemed an overpayment to 18 the State under this title to be disallowed 19 against the State’s regular quarterly draw 20 for all spending under section 1903(d)(2). 21

Such a disallowance is not subject to a re­

22

consideration under subsections (d) and (e)

of section 1116.

66 1 ‘‘(iv) DEFINITION.—In this para­2

States and the District of Columbia.

‘‘(B) DSH HEALTH REFORM METHOD-OLOGY.—The Secretary shall carry out sub­6 paragraph (A) through use of a DSH Health 7 Reform methodology that meets the following 8 requirements: 9 ‘‘(i) The methodology imposes the largest percentage reductions on the States 11 that— 12 ‘‘(I) have the lowest percentages 13 of uninsured individuals (determined 14 on the basis of data from the Bureau of the Census, audited hospital cost 16 reports, and other information likely 17 to yield accurate data) during the 18 most recent year for which such data 19 are available; or ‘‘(II) do not target their DSH

21

payments on— 22 ‘‘(aa) hospitals with high 23

volumes of Medicaid inpatients 24 (as defined in subsection (b)(1)(A)); and

67 1 ‘‘(bb) hospitals that have 2 high levels of uncompensated 3

care (excluding bad debt). 4 ‘‘(ii) The methodology imposes a smaller percentage reduction on low DSH 6 States described in paragraph (5)(B). 7 ‘‘(iii) The methodology takes into ac­8 count the extent to which the DSH allot­9 ment for a State was included in the budg­et neutrality calculation for a coverage ex­11 pansion approved under section 1115 as of 12 July 31, 2009.’’. 13 (b) EXTENSION OF DSH ALLOTMENT.—Section 14 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 16 following: 17 ‘‘(v) ALLOTMENT FOR 2D, 3RD, AND 18 4TH QUARTERS OF FISCAL YEAR 2012 AND 19 FOR FISCAL YEAR 2013.—Notwithstanding the table set forth in paragraph (2): 21 ‘‘(I) 2D, 3RD, AND 4TH QUAR­22 TERS OF FISCAL YEAR 2012.—In the 23

case of a State that has a DSH allot­

ment of $0 for the 2d, 3rd, and 4th quarters of fiscal year 2012, the DSH

case of a State that has a DSH allot­ment of $0 for fiscal year 2013, the 6 DSH allotment shall be $53,100,000 7 for such fiscal year.’’. 8 SEC. 1204. FUNDING FOR THE TERRITORIES. 9 (a) IN GENERAL.—Part III of subtitle D of title I of the Patient Protection and Affordable Care Act, as 11 amended by section 10104(m) of such Act, is amended 12 by inserting after section 1322 the following section: 13 ‘‘SEC. 1323. FUNDING FOR THE TERRITORIES. 14 ‘‘(a) IN GENERAL.—A territory that— ‘‘(1) elects consistent with subsection (b) to es­16 tablish an Exchange in accordance with part II of 17 this subtitle and establishes such an Exchange in ac­18 cordance with such part shall be treated as a State 19 for purposes of such part and shall be entitled to payment from the amount allocated to the territory

21

under subsection (c); or

22

‘‘(2) does not make such election shall be enti­

to the territory under subsections (f) and (g) of sec­tion 1108 of the Social Security Act (42 U.S.C.

subsections. ‘‘(b) TERMS AND CONDITIONS.—An election under 6 subsection (a)(1) shall— 7 ‘‘(1) not be effective unless the election is con­8 sistent with a form and manner specified by the Sec­9 retary and is received not later than October 1, 2013; and 11 ‘‘(2) be contingent upon entering into an agree­12 ment between the territory and the Secretary that 13 requires that— 14 ‘‘(A) funds provided under the agreement shall be used only to provide premium and cost-16 sharing assistance to residents of the territory 17 obtaining health insurance coverage through the 18 Exchange; and 19 ‘‘(B) the premium and cost-sharing assist­ance provided under such agreement shall be

21

structured in such a manner so as to prevent

22

any gap in assistance for individuals between

available through the territory’s Medicaid plan under title XIX of the Social Security Act and

ment.

‘‘(c) APPROPRIATION AND ALLOCATION.— ‘‘(1) APPROPRIATION.—Out of any funds in the 6 Treasury not otherwise appropriated, there is appro­7 priated for purposes of payment pursuant to sub­8 section (a) $1,000,000,000, to be available during 9 the period beginning with 2014 and ending with 2019. 11 ‘‘(2) ALLOCATION.—The Secretary shall allo­12 cate the amount appropriated under paragraph (1) 13 among the territories for purposes of carrying out 14 this section as follows: ‘‘(A) For Puerto Rico, $925,000,000. 16 ‘‘(B) For another territory, the portion of 17 $75,000,000 specified by the Secretary.’’. 18 (b) MEDICAID FUNDING.— 19 (1) INCREASE IN FUNDING CAPS.—Section 1108(g) of the Social Security Act (42 U.S.C.

21

1308(g)), as amended by section 2005(a) of the Pa­

22

tient Protection and Affordable Care Act, is amend­23 ed— 24

(A) in paragraph (2), by inserting ‘‘and section 1323(a)(2) of the Patient Protection

and Affordable Care Act’’ after ‘‘subject to’’; 2 and 3

(B) by striking paragraph (5) and insert­

4

ing the following:

5

‘‘(5) ADDITIONAL INCREASE.—The Secretary 6 shall increase the amounts otherwise determined 7 under this subsection for Puerto Rico, the Virgin Is­8 lands, Guam, the Northern Mariana Islands, and 9 American Samoa (after the application of subsection 10 (f) and the preceding paragraphs of this subsection) 11 for the period beginning July 1, 2011, and ending 12 on September 30, 2019, by such amounts that the 13 total additional payments under title XIX to such 14 territories equals $6,300,000,000 for such period. 15 The Secretary shall increase such amounts in pro­16 portion to the amounts applicable to such territories 17 under this subsection and subsection (f) on the date 18 of enactment of this paragraph.’’. 19 (2) DISREGARD OF PAYMENTS; INCREASED 20 FMAP.—Section 2005 of the Patient Protection and 21

Affordable Care Act is amended—

22

(A) by repealing subsection (b) (and the

been enacted; and

(B) in subsection (c)(2), by striking ‘‘Jan­

4

uary’’ and inserting ‘‘July’’.

5 SEC. 1205. DELAY IN COMMUNITY FIRST CHOICE OPTION. 6 Section 1915(k)(1) of the Social Security Act (42 7 U.S.C. 1396n(k)), as added by section 2401 of the Patient 8 Protection and Affordable Care Act, is amended by strik­9 ing ‘‘October 1, 2010’’ and inserting ‘‘October 1, 2011’’. 10 SEC. 1206. DRUG REBATES FOR NEW FORMULATIONS OF 11 EXISTING DRUGS. 12 (a) TREATMENT OF NEW FORMULATIONS.—Sub­13 paragraph (C) of section 1927(c)(2) of the Social Security 14 Act (42 U.S.C. 1396r–8(c)(2)), as added by section 15 2501(d) of the Patient Protection and Affordable Care 16 Act, is amended to read as follows: 17 ‘‘(C) TREATMENT OF NEW FORMULA­18 TIONS.—In the case of a drug that is a line ex­19 tension of a single source drug or an innovator 20 multiple source drug that is an oral solid dos­21

age form, the rebate obligation with respect to

22

such drug under this section shall be the

new drug or, if greater, the product of—

5

‘‘(ii) the highest additional rebate 6 (calculated as a percentage of average 7 manufacturer price) under this section for 8 any strength of the original single source 9 drug or innovator multiple source drug; 10 and 11 ‘‘(iii) the total number of units of 12 each dosage form and strength of the line 13 extension product paid for under the State 14 plan in the rebate period (as reported by 15 the State). 16 In this subparagraph, the term ‘line extension’ 17 means, with respect to a drug, a new formula­18 tion of the drug, such as an extended release 19 formulation.’’. 20 (b) EFFECTIVE DATE.—The amendment made by 21 subsection (a) shall take effect as if included in the enact­22 ment of the Patient Protection and Affordable Care Act.

(a) IN GENERAL.—Section 1861(ff)(3)(B) of the So­5 cial Security Act (42 U.S.C. 1395x(ff)(3)(B)) is amend­6 ed— 7 (1) in clause (ii), by striking ‘‘and’’ at the end; 8 (2) by redesignating clause (iii) as clause (iv); 9 and 10 (3) by inserting after clause (ii) the following: 11 ‘‘(iii) provides a significant share of its services 12 to individuals who are not eligible for benefits under 13 this title; and’’. 14 (b) RESTRICTION.—Section 1861(ff)(3)(A) of such 15 Act (42 U.S.C. 1395x(ff)(3)(A)) is amended by inserting 16 ‘‘other than in an individual’s home or in an inpatient or 17 residential setting’’ before the period. 18 (c) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to items and services furnished on 20 or after the first day of the first calendar quarter that 21 begins at least 12 months after the date of the enactment 22 of this Act.

ITATIONS .

Section 1874A(h) of the Social Security Act (42

U.S.C. 1395w–3a(h)) is repealed.

SEC. 1303. CMS–IRS DATA MATCH TO IDENTIFY FRAUDU­

LENT PROVIDERS.

(a) AUTHORITY TO DISCLOSE RETURN INFORMATION CONCERNING OUTSTANDING TAX DEBTS FOR PURPOSES OF ENHANCING MEDICARE PROGRAM INTEGRITY.—

(1) IN GENERAL.—Section 6103(l) of the Inter­nal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

‘‘(22) DISCLOSURE OF RETURN INFORMATION TO DEPARTMENT OF HEALTH AND HUMAN SERVICES FOR PURPOSES OF ENHANCING MEDICARE PROGRAM INTEGRITY.—

‘‘(A) IN GENERAL.—The Secretary shall, upon written request from the Secretary of Health and Human Services, disclose to officers and employees of the Department of Health and Human Services return information with respect to a taxpayer who has applied to enroll, or reenroll, as a provider of services or supplier under the Medicare program under title XVIII of the Social Security Act. Such return infor­mation shall be limited to—

linquent tax debt owed by that taxpayer; and 6 ‘‘(iii) the taxable year to which the se­7 riously delinquent tax debt pertains. 8 ‘‘(B) RESTRICTION ON DISCLOSURE.—Re­9 turn information disclosed under subparagraph

(A) may be used by officers and employees of 11 the Department of Health and Human Services 12 for the purposes of, and to the extent necessary 13 in, establishing the taxpayer’s eligibility for en­14 rollment or reenrollment in the Medicare pro­gram, or in any administrative or judicial pro­16 ceeding relating to, or arising from, a denial of 17 such enrollment or reenrollment, or in deter­18 mining the level of enhanced oversight to be ap­19 plied with respect to such taxpayer pursuant to section 1866(j)(3) of the Social Security Act.

21

‘‘(C) SERIOUSLY DELINQUENT TAX

22

DEBT.—For purposes of this paragraph, the

outstanding debt under this title for which a notice of lien has been filed pursuant to section

debt with respect to which a collection due proc­

5

ess hearing under section 6330, or relief under 6 subsection (a), (b), or (f) of section 6015, is re­7 quested or pending.’’. 8 (2) CONFORMING AMENDMENTS.—Section 9 6103(p)(4) of such Code, as amended by sections 10 1414 and 3308 the Patient Protection and Afford­11 able Care Act, in the matter preceding subparagraph 12 (A) and in subparagraph (F)(ii), is amended by 13 striking ‘‘or (17)’’ and inserting ‘‘(17), or (22)’’ 14 each place it appears. 15 (b) SECRETARY’S AUTHORITY TO USE INFORMATION 16 FROM THE DEPARTMENT OF TREASURY IN MEDICARE 17 ENROLLMENTS AND REENROLLMENTS.—Section 18 1866(j)(2) of the Social Security Act (42 U.S.C. 19 1395cc(j)), as inserted by section 6401(a) of the Patient 20 Protection and Affordable Care Act, is further amended— 21

(1) by redesignating subparagraph (E) as sub­

22

paragraph (F); and

23

(2) by inserting after subparagraph (D) the fol­

lowing new subparagraph:

78 1 ‘‘(E) USE OF INFORMATION FROM THE 2 DEPARTMENT OF TREASURY CONCERNING TAX 3

vider of services or supplier to enroll or reenroll

5

under the program under this title, the Sec­6 retary shall determine, on the basis of informa­7 tion supplied by the Secretary of the Treasury 8 pursuant to section 6103(l)(22) of the Internal 9 Revenue Code of 1986, whether to deny such 10 application or to apply enhanced oversight to 11 such provider of services or supplier pursuant 12 to paragraph (3) if the Secretary determines 13 such provider of services or supplier owes such 14 a debt.’’. 15 (c) AUTHORITY TO ADJUST PAYMENTS OF PRO­16 VIDERS OF SERVICES AND SUPPLIERS WITH THE SAME 17 TAX IDENTIFICATION NUMBER FOR MEDICARE OBLIGA­18 TIONS.—Section 1866(j)(5) of the Social Security Act (42 19 U.S.C. 1395cc(j)(5)), as inserted by section 6401(a) of the 20 Patient Protection and Affordable Care Act, is amended— 21

(1) in the paragraph heading, by striking

22

‘‘PAST-DUE’’ and inserting ‘‘MEDICARE’’;

23

(2) in subparagraph (A), by striking ‘‘past-due

(B)(ii) due from such’’; and

(3) in subparagraph (B)(ii), by striking ‘‘a

4

past-due obligation’’ and inserting ‘‘an amount that

5

is more than the amount required to be paid’’.

6 SEC. 1304. FUNDING TO FIGHT FRAUD, WASTE, AND ABUSE. 7 (a) FUNDING TO FIGHT FRAUD, WASTE, AND 8 ABUSE.— 9 (1) IN GENERAL.—Section 1817(k) of the So­10 cial Security Act (42 U.S.C. 1395i(k)), as amended 11 by section 6402(i) of the Patient Protection and Af­12 fordable Care Act, is further amended— 13 (A) by adding at the end the following new 14 paragraph: 15 ‘‘(8) ADDITIONAL FUNDING.— 16 ‘‘(A) IN GENERAL.—In addition to the 17 funds otherwise appropriated to the Account 18 from the Trust Fund under paragraphs (3)(C) 19 and (4)(A) and for purposes described in para­20 graphs (3)(C) and (4)(A), there are hereby ap­21

propriated to such Account from such Trust

22

Fund the following additional amounts: 23 ‘‘(i) For fiscal year 2011, 24

$95,000,000.

80 1 ‘‘(ii) For fiscal year 2012, 2

$55,000,000.

and 2014, $30,000,000. ‘‘(iv) For each of fiscal years 2015 6 and 2016, $20,000,000. 7 ‘‘(B) ALLOCATION.—The funds appro­8 priated under this paragraph shall be allocated 9 in the same proportion as the total funding ap­propriated with respect to paragraphs (3)(A) 11 and (4)(A) was allocated with respect to fiscal 12 year 2010, and shall be available without fur­13 ther appropriation until expended.’’; and 14 (B) in paragraph (4)(A), by inserting ‘‘for activities described in paragraph (3)(C) and’’ 16 after ‘‘necessary’’. 17 (b) MEDICAID INTEGRITY PROGRAM.—Section 18 1936(e)(1) of such Act (42 U.S.C. 1396-u6(e)(1)) is 19 amended—

(1) in subparagraph (B), by striking at the end 21 ‘‘and’’; 22

(2) in subparagraph (C)—

23

(A) by striking ‘‘for each fiscal year there­

after’’ and inserting ‘‘for each of fiscal years 2009 and 2010’’; and

(B) by striking the period and inserting ‘‘;

2

and’’; and

3

(3) by adding at the end the following new sub­

4

paragraph: ‘‘(D) for each fiscal year after fiscal year 6 2010, the amount appropriated under this para­7 graph for the previous fiscal year, increased by 8 the percentage increase in the consumer price 9 index for all urban consumers (all items; United States city average) over the previous year.’’.

11 SEC. 1305. 90-DAY PERIOD OF ENHANCED OVERSIGHT FOR 12 INITIAL CLAIMS OF DME SUPPLIERS. 13 Section 1866(j), as amended by section 6401 of the 14 Patient Protection and Affordable Care Act, is further amended— 16 (1) by redesignating paragraphs (4) through 17 (7) as paragraphs (5) through (8), respectively; and 18 (2) by inserting after paragraph (3) the fol­19 lowing new paragraph: ‘‘(4) 90-DAY PERIOD OF ENHANCED OVERSIGHT

21

FOR INITIAL CLAIMS OF DME SUPPLIERS.—For peri­

22

ods beginning after January 1, 2011, if the Sec­

fraudulent activity among suppliers of durable med­ical equipment, in the case of a supplier of durable

such determination and who is initially enrolling 4 under such title, the Secretary shall, notwith­standing sections 1816(c), 1842(c), and 1869(a)(2), 6 withhold payment under such title with respect to 7 durable medical equipment furnished by such sup­8 plier during the 90-day period beginning on the date 9 of the first submission of a claim under such title for durable medical equipment furnished by such 11 supplier.’’. 12 Subtitle E—Provisions Relating to 13 Revenue 14 SEC. 1401. HIGH-COST PLAN EXCISE TAX.

(a) IN GENERAL.—Section 4980I of the Internal 16 Revenue Code of 1986, as added by section 9001 of the 17 Patient Protection and Affordable Care Act and amended 18 by section 10901 of such Act, is amended— 19 (1) in subsection (b)(3)(B)—

(A) by striking ‘‘The annual’’ and insert­

21 ing the following:

22 ‘‘(i) IN GENERAL.—Except as pro­

23 vided in clause (ii), the annual’’, and

24

(B) by adding at the end the following new clause:

414(f)) shall be treated as coverage other than self-only coverage.’’, 6 (2) in subsection (b)(3)(C)— 7 (A) by striking ‘‘Except as provided in 8 subparagraph (D)—’’ 9 (B) in clause (i)—

(i) by striking ‘‘2013’’ each place it 11 appears in the heading and the text and 12 inserting ‘‘2018’’, 13 (ii) by striking ‘‘$8,500’’ in subclause 14 (I) and inserting ‘‘$10,200 multiplied by the health cost adjustment percentage (de­16 termined by only taking into account self-17 only coverage)’’, and 18 (iii) by striking ‘‘$23,000’’ in sub­19 clause (II) and inserting ‘‘$27,500 multi­plied by the health cost adjustment per­

21

centage (determined by only taking into

22

account coverage other than self-only cov­23 erage)’’, 24

(C) by redesignating clauses (ii) and (iii) as clauses (iv) and (v), respectively, and by in-

clauses:

PERCENTAGE.—For purposes of clause (i), the health cost adjustment percentage is 6 equal to 100 percent plus the excess (if 7 any) of— 8 ‘‘(I) the percentage by which the 9 per employee cost for providing cov­erage under the Blue Cross/Blue 11 Shield standard benefit option under 12 the Federal Employees Health Bene­13 fits Plan for plan year 2018 (deter­14 mined by using the benefit package for such coverage in 2010) exceeds 16 such cost for plan year 2010, over 17 ‘‘(II) 55 percent. 18 ‘‘(iii) AGE AND GENDER ADJUST­19 MENT.— ‘‘(I) IN GENERAL.—The amount

21

determined under subclause (I) or (II)

22

of clause (i), whichever is applicable,

creased by the amount determined under subclause (II).

excess (if any) of—

5

‘‘(aa) the premium cost of 6 the Blue Cross/Blue Shield 7 standard benefit option under the 8 Federal Employees Health Bene­9 fits Plan for the type of coverage 10 provided such individual in such 11 taxable period if priced for the 12 age and gender characteristics of 13 all employees of the individual’s 14 employer, over 15 ‘‘(bb) that premium cost for 16 the provision of such coverage 17 under such option in such taxable 18 period if priced for the age and 19 gender characteristics of the na­20 tional workforce.’’. 21

(D) in clause (iv), as redesignated by sub­

22

paragraph (C)—

23

(i) by inserting ‘‘covered by the plan’’

(ii) by striking subclauses (I) and (II)

2

and inserting the following:

3

‘‘(I) the dollar amount in clause

4

(i)(I) shall be increased by $1,650, 5 and 6 ‘‘(II) the dollar amount in clause 7 (i)(II) shall be increased by $3,450,’’, 8 and 9 (E) in clause (v), as redesignated by sub­10 paragraph (C)— 11 (i) by striking ‘‘2013’’ and inserting 12 ‘‘2018’’, 13 (ii) by striking ‘‘clauses (i) and (ii)’’ 14 and inserting ‘‘clauses (i) (after the appli­15 cation of clause (ii)) and (iv)’’, and 16 (iii) by inserting ‘‘in the case of deter­17 minations for calendar years beginning be­18 fore 2020’’ after ‘‘1 percentage point’’ in 19 subclause (II) thereof, 20 (3) by striking subparagraph (D) of subsection 21 (b)(3), 22

(4) in subsection (d)(1)(B), by redesignating

clause (i) the following new clause:

which are for treatment of the mouth (in­

5

cluding any organ or structure within the 6 mouth) or for treatment of the eye, or’’, 7 and 8 (5) in subsection (d), by adding at the end the 9 following new paragraph: 10 ‘‘(3) EMPLOYEE.—The term ‘employee’ includes 11 any former employee, surviving spouse, or other pri­12 mary insured individual.’’. 13 (b) EFFECTIVE DATES.— 14 (1) Section 9001(c) of the Patient Protection 15 and Affordable Care Act is amended by striking 16 ‘‘2012’’ and inserting ‘‘2017’’. 17 (2) Section 10901(c) of the Patient Protection 18 and Affordable Care Act is amended by striking 19 ‘‘2012’’ and inserting ‘‘2017’’. 20 SEC. 1402. MEDICARE TAX. 21

(a) INVESTMENT INCOME.—

22

(1) IN GENERAL.—Subtitle A of the Internal

chapter 2 the following new chapter:

‘‘Sec. 1411. Imposition of tax.

2 ‘‘SEC. 1411. IMPOSITION OF TAX. 3

‘‘(a) IN GENERAL.—Except as provided in subsection 4 (e)— 5 ‘‘(1) APPLICATION TO INDIVIDUALS.—In the 6 case of an individual, there is hereby imposed (in ad­7 dition to any other tax imposed by this subtitle) for 8 each taxable year a tax equal to 3.8 percent of the 9 lesser of— 10 ‘‘(A) net investment income for such tax­11 able year, or 12 ‘‘(B) the excess (if any) of— 13 ‘‘(i) the modified adjusted gross in­14 come for such taxable year, over 15 ‘‘(ii) the threshold amount. 16 ‘‘(2) APPLICATION TO ESTATES AND TRUSTS.— 17 In the case of an estate or trust, there is hereby im­18 posed (in addition to any other tax imposed by this 19 subtitle) for each taxable year a tax of 3.8 percent 20

of the lesser of—

21

‘‘(A) the undistributed net investment in­

come for such taxable year, or

year, over

‘‘(ii) the dollar amount at which the

5

highest tax bracket in section 1(e) begins 6 for such taxable year. 7 ‘‘(b) THRESHOLD AMOUNT.—For purposes of this 8 chapter, the term ‘threshold amount’ means— 9 ‘‘(1) in the case of a taxpayer making a joint 10 return under section 6013 or a surviving spouse (as 11 defined in section 2(a)), $250,000, 12 ‘‘(2) in the case of a married taxpayer (as de­13 fined in section 7703) filing a separate return, ¹⁄2 of 14 the dollar amount determined under paragraph (1), 15 and 16 ‘‘(3) in any other case, $200,000. 17 ‘‘(c) NET INVESTMENT INCOME.—For purposes of 18 this chapter— 19 ‘‘(1) IN GENERAL.—The term ‘net investment 20 income’ means the excess (if any) of— 21

‘‘(A) the sum of—

22

‘‘(i) gross income from interest, divi­

a trade or business described in paragraph

5

(2), and 6 ‘‘(iii) net gain (to the extent taken 7 into account in computing taxable income) 8 attributable to the disposition of property 9 other than property held in a trade or 10 business not described in paragraph (2), 11 over 12 ‘‘(B) the deductions allowed by this sub­13 title which are properly allocable to such gross 14 income or net gain. 15 ‘‘(2) TRADES AND BUSINESSES TO WHICH TAX 16 APPLIES.—A trade or business is described in this 17 paragraph if such trade or business is— 18 ‘‘(A) a passive activity (within the meaning 19 of section 469) with respect to the taxpayer, or 20 ‘‘(B) a trade or business of trading in fi­21

nancial instruments or commodities (as defined

22

in section 475(e)(2)). 23 ‘‘(3) INCOME ON INVESTMENT OF WORKING 24 CAPITAL SUBJECT TO TAX.—A rule similar to the

of this subsection.

ESTS IN PARTNERSHIPS AND S CORPORATIONS.—In

5

the case of a disposition of an interest in a partner­6 ship or S corporation— 7 ‘‘(A) gain from such disposition shall be 8 taken into account under clause (iii) of para­9 graph (1)(A) only to the extent of the net gain 10 which would be so taken into account by the 11 transferor if all property of the partnership or 12 S corporation were sold for fair market value 13 immediately before the disposition of such inter­14 est, and 15 ‘‘(B) a rule similar to the rule of subpara­16 graph (A) shall apply to a loss from such dis­17 position. 18 ‘‘(5) EXCEPTION FOR DISTRIBUTIONS FROM 19 QUALIFIED PLANS.—The term ‘net investment in­20 come’ shall not include any distribution from a plan 21

or arrangement described in section 401(a), 403(a),

22

403(b), 408, 408A, or 457(b).

‘‘(d) MODIFIED ADJUSTED GROSS INCOME.—For 4 purposes of this chapter, the term ‘modified adjusted gross income’ means adjusted gross income increased by the ex­6 cess of— 7 ‘‘(1) the amount excluded from gross income 8 under section 911(a)(1), over 9 ‘‘(2) the amount of any deductions (taken into account in computing adjusted gross income) or ex­11 clusions disallowed under section 911(d)(6) with re­12 spect to the amounts described in paragraph (1). 13 ‘‘(e) NONAPPLICATION OF SECTION.—This section 14 shall not apply to— ‘‘(1) a nonresident alien, or 16 ‘‘(2) a trust all of the unexpired interests in 17 which are devoted to one or more of the purposes 18 described in section 170(c)(2)(B).’’. 19 (2) ESTIMATED TAXES.—Section 6654 of the Internal Revenue Code of 1986 is amended—

21

(A) in subsection (a), by striking ‘‘and the

22

tax under chapter 2’’ and inserting ‘‘the tax

23

under chapter 2, and the tax under chapter 24 2A’’, and

(B) in subsection (f)—

(i) by striking ‘‘minus’’ at the end of

2

paragraph (2) and inserting ‘‘plus’’, and

3

(ii) by redesignating paragraph (3) as

paragraph (4) and inserting after para­graph (2) the following new paragraph: 6 ‘‘(3) the taxes imposed by chapter 2A, minus’’. 7 (3) FEDERAL SUPPLEMENTARY MEDICAL IN­8 SURANCE TRUST FUND.—Section 1841(a) of such 9 Act (42 U.S.C. 1395t(a)) is amended by adding at the end the following: ‘‘There are hereby appro­11 priated to the Trust Fund, out of any moneys in the 12 Treasury not otherwise appropriated, amounts equiv­13 alent to 100 per centum of the taxes imposed by 14 1411 of the Internal Revenue Code of 1986 with re­spect to income described in such section and re­16 ported to the Secretary of the Treasury or the Sec­17 retary’s delegate on tax returns under subtitle F of 18 such Code, as determined by the Secretary of the 19 Treasury by applying the applicable rate of tax under such section to such income. The amounts ap­

21

propriated by the preceding sentence shall be trans­

22

ferred from time to time from the general fund of

determined on the basis of estimates by the Sec­retary of the Treasury of the taxes, specified in the

2

Treasury; and proper adjustments shall be made in

3

amounts subsequently transferred to the extent prior

4

estimates were in excess of or were less than the

5

taxes specified in such sentence.’’. 6 (4) CLERICAL AMENDMENT.—The table of 7 chapters for subtitle A of chapter 1 of the Internal 8 Revenue Code of 1986 is amended by inserting after 9 the item relating to chapter 2 the following new 10 item:

‘‘CHAPTER 2A—MEDICARE TAX’’.

11 (5) EFFECTIVE DATES.—The amendments 12 made by this subsection shall apply to taxable years 13 beginning after December 31, 2012. 14 (b) EARNED INCOME.— 15 (1) THRESHOLD.— 16 (A) FICA.—Paragraph (2) of section 17 3101(b) of the Internal Revenue Code of 1986, 18 as added by section 9015 of the Patient Protec­19 tion and Affordable Care Act and amended by 20

section 10906 of such Act, is amended by strik­

21

ing ‘‘and’’ at the end of subparagraph (A), by

22

redesignating subparagraph (B) as subpara­

23

graph (C), and by inserting after subparagraph

24

(A) the following new subparagraph:

subparagraph (A), and’’.

(B) SECA.—Section 1401(b)(2) of the In­6 ternal Revenue Code of 1986, as added by sec­7 tion 9015 of the Patient Protection and Afford­8 able Care Act and amended by section 10906 of 9 such Act, is amended—

(i) in subparagraph (A), by striking 11 ‘‘and’’ at the end of clause (i), by redesig­12 nating clause (ii) as clause (iii), and by in­13 serting after clause (i) the following new 14 clause: ‘‘(ii) in the case of a married taxpayer 16 (as defined in section 7703) filing a sepa­17 rate return, ¹⁄2 of the dollar amount deter­18 mined under clause (i), and’’, and 19 (ii) in subparagraph (B), by striking ‘‘under clauses (i) and (ii)’’ and inserting

21 ‘‘under clause (i), (ii), or (iii) (whichever is

22 applicable)’’.

23

(2) ESTIMATED TAXES.—Section 6654 of the

24 Internal Revenue Code of 1986 is amended by redes­ignating subsection (m) as subsection (n) and by in-section:

3

‘‘(m) SPECIAL RULE FOR MEDICARE TAX.—For pur­4 poses of this section, the tax imposed under section 3101(b)(2) (to the extent not withheld) shall be treated 6 as a tax imposed under chapter 2.’’. 7 (3) EFFECTIVE DATE.—The amendments made 8 by this subsection shall apply with respect to remu­9 neration received, and taxable years beginning after, December 31, 2012.

11 SEC. 1403. DELAY OF LIMITATION ON HEALTH FLEXIBLE 12 SPENDING ARRANGEMENTS UNDER CAFE­13 TERIA PLANS. 14 (a) IN GENERAL.—Section 10902(b) of the Patient Protection and Affordable Care Act is amended by strik­16 ing ‘‘December 31, 2010’’ and inserting ‘‘December 31, 17 2012’’. 18 (b) INFLATION ADJUSTMENT.—Paragraph (2) of sec­19 tion 125(i) of the Internal Revenue Code of 1986, as added by section 9005 of the Patient Protection and Af­21 fordable Care Act and amended by section 10902 of such 22 Act, is amended— 23

(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’’

2

and inserting ‘‘2012’’.

3 SEC. 1404. BRAND NAME PHARMACEUTICALS. 4

(a) IN GENERAL.—Section 9008 of the Patient Pro­5 tection and Affordable Care Act is amended— 6 (1) in subsection (a)(1), by striking ‘‘2009’’ and 7 inserting ‘‘2010’’, 8 (2) in subsection (b)— 9 (A) by striking ‘‘$2,300,000,000’’ in para­

10 graph (1) and inserting ‘‘the applicable 11 amount’’, and 12 (B) by adding at the end the following new 13 paragraph: 14 ‘‘(4) APPLICABLE AMOUNT.—For purposes of 15 paragraph (1), the applicable amount shall be deter­16 mined in accordance with the following table:

‘‘Calendar year Applicable amount

2011 …………………………………………………………….. $2,500,000,000 2012 …………………………………………………………….. $3,000,000,000 2013 …………………………………………………………….. $3,000,000,000 2014 …………………………………………………………….. $3,000,000,000 2015 …………………………………………………………….. $3,000,000,000 2016 …………………………………………………………….. $3,000,000,000 2017 …………………………………………………………….. $3,500,000,000. 2018 …………………………………………………………….. $4,200,000,000 2019 and thereafter ……………………………………….. $2,800,000,000.’’,

17

(3) in subsection (d), by adding at the end the

18 following new paragraph:

19 ‘‘(3) JOINT AND SEVERAL LIABILITY.—If more

20 than one person is liable for payment of the fee

5

(4) by striking subsection (j) and inserting the 6 following new subsection: 7 ‘‘(j) EFFECTIVE DATE.—This section shall apply to 8 calendar years beginning after December 31, 2010.’’. 9 (b) EFFECTIVE DATE.—The amendments made by 10 this section shall take effect as if included in section 9008 11 of the Patient Protection and Affordable Care Act. 12 SEC. 1405. EXCISE TAX ON MEDICAL DEVICE MANUFACTUR­13 ERS. 14 (a) IN GENERAL.—Chapter 32 of the Internal Rev­15 enue Code of 1986 is amended— 16 (1) by inserting after subchapter D the fol­17 lowing new subchapter: 18 ‘‘Subchapter E—Medical Devices

‘‘Sec. 4191. Medical devices. 19 ‘‘SEC. 4191. MEDICAL DEVICES. 20

‘‘(a) IN GENERAL.—There is hereby imposed on the 21 sale of any taxable medical device by the manufacturer, 22 producer, or importer a tax equal to 2.9 percent of the 23 price for which so sold.

‘‘(b) TAXABLE MEDICAL DEVICE.—For purposes of 2 this section— 3

device’ means any device (as defined in section

5

201(h) of the Federal Food, Drug, and Cosmetic 6 Act) intended for humans. 7 ‘‘(2) EXEMPTIONS.—Such term shall not in­8 clude— 9 ‘‘(A) devices classified in class I under sec­10 tion 513 of such Act, 11 ‘‘(B) eyeglasses, 12 ‘‘(C) contact lenses, 13 ‘‘(D) hearing aids, and 14 ‘‘(E) any other medical device determined 15 by the Secretary to be of a type which is gen­16 erally purchased by the general public at retail 17 for individual use.’’, and 18 (2) by inserting after the item relating to sub­19 chapter D in the table of subchapters for such chap­20 ter the following new item:

‘‘SUBCHAPTER E. MEDICAL DEVICES.’’.

21

(b) CERTAIN EXEMPTIONS NOT TO APPLY.—

22

(1) Section 4221(a) of the Internal Revenue

24

following new sentence: ‘‘In the case of the tax im­

(6) shall not apply.’’.

3

(2) Section 6416(b)(2) of such Code is amend­

4

ed by adding at the end the following: ‘‘In the case of the tax imposed by section 4191, subparagraphs 6 (B), (C), (D), and (E) shall not apply.’’. 7 (c) EFFECTIVE DATE.—The amendments made by 8 this section shall apply to sales after December 31, 2012. 9 (d) REPEAL OF SECTION 9009 OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT.—Section 11 9009 of the Patient Protection and Affordable Care Act, 12 as amended by section 10904 of such Act, is repealed ef­13 fective as of the date of enactment of that Act. 14 SEC. 1406. HEALTH INSURANCE PROVIDERS.

(a) IN GENERAL.—Section 9010 of the Patient Pro­16 tection and Affordable Care Act, as amended by section 17 10905 of such Act, is amended— 18 (1) in subsection (a)(1), by striking ‘‘2010’’ and 19 inserting ‘‘2013’’,

(2) in subsection (b)(2)—

21

(A) by striking ‘‘For purposes of para­

22

graph (1), the net premiums’’ and inserting

‘‘(A) IN GENERAL.—The net premiums’’, and

(B) by adding at the end the following sub­

2

paragraph:

3

‘‘(B) PARTIAL EXCLUSION FOR CERTAIN

4

EXEMPT ACTIVITIES.—After the application of subparagraph (A), only 50 percent of the re­6 maining net premiums written with respect to 7 health insurance for any United States health 8 risk that are attributable to the activities (other 9 than activities of an unrelated trade or business as defined in section 513 of the Internal Rev­11 enue Code of 1986) of any covered entity quali­12 fying under paragraph (3), (4), (26), or (29) of 13 section 501(c) of such Code and exempt from 14 tax under section 501(a) of such Code shall be taken into account.’’, 16 (3) in subsection (c)— 17 (A) by inserting ‘‘during the calendar year 18 in which the fee under this section is due’’ in 19 paragraph (1) after ‘‘risk’’,

(B) in paragraph (2), by striking subpara­

21

graphs (C), (D), and (E) and inserting the fol­

22

lowing new subparagraphs:

‘‘(C) any entity—

‘‘(i) which is incorporated as a non­profit corporation under a State law,

part of the activities of which is carrying

5

on propaganda, or otherwise attempting, to 6 influence legislation (except as otherwise 7 provided in section 501(h) of the Internal 8 Revenue Code of 1986), and which does 9 not participate in, or intervene in (includ­10 ing the publishing or distributing of state­11 ments), any political campaign on behalf of 12 (or in opposition to) any candidate for 13 public office, and 14 ‘‘(iii) more than 80 percent of the 15 gross revenues of which is received from 16 government programs that target low-in­17 come, elderly, or disabled populations 18 under titles XVIII, XIX, and XXI of the 19 Social Security Act, and 20 ‘‘(D) any entity which is described in sec­21

tion 501(c)(9) of such Code and which is estab­

22

lished by an entity (other than by an employer

care benefits.’’,

(C) in paragraph (3)(A), by striking ‘‘sub­

2

paragraph (C)(i)(I), (D)(i)(I), or (E)(i)’’ and

3

inserting ‘‘subparagraph (C) or (D)’’, and

4

(D) by adding at the end the following new

5

paragraph: 6 ‘‘(4) JOINT AND SEVERAL LIABILITY.—If more 7 than one person is liable for payment of the fee 8 under subsection (a) with respect to a single covered 9 entity by reason of the application of paragraph (3), 10 all such persons shall be jointly and severally liable 11 for payment of such fee.’’, 12 (4) by striking subsection (e) and inserting the 13 following: 14 ‘‘(e) APPLICABLE AMOUNT.—For purposes of sub­15 section (b)(1)— 16 ‘‘(1) YEARS BEFORE 2019.—In the case of cal­17 endar years beginning before 2019, the applicable 18 amount shall be determined in accordance with the 19 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.

20 ‘‘(2) YEARS AFTER 2018.—In the case of any 21

calendar year beginning after 2018, the applicable

22

amount shall be the applicable amount for the pre-

ceding calendar year increased by the rate of pre­2 mium growth (within the meaning of section 3

1986) for such preceding calendar year.’’,

(5) in subsection (g), by adding at the end the 6 following new paragraphs: 7 ‘‘(3) ACCURACY-RELATED PENALTY.— 8 ‘‘(A) IN GENERAL.—In the case of any un­9 derstatement of a covered entity’s net premiums written with respect to health insurance for any 11 United States health risk for any calendar year, 12 there shall be paid by the covered entity making 13 such understatement, an amount equal to the 14 excess of— ‘‘(i) the amount of the covered entity’s 16 fee under this section for the calendar year 17 the Secretary determines should have been 18 paid in the absence of any such under­19 statement, over ‘‘(ii) the amount of such fee the Sec­

21

retary determined based on such under­

22

statement.

of this paragraph, an understatement of a cov­ered entity’s net premiums written with respect

miums written as reported on the return filed

5

by the covered entity under paragraph (1) and 6 the amount of such net premiums written that 7 should have been reported on such return. 8 ‘‘(C) TREATMENT OF PENALTY.—The pen­9 alty imposed under subparagraph (A) shall be 10 subject to the provisions of subtitle F of the In­11 ternal Revenue Code of 1986 that apply to as­12 sessable penalties imposed under chapter 68 of 13 such Code. 14 ‘‘(4) TREATMENT OF INFORMATION.—Section 15 6103 of the Internal Revenue Code of 1986 shall not 16 apply to any information reported under this sub­17 section.’’, and 18 (6) by striking subsection (j) and inserting the 19 following new subsection: 20 ‘‘(j) EFFECTIVE DATE.—This section shall apply to 21 calendar years beginning after December 31, 2013.’’. 22

(b) EFFECTIVE DATE.—The amendments made by 23 this section shall take effect as if included in section 9010 24 of the Patient Protection and Affordable Care Act.

SUBSIDY.

Section 9012(b) of the Patient Protection and Af­5 fordable Care Act is amended by striking ‘‘2010’’ and in­6 serting ‘‘2012’’. 7 SEC. 1408. ELIMINATION OF UNINTENDED APPLICATION OF 8 CELLULOSIC BIOFUEL PRODUCER CREDIT. 9 (a) IN GENERAL.—Section 40(b)(6)(E) of the Inter­10 nal Revenue Code of 1986 is amended by adding at the 11 end the following new clause: 12 ‘‘(iii) EXCLUSION OF UNPROCESSED 13 FUELS.—The term ‘cellulosic biofuel’ shall 14 not include any fuel if— 15 ‘‘(I) more than 4 percent of such 16 fuel (determined by weight) is any 17 combination of water and sediment, or 18 ‘‘(II) the ash content of such fuel 19 is more than 1 percent (determined by 20 weight).’’. 21

(b) EFFECTIVE DATE.—The amendment made by 22 this section shall apply to fuels sold or used on or after 23 January 1, 2010.

TRINE 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

the transaction were respected. ‘‘(B) TREATMENT OF FEES AND FOREIGN 6 TAXES.—Fees and other transaction expenses 7 shall be taken into account as expenses in de­8 termining pre-tax profit under subparagraph 9 (A). The Secretary shall issue regulations re­quiring foreign taxes to be treated as expenses 11 in determining pre-tax profit in appropriate 12 cases. 13 ‘‘(3) STATE AND LOCAL TAX BENEFITS.—For 14 purposes of paragraph (1), any State or local income tax effect which is related to a Federal income tax 16 effect shall be treated in the same manner as a Fed­17 eral income tax effect. 18 ‘‘(4) FINANCIAL ACCOUNTING BENEFITS.—For 19 purposes of paragraph (1)(B), achieving a financial accounting benefit shall not be taken into account as

21

a purpose for entering into a transaction if the ori­

22

gin of such financial accounting benefit is a reduc­

tion of Federal income tax. 24 ‘‘(5) DEFINITIONS AND SPECIAL RULES.—For purposes of this subsection—

fits under subtitle A with respect to a trans­

5

action are not allowable if the transaction does 6 not have economic substance or lacks a business 7 purpose. 8 ‘‘(B) EXCEPTION FOR PERSONAL TRANS­9 ACTIONS OF INDIVIDUALS.—In the case of an 10 individual, paragraph (1) shall apply only to 11 transactions entered into in connection with a 12 trade or business or an activity engaged in for 13 the production of income. 14 ‘‘(C) DETERMINATION OF APPLICATION OF 15 DOCTRINE NOT AFFECTED.—The determination 16 of whether the economic substance doctrine is 17 relevant to a transaction shall be made in the 18 same manner as if this subsection had never 19 been enacted. 20 ‘‘(D) TRANSACTION.—The term ‘trans­21

action’ includes a series of transactions.’’.

22

(b) PENALTY FOR UNDERPAYMENTS ATTRIBUTABLE 23 TO TRANSACTIONS LACKING ECONOMIC SUBSTANCE.—

(1) IN GENERAL.—Subsection (b) of section

the following new paragraph:

‘‘(6) Any disallowance of claimed tax benefits by reason of a transaction lacking economic sub­6 stance (within the meaning of section 7701(o)) or 7 failing to meet the requirements of any similar rule 8 of law.’’. 9 (2) INCREASED PENALTY FOR NONDISCLOSED TRANSACTIONS.—Section 6662 is amended by add­11 ing at the end the following new subsection: 12 ‘‘(i) INCREASE IN PENALTY IN CASE OF NONDIS­13 CLOSED NONECONOMIC SUBSTANCE TRANSACTIONS.— 14 ‘‘(1) IN GENERAL.—In the case of any portion of an underpayment which is attributable to one or 16 more nondisclosed noneconomic substance trans­17 actions, subsection (a) shall be applied with respect 18 to such portion by substituting ‘40 percent’ for ‘20 19 percent’. ‘‘(2) NONDISCLOSED NONECONOMIC SUB­

21

STANCE TRANSACTIONS.—For purposes of this sub­

22

section, the term ‘nondisclosed noneconomic sub­

action described in subsection (b)(6) with respect to which the relevant facts affecting the tax treatment

statement attached to the return.

TURNS.—In no event shall any amendment or sup­

5

plement to a return of tax be taken into account for 6 purposes of this subsection if the amendment or sup­7 plement is filed after the earlier of the date the tax­8 payer is first contacted by the Secretary regarding 9 the examination of the return or such other date as 10 is specified by the Secretary.’’. 11 (3) CONFORMING AMENDMENT.—Subparagraph 12 (B) of section 6662A(e)(2) is amended— 13 (A) by striking ‘‘section 6662(h)’’ and in­14 serting ‘‘subsections (h) or (i) of section 6662’’; 15 and 16 (B) by striking ‘‘GROSS VALUATION 17 MISSTATEMENT PENALTY’’ in the heading and 18 inserting ‘‘CERTAIN INCREASED UNDER­19 PAYMENT PENALTIES’’. 20 (c) REASONABLE CAUSE EXCEPTION NOT APPLICA­21 BLE TO NONECONOMIC SUBSTANCE TRANSACTIONS.— 22 (1) REASONABLE CAUSE EXCEPTION FOR UN­23

DERPAYMENTS.—Subsection (c) of section 6664 is

amended—

(A) by redesignating paragraphs (2) and

2

(3) as paragraphs (3) and (4), respectively;

3

(B) by striking ‘‘paragraph (2)’’ in para­

4

graph (4)(A), as so redesignated, and inserting ‘‘paragraph (3)’’; and 6 (C) by inserting after paragraph (1) the 7 following new paragraph: 8 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 9 apply to any portion of an underpayment which is attributable to one or more transactions described in 11 section 6662(b)(6).’’. 12 (2) REASONABLE CAUSE EXCEPTION FOR RE­13 PORTABLE TRANSACTION UNDERSTATEMENTS.— 14 Subsection (d) of section 6664 is amended—

(A) by redesignating paragraphs (2) and 16 (3) as paragraphs (3) and (4), respectively; 17 (B) by striking ‘‘paragraph (2)(C)’’ in 18 paragraph (4), as so redesignated, and inserting 19 ‘‘paragraph (3)(C)’’; and

(C) by inserting after paragraph (1) the

21

following new paragraph:

22

‘‘(2) EXCEPTION.—Paragraph (1) shall not

derstatement which is attributable to one or more transactions described in section 6662(b)(6).’’.

113 1 (d) APPLICATION OF PENALTY FOR ERRONEOUS 2 CLAIM FOR REFUND OR CREDIT TO NONECONOMIC SUB­3 STANCE TRANSACTIONS.—Section 6676 is amended by re­4 designating subsection (c) as subsection (d) and inserting after subsection (b) the following new subsection: 6 ‘‘(c) NONECONOMIC SUBSTANCE TRANSACTIONS 7 TREATED AS LACKING REASONABLE BASIS.—For pur­8 poses of this section, any excessive amount which is attrib­9 utable to any transaction described in section 6662(b)(6) shall not be treated as having a reasonable basis.’’. 11 (e) EFFECTIVE DATE.— 12 (1) IN GENERAL.—Except as otherwise pro­13 vided in this subsection, the amendments made by 14 this section shall apply to transactions entered into after the date of the enactment of this Act. 16 (2) UNDERPAYMENTS.—The amendments made 17 by subsections (b) and (c)(1) shall apply to under­18 payments attributable to transactions entered into 19 after the date of the enactment of this Act.

(3) UNDERSTATEMENTS.—The amendments

21

made by subsection (c)(2) shall apply to understate­

22

ments attributable to transactions entered into after

23

the date of the enactment of this Act.

24

(4) REFUNDS AND CREDITS.—The amendment made by subsection (d) shall apply to refunds and

the date of the enactment of this Act.

TAXES.

5

The percentage under paragraph (1) of section 6 202(b) of the Corporate Estimated Tax Shift Act of 2009 7 in effect on the date of the enactment of this Act is in­8 creased by 14.5 percentage points. 9 SEC. 1411. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS. 10 (a) ESTIMATE OF SECRETARY.—The Secretary of the 11 Treasury shall annually estimate the impact that the en­12 actment of this Act has on the income and balances of 13 the trust funds established under section 201 of the Social 14 Security Act (42 U.S.C. 401). 15 (b) TRANSFER OF FUNDS.—If, under subsection (a), 16 the Secretary of the Treasury estimates that the enact­17 ment of this Act has a negative impact on the income and 18 balances of the trust funds established under section 201 19 of the Social Security Act (42 U.S.C. 401), the Secretary 20 shall transfer, not less frequently than quarterly, from the 21 general revenues of the Federal Government an amount 22 sufficient so as to ensure that the income and balances 23 of such trust funds are not reduced as a result of the en­24 actment of this Act.

GRANT PROGRAM.

There are authorized to be appropriated, and there 5 are appropriated, $500,000,000, for each of the fiscal 6 years 2011, 2012, 2013, and 2014, to award Community 7 College and Career Training Grants authorized under sec­8 tion 278 of the Trade Act of 1974 (19 U.S.C. 2372), pro­9 vided that— 10 (1) the limitations contained in subsection 11 (a)(2) of such section shall not apply for such fiscal 12 years; 13 (2) in addition to workers eligible for training 14 under section 236 of the Trade Act of 1974 (19 15 U.S.C. 2296) such Grants may be used to develop, 16 offer, or improve an educational or career training 17 program that is suited to individuals who are, or 18 may become, eligible for unemployment compensa­19 tion as defined in section 85(b) of the Internal Rev­20 enue Code of 1986; and 21

(3) each State shall receive not less than 0.5

22

percent of the amount appropriated pursuant to this

section for each such fiscal year.

(a) SHORT TITLE.—This subtitle may be cited as the 6 ‘‘SAFRA Act’’. 7 (b) REFERENCES.—Except as otherwise expressly 8 provided, whenever in this subtitle an amendment or re­9 peal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be con­11 sidered to be made to a section or other provision of the 12 Higher Education Act of 1965 (20 U.S.C. 1001 et seq.). 13 PART I—INVESTING IN STUDENTS AND FAMILIES 14 SEC. 2101. FEDERAL PELL GRANTS.

(a) AMOUNT OF GRANTS.—Section 401(b) (20 16 U.S.C. 1070a(b)) is amended— 17 (1) by amending paragraph (2)(A) to read as 18 follows: 19 ‘‘(A) The amount of the Federal Pell Grant for a student eligible under this part

21

shall be—

22

‘‘(i) the maximum Federal Pell Grant,

23 as specified in the last enacted appropria­

24 tion Act applicable to that award year, plus

year, less

‘‘(iii) an amount equal to the amount determined to be the expected family con­6 tribution with respect to that student for 7 that year.’’; and 8 (2) in paragraph (8)— 9 (A) in subparagraph (A)—

(i) in clause (ii), by striking the semi­11 colon and inserting ‘‘; and’’; and 12 (ii) by striking clauses (iii) through 13 (x) and inserting the following: 14 ‘‘(iii) such sums as may be necessary for fiscal year 2010 and each subsequent 16 fiscal year to provide the amount of in­17 crease of the maximum Federal Pell Grant 18 required by clauses (ii) and (iii) of sub­19 paragraph (B).’’;

(B) in subparagraph (B)—

21

(i) in clause (ii), by striking ‘‘and

22

2011–2012’’ and inserting ‘‘, 2011–2012,

23

and 2012–2013’’; and

24

(ii) by striking clause (iii) and insert­ing the following:

‘‘(iii) the amount determined under 2 subparagraph (C) for each succeeding 3

award year.’’;

(C) by striking subparagraph (C) and in­serting the following: 6 ‘‘(C) ADJUSTMENT AMOUNTS.— 7 ‘‘(i) AWARD YEAR 2013–2014.—For 8 award year 2013–2014, the amount deter­9 mined under this subparagraph for pur­poses of subparagraph (B)(iii) shall be 11 equal to— 12 ‘‘(I) $5,550 or the total max­13 imum Federal Pell Grant for the pre­14 ceding award year (as determined under clause (v)(II)), whichever is 16 greater, increased by a percentage 17 equal to the annual adjustment per­18 centage for award year 2013–2014; 19 reduced by ‘‘(II) $4,860 or the maximum

21

Federal Pell Grant for which a stu­

22

dent was eligible for the preceding

acted appropriation Act applicable to that year, whichever is greater; and

‘‘(ii) AWARD YEARS 2014–2015 3 THROUGH 2017–2018.—For each of the 4

award years 2014–2015 through 2017– 2018, the amount determined under this 6 subparagraph for purposes of subpara­7 graph (B)(iii) shall be equal to— 8 ‘‘(I) the total maximum Federal 9 Pell Grant for the preceding award year (as determined under clause 11 (v)(II)), increased by a percentage 12 equal to the annual adjustment per­13 centage for the award year for which 14 the amount under this subparagraph is being determined; reduced by 16 ‘‘(II) $4,860 or the maximum 17 Federal Pell Grant for which a stu­18 dent was eligible for the preceding 19 award year, as specified in the last en­acted appropriation Act applicable to

21

that year, whichever is greater; and

22

‘‘(III) rounded to the nearest $5. 23 ‘‘(iii) SUBSEQUENT AWARD YEARS.— 24

For award year 2018–2019 and each sub­sequent award year, the amount deter-

clause (ii) for award year 2017–2018. 5 ‘‘(iv) LIMITATION ON DECREASES.— 6 Notwithstanding clauses (i), (ii), and (iii), 7 if the amount determined under clause (i), 8 (ii), or (iii) for a particular award year is 9 less than the amount determined under 10 this paragraph for the award year pre­11 ceding that particular award year, then the 12 amount determined under such clause for 13 that particular award year shall be the 14 amount determined under this paragraph 15 for the preceding award year. 16 ‘‘(v) DEFINITIONS.—For purposes of 17 this subparagraph— 18 ‘‘(I) the term ‘annual adjustment 19 percentage’ as applied to an award 20 year, is equal to the estimated per­21

centage change in the Consumer Price

22

Index (as determined by the Sec­

that award year; and

Federal Pell Grant’ as applied to a

5

preceding award year, is equal to the 6 sum of— 7 ‘‘(aa) the maximum Federal 8 Pell Grant for which a student is 9 eligible during an award year, as 10 specified in the last enacted ap­11 propriation Act applicable to that 12 preceding award year; and 13 ‘‘(bb) the amount of the in­14 crease in the maximum Federal 15 Pell Grant required by this para­16 graph for that preceding award 17 year.’’; 18 (D) by striking subparagraph (E); and 19 (E) by redesignating subparagraph (F) as 20 subparagraph (E). 21 (b) CONFORMING AMENDMENTS.—Title IV (20 22 U.S.C. 1070 et seq.) is further amended— 23

(1) in section 401(b) (20 U.S.C. 1070a(b))—

24

(A) in paragraph (4)—

(i) by striking ‘‘maximum basic grant

2

level specified in the appropriate appro­

3

priation Act’’ and inserting ‘‘maximum

4

amount of a Federal Pell Grant award de­termined under paragraph (2)(A)’’; and 6 (ii) by striking ‘‘such level’’ each place 7 it appears and inserting ‘‘such Federal Pell 8 Grant amount’’ in each such place; and 9 (B) in paragraph (6), by striking ‘‘the grant level specified in the appropriate Appro­11 priation Act for this subpart for such year’’ and 12 inserting ‘‘the maximum amount of a Federal 13 Pell Grant award determined under paragraph 14 (2)(A), for which a student is eligible during such award year’’; 16 (2) in section 402D(d)(1) (20 U.S.C. 1070a– 17 14(d)(1)), by striking ‘‘exceed the maximum’’ and 18 all that follows through ‘‘Grant, for’’ and inserting 19 ‘‘exceed the Federal Pell Grant amount, determined under section 401(b)(2)(A), for which a student is

21

eligible, or be less than the minimum Federal Pell

22

Grant amount described in section 401(b)(4), for’’;

23

(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

(4) in section 483(e)(3)(A)(ii) (20 U.S.C.

5

1090(e)(3)(A)(ii)), by striking ‘‘based on the max­6 imum Federal Pell Grant award at the time of appli­7 cation’’ and inserting ‘‘based on the Federal Pell 8 Grant amount, determined under section 9 401(b)(2)(A), for which a student is eligible at the 10 time of application’’; 11 (5) in section 485E(b)(1)(A) (20 U.S.C. 12 1092f(b)(1)(A)), by striking ‘‘of such students’ po­13 tential eligibility for a maximum Federal Pell Grant 14 under subpart 1 of part A’’ and inserting ‘‘of such 15 students’ potential eligibility for the Federal Pell 16 Grant amount, determined under section 17 401(b)(2)(A), for which the student would be eligi­18 ble’’; and 19 (6) in section 894(f)(2)(C)(ii)(I) (20 U.S.C. 20 1161y(f)(2)(C)(ii)(I)), by striking ‘‘the maximum 21

Federal Pell Grant for each award year’’ and insert­

22

ing ‘‘the Federal Pell Grant amount, determined

be eligible for each award year’’.

(c) EFFECTIVE DATE.—The amendments made by 2 subsections (a) and (b) shall take effect on July 1, 2010. 3 SEC. 2102. STUDENT FINANCIAL ASSISTANCE. 4

(a) IN GENERAL.—There are authorized to be appro­priated, and there are appropriated, to carry out subpart 6 1 of part A of title IV of the Higher Education Act of 7 1965 (20 U.S.C. 1070 et seq.) (in addition to any other 8 amounts appropriated to carry out such subpart and out 9 of any money in the Treasury not otherwise appropriated) $13,500,000,000. 11 (b) AVAILABILITY OF FUNDS.—Funds appropriated 12 under this section shall be available as of the date of en­13 actment of this subtitle and shall remain available until 14 September 30, 2012.

SEC. 2103. COLLEGE ACCESS CHALLENGE GRANT PRO­16 GRAM. 17 Section 781 (20 U.S.C. 1141) is amended— 18 (1) in the first sentence of subsection (a), by 19 striking ‘‘$66,000,000’’ and all that follows through the period and inserting ‘‘$150,000,000 for each of

21

the fiscal years 2010 through 2014. The authority

22

to award grants under this section shall expire at

23

the end of fiscal year 2014.’’; and

24

(2) in subsection (c)(2), by striking ‘‘0.5 per­cent’’ and inserting ‘‘1.0 percent’’.

Section 371(b)(1)(A) (20 U.S.C. 1067q(b)(1)(A)) is 5 amended by striking ‘‘and 2009.’’ and all that follows and 6 inserting ‘‘through 2019. The authority to award grants 7 under this section shall expire at the end of fiscal year 8 2019.’’. 9 PART II—STUDENT LOAN REFORM 10 SEC. 2201. TERMINATION OF FEDERAL FAMILY EDUCATION 11 LOAN APPROPRIATIONS. 12 Section 421 (20 U.S.C. 1071) is amended— 13 (1) in subsection (b), in the first sentence of 14 the matter following paragraph (6), by inserting ‘‘, 15 except that no sums may be expended after June 30, 16 2010, with respect to loans under this part for which 17 the first disbursement is after such date’’ after ‘‘ex­18 pended’’; and 19 (2) by adding at the end the following new sub­20 section: 21

‘‘(d) TERMINATION OF AUTHORITY TO MAKE OR IN­22 SURE NEW LOANS.—Notwithstanding paragraphs (1) 23 through (6) of subsection (b) or any other provision of 24 law—

June 30, 2010; and

‘‘(2) no funds are authorized to be appro­priated, or may be expended, under this Act or any 6 other Act to make or insure loans under this part 7 (including consolidation loans) for which the first 8 disbursement is after June 30, 2010, 9 except as expressly authorized by an Act of Congress en­acted after the date of enactment of the SAFRA Act.’’.

11 SEC. 2202. TERMINATION OF FEDERAL LOAN INSURANCE 12 PROGRAM. 13 Section 424(a) (20 U.S.C. 1074(a)) is amended by 14 striking ‘‘September 30, 1976,’’ and all that follows and inserting ‘‘September 30, 1976, for each of the succeeding 16 fiscal years ending prior to October 1, 2009, and for the 17 period from October 1, 2009, to June 30, 2010, for loans 18 first disbursed on or before June 30, 2010.’’. 19 SEC. 2203. TERMINATION OF APPLICABLE INTEREST RATES.

21

Section 427A(l) (20 U.S.C. 1077a(l)) is amended—

22

(1) in the subsection heading, by inserting

23

‘‘AND BEFORE JULY 1, 2010’’ after ‘‘2006’’;

24

(2) in paragraph (1), by inserting ‘‘and before July 1, 2010,’’ after ‘‘July 1, 2006,’’;

(3) in paragraph (2), by inserting ‘‘and before

2

July 1, 2010,’’ after ‘‘July 1, 2006,’’;

3

(4) in paragraph (3), by inserting ‘‘and that

4

was disbursed before July 1, 2010,’’ after ‘‘July 1, 2006,’’; and 6 (5) in paragraph (4)— 7 (A) in the matter preceding subparagraph 8 (A), by striking ‘‘July 1, 2012’’ and inserting 9 ‘‘July 1, 2010’’; and

(B) by repealing subparagraphs (D) and 11 (E). 12 SEC. 2204. TERMINATION OF FEDERAL PAYMENTS TO RE­13 DUCE STUDENT INTEREST COSTS. 14 (a) HIGHER EDUCATION ACT OF 1965.—Section 428 (20 U.S.C. 1078) is amended— 16 (1) in subsection (a)— 17 (A) in paragraph (1), in the matter pre­18 ceding subparagraph (A), by inserting ‘‘for 19 which the first disbursement is made before July 1, 2010, and’’ after ‘‘eligible institution’’; 21 and 22

(B) in paragraph (5), by striking ‘‘Sep­

23

tember 30, 2014,’’ and all that follows through

24

the period and inserting ‘‘June 30, 2010.’’;

(2) in subsection (b)(1)—

(A) in subparagraph (G)(ii), by inserting

2

‘‘and before July 1, 2010,’’ after ‘‘July 1,

3

2006,’’; and

4

(B) in subparagraph (H)(ii), by inserting ‘‘and that are first disbursed before July 1, 6 2010,’’ after ‘‘July 1, 2006,’’; 7 (3) in subsection (f)(1)(A)(ii)— 8 (A) by striking ‘‘during fiscal years begin­9 ning’’; and

(B) by inserting ‘‘and first disbursed be­11 fore July 1, 2010,’’ after ‘‘October 1, 2003,’’; 12 and 13 (4) in subsection (j)(1), by inserting ‘‘, before 14 July 1, 2010,’’ after ‘‘section 435(d)(1)(D) of this Act shall’’. 16 (b) COLLEGE COST REDUCTION AND ACCESS ACT.— 17 Section 303 of the College Cost Reduction and Access Act 18 (Public Law 110–84) is repealed. 19 SEC. 2205. TERMINATION OF FFEL PLUS LOANS.

Section 428B(a)(1) (20 U.S.C. 1078–2(a)(1)) is 21 amended by striking ‘‘A graduate’’ and inserting ‘‘Prior 22 to July 1, 2010, a graduate’’. 23 SEC. 2206. FEDERAL CONSOLIDATION LOANS. 24

(a) IN GENERAL.—Section 428C (20 U.S.C. 1078– 3) is amended—

(1) in subsection (a)(4)(A), by inserting ‘‘, and

2

first disbursed before July 1, 2010’’ after ‘‘under

3

this part’’;

4

(2) in subsection (b)—

(A) in paragraph (1)(E), by inserting be­6 fore the semicolon ‘‘, and before July 1, 2010’’; 7 and 8 (B) in paragraph (5), by striking ‘‘In the 9 event that’’ and inserting ‘‘If, before July 1, 2010,’’; 11 (3) in subsection (c)(1)— 12 (A) in subparagraph (A)(ii), by inserting 13 ‘‘and that is disbursed before July 1, 2010,’’ 14 after ‘‘2006,’’; and

(B) in subparagraph (C), by inserting 16 ‘‘and disbursed before July 1, 2010,’’ after 17 ‘‘1994,’’; and 18 (4) in subsection (e), by striking ‘‘September 19 30, 2014.’’ and inserting ‘‘June 30, 2010. No loan may be made under this section for which the dis­

21

bursement is on or after July 1, 2010.’’.

22

(b) TEMPORARY LOAN CONSOLIDATION AUTHOR­23 ITY.—Part D of title IV (20 U.S.C. 1087a et seq.) is 24 amended by inserting after section 459A (20 U.S.C. 1087i) the following:

1 ‘‘SEC. 459B. TEMPORARY LOAN CONSOLIDATION AUTHOR­2 ITY. 3

‘‘(a) TEMPORARY LOAN CONSOLIDATION AUTHOR­4 ITY.— ‘‘(1) IN GENERAL.—A borrower who has 1 or 6 more loans in 2 or more of the categories described 7 in paragraph (2), and who has not yet entered re­8 payment on 1 or more of those loans in any of the 9 categories, may consolidate all of the loans of the borrower that are described in paragraph (2) into a 11 Federal Direct Consolidation Loan during the period 12 described in paragraph (3). 13 ‘‘(2) CATEGORIES OF LOANS THAT MAY BE 14 CONSOLIDATED.—The categories of loans that may be consolidated under paragraph (1) are— 16 ‘‘(A) loans made under this part; 17 ‘‘(B) loans purchased by the Secretary 18 pursuant to section 459A; and 19 ‘‘(C) loans made under part B that are held by an eligible lender, as such term is de­

21

fined in section 435(d). 22 ‘‘(3) TIME PERIOD IN WHICH LOANS MAY BE 23

eral Direct Consolidation Loan under this section to a borrower whose application for such Federal Di­

1, 2010, and before July 1, 2011.

‘‘(b) TERMS OF LOANS.—A Federal Direct Consoli­4 dation Loan made under this section shall have the same 5 terms and conditions as a Federal Direct Consolidation 6 Loan made under section 455(g), except that— 7 ‘‘(1) in determining the applicable rate of inter­8 est on the Federal Direct Consolidation Loan made 9 under this section (other than on a Federal Direct 10 Consolidation Loan described in paragraph (2)), sec­11 tion 427A(l)(3) shall be applied without rounding 12 the weighted average of the interest rate on the 13 loans consolidated to the nearest higher one-eighth 14 of 1 percent as described in subparagraph (A) of 15 section 427A(l)(3); and 16 ‘‘(2) if a Federal Direct Consolidation Loan 17 made under this section that repays a loan which is 18 subject to an interest rate determined under section 19 427A(g)(2), (j)(2), or (k)(2), then the interest rate 20 for such Federal Direct Consolidation Loan shall be 21

calculated—

22

‘‘(A) by using the applicable rate of inter­

(k)(2), respectively; and

427A(l)(3).’’.

LOANS FOR MIDDLE-INCOME BORROWERS.

5

Section 428H (20 U.S.C. 1078–8) is amended— 6 (1) in subsection (a), by inserting ‘‘that are 7 first disbursed before July 1, 2010,’’ after ‘‘under 8 this part’’; 9 (2) in subsection (b)— 10 (A) by striking ‘‘Any student’’ and insert­11 ing ‘‘Prior to July 1, 2010, any student’’; and 12 (B) by inserting ‘‘for which the first dis­13 bursement is made before such date’’ after ‘‘un­14 subsidized Federal Stafford Loan’’; and 15 (3) in subsection (h), by inserting ‘‘and that are 16 first disbursed before July 1, 2010,’’ after ‘‘July 1, 17 2006,’’. 18 SEC. 2208. TERMINATION OF SPECIAL ALLOWANCES. 19 Section 438 (20 U.S.C. 1087–1) is amended— 20 (1) in subsection (b)(2)(I)— 21

(A) in the subclause heading, by inserting

22

‘‘, AND BEFORE JULY 1, 2010’’ after ‘‘2000’’;

23

(B) in clause (i), by inserting ‘‘and before

July 1, 2010,’’ after ‘‘2000,’’;

(C) in clause (ii)(II), by inserting ‘‘and be­

2

fore July 1, 2010,’’ after ‘‘2006,’’;

3

(D) in clause (iii), by inserting ‘‘and before

4

July 1, 2010,’’ after ‘‘2000,’’;

5

(E) in clause (iv), by inserting ‘‘and that 6 is disbursed before July 1, 2010,’’ after 7 ‘‘2000,’’; 8 (F) in clause (v)(I), by inserting ‘‘and be­9 fore July 1, 2010,’’ after ‘‘2006,’’; and 10 (G) in clause (vi)— 11 (i) in the clause heading, by inserting 12 ‘‘, AND BEFORE JULY 1, 2010’’ after ‘‘2007’’; 13 and 14 (ii) in the matter preceding subclause 15 (I), by inserting ‘‘and before July 1, 16 2010,’’ after ‘‘2007,’’; 17 (2) in subsection (c)— 18 (A) in paragraph (2)(B)— 19 (i) in clause (iii), by inserting ‘‘and’’ 20 after the semicolon; 21

(ii) in clause (iv), by striking ‘‘; and’’

22

and inserting a period; and

23

(iii) by striking clause (v); and

(B) in paragraph (6), by inserting ‘‘and

2

first disbursed before July 1, 2010,’’ after

3

‘‘1992,’’; and

4

(3) in subsection (d)(2)(B), by inserting ‘‘, and

5

before July 1, 2010’’ after ‘‘2007’’.

6 SEC. 2209. ORIGINATION OF DIRECT LOANS AT INSTITU­

7 TIONS OUTSIDE THE UNITED STATES.

8 (a) LOANS FOR STUDENTS ATTENDING INSTITU­

9 TIONS OUTSIDE THE UNITED STATES.—Section 452 (20 10 U.S.C. 1087b) is amended by adding at the end the fol­11 lowing: 12 ‘‘(d) INSTITUTIONS OUTSIDE THE UNITED 13 STATES.—Loan funds for students (and parents of stu­14 dents) attending institutions outside the United States 15 shall be disbursed through a financial institution located 16 or operating in the United States and designated by the 17 Secretary to serve as the agent of such institutions with 18 respect to the receipt of the disbursements of such loan 19 funds and the transfer of such funds to such institutions. 20 To be eligible to receive funds under this part, an institu­21 tion outside the United States shall make arrangements 22 with the agent designated by the Secretary under this sub­23 section to receive funds under this part.’’. 24

(b) CONFORMING AMENDMENTS.—

(1) AMENDMENTS.—Section 102 (20 U.S.C.

2

1002), as amended by section 102 of the Higher

3

Education Opportunity Act (Public Law 110–315)

4

and section 101 of Public Law 111–39, is amend­5 ed— 6 (A) by striking ‘‘part B’’ each place the 7 term appears and inserting ‘‘part D’’; 8 (B) in subsection (a)(1)(C), by inserting ‘‘, 9 consistent with the requirements of section 10 452(d)’’ before the period at the end; and 11 (C) in subsection (a)(2)(A)— 12 (i) in the second sentence of the mat­13 ter preceding clause (i), by striking ‘‘made, 14 insured, or guaranteed’’ and inserting 15 ‘‘made’’; and 16 (ii) in clause (iii)— 17 (I) in subclause (III), by striking 18 ‘‘only Federal Stafford’’ and all that 19 follows through ‘‘section 428B’’ and 20 inserting ‘‘only Federal Direct Staf­21 ford Loans under section 22

455(a)(2)(A), Federal Direct Unsub­

(II) in subclause (V), by striking

4

‘‘a Federal Stafford’’ and all that fol­

5

lows through ‘‘section 428B’’ and in­6 serting ‘‘a Federal Direct Stafford 7 Loan under section 455(a)(2)(A), a 8 Federal Direct Unsubsidized Stafford 9 Loan under section 455(a)(2)(D), or a 10 Federal Direct PLUS Loan under 11 section 455(a)(2)(B)’’. 12 (2) EFFECTIVE DATE.—The amendments made 13 by subparagraph (C) of paragraph (1) shall be effec­14 tive on July 1, 2010, as if enacted as part of section 15 102(a)(1) of the Higher Education Opportunity Act 16 (Public Law 110–315) and subject to section 102(e) 17 of such Act as amended by section 101(a)(2) of 18 Public Law 111–39 (20 U.S.C. 1002 note). 19 SEC. 2210. CONFORMING AMENDMENTS. 20 (a) AMENDMENTS.—Section 454 (20 U.S.C. 1087d) 21 is amended— 22

(1) in subsection (a)—

23

(A) by striking paragraph (4); and

spectively; and

(2) in subsection (b)(2), by striking ‘‘(5), (6),

5

and (7)’’ and inserting ‘‘(5), and (6)’’. 6 (b) EFFECTIVE DATE.—The amendments made by 7 subsection (a) shall take effect on July 1, 2010. 8 SEC. 2211. TERMS AND CONDITIONS OF LOANS. 9 (a) IN GENERAL.—Section 455 (20 U.S.C. 1087e) is 10 amended— 11 (1) in subsection (a)(1), by inserting ‘‘, and 12 first disbursed on June 30, 2010,’’ before ‘‘under 13 sections 428’’; and 14 (2) in subsection (g)— 15 (A) by inserting ‘‘, including any loan 16 made under part B and first disbursed before 17 July 1, 2010’’ after ‘‘section 428C(a)(4)’’; and 18 (B) by striking the third sentence. 19 (b) EFFECTIVE DATE.—The amendment made by 20 subsection (a)(1) shall apply with respect to loans first dis­21 bursed under part D of title IV of the Higher Education 22 Act of 1965 (20 U.S.C. 1087a et seq.) on or after July 23 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 DE­

TERMINATION 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.

after July 1, 2014, if— ‘‘(I) the servicer has not been 6 awarded such a contract before that 7 date; or 8 ‘‘(II) the servicer’s contract was 9 terminated, and the servicer had not reapplied for, and been awarded, a 11 contract under this paragraph. 12 ‘‘(B) ALLOCATIONS.— 13 ‘‘(i) IN GENERAL.—The Secretary 14 shall (except as provided in clause (ii)) al­locate to an eligible not-for-profit servicer, 16 subject to the contract of such servicer de­17 scribed in subparagraph (A), the servicing 18 rights for the loan accounts of 100,000 19 borrowers (including borrowers who bor­rowed loans in a prior year that were serv­

21

iced by the servicer). 22 ‘‘(ii) SERVICER ALLOCATION.—The 23

Secretary may reallocate, increase, reduce, 24 or terminate an eligible not-for-profit servicer’s allocation of servicing rights

pursuant to paragraph (1).’’; and

(2) by adding at the end the following: 6 ‘‘(c) DEFINITION OF ELIGIBLE NOT-FOR-PROFIT 7 SERVICER.—In this section: 8 ‘‘(1) IN GENERAL.—The term ‘eligible not-for-9 profit servicer’ means an entity— ‘‘(A) that is not owned or controlled in 11 whole or in part by— 12 ‘‘(i) a for profit entity; or 13 ‘‘(ii) a nonprofit entity having its 14 principal place of business in another State; and 16 ‘‘(B) that— 17 ‘‘(i) as of July 1, 2009— 18 ‘‘(I) meets the definition of an el­19 igible not-for-profit holder under sec­tion 435(p), except that such term

21 does not include eligible lenders de­

22 scribed in paragraph (1)(D) of such

23 section; and

24 ‘‘(II) was performing, or had en­tered into a contract with a third

tions for loans made under part B of this title; 6 ‘‘(ii) notwithstanding clause (i), as of 7 July 1, 2009— 8 ‘‘(I) is the sole beneficial owner 9 of a loan for which the special allow­ance rate is calculated under section 11 438(b)(2)(I)(vi)(II) because the loan 12 is held by an eligible lender trustee 13 that is an eligible not-for-profit holder 14 as defined under section 435(p)(1)(D); and 16 ‘‘(II) was performing, or had en­17 tered into a contract with a third 18 party servicer (as such term is defined 19 in section 481(c)) who was per­forming, student loan servicing func­

21

tions for loans made under part B of

22

this title; or

‘‘(iii) is an affiliated entity of an eligi­24 ble not-for-profit servicer described in clause (i) or (ii) that—

a contract awarded by the Secretary pursuant to subsection (a)(3)(A)), the 6 majority of individuals who perform 7 borrower-specific student loan serv­8 icing functions; and 9 ‘‘(II) as of July 1, 2009, was performing, or had entered into a con­11 tract with a third party servicer (as 12 such term is defined in section 13 481(c)) who was performing, student 14 loan servicing functions for loans made under part B of this title. 16 ‘‘(2) AFFILIATED ENTITY.—For the purposes of 17 paragraph (1), the term ‘affiliated entity’— 18 ‘‘(A) means an entity contracted to per­19 form services for an eligible not-for-profit servicer that—

21

‘‘(i) is a nonprofit entity or is wholly

22

owned by a nonprofit entity; and

whole or in part, by— ‘‘(I) a for-profit entity; or

State; and

‘‘(B) may include an affiliated entity that is established by an eligible not-for-profit 6 servicer after the date of enactment of the 7 SAFRA Act, if such affiliated entity is other­8 wise described in paragraph (1)(B)(iii)(I) and 9 subparagraph (A) of this paragraph.’’.

(b) MANDATORY FUNDS.— 11 (1) AMENDMENTS.—Section 458(a) (20 U.S.C. 12 1087h(a)) is amended— 13 (A) by redesignating paragraph (5) as 14 paragraph (8);

(B) by redesignating paragraphs (2) 16 through (4) as paragraphs (3) through (5), re­17 spectively; 18 (C) by inserting after paragraph (1) the 19 following new paragraph: ‘‘(2) MANDATORY FUNDS FOR ELIGIBLE NOT-21 FOR-PROFIT-SERVICERS.—For fiscal years 2010 22

through 2019, there shall be available to the Sec­

priated to carry out this paragraph and out of any money in the Treasury not otherwise appropriated,

(D) by inserting after paragraph (5), as redesignated by subparagraph (B) of this para­6 graph, the following: 7 ‘‘(6) TECHNICAL ASSISTANCE TO INSTITUTIONS 8 OF HIGHER EDUCATION.— 9 ‘‘(A) PROVISION OF ASSISTANCE.—The Secretary shall provide institutions of higher 11 education participating, or seeking to partici­12 pate, in the loan programs under this part with 13 technical assistance in establishing and admin­14 istering such programs. ‘‘(B) FUNDS.—There are authorized to be 16 appropriated, and there are appropriated, to 17 carry out this paragraph (in addition to any 18 other amounts appropriated to carry out this 19 paragraph and out of any money in the Treas­ury not otherwise appropriated), $50,000,000

21 for fiscal year 2010.

22 ‘‘(C) DEFINITION.—In this paragraph, the

23 term ‘assistance’ means the provision of tech­

24 nical support, training, materials, technical as­sistance, and financial assistance.

‘‘(7) ADDITIONAL PAYMENTS.— 2 ‘‘(A) PROVISION OF ASSISTANCE.—The 3

servicers for retaining jobs at locations in the United States where such servicers were oper­6 ating under part B on January 1, 2010. 7 ‘‘(B) FUNDS.—There are authorized to be 8 appropriated, and there are appropriated, to 9 carry out this paragraph (in addition to any other amounts appropriated to carry out this 11 paragraph and out of any money in the Treas­12 ury not otherwise appropriated), $25,000,000 13 for each of the fiscal years 2010 and 2011.’’. 14 (2) CONFORMING AMENDMENT.—Section 458 (20 U.S.C. 1087h) is further amended by striking 16 ‘‘subsection (a)(3)’’ in subsection (b) and inserting 17 ‘‘subsection (a)(4)’’. 18 SEC. 2213. AGREEMENTS WITH STATE-OWNED BANKS. 19 Part D of title IV (as amended by this subtitle) (20

U.S.C. 1087a et seq.) is further amended by adding at 21 the end the following: 22 ‘‘SEC. 460A. AGREEMENTS WITH STATE-OWNED BANKS. 23

‘‘(a) DEFINITION OF ELIGIBLE LENDER.—In this 24 section, the term ‘eligible lender’ means a lender that, on July 1, 2009, was and continues to be—

teed by a State;

located; ‘‘(3) under the control of a board of directors 6 that includes the Governor of the State; and 7 ‘‘(4) an originator or holder of loans made 8 under the program under part B, as such part was 9 in effect on July 1, 2009. ‘‘(b) AGREEMENTS.— 11 ‘‘(1) IN GENERAL.—At the request of a State 12 in which an eligible lender is located, the Secretary 13 shall enter into an agreement with the eligible lender 14 under which— ‘‘(A) the eligible lender agrees to provide 16 student loans to borrowers in accordance with 17 this section; and 18 ‘‘(B) the Secretary agrees to provide Fed­19 eral loan insurance on the student loans made under this section by that eligible lender to bor­

21

rowers who—

22

‘‘(i) are residents of the State in

which the eligible lender is located; or

‘‘(ii) attend an institution of higher education in such State.

as such part was in effect on June 30, 2010. ‘‘(3) PAYMENTS TO ELIGIBLE LENDER.—An 6 agreement under this section shall provide the eligi­7 ble lender with the equivalent payments and sub­8 sidies as those provided for loans made under part 9 B, as such part was in effect on June 30, 2010. ‘‘(4) FFEL PROGRAM REGULATIONS.—An 11 agreement under this section, any loans made under 12 this section, and the participation of institutions of 13 higher education under this section, shall be subject 14 to regulations issued by the Secretary under part B, as such part was in effect on June 30, 2010. 16 ‘‘(c) INSTITUTIONS OF HIGHER EDUCATION.—An in­17 stitution of higher education that is located in the same 18 State as an eligible lender that has an agreement with the 19 Secretary under this section, or an institution of higher education that is located in another State and is attended 21 by borrowers described in subsection (b)(1)(B)(i), may 22 choose to participate in the loan program operated pursu­23 ant to the agreement. If such institution of higher edu­24 cation chooses such participation, the institution shall carry out the institution’s responsibilities with respect to

148 1 loans made pursuant to the agreement in accordance with 2 subsection (b)(4). 3

‘‘(d) BORROWERS.—A borrower described in sub­4 section (b)(1)(B) may choose to borrow a loan made pur­5 suant to an agreement described in subsection (b)(1). A 6 borrower of a loan made pursuant to such agreement shall 7 be subject to the loan terms and conditions required by 8 the agreement, and shall not be eligible to receive a loan 9 made under this part concurrently with a loan made under 10 this section. 11 ‘‘(e) INAPPLICABILITY.—Sections 451 through 460 12 shall not apply to this section.’’. 13 SEC. 2214. INCOME-BASED REPAYMENT. 14 Section 493C (20 U.S.C. 1098e) is amended by add­15 ing at the end the following new subsection: 16 ‘‘(e) SPECIAL TERMS FOR NEW BORROWERS ON AND 17 AFTER JULY 1, 2014.—With respect to any loan made 18 to a new borrower on or after July 1, 2014— 19 ‘‘(1) subsection (a)(3)(B) shall be applied by 20 substituting ‘10 percent’ for ‘15 percent’; and 21

‘‘(2) subsection (b)(7)(B) shall be applied by

22

substituting ‘20 years’ for ‘25 years’.’’.

(a) EXTENDING CERTAIN INSURANCE REFORMS TO 4 GRANDFATHERED PLANS.—Section 1251(a) of the Pa­5 tient Protection and Affordable Care Act, as added by sec­6 tion 10103(d) of such Act, is amended by adding at the 7 end the following: 8 ‘‘(4) APPLICATION OF CERTAIN PROVISIONS.— 9 ‘‘(A) IN GENERAL.—The following provi­10 sions of the Public Health Service Act (as 11 added by this title) shall apply to grandfathered 12 health plans for plan years beginning with the 13 first plan year to which such provisions would 14 otherwise apply: 15 ‘‘(i) Section 2708 (relating to exces­16 sive waiting periods). 17 ‘‘(ii) Those provisions of section 2711 18 relating to lifetime limits. 19 ‘‘(iii) Section 2712 (relating to rescis­20 sions). 21

‘‘(iv) Section 2714 (relating to exten­

22

sion of dependent coverage). 23 ‘‘(B) PROVISIONS APPLICABLE ONLY TO 24

GROUP HEALTH PLANS.—

2704 (relating to pre-existing condition ex­clusions) of the Public Health Service Act 6 (as added by this subtitle) shall apply to 7 grandfathered health plans that are group 8 health plans for plan years beginning with 9 the first plan year to which such provisions otherwise apply. 11 ‘‘(ii) ADULT DEPENDENT COV­12 ERAGE.—For plan years beginning before 13 January 1, 2014, the provisions of section 14 2714 of the Public Health Service Act (as added by this subtitle) shall apply in the 16 case of an adult dependent with respect to 17 a grandfathered health plan that is a 18 group health plan only if such dependent is 19 not eligible to enroll in an eligible em­ployer-sponsored health plan (as defined in

21

section 5000A(f)(2) of the Internal Rev­

22

enue Code of 1986) other than such grand­

(b) CLARIFICATION REGARDING DEPENDENT COV­ERAGE.—Section 2714(a) of the Public Health Service

151 1 Act, as added by section 1001(5) of the Patient Protection 2 and Affordable Care Act, is amended by striking ‘‘(who 3 is not married)’’. 4 SEC. 2302. DRUGS PURCHASED BY COVERED ENTITIES.

Section 340B of the Public Health Service Act (42 6 U.S.C. 256b), as amended by sections 7101 and 7102 of 7 the Patient Protection and Affordable Care Act, is amend­8 ed— 9 (1) in subsection (a)—

(A) in paragraphs (1), (2), (5), (7), and 11 (9), by striking the terms ‘‘covered drug’’ and 12 ‘‘covered drugs’’ each place either term appears 13 and inserting ‘‘covered outpatient drug’’ or 14 ‘‘covered outpatient drugs’’, respectively;

(B) in paragraph (4)(L)— 16 (i) in clause (i), by striking ‘‘and’’ at 17 the end; 18 (ii) in clause (ii), by striking the pe­19 riod and inserting ‘‘; and’’; and

(iii) by inserting after clause (ii), the 21 following: 22

‘‘(iii) does not obtain covered out­

23

patient drugs through a group purchasing

24

organization or other group purchasing ar­rangement.’’; and

(C) in paragraph (5)—

2

(i) by striking subparagraph (C);

3

(ii) by redesignating subparagraphs

4

(D) and (E) as subparagraphs (C) and

5

(D), respectively; and 6 (iii) in subparagraph (D), as so redes­7 ignated, by striking ‘‘subparagraph (D)’’ 8 and inserting ‘‘subparagraph (C)’’; 9 (2) by striking subsection (c); 10 (3) in subsection (d)— 11 (A) by striking ‘‘covered drugs’’ each place 12 it appears and inserting ‘‘covered outpatient 13 drugs’’; 14 (B) by striking ‘‘(a)(5)(D)’’ each place it 15 appears and inserting ‘‘(a)(5)(C)’’; and 16 (C) by striking ‘‘(a)(5)(E)’’ each place it 17 appears and inserting ‘‘(a)(5)(D)’’; and 18 (4) by inserting after subsection (d) the fol­19 lowing: 20 ‘‘(e) EXCLUSION OF ORPHAN DRUGS FOR CERTAIN 21 COVERED ENTITIES.—For covered entities described in 22 subparagraph (M), (N), or (O) of subsection (a)(4), the 23 term ‘covered outpatient drug’ shall not include a drug 24 designated by the Secretary under section 526 of the Fed-

153 1 eral Food, Drug, and Cosmetic Act for a rare disease or 2 condition.’’. 3 SEC. 2303. COMMUNITY HEALTH CENTERS. 4

Section 10503(b)(1) of the Patient Protection and 5 Affordable Care Act is amended— 6 (1) in subparagraph (A), by striking 7 ‘‘700,000,000’’ and inserting ‘‘1,000,000,000’’; 8 (2) in subparagraph (B), by striking 9 ‘‘800,000,000’’ and inserting ‘‘1,200,000,000’’; 10 (3) in subparagraph (C), by striking 11 ‘‘1,000,000,000’’ and inserting ‘‘1,500,000,000’’; 12 (4) in subparagraph (D), by striking 13 ‘‘1,600,000,000’’ and inserting ‘‘2,200,000,000’’; 14 and 15 (5) in subparagraph (E), by striking 16 ‘‘2,900,000,000’’ and inserting ‘‘3,600,000,000’’.

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