[DOCID: f:publ152.111]
[[Page 124 STAT.1029]]
Public Law 111-152
111th Congress
An Act
To provide for reconciliation pursuant to Title II of the concurrent
resolution on the budget for fiscal year 2010 (S. Con. Res.
13). <<NOTE: Mar. 30, 2010 - [H.R. 4872]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Health Care and
Education Reconciliation Act of 2010.>>
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short <<NOTE: 42 USC 1305 note.>> Title.--This Act may be cited
as the ``Health Care and Education Reconciliation Act of 2010''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--COVERAGE, MEDICARE, MEDICAID, AND REVENUES
Subtitle A--Coverage
Sec. 1001. Tax credits.
Sec. 1002. Individual responsibility.
Sec. 1003. Employer responsibility.
Sec. 1004. Income definitions.
Sec. 1005. Implementation funding.
Subtitle B--Medicare
Sec. 1101. Closing the medicare prescription drug ``donut hole''.
Sec. 1102. Medicare Advantage payments.
Sec. 1103. Savings from limits on MA plan administrative costs.
Sec. 1104. Disproportionate share hospital (DSH) payments.
Sec. 1105. Market basket updates.
Sec. 1106. Physician ownership-referral.
Sec. 1107. Payment for imaging services.
Sec. 1108. PE GPCI adjustment for 2010.
Sec. 1109. Payment for qualifying hospitals.
Subtitle C--Medicaid
Sec. 1201. Federal funding for States.
Sec. 1202. Payments to primary care physicians.
Sec. 1203. Disproportionate share hospital payments.
Sec. 1204. Funding for the territories.
Sec. 1205. Delay in Community First Choice option.
Sec. 1206. Drug rebates for new formulations of existing drugs.
Subtitle D--Reducing Fraud, Waste, and Abuse
Sec. 1301. Community mental health centers.
Sec. 1302. Medicare prepayment medical review limitations.
Sec. 1303. Funding to fight fraud, waste, and abuse.
Sec. 1304. 90-day period of enhanced oversight for initial claims of DME
suppliers.
Subtitle E--Provisions Relating to Revenue
Sec. 1401. High-cost plan excise tax.
Sec. 1402. Unearned income Medicare contribution.
Sec. 1403. Delay of limitation on health flexible spending arrangements
under cafeteria plans.
[[Page 124 STAT.1030]]
Sec. 1404. Brand name pharmaceuticals.
Sec. 1405. Excise tax on medical device manufacturers.
Sec. 1406. Health insurance providers.
Sec. 1407. Delay of elimination of deduction for expenses allocable to
medicare part D subsidy.
Sec. 1408. Elimination of unintended application of cellulosic biofuel
producer credit.
Sec. 1409. Codification of economic substance doctrine and penalties.
Sec. 1410. Time for payment of corporate estimated taxes.
Subtitle F--Other Provisions
Sec. 1501. Community college and career training grant program.
TITLE II--EDUCATION AND HEALTH
Subtitle A--Education
Sec. 2001. Short title; references.
Part I--Investing in Students and Families
Sec. 2101. Federal Pell Grants.
Sec. 2102. College access challenge grant program.
Sec. 2103. Investment in historically black colleges and universities
and minority-serving institutions.
Part II--Student Loan Reform
Sec. 2201. Termination of Federal Family Education Loan appropriations.
Sec. 2202. Termination of Federal loan insurance program.
Sec. 2203. Termination of applicable interest rates.
Sec. 2204. Termination of Federal payments to reduce student interest
costs.
Sec. 2205. Termination of FFEL PLUS Loans.
Sec. 2206. Federal Consolidation Loans.
Sec. 2207. Termination of Unsubsidized Stafford Loans for middle-income
borrowers.
Sec. 2208. Termination of special allowances.
Sec. 2209. Origination of Direct Loans at institutions outside the
United States.
Sec. 2210. Conforming amendments.
Sec. 2211. Terms and conditions of loans.
Sec. 2212. Contracts; mandatory funds.
Sec. 2213. Income-based repayment.
Subtitle B--Health
Sec. 2301. Insurance reforms.
Sec. 2302. Drugs purchased by covered entities.
Sec. 2303. Community health centers.
TITLE I--COVERAGE, MEDICARE, MEDICAID, AND REVENUES
Subtitle A--Coverage
SEC. 1001. TAX CREDITS.
(a) Premium Tax Credits.--Section 36B of the Internal Revenue Code
of 1986, as added by section 1401 of the Patient Protection and
Affordable Care Act and amended by section 10105 of such <<NOTE: Ante,
p. 213, 906.>> Act, is amended--
(1) in subsection (b)(3)(A)--
(A) in clause (i), by striking ``with respect to any
taxpayer'' and all that follows up to the end period and
inserting: ``for any taxable year shall be the
percentage such that the applicable percentage for any
taxpayer whose household income is within an income tier
specified in the following table shall increase, on a
sliding scale in a linear manner, from the initial
premium percentage to
[[Page 124 STAT.1031]]
the final premium percentage specified in such table for
such income tier:
``In the case of household
income (expressed as a
percent of poverty line) The initial premium The final premium
within the following income percentage is-- percentage is--
tier:
Up to 133% 2.0% 2.0%
133% up to 150% 3.0% 4.0%
150% up to 200% 4.0% 6.3%
200% up to 250% 6.3% 8.05%
250% up to 300% 8.05% 9.5%
300% up to 400% 9.5% 9.5%''; and
(B) by striking clauses (ii) and (iii), and
inserting the following:
``(ii) Indexing.--
``(I) In general.--Subject to
subclause (II), in the case of taxable
years beginning in any calendar year
after 2014, the initial and final
applicable percentages under clause (i)
(as in effect for the preceding calendar
year after application of this clause)
shall be adjusted to reflect the excess
of the rate of premium growth for the
preceding calendar year over the rate of
income growth for the preceding calendar
year.
``(II) Additional adjustment.--
Except as provided in subclause (III),
in the case of any calendar year after
2018, the percentages described in
subclause (I) shall, in addition to the
adjustment under subclause (I), be
adjusted to reflect the excess (if any)
of the rate of premium growth estimated
under subclause (I) for the preceding
calendar year over the rate of growth in
the consumer price index for the
preceding calendar year.
``(III) Failsafe.--
Subclause <<NOTE: Applicability.>> (II)
shall apply for any calendar year only
if the aggregate amount of premium tax
credits under this section and cost-
sharing reductions under section 1402 of
the Patient Protection and Affordable
Care Act for the preceding calendar year
exceeds an amount equal to 0.504 percent
of the gross domestic product for the
preceding calendar year.''; and
(2) in subsection (c)(2)(C)--
(A) by striking ``9.8 percent'' in clauses (i)(II)
and (iv) and inserting ``9.5 percent''; and
(B) by striking ``(b)(3)(A)(iii)'' in clause (iv)
and inserting ``(b)(3)(A)(ii)''.
(b) Cost Sharing.--Section 1402(c) of the Patient Protection and
Affordable Care <<NOTE: Ante, p. 221.>> Act is amended--
(1) in paragraph (1)(B)(i)--
(A) in subclause (I), by striking ``90'' and
inserting ``94'';
(B) in subclause (II)--
(i) by striking ``80'' and inserting ``87'';
and
(ii) by striking ``and''; and
[[Page 124 STAT.1032]]
(C) by striking subclause (III) and inserting the
following:
``(III) 73 percent in the case of an
eligible insured whose household income
is more than 200 percent but not more
than 250 percent of the poverty line for
a family of the size involved; and
``(IV) 70 percent in the case of an
eligible insured whose household income
is more than 250 percent but not more
than 400 percent of the poverty line for
a family of the size involved.''; and
(2) in paragraph (2)--
(A) in subparagraph (A)--
(i) by striking ``90'' and inserting ``94'';
and
(ii) by striking ``and'';
(B) in subparagraph (B)--
(i) by striking ``80'' and inserting ``87'';
and
(ii) by striking the period and inserting ``;
and''; and
(C) by inserting after subparagraph (B) the
following new subparagraph:
``(C) in the case of an eligible insured whose
household income is more than 200 percent but not more
than 250 percent of the poverty line for a family of the
size involved, increase the plan's share of the total
allowed costs of benefits provided under the plan to 73
percent of such costs.''.
SEC. 1002. INDIVIDUAL RESPONSIBILITY.
(a) Amounts.--Section 5000A(c) of the Internal Revenue Code of 1986,
as added by section 1501(b) of the Patient Protection and Affordable
Care Act and amended by section 10106 of <<NOTE: Ante, p. 244,
907.>> such Act, is amended--
(1) in paragraph (2)(B)--
(A) in the matter preceding clause (i), by--
(i) inserting ``the excess of'' before ``the
taxpayer's household income''; and
(ii) inserting ``for the taxable year over the
amount of gross income specified in section
6012(a)(1) with respect to the taxpayer'' before
``for the taxable year'';
(B) in clause (i), by striking ``0.5'' and inserting
``1.0'';
(C) in clause (ii), by striking ``1.0'' and
inserting ``2.0''; and
(D) in clause (iii), by striking ``2.0'' and
inserting ``2.5''; and
(2) in paragraph (3)--
(A) in subparagraph (A), by striking ``$750'' and
inserting ``$695'';
(B) in subparagraph (B), by striking ``$495'' and
inserting ``$325''; and
(C) in subparagraph (D)--
(i) in the matter preceding clause (i), by
striking ``$750'' and inserting ``$695''; and
(ii) in clause (i), by striking ``$750'' and
inserting ``$695''.
(b) Threshold.--Section 5000A of such Code, as so added and amended,
is amended--
(1) by striking subsection (c)(4)(D); and
(2) in subsection (e)(2)--
[[Page 124 STAT.1033]]
(A) by striking ``under 100 percent of poverty
line'' and inserting ``below filing threshold''; and
(B) by striking all that follows ``less than'' and
inserting ``the amount of gross income specified in
section 6012(a)(1) with respect to the taxpayer.''.
SEC. 1003. EMPLOYER RESPONSIBILITY.
(a) Payment Calculation.--Subparagraph (D) of subsection (d)(2) of
section 4980H of the Internal Revenue Code of 1986, as added by section
1513 of the Patient Protection and Affordable Care Act and amended by
section 10106 of such Act, <<NOTE: Ante, p. 253, 907.>> is amended to
read as follows:
``(D) Application of employer size to assessable
penalties.--
``(i) In general.--The number of individuals
employed by an applicable large employer as full-
time employees during any month shall be reduced
by 30 solely for purposes of calculating--
``(I) the assessable payment under
subsection (a), or
``(II) the overall limitation under
subsection (b)(2).
``(ii) Aggregation.--In the case of persons
treated as 1 employer under subparagraph (C)(i),
only 1 reduction under subclause (I) or (II) shall
be allowed with respect to such persons and such
reduction shall be allocated among such persons
ratably on the basis of the number of full-time
employees employed by each such person.''.
(b) Applicable Payment Amount.--Section 4980H of such Code, as so
added and amended, is amended--
(1) in the flush text following subsection (c)(1)(B), by
striking ``400 percent of the applicable payment amount'' and
inserting ``an amount equal to \1/12\ of $3,000'';
(2) in subsection (d)(1), by striking ``$750'' and inserting
``$2,000''; and
(3) in subsection (d)(5)(A), in the matter preceding clause
(i), by striking ``subsection (b)(2) and (d)(1)'' and inserting
``subsection (b) and paragraph (1)''.
(c) Counting Part-time Workers in Setting the Threshold for Employer
Responsibility.--Section 4980H(d)(2) of such Code, as so added and
amended and as amended by subsection (a), is amended by adding at the
end the following new subparagraph:
``(E) Full-time equivalents treated as full-time
employees.--Solely for purposes of determining whether
an employer is an applicable large employer under this
paragraph, an employer shall, in addition to the number
of full-time employees for any month otherwise
determined, include for such month a number of full-time
employees determined by dividing the aggregate number of
hours of service of employees who are not full-time
employees for the month by 120.''.
(d) Eliminating Waiting Period Assessment.--Section 4980H of such
Code, as so added and amended and as amended by the preceding
subsections, is amended by striking subsection (b) and redesignating
subsections (c), (d), and (e) as subsections (b), (c), and (d),
respectively.
[[Page 124 STAT.1034]]
SEC. 1004. INCOME DEFINITIONS.
(a) Modified Adjusted Gross Income.--
(1) In general.--The following provisions of the Internal
Revenue Code of 1986 are each amended by striking ``modified
gross'' each place it appears and inserting ``modified adjusted
gross'':
(A) Clauses (i) and (ii) of section 36B(d)(2)(A), as
added by section 1401 of the Patient Protection and
Affordable Care Act. <<NOTE: Ante, p. 213.>>
(B) Section 6103(l)(21)(A)(iv), as added by section
1414 of such Act. <<NOTE: Ante, p. 236.>>
(C) Clauses (i) and (ii) of section 5000A(c)(4), as
added by section 1501(b) <<NOTE: Ante, p. 244.>> of such
Act.
(2) Definition.--
(A) Section 36B(d)(2)(B) of such Code, as so added,
is amended to read as follows:
``(B) Modified adjusted gross income.--The term
`modified adjusted gross income' means adjusted gross
income increased by--
``(i) any amount excluded from gross income
under section 911, and
``(ii) any amount of interest received or
accrued by the taxpayer during the taxable year
which is exempt from tax.''.
(B) Section 5000A(c)(4)(C) of such Code, as so
added, is amended to read as follows:
``(C) Modified adjusted gross income.--The term
`modified adjusted gross income' means adjusted gross
income increased by--
``(i) any amount excluded from gross income
under section 911, and
``(ii) any amount of interest received or
accrued by the taxpayer during the taxable year
which is exempt from tax.''.
(b) Modified Adjusted Gross Income Definition.--
(1) Medicaid.--Section 1902 of the Social Security Act (42
U.S.C. 1396a) is amended by striking ``modified gross income''
each place it appears in the text and headings of the following
provisions and inserting ``modified adjusted gross income'':
(A) Paragraph (14) of subsection (e), as added by
section 2002(a) of the Patient Protection and Affordable
Care Act.
(B) Subsection (gg)(4)(A), as added by section
2001(b) of such Act.
(2) Chip.--
(A) State plan requirements.--Section
2102(b)(1)(B)(v) of the Social Security Act (42 U.S.C.
1397bb(b)(1)(B)(v)), as added by section 2101(d)(1) of
the Patient Protection and Affordable Care Act, is
amended by striking ``modified gross income'' and
inserting ``modified adjusted gross income''.
(B) Plan administration.--Section 2107(e)(1)(E) of
the Social Security Act (42 U.S.C. 1397gg(e)(1)(E)), as
added by section 2101(d)(2) of the Patient Protection
and Affordable Care Act, is amended by striking
``modified gross income'' and inserting ``modified
adjusted gross income''.
[[Page 124 STAT.1035]]
(c) No Excess Payments.--Section 36B(f) of the Internal Revenue Code
of 1986, as added by section 1401(a) of the Patient Protection and
Affordable Care Act, <<NOTE: Ante, p. 213.>> is amended by adding at the
end the following new paragraph:
``(3) Information requirement.--Each Exchange (or any person
carrying out 1 or more responsibilities of an Exchange under
section 1311(f)(3) or 1321(c) of the Patient Protection and
Affordable Care Act) shall provide the following information to
the Secretary and to the taxpayer with respect to any health
plan provided through the Exchange:
``(A) The level of coverage described in section
1302(d) of the Patient Protection and Affordable Care
Act and the period such coverage was in effect.
``(B) The total premium for the coverage without
regard to the credit under this section or cost-sharing
reductions under section 1402 of such Act.
``(C) The aggregate amount of any advance payment of
such credit or reductions under section 1412 of such
Act.
``(D) The name, address, and TIN of the primary
insured and the name and TIN of each other individual
obtaining coverage under the policy.
``(E) Any information provided to the Exchange,
including any change of circumstances, necessary to
determine eligibility for, and the amount of, such
credit.
``(F) Information necessary to determine whether a
taxpayer has received excess advance payments.''.
(d) Adult Dependents.--
(1) Exclusion of amounts expended for medical care.--The
first sentence of section 105(b) of the Internal Revenue Code of
1986 <<NOTE: 26 USC 105.>> (relating to amounts expended for
medical care) is amended--
(A) by striking ``and his dependents'' and inserting
``his dependents''; and
(B) by inserting before the period the following:
``, and any child (as defined in section 152(f)(1)) of
the taxpayer who as of the end of the taxable year has
not attained age 27''.
(2) Self-employed health insurance deduction.--Section
162(l)(1) of such Code <<NOTE: 26 USC 162.>> is amended to read
as follows:
``(1) Allowance of deduction.--In the case of a taxpayer who
is an employee within the meaning of section 401(c)(1), there
shall be allowed as a deduction under this section an amount
equal to the amount paid during the taxable year for insurance
which constitutes medical care for--
``(A) the taxpayer,
``(B) the taxpayer's spouse,
``(C) the taxpayer's dependents, and
``(D) any child (as defined in section 152(f)(1)) of
the taxpayer who as of the end of the taxable year has
not attained age 27.''.
(3) Coverage under self-employed deduction.--Section
162(l)(2)(B) of such Code is amended by inserting ``, or any
dependent, or individual described in subparagraph (D) of
paragraph (1) with respect to,'' after ``spouse of''.
(4) Sick and accident benefits provided to members of a
voluntary employees' beneficiary association and
[[Page 124 STAT.1036]]
their dependents.--Section 501(c)(9) of such Code <<NOTE: 26 USC
501.>> is amended by adding at the end the following new
sentence: ``For purposes of providing for the payment of sick
and accident benefits to members of such an association and
their dependents, the term `dependent' shall include any
individual who is a child (as defined in section 152(f)(1)) of a
member who as of the end of the calendar year has not attained
age 27.''.
(5) Medical and other benefits for retired employees.--
Section 401(h) of such Code <<NOTE: 26 USC 401.>> is amended by
adding at the end the following: ``For purposes of this
subsection, the term `dependent' shall include any individual
who is a child (as defined in section 152(f)(1)) of a retired
employee who as of the end of the calendar year has not attained
age 27.''.
(e) Five Percent Income Disregard for Certain Individuals.--Section
1902(e)(14) of the Social Security Act (42 U.S.C. 1396a(e)(14)), as
amended by subsection (b)(1), is further amended--
(1) in subparagraph (B), by striking ``No type'' and
inserting ``Subject to subparagraph (I), no type''; and
(2) by adding at the end the following new subparagraph:
``(I) Treatment of portion of modified adjusted
gross income.--For purposes of determining the income
eligibility of an individual for medical assistance
whose eligibility is determined based on the application
of modified adjusted gross income under subparagraph
(A), the State shall--
``(i) determine <<NOTE: Determination.>> the
dollar equivalent of the difference between the
upper income limit on eligibility for such an
individual (expressed as a percentage of the
poverty line) and such upper income limit
increased by 5 percentage points; and
``(ii) notwithstanding the requirement in
subparagraph (A) with respect to use of modified
adjusted gross income, utilize as the applicable
income of such individual, in determining such
income eligibility, an amount equal to the
modified adjusted gross income applicable to such
individual reduced by such dollar equivalent
amount.''.
SEC. 1005. <<NOTE: 42 USC 18121.>> IMPLEMENTATION FUNDING.
(a) In General.--There is hereby established a Health Insurance
Reform Implementation Fund (referred to in this section as the ``Fund'')
within the Department of Health and Human Services to carry out the
Patient Protection and Affordable Care Act and this Act (and the
amendments made by such Acts).
(b) Funding.--There is appropriated to the Fund, out of any funds in
the Treasury not otherwise appropriated, $1,000,000,000 for Federal
administrative expenses to carry out such Act (and the amendments made
by such Acts).
Subtitle B--Medicare
SEC. 1101. CLOSING THE MEDICARE PRESCRIPTION DRUG ``DONUT HOLE''.
(a) Coverage Gap Rebate for 2010.--
[[Page 124 STAT.1037]]
(1) In general.--Section 1860D-42 of the Social Security Act
(42 U.S.C. 1395w-152) is amended by adding at the end the
following new subsection:
``(c) Coverage <<NOTE: Payments.>> Gap Rebate for 2010.--
``(1) In general.--In <<NOTE: Deadline.>> the case of an
individual described in subparagraphs (A) through (D) of section
1860D-14A(g)(1) who as of the last day of a calendar quarter in
2010 has incurred costs for covered part D drugs so that the
individual has exceeded the initial coverage limit under section
1860D-2(b)(3) for 2010, the Secretary shall provide for payment
from the Medicare Prescription Drug Account of $250 to the
individual by not later than the 15th day of the third month
following the end of such quarter.
``(2) Limitation.--The Secretary shall provide only 1
payment under this subsection with respect to any individual.''.
(2) Repeal of provision.--Section 3315 of the Patient
Protection and Affordable Care Act (including the amendments
made by such section) <<NOTE: Ante, p. 479.>> is repealed, and
any provision of law amended or repealed by such sections is
hereby restored or revived as if such section had not been
enacted into law.
(b) Closing the Donut Hole.--Part D of title XVIII of the Social
Security Act (42 U.S.C. 1395w-101 et seq.), as amended by section 3301
of the Patient Protection and Affordable Care Act, is further amended--
(1) in section <<NOTE: Ante, p. 461.>> 1860D-43--
(A) in subsection (b), by striking ``July 1, 2010''
and inserting ``January 1, 2011''; and
(B) in subsection (c)(2), by striking ``July 1,
2010, and ending on December 31, 2010,'' and inserting
``January 1, 2011, and December 31, 2011,'';
(2) in section <<NOTE: Ante, p. 462.>> 1860D-14A--
(A) in subsection (a)--
(i) by striking ``July 1, 2010'' and inserting
``January 1, 2011''; and
(ii) by striking ``April 1, 2010'' and
inserting ``180 days after the date of the
enactment of this section'';
(B) in subsection (b)(1)(C)--
(i) in the heading, by striking ``2010 and'';
(ii) by striking ``July 1, 2010'' and
inserting ``January 1, 2011''; and
(iii) by striking ``May 1, 2010'' and
inserting ``not later than 30 days after the date
of the establishment of a model agreement under
subsection (a)'';
(C) in subsection (c)--
(i) in paragraph (1)(A)(iii), by striking
``July 1, 2010, and ending on December 31, 2011''
and inserting ``January 1, 2011, and ending on
December 31, 2011''; and
(ii) in paragraph (2), by striking ``2010''
and inserting ``2011'';
(D) in subsection (d)(2)(B), by striking ``July 1,
2010, and ending on December 31, 2010'' and inserting
``January 1, 2011, and ending on December 31, 2011'';
and
(E) in subsection (g)(1)--
(i) in the matter before subparagraph (A), by
striking ``an applicable drug'' and inserting ``a
covered part D drug'';
[[Page 124 STAT.1038]]
(ii) by adding ``and'' at the end of
subparagraph (C);
(iii) by striking subparagraph (D); and
(iv) by redesignating subparagraph (E) as
subparagraph (D); and
(3) in section <<NOTE: 42 USC 1395w-102.>> 1860D-2(b)--
(A) in paragraph (2)(A), by striking ``The
coverage'' and inserting ``Subject to subparagraphs (C)
and (D), the coverage'';
(B) in paragraph (2)(B), by striking ``subparagraph
(A)(ii)'' and inserting ``subparagraphs (A)(ii), (C),
and (D)'';
(C) by adding at the end of paragraph (2) the
following new subparagraphs:
``(C) Coverage for generic drugs in coverage gap.--
``(i) In general.--Except as provided in
paragraph (4), the coverage for an applicable
beneficiary (as defined in section 1860D-
14A(g)(1)) has coinsurance (for costs above the
initial coverage limit under paragraph (3) and
below the out-of-pocket threshold) for covered
part D drugs that are not applicable drugs under
section 1860D-14A(g)(2) that is--
``(I) equal to the generic-gap
coinsurance percentage (specified in
clause (ii)) for the year; or
``(II) actuarially equivalent (using
processes and methods established under
section 1860D-11(c)) to an average
expected payment of such percentage of
such costs for covered part D drugs that
are not applicable drugs under section
1860D-14A(g)(2).
``(ii) Generic-gap coinsurance percentage.--
The generic-gap coinsurance percentage specified
in this clause for--
``(I) 2011 is 93 percent;
``(II) 2012 and each succeeding year
before 2020 is the generic-gap
coinsurance percentage under this clause
for the previous year decreased by 7
percentage points; and
``(III) 2020 and each subsequent
year is 25 percent.
``(D) Coverage for applicable drugs in coverage
gap.--
``(i) In general.--Except as provided in
paragraph (4), the coverage for an applicable
beneficiary (as defined in section 1860D-
14A(g)(1)) has coinsurance (for costs above the
initial coverage limit under paragraph (3) and
below the out-of-pocket threshold) for the
negotiated price (as defined in section 1860D-
14A(g)(6)) of covered part D drugs that are
applicable drugs under section 1860D-14A(g)(2)
that is--
``(I) equal to the difference
between the applicable gap percentage
(specified in clause (ii) for the year)
and the discount percentage specified in
section 1860D-14A(g)(4)(A) for such
applicable drugs; or
[[Page 124 STAT.1039]]
``(II) actuarially equivalent (using
processes and methods established under
section 1860D-11(c)) to an average
expected payment of such percentage of
such costs, for covered part D drugs
that are applicable drugs under section
1860D-14A(g)(2).
``(ii) Applicable gap percentage.--The
applicable gap percentage specified in this clause
for--
``(I) 2013 and 2014 is 97.5 percent;
``(II) 2015 and 2016 is 95 percent;
``(III) 2017 is 90 percent;
``(IV) 2018 is 85 percent;
``(V) 2019 is 80 percent; and
``(VI) 2020 and each subsequent year
is 75 percent.'';
(D) in paragraph (3)(A), as restored under
subsection (a)(2), by striking ``paragraph (4)'' and
inserting ``paragraphs (2)(C), (2)(D), and (4)''; and
(E) in paragraph (4)(E), by inserting before the
period at the end the following: ``, except that
incurred costs shall not include the portion of the
negotiated price that represents the reduction in
coinsurance resulting from the application of paragraph
(2)(D)''; and
(4) in section 1860D-22(a)(2)(A), <<NOTE: 42 USC 1395w-
132.>> by inserting before the period at the end the following:
``, not taking into account the value of any discount or
coverage provided during the gap in prescription drug coverage
that occurs between the initial coverage limit under section
1860D-2(b)(3) during the year and the out-of-pocket threshold
specified in section 1860D-2(b)(4)(B)''.
(c) Conforming Amendment to AMP Under Medicaid.--Section
1927(k)(1)(B)(i) of the Social Security Act (42 U.S.C. 1396r-
8(k)(1)(B)(i)), as amended by section 2503(a)(2)(B) of the Patient
Protection and Affordable Care Act, is amended--
(1) by striking ``and'' at the end of subclause (III);
(2) by striking the period at the end of subclause (IV); and
(3) by adding at the end the following new subclause:
``(V) discounts provided by
manufacturers under section 1860D-
14A.''.
(d) Reducing Growth Rate of Out-of-pocket Cost Threshold.--Section
1860D-2(b) of the Social Security Act (42 U.S.C. 1395w-102(b)) is
amended--
(1) in paragraph (4)(B)(i)--
(A) in subclause (I), by striking ``or'' at the end;
(B) by redesignating subclause (II) as subclause
(VI); and
(C) by inserting after subclause (I) the following
new subclauses:
``(II) for each of years 2007
through 2013, is equal to the amount
specified in this subparagraph for the
previous year, increased by the annual
percentage increase described in
paragraph (6) for the year involved;
``(III) for 2014 and 2015, is equal
to the amount specified in this
subparagraph for the previous year,
increased by the annual percentage
increase
[[Page 124 STAT.1040]]
described in paragraph (6) for the year
involved, minus 0.25 percentage point;
``(IV) for each of years 2016
through 2019, is equal to the amount
specified in this subparagraph for the
previous year, increased by the lesser
of--
``(aa) the annual percentage
increase described in paragraph
(7) for the year involved, plus
2 percentage points; or
``(bb) the annual percentage
increase described in paragraph
(6) for the year;
``(V) for 2020, is equal to the
amount that would have been applied
under this subparagraph for 2020 if the
amendments made by section 1101(d)(1) of
the Health Care and Education
Reconciliation Act of 2010 had not been
enacted; or''; and
(2) by adding at the end the following new paragraph:
``(7) Additional annual percentage increase.--The annual
percentage increase specified in this paragraph for a year is
equal to the annual percentage increase in the consumer price
index for all urban consumers (United States city average) for
the 12-month period ending in July of the previous year.''.
SEC. 1102. MEDICARE ADVANTAGE PAYMENTS.
(a) Repeal.--Effective <<NOTE: Effective date. 42 USC 1395w-21 et
seq. and note.>> as if included in the enactment of the Patient
Protection and Affordable Care Act, sections 3201 and 3203 of such Act
(and the amendments made by such sections) are repealed.
(b) Phase-in of Modified Benchmarks.--Section 1853 of the Social
Security Act (42 U.S.C. 1395w-23) is amended--
(1) in subsection (j)(1)(A), by striking ``(or, beginning
with 2007, \1/12\ of the applicable amount determined under
subsection (k)(1)) for the area for the year'' and inserting
``for the area for the year (or, for 2007, 2008, 2009, and 2010,
\1/12\ of the applicable amount determined under subsection
(k)(1) for the area for the year; for 2011, \1/12\ of the
applicable amount determined under subsection (k)(1) for the
area for 2010; and, beginning with 2012, \1/12\ of the blended
benchmark amount determined under subsection (n)(1) for the area
for the year)''; and
(2) by adding at the end the following new subsection:
``(n) Determination of Blended Benchmark Amount.--
``(1) In general.--For <<NOTE: Definition.>> purposes of
subsection (j), subject to paragraphs (3), (4), and (5), the
term `blended benchmark amount' means for an area--
``(A) for 2012 the sum of--
``(i) \1/2\ of the applicable amount for the
area and year; and
``(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area and year; and
``(B) for a subsequent year the amount specified in
paragraph (2)(A) for the area and year.
``(2) Specified amount.--
``(A) In general.--The amount specified in this
subparagraph for an area and year is the product of--
``(i) the base payment amount specified in
subparagraph (E) for the area and year adjusted to
take into
[[Page 124 STAT.1041]]
account the phase-out in the indirect costs of
medical education from capitation rates described
in subsection (k)(4); and
``(ii) the applicable percentage for the area
for the year specified under subparagraph (B).
``(B) Applicable percentage.--Subject to
subparagraph (D), the applicable percentage specified in
this subparagraph for an area for a year in the case of
an area that is ranked--
``(i) in the highest quartile under
subparagraph (C) for the previous year is 95
percent;
``(ii) in the second highest quartile under
such subparagraph for the previous year is 100
percent;
``(iii) in the third highest quartile under
such subparagraph for the previous year is 107.5
percent; or
``(iv) in the lowest quartile under such
subparagraph for the previous year is 115 percent.
``(C) Periodic ranking.--For purposes of this
paragraph in the case of an area located--
``(i) in 1 of the 50 States or the District of
Columbia, the Secretary shall rank such area in
each year specified under subsection (c)(1)(D)(ii)
based upon the level of the amount specified in
subparagraph (A)(i) for such areas; or
``(ii) in a territory, the Secretary shall
rank such areas in each such year based upon the
level of the amount specified in subparagraph
(A)(i) for such area relative to quartile rankings
computed under clause (i).
``(D) 1-year transition for changes in applicable
percentage.--If, for a year after 2012, there is a
change in the quartile in which an area is ranked
compared to the previous year, the applicable percentage
for the area in the year shall be the average of--
``(i) the applicable percentage for the area
for the previous year; and
``(ii) the applicable percentage that would
otherwise apply for the area for the year.
``(E) Base payment amount.--Subject to subparagraph
(F), the base payment amount specified in this
subparagraph--
``(i) for 2012 is the amount specified in
subsection (c)(1)(D) for the area for the year; or
``(ii) for a subsequent year that--
``(I) is not specified under
subsection (c)(1)(D)(ii), is the base
amount specified in this subparagraph
for the area for the previous year,
increased by the national per capita MA
growth percentage, described in
subsection (c)(6) for that succeeding
year, but not taking into account any
adjustment under subparagraph (C) of
such subsection for a year before 2004;
and
``(II) is specified under subsection
(c)(1)(D)(ii), is the amount specified
in subsection (c)(1)(D) for the area for
the year.
[[Page 124 STAT.1042]]
``(F) Application of indirect medical education
phase-out.--The base payment amount specified in
subparagraph (E) for a year shall be adjusted in the
same manner under paragraph (4) of subsection (k) as the
applicable amount is adjusted under such subsection.
``(3) Alternative phase-ins.--
``(A) 4-year phase-in for certain areas.--If the
difference between the applicable amount (as defined in
subsection (k)) for an area for 2010 and the projected
2010 benchmark amount (as defined in subparagraph (C))
for the area is at least $30 but less than $50, the
blended benchmark amount for the area is--
``(i) for 2012 the sum of--
``(I) \3/4\ of the applicable amount
for the area and year; and
``(II) \1/4\ of the amount specified
in paragraph (2)(A) for the area and
year;
``(ii) for 2013 the sum of--
``(I) \1/2\ of the applicable amount
for the area and year; and
``(II) \1/2\ of the amount specified
in paragraph (2)(A) for the area and
year;
``(iii) for 2014 the sum of--
``(I) \1/4\ of the applicable amount
for the area and year; and
``(II) \3/4\ of the amount specified
in paragraph (2)(A) for the area and
year; and
``(iv) for a subsequent year the amount
specified in paragraph (2)(A) for the area and
year.
``(B) 6-year phase-in for certain areas.--If the
difference between the applicable amount (as defined in
subsection (k)) for an area for 2010 and the projected
2010 benchmark amount (as defined in subparagraph (C))
for the area is at least $50, the blended benchmark
amount for the area is--
``(i) for 2012 the sum of--
``(I) \5/6\ of the applicable amount
for the area and year; and
``(II) \1/6\ of the amount specified
in paragraph (2)(A) for the area and
year;
``(ii) for 2013 the sum of--
``(I) \2/3\ of the applicable amount
for the area and year; and
``(II) \1/3\ of the amount specified
in paragraph (2)(A) for the area and
year;
``(iii) for 2014 the sum of--
``(I) \1/2\ of the applicable amount
for the area and year; and
``(II) \1/2\ of the amount specified
in paragraph (2)(A) for the area and
year;
``(iv) for 2015 the sum of--
``(I) \1/3\ of the applicable amount
for the area and year; and
``(II) \2/3\ of the amount specified
in paragraph (2)(A) for the area and
year; and
``(v) for 2016 the sum of--
[[Page 124 STAT.1043]]
``(I) \1/6\ of the applicable amount
for the area and year; and
``(II) \5/6\ of the amount specified
in paragraph (2)(A) for the area and
year; and
``(vi) for a subsequent year the amount
specified in paragraph (2)(A) for the area and
year.
``(C) Projected 2010 benchmark amount.--The
projected 2010 benchmark amount described in this
subparagraph for an area is equal to the sum of--
``(i) \1/2\ of the applicable amount (as
defined in subsection (k)) for the area for 2010;
and
``(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area for 2010 but
determined as if there were substituted for the
applicable percentage specified in clause (ii) of
such paragraph the sum of--
``(I) the applicable percent that
would be specified under subparagraph
(B) of paragraph (2) (determined without
regard to subparagraph (D) of such
paragraph) for the area for 2010 if any
reference in such paragraph to `the
previous year' were deemed a reference
to 2010; and
``(II) the applicable percentage
increase that would apply to a
qualifying plan in the area under
subsection (o) as if any reference in
such subsection to 2012 were deemed a
reference to 2010 and as if the
determination of a qualifying county
under paragraph (3)(B) of such
subsection were made for 2010.
``(4) Cap on benchmark amount.--In no case shall the blended
benchmark amount for an area for a year (determined taking into
account subsection (o)) be greater than the applicable amount
that would (but for the application of this subsection) be
determined under subsection (k)(1) for the area for the year.
``(5) Non-application to pace plans.--This subsection shall
not apply to payments to a PACE program under section 1894.''.
(c) Applicable Percentage Quality Increases.--Section 1853 of such
Act (42 U.S.C. 1395w-23), as amended by subsection (b), is amended--
(1) in subsection (j), by inserting ``subject to subsection
(o),'' after ``For purposes of this part,'';
(2) in subsection (n)(2)(B), as added by subsection (b), by
inserting ``, subject to subsection (o)'' after ``as follows'';
and
(3) by adding at the end the following new subsection:
``(o) Applicable Percentage Quality Increases.--
``(1) In general.--Subject <<NOTE: Determination.>> to the
succeeding paragraphs, in the case of a qualifying plan with
respect to a year beginning with 2012, the applicable percentage
under subsection (n)(2)(B) shall be increased on a plan or
contract level, as determined by the Secretary--
``(A) for 2012, by 1.5 percentage points;
``(B) for 2013, by 3.0 percentage points; and
``(C) for 2014 or a subsequent year, by 5.0
percentage points.
[[Page 124 STAT.1044]]
``(2) Increase for qualifying plans in qualifying
counties.--The increase applied under paragraph (1) for a
qualifying plan located in a qualifying county for a year shall
be doubled.
``(3) Qualifying plans and qualifying county defined;
application of increases to low enrollment and new plans.--For
purposes of this subsection:
``(A) Qualifying plan.--
``(i) In general.--The term `qualifying plan'
means, for a year and subject to paragraph (4), a
plan that had a quality rating under paragraph (4)
of 4 stars or higher based on the most recent data
available for such year.
``(ii) Application of increases to low
enrollment plans.--
``(I) 2012.--
For <<NOTE: Determination.>> 2012, the
term `qualifying plan' includes an MA
plan that the Secretary determines is
not able to have a quality rating under
paragraph (4) because of low enrollment.
``(II) 2013 and subsequent years.--
For 2013 and subsequent years, for
purposes of determining whether an MA
plan with low enrollment (as defined by
the Secretary) is included as a
qualifying plan, the Secretary shall
establish a method to apply to MA plans
with low enrollment (as defined by the
Secretary) the computation of quality
rating and the rating system under
paragraph (4).
``(iii) Application of increases to new
plans.--
``(I) In general.--A new MA plan
that meets criteria specified by the
Secretary shall be treated as a
qualifying plan, except that in applying
paragraph (1), the applicable percentage
under subsection (n)(2)(B) shall be
increased--
``(aa) for 2012, by 1.5
percentage points;
``(bb) for 2013, by 2.5
percentage points; and
``(cc) for 2014 or a
subsequent year, by 3.5
percentage points.
``(II) New ma plan defined.--The
term `new MA plan' means, with respect
to a year, a plan offered by an
organization or sponsor that has not had
a contract as a Medicare Advantage
organization in the preceding 3-year
period.
``(B) Qualifying county.--The term `qualifying
county' means, for a year, a county--
``(i) that has an MA capitation rate that, in
2004, was based on the amount specified in
subsection (c)(1)(B) for a Metropolitan
Statistical Area with a population of more than
250,000;
``(ii) for which, as of December 2009, of the
Medicare Advantage eligible individuals residing
in the county at least 25 percent of such
individuals were enrolled in Medicare Advantage
plans; and
``(iii) that has per capita fee-for-service
spending that is lower than the national monthly
per capita cost for expenditures for individuals
enrolled under
[[Page 124 STAT.1045]]
the original medicare fee-for-service program for
the year.
``(4) Quality determinations for application of increase.--
``(A) Quality determination.--The quality rating for
a plan shall be determined according to a 5-star rating
system (based on the data collected under section
1852(e)).
``(B) Plans that failed to report.--An MA plan which
does not report data that enables the Secretary to rate
the plan for purposes of this paragraph shall be counted
as having a rating of fewer than 3.5 stars.
``(5) Exception for pace plans.--This subsection shall not
apply to payments to a PACE program under section 1894.''.
(4) Determination of medicare part d low-income benchmark
premium.--Section 1860D-14(b)(2)(B)(iii) of the Social Security
Act (42 U.S.C. 1395w-114(b)(2)(B)(iii)) as amended by section
3302 of the Patient Protection and Affordable Care Act, is
amended by striking ``, determined without regard to any
reduction in such premium as a result of any beneficiary rebate
under section 1854(b)(1)(C) or bonus payment under section
1853(n)'' and inserting the following: ``and determined before
the application of the monthly rebate computed under section
1854(b)(1)(C)(i) for that plan and year involved and, in the
case of a qualifying plan, before the application of the
increase under section 1853(o) for that plan and year
involved''.
(d) Beneficiary Rebates.--Section 1854(b)(1)(C) of such Act (42
U.S.C. 1395w-24(b)(1)(C)), as amended by section 3202(b) of the Patient
Protection and Affordable Care Act, is further amended--
(1) in clause (i), by inserting ``(or the applicable rebate
percentage specified in clause (iii) in the case of plan years
beginning on or after January 1, 2012)'' after ``75 percent'';
and
(2) by striking clause (iii), by redesignating clauses (iv)
and (v) as clauses (vii) and (viii), respectively, and by
inserting after clause (ii) the following new clauses:
``(iii) Applicable rebate percentage.--The
applicable rebate percentage specified in this
clause for a plan for a year, based on the system
under section 1853(o)(4)(A), is the sum of--
``(I) the product of the old phase-
in proportion for the year under clause
(iv) and 75 percent; and
``(II) the product of the new phase-
in proportion for the year under clause
(iv) and the final applicable rebate
percentage under clause (v).
``(iv) Old and new phase-in proportions.--For
purposes of clause (iv)--
``(I) for 2012, the old phase-in
proportion is \2/3\ and the new phase-in
proportion is \1/3\;
``(II) for 2013, the old phase-in
proportion is \1/3\ and the new phase-in
proportion is \2/3\; and
``(III) for 2014 and any subsequent
year, the old phase-in proportion is 0
and the new phase-in proportion is 1.
[[Page 124 STAT.1046]]
``(v) Final applicable rebate percentage.--
Subject to clause (vi), the final applicable
rebate percentage under this clause is--
``(I) in the case of a plan with a
quality rating under such system of at
least 4.5 stars, 70 percent;
``(II) in the case of a plan with a
quality rating under such system of at
least 3.5 stars and less than 4.5 stars,
65 percent; and
``(III) in the case of a plan with a
quality rating under such system of less
than 3.5 stars, 50 percent.
``(vi) Treatment of low enrollment and new
plans.--For purposes of clause (v)--
``(I) for 2012, in the case of a
plan described in subclause (I) of
subsection (o)(3)(A)(ii), the plan shall
be treated as having a rating of 4.5
stars; and
``(II) for 2012 or a subsequent
year, in the case of a new MA plan (as
defined under subclause (III) of
subsection (o)(3)(A)(iii)) that is
treated as a qualifying plan pursuant to
subclause (I) of such subsection, the
plan shall be treated as having a rating
of 3.5 stars.''.
(e) Coding Intensity Adjustment.--Section 1853(a)(1)(C)(ii) of such
Act (42 U.S.C. 1395w-23(a)(1)(C)(ii)) is amended--
(1) in the heading, by striking ``during phaseout of budget
neutrality factor'' and inserting ``of coding adjustment'';
(2) in the matter before subclause (I), by striking
``through 2010'' and inserting ``and each subsequent year''; and
(3) in subclause (II)--
(A) in the first sentence, by inserting ``annually''
before ``conduct an analysis'';
(B) in the second sentence--
(i) by inserting ``on a timely basis'' after
``are incorporated''; and
(ii) by striking ``only for 2008, 2009, and
2010'' and inserting ``for 2008 and subsequent
years'';
(C) in the third sentence, by inserting ``and
updated as appropriate'' before the period at the end;
and
(D) by adding at the end the following new
subclauses:
``(III) In calculating each year's
adjustment, the adjustment factor shall
be for 2014, not less than the
adjustment factor applied for 2010, plus
1.3 percentage points; for each of years
2015 through 2018, not less than the
adjustment factor applied for the
previous year, plus 0.25 percentage
point; and for 2019 and each subsequent
year, not less than 5.7 percent.
``(IV) <<NOTE: Applicability.>> Such
adjustment shall be applied to risk
scores until the Secretary implements
risk adjustment using Medicare Advantage
diagnostic, cost, and use data.''.
(f) Repeal of Comparative Cost Adjustment Program.--Section 1860C-1
of the Social Security Act (42 U.S.C. 1395w-29), as added by section
241(a) of the Medicare Prescription Drug,
[[Page 124 STAT.1047]]
Improvement, and Modernization Act of 2003 (Public Law 108-173), is
repealed.
SEC. 1103. SAVINGS FROM LIMITS ON MA PLAN ADMINISTRATIVE COSTS.
Section 1857(e) of the Social Security Act (42 U.S.C. 1395w-27(e))
is amended by adding at the end the following new paragraph:
``(4) Requirement <<NOTE: Time periods.>> for minimum
medical loss ratio.--If the
Secretary <<NOTE: Determination.>> determines for a contract
year (beginning with 2014) that an MA plan has failed to have a
medical loss ratio of at least .85--
``(A) the <<NOTE: Payments.>> MA plan shall remit to
the Secretary an amount equal to the product of--
``(i) the total revenue of the MA plan under
this part for the contract year; and
``(ii) the difference between .85 and the
medical loss ratio;
``(B) for 3 consecutive contract years, the
Secretary shall not permit the enrollment of new
enrollees under the plan for coverage during the second
succeeding contract year; and
``(C) the Secretary shall terminate the plan
contract if the plan fails to have such a medical loss
ratio for 5 consecutive contract years.''.
SEC. 1104. DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS.
Section 1886(r) of the Social Security Act (42 U.S.C. 1395ww(r)), as
added by section 3133 of the Patient Protection and Affordable Care Act
and as amended by section 10316 of such Act, is amended--
(1) in paragraph (1), by striking ``2015'' and inserting
``2014''; and
(2) in paragraph (2)--
(A) in the matter preceding subparagraph (A), by
striking ``2015'' and inserting ``2014'';
(B) in subparagraph (B)(i)--
(i) in the heading, by inserting ``2014,''
after ``years'';
(ii) in the matter preceding subclause (I), by
inserting ``2014,'' after ``each of fiscal
years'';
(iii) in subclause (I), by striking ``on such
Act'' and inserting ``on the Health Care and
Education Reconciliation Act of 2010''; and
(iv) in the matter following subclause (II),
by striking ``minus 1.5 percentage points'' and
inserting ``minus 0.1 percentage points for fiscal
year 2014 and minus 0.2 percentage points for each
of fiscal years 2015, 2016, and 2017''; and
(C) in subparagraph (B)(ii), in the matter following
subclause (II), by striking ``and, for each of 2018 and
2019, minus 1.5 percentage points'' and inserting
``minus 0.2 percentage points for each of fiscal years
2018 and 2019''.
SEC. 1105. MARKET BASKET UPDATES.
(a) IPPS.--Section 1886(b)(3)(B) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)), as amended by sections 3401(a)(4) and 10319(a)
of the Patient Protection and Affordable Care Act, is amended--
[[Page 124 STAT.1048]]
(1) in clause (xii)--
(A) by placing the subclause (II) (inserted by
section 10319(a)(3) of the Patient Protection and
Affordable Care Act) immediately after subclause (I)
and, in such subclause (II), by striking ``and'' at the
end; and
(B) by striking subclause (III) and inserting the
following:
``(III) for fiscal year 2014, by 0.3 percentage point;
``(IV) for each of fiscal years 2015 and 2016, by 0.2
percentage point; and
``(V) for each of fiscal years 2017, 2018, and 2019, by 0.75
percentage point.''; and
(2) by striking clause (xiii).
(b) Long-term Care Hospitals.--Section 1886(m)(4) of the Social
Security Act (42 U.S.C. 1395ww(m)(4)), as added by section 3401(c) of
the Patient Protection and Affordable Care Act and amended by section
10319(b) of such Act, is amended--
(1) in subparagraph (A)--
(A) in clause (iii), by striking ``and'' at the end;
and
(B) by striking clause (iv) and inserting the
following:
``(iv) for rate year 2014, 0.3 percentage
point;
``(v) for each of rate years 2015 and 2016,
0.2 percentage point; and
``(vi) for each of rate years 2017, 2018, and
2019, 0.75 percentage point.'';
(2) by striking subparagraph (B); and
(3) by striking ``(4) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(4) Other
adjustment.--For purposes'' (and redesignating clauses (i)
through (vi) as subparagraphs (A) through (F), respectively,
with appropriate indentation).
(c) Inpatient Rehabilitation Facilities.--Section 1886(j)(3)(D) of
the Social Security Act (42 U.S.C. 1395ww(j)(3)(D)), as added by section
3401(d)(2) of the Patient Protection and Affordable Care Act and amended
by section 10319(c) of such Act, is amended--
(1) in clause (i)--
(A) by placing the subclause (II) (inserted by
section 10319(c)(3) of the Patient Protection and
Affordable Care Act) immediately after subclause (I)
and, in such subclause (II), by striking ``and'' at the
end; and
(B) by striking subclause (III) and inserting the
following:
``(III) for fiscal year 2014, 0.3
percentage point;
``(IV) for each of fiscal years 2015
and 2016, 0.2 percentage point; and
``(V) for each of fiscal years 2017,
2018, and 2019, 0.75 percentage
point.'';
(2) by striking clause (ii); and
(3) by striking ``(D) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(D) Other
adjustment.--For purposes'' (and redesignating subclauses (I)
through (V) as clauses (i) through (v), respectively, with
appropriate indentation).
(d) Psychiatric Hospitals.--Section 1886(s)(3) of the Social
Security Act, as added by section 3401(f) of the Patient Protection
[[Page 124 STAT.1049]]
and Affordable Care Act and amended by section 10319(e) of such
Act, <<NOTE: Ante, p. 484, 949.>> is amended--
(1) in subparagraph (A)--
(A) by placing the clause (ii) (inserted by section
10319(e)(3) of the Patient Protection and Affordable
Care Act) immediately after clause (i) and, in such
clause (ii), by striking ``and'' at the end; and
(B) by striking clause (iii) and inserting the
following:
``(iii) for the rate year beginning in 2014,
0.3 percentage point;
``(iv) for each of the rate years beginning in
2015 and 2016, 0.2 percentage point; and
``(v) for each of the rate years beginning in
2017, 2018, and 2019, 0.75 percentage point.'';
(2) by striking subparagraph (B); and
(3) by striking ``(3) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(3) Other
adjustment.--For purposes'' (and redesignating clauses (i)
through (v) as subparagraphs (A) through (E), respectively, with
appropriate indentation).
(e) Outpatient Hospitals.--Section 1833(t)(3)(G) of the Social
Security Act (42 U.S.C. 1395l(t)(3)(G)), as added by section 3401(i)(2)
of the Patient Protection and Affordable Care Act and amended by section
10319(g) of such Act, is amended--
(1) in clause (i)--
(A) by placing the subclause (II) (inserted by
section 10319(g)(3) of the Patient Protection and
Affordable Care Act) immediately after subclause (I)
and, in such subclause (II), by striking ``and'' at the
end; and
(B) by striking subclause (III) and inserting the
following:
``(III) for 2014, 0.3 percentage
point;
``(IV) for each of 2015 and 2016,
0.2 percentage point; and
``(V) for each of 2017, 2018, and
2019, 0.75 percentage point.'';
(2) by striking clause (ii); and
(3) by striking ``(G) Other adjustment.--'' and all that
follows through ``For purposes'' and inserting ``(G) Other
adjustment.--For purposes'' (and redesignating subclauses (I)
through (V) as clauses (i) through (v), respectively, with
appropriate indentation).
SEC. 1106. PHYSICIAN OWNERSHIP-REFERRAL.
Section 1877(i) of the Social Security Act (42 U.S.C. 1395nn(i)), as
added by section 6001(a)(3) of the Patient Protection and Affordable
Care Act and as amended by section 10601(a) of such Act, is amended--
(1) in paragraph (1)(A)(i), by striking ``August 1, 2010''
and inserting ``December 31, 2010''; and
(2) in paragraph (3)--
(A) in subparagraph (A)(i), by striking ``an
applicable hospital (as defined in subparagraph (E))''
and inserting ``a hospital that is an applicable
hospital (as defined in subparagraph (E)) or is a high
Medicaid facility described in subparagraph (F)'';
[[Page 124 STAT.1050]]
(B) in subparagraph (C)(iii), by inserting after
``date of enactment of this subsection'' the following:
``(or, in the case of a hospital that did not have a
provider agreement in effect as of such date but does
have such an agreement in effect on December 31, 2010,
the effective date of such provider agreement)'';
(C) by redesignating subparagraphs (F) through (H)
as subparagraphs (G) through (I), respectively; and
(D) by inserting after subparagraph (E) the
following new subparagraph:
``(F) High medicaid facility described.--A high
Medicaid facility described in this subparagraph is a
hospital that--
``(i) is not the sole hospital in a county;
``(ii) with respect to each of the 3 most
recent years for which data are available, has an
annual percent of total inpatient admissions that
represent inpatient admissions under title XIX
that is estimated to be greater than such percent
with respect to such admissions for any other
hospital located in the county in which the
hospital is located; and
``(iii) meets the conditions described in
subparagraph (E)(iii).''.
SEC. 1107. PAYMENT FOR IMAGING SERVICES.
Section 1848 of the Social Security Act (42 U.S.C. 1395w-4), as
amended by section 3135(a) of the Patient Protection and Affordable Care
Act, is amended--
(1) in subsection (b)(4)--
(A) in subparagraph (B), by striking ``this
paragraph'' and inserting ``subparagraph (A)''; and
(B) by amending subparagraph (C) to read as follows:
``(C) Adjustment in imaging utilization rate.--With
respect to fee schedules established for 2011 and
subsequent years, in the methodology for determining
practice expense relative value units for expensive
diagnostic imaging equipment under the final rule
published by the Secretary in the Federal Register on
November 25, 2009 (42 CFR 410 et al.), the Secretary
shall use a 75 percent assumption instead of the
utilization rates otherwise established in such final
rule.''; and
(2) in subsection (c)(2)(B)(v), by striking subclauses
(III), (IV), and (V) and inserting the following new subclause:
``(III) Change in utilization rate
for certain imaging
services. <<NOTE: Effective date.>> --
Effective for fee schedules established
beginning with 2011, reduced
expenditures attributable to the change
in the utilization rate applicable to
2011, as described in subsection
(b)(4)(C).''.
SEC. 1108. <<NOTE: 42 USC 1395w-4 note.>> PE GPCI ADJUSTMENT FOR
2010.
<<NOTE: Effective date.>> Effective as if included in the enactment
of the Patient Protection and Affordable Care Act, section
1848(e)(1)(H)(i) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)(H)(i)), as added by section 3102(b)(2) of the Patient Protection
and Affordable Care Act, is amended by striking ``\3/4\'' and inserting
``\1/2\''.
[[Page 124 STAT.1051]]
SEC. 1109. <<NOTE: 42 USC 1395ww note.>> PAYMENT FOR QUALIFYING
HOSPITALS.
(a) In General.--From the amount available under subsection (b), the
Secretary of Health and Human Services shall provide for a payment to
qualifying hospitals (as defined in subsection (d)) for fiscal years
2011 and 2012 of the amount determined under subsection (c).
(b) Amounts Available.--There shall be available from the Federal
Hospital Insurance Trust Fund $400,000,000 for payments under this
section for fiscal years 2011 and 2012.
(c) Payment Amount.--The amount of payment under this section for a
qualifying hospital shall be determined, in a manner consistent with the
amount available under subsection (b), in proportion to the portion of
the amount of the aggregate payments under section 1886(d) of the Social
Security Act to the hospital for fiscal year 2009 bears to the sum of
all such payments to all qualifying hospitals for such fiscal year.
(d) Qualifying Hospital Defined.--In this section, the term
``qualifying hospital'' means a subsection (d) hospital (as defined for
purposes of section 1886(d) of the Social Security Act) that is located
in a county that ranks, based upon its ranking in age, sex, and race
adjusted spending for benefits under parts A and B under title XVIII of
such Act per enrollee, within the lowest quartile of such counties in
the United States.
Subtitle C--Medicaid
SEC. 1201. FEDERAL FUNDING FOR STATES.
Section 1905 of the Social Security Act (42 U.S.C. 1396d), as
amended by sections 2001(a)(3) and 10201(c) of the Patient Protection
and Affordable Care Act, is amended--
(1) in subsection (y)--
(A) by redesignating subclause (II) of paragraph
(1)(B)(ii) as paragraph (5) of subsection (z) and
realigning the left margins accordingly; and
(B) by striking paragraph (1) and inserting the
following:
``(1) Amount of increase.--Notwithstanding subsection (b),
the Federal medical assistance percentage for a State that is
one of the 50 States or the District of Columbia, with respect
to amounts expended by such State for medical assistance for
newly eligible individuals described in subclause (VIII) of
section 1902(a)(10)(A)(i), shall be equal to--
``(A) 100 percent for calendar quarters in 2014,
2015, and 2016;
``(B) 95 percent for calendar quarters in 2017;
``(C) 94 percent for calendar quarters in 2018;
``(D) 93 percent for calendar quarters in 2019; and
``(E) 90 percent for calendar quarters in 2020 and
each year thereafter.''; and
(2) in subsection (z)--
(A) in paragraph (1), by striking ``September 30,
2019'' and inserting ``December 31, 2015'' and by
striking ``subsection (y)(1)(B)(ii)(II)'' and inserting
``paragraph (3)'';
(B) by striking paragraphs (2) through (4) and
inserting the following:
[[Page 124 STAT.1052]]
``(2)(A) For calendar quarters in 2014 and each year
thereafter, the Federal medical assistance percentage otherwise
determined under subsection (b) for an expansion State described
in paragraph (3) with respect to medical assistance for
individuals described in section 1902(a)(10)(A)(i)(VIII) who are
nonpregnant childless adults with respect to whom the State may
require enrollment in benchmark coverage under section 1937
shall be equal to the percent specified in subparagraph (B)(i)
for such year.
``(B)(i) The percent specified in this subparagraph for a
State for a year is equal to the Federal medical assistance
percentage (as defined in the first sentence of subsection (b))
for the State increased by a number of percentage points equal
to the transition percentage (specified in clause (ii) for the
year) of the number of percentage points by which--
``(I) such Federal medical assistance percentage for
the State, is less than
``(II) the percent specified in subsection (y)(1)
for the year.
``(ii) The transition percentage specified in this clause
for--
``(I) 2014 is 50 percent;
``(II) 2015 is 60 percent;
``(III) 2016 is 70 percent;
``(IV) 2017 is 80 percent;
``(V) 2018 is 90 percent; and
``(VI) 2019 and each subsequent year is 100
percent.''; and
(C) by redesignating paragraph (5) (as added by
paragraph (1)(A) of this section) as paragraph (3),
realigning the left margins to align with paragraph (2),
and striking the heading and all that follows through
``a State is'' and inserting ``A State is''.
SEC. 1202. PAYMENTS TO PRIMARY CARE PHYSICIANS.
(a) In General.--
(1) Fee-for-service payments.--Section 1902 of the Social
Security Act (42 U.S.C. 1396a), as amended by section 2303(a)(2)
of the Patient Protection and Affordable Care Act, is amended--
(A) in subsection (a)(13)--
(i) by striking ``and'' at the end of
subparagraph (A);
(ii) by adding ``and'' at the end of
subparagraph (B); and
(iii) by adding at the end the following new
subparagraph:
``(C) payment for primary care services (as defined
in subsection (jj)) furnished in 2013 and 2014 by a
physician with a primary specialty designation of family
medicine, general internal medicine, or pediatric
medicine at a rate not less than 100 percent of the
payment rate that applies to such services and physician
under part B of title XVIII (or, if greater, the payment
rate that would be applicable under such part if the
conversion factor under section 1848(d) for the year
involved were the conversion factor under such section
for 2009);''; and
(B) by adding at the end the following new
subsection:
[[Page 124 STAT.1053]]
``(jj) Primary Care Services Defined.--For purposes of subsection
(a)(13)(C), the term `primary care services' means--
``(1) evaluation and management services that are procedure
codes (for services covered under title XVIII) for services in
the category designated Evaluation and Management in the
Healthcare Common Procedure Coding System (established by the
Secretary under section 1848(c)(5) as of December 31, 2009, and
as subsequently modified); and
``(2) services related to immunization administration for
vaccines and toxoids for which CPT codes 90465, 90466, 90467,
90468, 90471, 90472, 90473, or 90474 (as subsequently modified)
apply under such System.''.
(2) Under medicaid managed care plans.--Section 1932(f) of
such Act (42 U.S.C. 1396u-2(f)) is amended--
(A) in the heading, by adding at the end the
following: ``; Adequacy of Payment for Primary Care
Services''; and
(B) by inserting before the period at the end the
following: ``and, in the case of primary care services
described in section 1902(a)(13)(C), consistent with the
minimum payment rates specified in such section
(regardless of the manner in which such payments are
made, including in the form of capitation or partial
capitation)''.
(b) Increase in Payment Using Increased FMAP.--Section 1905 of the
Social Security Act, as amended by section 1004(b) of this Act and
section 10201(c)(6) of the Patient Protection and Affordable Care Act,
is amended by adding at the end the following new subsection:
``(dd) Increased FMAP for Additional Expenditures for Primary Care
Services.--Notwithstanding subsection (b), with respect to the portion
of the amounts expended for medical assistance for services described in
section 1902(a)(13)(C) furnished on or after January 1, 2013, and before
January 1, 2015, that is attributable to the amount by which the minimum
payment rate required under such section (or, by application, section
1932(f)) exceeds the payment rate applicable to such services under the
State plan as of July 1, 2009, the Federal medical assistance percentage
for a State that is one of the 50 States or the District of Columbia
shall be equal to 100 percent. The preceding sentence does not prohibit
the payment of Federal financial participation based on the Federal
medical assistance percentage for amounts in excess of those specified
in such sentence.''.
SEC. 1203. DISPROPORTIONATE SHARE HOSPITAL PAYMENTS.
(a) In General.--Section 1923(f) of the Social Security Act (42
U.S.C. 1396r-4(f)), as amended by sections 2551(a)(4) and 10201(e)(1) of
the Patient Protection and Affordable Care Act, is amended--
(1) in paragraph (6)(B)(iii), in the matter preceding
subclause (I), by striking ``or paragraph (7)''; and
(2) by striking paragraph (7) and inserting the following:
``(7) Medicaid dsh reductions.--
``(A) Reductions.--
``(i) In general.--For each of fiscal years
2014 through 2020 the Secretary shall effect the
following reductions:
[[Page 124 STAT.1054]]
``(I) Reduction in dsh allotments.--
The Secretary shall reduce DSH
allotments to States in the amount
specified under the DSH health reform
methodology under subparagraph (B) for
the State for the fiscal year.
``(II) Reductions in payments.--The
Secretary shall reduce payments to
States under section 1903(a) for each
calendar quarter in the fiscal year, in
the manner specified in clause (iii), in
an amount equal to \1/4\ of the DSH
allotment reduction under subclause (I)
for the State for the fiscal year.
``(ii) Aggregate reductions.--The aggregate
reductions in DSH allotments for all States under
clause (i)(I) shall be equal to--
``(I) $500,000,000 for fiscal year
2014;
``(II) $600,000,000 for fiscal year
2015;
``(III) $600,000,000 for fiscal year
2016;
``(IV) $1,800,000,000 for fiscal
year 2017;
``(V) $5,000,000,000 for fiscal year
2018;
``(VI) $5,600,000,000 for fiscal
year 2019; and
``(VII) $4,000,000,000 for fiscal
year 2020.
The Secretary shall distribute such aggregate
reductions among States in accordance with
subparagraph (B).
``(iii) Manner of payment reduction.--The
amount of the payment reduction under clause
(i)(II) for a State for a quarter shall be deemed
an overpayment to the State under this title to be
disallowed against the State's regular quarterly
draw for all spending under section 1903(d)(2).
Such a disallowance is not subject to a
reconsideration under subsections (d) and (e) of
section 1116.
``(iv) Definition.--In this paragraph, the
term `State' means the 50 States and the District
of Columbia.
``(B) DSH health reform methodology.--The Secretary
shall carry out subparagraph (A) through use of a DSH
Health Reform methodology that meets the following
requirements:
``(i) The methodology imposes the largest
percentage reductions on the States that--
``(I) have the lowest percentages of
uninsured individuals (determined on the
basis of data from the Bureau of the
Census, audited hospital cost reports,
and other information likely to yield
accurate data) during the most recent
year for which such data are available;
or
``(II) do not target their DSH
payments on--
``(aa) hospitals with high
volumes of Medicaid inpatients
(as defined in subsection
(b)(1)(A)); and
``(bb) hospitals that have
high levels of uncompensated
care (excluding bad debt).
``(ii) The methodology imposes a smaller
percentage reduction on low DSH States described
in paragraph (5)(B).
[[Page 124 STAT.1055]]
``(iii) The methodology takes into account the
extent to which the DSH allotment for a State was
included in the budget neutrality calculation for
a coverage expansion approved under section 1115
as of July 31, 2009.''.
(b) Extension of DSH Allotment.--Section 1923(f)(6)(A) of the Social
Security Act (42 U.S.C. 1396r-4(f)(6)(A)) is amended by adding at the
end the following:
``(v) Allotment for 2d, 3rd, and 4th quarters
of fiscal year 2012 and for fiscal year 2013.--
Notwithstanding the table set forth in paragraph
(2):
``(I) 2d, 3rd, and 4th quarters of
fiscal year 2012.--In the case of a
State that has a DSH allotment of $0 for
the 2d, 3rd, and 4th quarters of fiscal
year 2012, the DSH allotment shall be
$47,200,000 for such quarters.
``(II) Fiscal year 2013.--In the
case of a State that has a DSH allotment
of $0 for fiscal year 2013, the DSH
allotment shall be $53,100,000 for such
fiscal year.''.
SEC. 1204. FUNDING FOR THE TERRITORIES.
(a) In General.--Part III of subtitle D of title I of the Patient
Protection and Affordable Care Act, as amended by section 10104(m) of
such Act, is amended by inserting after section 1322 the following
section:
``SEC. 1323. <<NOTE: 42 USC 18043.>> FUNDING FOR THE TERRITORIES.
``(a) In General.--A territory that--
``(1) elects consistent with subsection (b) to establish an
Exchange in accordance with part II of this subtitle and
establishes such an Exchange in accordance with such part shall
be treated as a State for purposes of such part and shall be
entitled to payment from the amount allocated to the territory
under subsection (c); or
``(2) does not make such election shall be entitled to an
increase in the dollar limitation applicable to the territory
under subsections (f) and (g) of section 1108 of the Social
Security Act (42 U.S.C. 1308) for such period in such amount for
such territory and such increase shall not be taken into account
in computing any other amount under such subsections.
``(b) Terms and Conditions.--An election under subsection (a)(1)
shall--
``(1) <<NOTE: Deadline.>> not be effective unless the
election is consistent with section 1321 and is received not
later than October 1, 2013; and
``(2) <<NOTE: Contracts.>> be contingent upon entering into
an agreement between the territory and the Secretary that
requires that--
``(A) funds provided under the agreement shall be
used only to provide premium and cost-sharing assistance
to residents of the territory obtaining health insurance
coverage through the Exchange; and
``(B) the premium and cost-sharing assistance
provided under such agreement shall be structured in
such a manner so as to prevent any gap in assistance for
individuals between the income level at which medical
assistance is available through the territory's Medicaid
plan under title XIX of the Social Security Act and the
income level at
[[Page 124 STAT.1056]]
which premium and cost-sharing assistance is available
under the agreement.
``(c) Appropriation and Allocation.--
``(1) <<NOTE: Time period.>> Appropriation.--Out of any
funds in the Treasury not otherwise appropriated, there is
appropriated for purposes of payment pursuant to subsection (a)
$1,000,000,000, to be available during the period beginning with
2014 and ending with 2019.
``(2) Allocation.--The Secretary shall allocate the amount
appropriated under paragraph (1) among the territories for
purposes of carrying out this section as follows:
``(A) For Puerto Rico, $925,000,000.
``(B) For another territory, the portion of
$75,000,000 specified by the Secretary.''.
(b) Medicaid Funding.--
(1) Increase in funding caps.--Section 1108(g) of the Social
Security Act (42 U.S.C. 1308(g)), as amended by section 2005(a)
of the Patient Protection and Affordable Care Act, is amended--
(A) in paragraph (2), by inserting ``and section
1323(a)(2) of the Patient Protection and Affordable Care
Act'' after ``subject to''; and
(B) by striking paragraph (5) and inserting the
following:
``(5) Additional increase.-- <<NOTE: Time period.>> The
Secretary shall increase the amounts otherwise determined under
this subsection for Puerto Rico, the Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa (after the
application of subsection (f) and the preceding paragraphs of
this subsection) for the period beginning July 1, 2011, and
ending on September 30, 2019, by such amounts that the total
additional payments under title XIX to such territories equals
$6,300,000,000 for such period. The Secretary shall increase
such amounts in proportion to the amounts applicable to such
territories under this subsection and subsection (f) on the date
of enactment of this paragraph.''.
(2) Disregard of payments; increased fmap.--Section 2005 of
the Patient Protection and Affordable Care Act <<NOTE: Ante, p.
283.>> is amended--
(A) <<NOTE: Applicability.>> by repealing subsection
(b) (and the amendments made by that subsection) and
section 1108(g)(4) of the Social Security Act shall be
applied as if such amendments had never been enacted;
and
(B) in subsection (c)(2), by striking ``January''
and inserting ``July''.
SEC. 1205. DELAY IN COMMUNITY FIRST CHOICE OPTION.
Section 1915(k)(1) of the Social Security Act (42 U.S.C. 1396n(k)),
as added by section 2401 of the Patient Protection and Affordable Care
Act, is amended by striking ``October 1, 2010'' and inserting ``October
1, 2011''.
SEC. 1206. DRUG REBATES FOR NEW FORMULATIONS OF EXISTING DRUGS.
(a) Treatment of New Formulations.--Subparagraph (C) of section
1927(c)(2) of the Social Security Act (42 U.S.C. 1396r-8(c)(2)), as
added by section 2501(d) of the Patient Protection and Affordable Care
Act, is amended to read as follows:
[[Page 124 STAT.1057]]
``(C) Treatment of new formulations.--In the case of
a drug that is a line extension of a single source drug
or an innovator multiple source drug that is an oral
solid dosage form, the rebate obligation with respect to
such drug under this section shall be the amount
computed under this section for such new drug or, if
greater, the product of--
``(i) the average manufacturer price of the
line extension of a single source drug or an
innovator multiple source drug that is an oral
solid dosage form;
``(ii) the highest additional rebate
(calculated as a percentage of average
manufacturer price) under this section for any
strength of the original single source drug or
innovator multiple source drug; and
``(iii) the total number of units of each
dosage form and strength of the line extension
product paid for under the State plan in the
rebate period (as reported by the State).
<<NOTE: Definition.>> In this subparagraph, the term
`line extension' means, with respect to a drug, a new
formulation of the drug, such as an extended release
formulation.''.
(b) <<NOTE: 42 USC 1396r-8 note.>> Effective Date.--The amendment
made by subsection (a) shall take effect as if included in the enactment
of the Patient Protection and Affordable Care Act.
Subtitle D--Reducing Fraud, Waste, and Abuse
SEC. 1301. COMMUNITY MENTAL HEALTH CENTERS.
(a) In General.--Section 1861(ff)(3)(B) of the Social Security Act
(42 U.S.C. 1395x(ff)(3)(B)) is amended--
(1) in clause (ii), by striking ``and'' at the end;
(2) by redesignating clause (iii) as clause (iv); and
(3) by inserting after clause (ii) the following:
``(iii) provides at least 40 percent of its services to
individuals who are not eligible for benefits under this title;
and''.
(b) Restriction.--Section 1861(ff)(3)(A) of such Act (42 U.S.C.
1395x(ff)(3)(A)) is amended by inserting ``other than in an individual's
home or in an inpatient or residential setting'' before the period.
(c) <<NOTE: Applicability. 42 USC 1395x note.>> Effective Date.--The
amendments made by this section shall apply to items and services
furnished on or after the first day of the first calendar quarter that
begins at least 12 months after the date of the enactment of this Act.
SEC. 1302. MEDICARE PREPAYMENT MEDICAL REVIEW LIMITATIONS.
Section 1874A(h) of the Social Security Act <<NOTE: 42 USC 1395kk-
1.>> (42 U.S.C. 1395w-3a(h)) is repealed.
SEC. 1303. FUNDING TO FIGHT FRAUD, WASTE, AND ABUSE.
(a) Funding to Fight Fraud, Waste, and Abuse.--
(1) In general.--Section 1817(k) of the Social Security Act
42 U.S.C. 1395i(k)), as amended by section 6402(i) of the
Patient Protection and Affordable Care Act, is further amended--
(A) by adding at the end the following new
paragraph:
[[Page 124 STAT.1058]]
``(8) Additional funding.--
``(A) In general.--In addition to the funds
otherwise appropriated to the Account from the Trust
Fund under paragraphs (3)(C) and (4)(A) and for purposes
described in paragraphs (3)(C) and (4)(A), there are
hereby appropriated to such Account from such Trust Fund
the following additional amounts:
``(i) For fiscal year 2011, $95,000,000.
``(ii) For fiscal year 2012, $55,000,000.
``(iii) For each of fiscal years 2013 and
2014, $30,000,000.
``(iv) For each of fiscal years 2015 and 2016,
$20,000,000.
``(B) Allocation.--The funds appropriated under this
paragraph shall be allocated in the same proportion as
the total funding appropriated with respect to
paragraphs (3)(A) and (4)(A) was allocated with respect
to fiscal year 2010, and shall be available without
further appropriation until expended.''; and
(B) in paragraph (4)(A), by inserting ``for
activities described in paragraph (3)(C) and'' after
``necessary''.
(b) Medicaid Integrity Program.--Section 1936(e)(1) of such Act (42
U.S.C. 1396-u6(e)(1)) <<NOTE: 42 USC 1396u-6.>> is amended--
(1) in subparagraph (B), by striking at the end ``and'';
(2) in subparagraph (C)--
(A) by striking ``for each fiscal year thereafter''
and inserting ``for each of fiscal years 2009 and
2010''; and
(B) by striking the period and inserting ``; and'';
and
(3) by adding at the end the following new subparagraph:
``(D) for each fiscal year after fiscal year 2010,
the amount appropriated under this paragraph for the
previous fiscal year, increased by the percentage
increase in the consumer price index for all urban
consumers (all items; United States city average) over
the previous year.''.
SEC. 1304. 90-DAY PERIOD OF ENHANCED OVERSIGHT FOR INITIAL CLAIMS
OF DME SUPPLIERS.
Section 1866(j), as amended by section 6401 of the Patient
Protection and Affordable Care Act, <<NOTE: 42 USC 1395cc.>> is further
amended--
(1) by redesignating paragraphs (4) through (7) as
paragraphs (5) through (8), respectively; and
(2) by inserting after paragraph (3) the following new
paragraph:
``(4) 90-day period of enhanced oversight for initial claims
of dme suppliers. <<NOTE: Determination.>> --For periods
beginning after January 1, 2011, if the Secretary determines
that there is a significant risk of fraudulent activity among
suppliers of durable medical equipment, in the case of a
supplier of durable medical equipment who is within a category
or geographic area under title XVIII identified pursuant to such
determination and who is initially enrolling under such title,
the Secretary shall, notwithstanding sections 1816(c), 1842(c),
and 1869(a)(2), withhold payment under such title with respect
to durable medical equipment furnished by such supplier during
the 90-day period beginning on the date of the first submission
of a claim under such title for durable medical equipment
furnished by such supplier.''.
[[Page 124 STAT.1059]]
Subtitle E--Provisions Relating to Revenue
SEC. 1401. HIGH-COST PLAN EXCISE TAX.
(a) In General.--Section 4980I of the Internal Revenue Code of 1986,
as added by section 9001 of the Patient Protection and Affordable Care
Act and amended by section 10901 of such Act, is <<NOTE: Ante, p. 848,
1015.>> amended--
(1) in subsection (b)(3)(B)--
(A) by striking ``The annual'' and inserting the
following:
``(i) In general.--Except as provided in
clause (ii), the annual''; and
(B) by adding at the end the following new clause:
``(ii) Multiemployer plan coverage.--Any
coverage provided under a multiemployer plan (as
defined in section 414(f)) shall be treated as
coverage other than self-only coverage.'';
(2) in subsection (b)(3)(C)--
(A) by striking ``Except as provided in subparagraph
(D)--'';
(B) in clause (i)--
(i) by striking ``2013'' each place it appears
in the heading and the text and inserting
``2018'';
(ii) by striking ``$8,500'' in subclause (I)
and inserting ``$10,200 multiplied by the health
cost adjustment percentage (determined by only
taking into account self-only coverage)''; and
(iii) by striking ``$23,000'' in subclause
(II) and inserting ``$27,500 multiplied by the
health cost adjustment percentage (determined by
only taking into account coverage other than self-
only coverage)'';
(C) by redesignating clauses (ii) and (iii) as
clauses (iv) and (v), respectively, and by inserting
after clause (i) the following new clauses:
``(ii) Health cost adjustment percentage.--For
purposes of clause (i), the health cost adjustment
percentage is equal to 100 percent plus the excess
(if any) of--
``(I) the percentage by which the
per employee cost for providing coverage
under the Blue Cross/Blue Shield
standard benefit option under the
Federal Employees Health Benefits Plan
for plan year 2018 (determined by using
the benefit package for such coverage in
2010) exceeds such cost for plan year
2010, over
``(II) 55 percent.
``(iii) Age and gender adjustment.--
``(I) In general.--The amount
determined under subclause (I) or (II)
of clause (i), whichever is applicable,
for any taxable period shall be
increased by the amount determined under
subclause (II).
``(II) Amount determined.--The
amount determined under this subclause
is an amount equal to the excess (if
any) of--
[[Page 124 STAT.1060]]
``(aa) the premium cost of
the Blue Cross/Blue Shield
standard benefit option under
the Federal Employees Health
Benefits Plan for the type of
coverage provided such
individual in such taxable
period if priced for the age and
gender characteristics of all
employees of the individual's
employer, over
``(bb) that premium cost for
the provision of such coverage
under such option in such
taxable period if priced for the
age and gender characteristics
of the national workforce.''.
(D) in clause (iv), as redesignated by subparagraph
(C)--
(i) by inserting ``covered by the plan'' after
``whose employees''; and
(ii) by striking subclauses (I) and (II) and
inserting the following:
``(I) the dollar amount in clause
(i)(I) shall be increased by $1,650, and
``(II) the dollar amount in clause
(i)(II) shall be increased by $3,450,'',
and
(E) in clause (v), as redesignated by subparagraph
(C)--
(i) by striking ``2013'' and inserting
``2018'';
(ii) by striking ``clauses (i) and (ii)'' and
inserting ``clauses (i) (after the application of
clause (ii)) and (iv)''; and
(iii) by inserting ``in the case of
determinations for calendar years beginning before
2020'' after ``1 percentage point'' in subclause
(II) thereof;
(3) by striking subparagraph (D) of subsection (b)(3);
(4) in subsection (d)(1)(B), by redesignating clause (ii) as
clause (iii) and by inserting after clause (i) the following new
clause:
``(ii) any coverage under a separate policy,
certificate, or contract of insurance which
provides benefits substantially all of which are
for treatment of the mouth (including any organ or
structure within the mouth) or for treatment of
the eye, or''; and
(5) in subsection (d), by adding at the end the following
new paragraph:
``(3) Employee.--The term `employee' includes any former
employee, surviving spouse, or other primary insured
individual.''.
(b) Effective Dates.--
(1) Section 9001(c) of the Patient Protection and Affordable
Care Act <<NOTE: Ante, p. 853.>> is amended by striking ``2012''
and inserting ``2017''.
(2) Section 10901(c) of the Patient Protection and
Affordable Care Act is <<NOTE: Ante, p. 1016.>> amended by
striking ``2012'' and inserting ``2017''.
SEC. 1402. UNEARNED INCOME MEDICARE CONTRIBUTION.
(a) Investment Income.--
(1) In general.--Subtitle A of the Internal Revenue Code of
1986 is amended by inserting after chapter 2 the following new
chapter:
[[Page 124 STAT.1061]]
``CHAPTER 2A--UNEARNED INCOME MEDICARE CONTRIBUTION
``Sec. 1411. Imposition of tax.
``SEC. 1411. <<NOTE: Definitions. 26 USC 1411.>> IMPOSITION OF
TAX.
``(a) In General.--Except as provided in subsection (e)--
``(1) Application to individuals.--In the case of an
individual, there is hereby imposed (in addition to any other
tax imposed by this subtitle) for each taxable year a tax equal
to 3.8 percent of the lesser of--
``(A) net investment income for such taxable year,
or
``(B) the excess (if any) of--
``(i) the modified adjusted gross income for
such taxable year, over
``(ii) the threshold amount.
``(2) Application to estates and trusts.--In the case of an
estate or trust, there is hereby imposed (in addition to any
other tax imposed by this subtitle) for each taxable year a tax
of 3.8 percent of the lesser of--
``(A) the undistributed net investment income for
such taxable year, or
``(B) the excess (if any) of--
``(i) the adjusted gross income (as defined in
section 67(e)) for such taxable year, over
``(ii) the dollar amount at which the highest
tax bracket in section 1(e) begins for such
taxable year.
``(b) Threshold Amount.--For purposes of this chapter, the term
`threshold amount' means--
``(1) in the case of a taxpayer making a joint return under
section 6013 or a surviving spouse (as defined in section 2(a)),
$250,000,
``(2) in the case of a married taxpayer (as defined in
section 7703) filing a separate return, \1/2\ of the dollar
amount determined under paragraph (1), and
``(3) in any other case, $200,000.
``(c) Net Investment Income.--For purposes of this chapter--
``(1) In general.--The term `net investment income' means
the excess (if any) of--
``(A) the sum of--
``(i) gross income from interest, dividends,
annuities, royalties, and rents, other than such
income which is derived in the ordinary course of
a trade or business not described in paragraph
(2),
``(ii) other gross income derived from a trade
or business described in paragraph (2), and
``(iii) net gain (to the extent taken into
account in computing taxable income) attributable
to the disposition of property other than property
held in a trade or business not described in
paragraph (2), over
``(B) the deductions allowed by this subtitle which
are properly allocable to such gross income or net gain.
``(2) Trades and businesses to which tax applies.--A trade
or business is described in this paragraph if such trade or
business is--
``(A) a passive activity (within the meaning of
section 469) with respect to the taxpayer, or
[[Page 124 STAT.1062]]
``(B) a trade or business of trading in financial
instruments or commodities (as defined in section
475(e)(2)).
``(3) Income on investment of working capital subject to
tax.-- <<NOTE: Applicability.>> A rule similar to the rule of
section 469(e)(1)(B) shall apply for purposes of this
subsection.
``(4) Exception for certain active interests in partnerships
and s corporations.--In the case of a disposition of an interest
in a partnership or S corporation--
``(A) gain from such disposition shall be taken into
account under clause (iii) of paragraph (1)(A) only to
the extent of the net gain which would be so taken into
account by the transferor if all property of the
partnership or S corporation were sold for fair market
value immediately before the disposition of such
interest, and
``(B) <<NOTE: Applicability.>> a rule similar to the
rule of subparagraph (A) shall apply to a loss from such
disposition.
``(5) Exception for distributions from qualified plans.--The
term `net investment income' shall not include any distribution
from a plan or arrangement described in section 401(a), 403(a),
403(b), 408, 408A, or 457(b).
``(6) Special rule.--Net investment income shall not include
any item taken into account in determining self-employment
income for such taxable year on which a tax is imposed by
section 1401(b).
``(d) Modified Adjusted Gross Income.--For purposes of this chapter,
the term `modified adjusted gross income' means adjusted gross income
increased by the excess of--
``(1) the amount excluded from gross income under section
911(a)(1), over
``(2) the amount of any deductions (taken into account in
computing adjusted gross income) or exclusions disallowed under
section 911(d)(6) with respect to the amounts described in
paragraph (1).
``(e) Nonapplication of Section.--This section shall not apply to--
``(1) a nonresident alien, or
``(2) a trust all of the unexpired interests in which are
devoted to one or more of the purposes described in section
170(c)(2)(B).''.
(2) Estimated taxes.--Section 6654 of the Internal Revenue
Code of 1986 <<NOTE: 26 USC 6654.>> is amended--
(A) in subsection (a), by striking ``and the tax
under chapter 2'' and inserting ``the tax under chapter
2, and the tax under chapter 2A''; and
(B) in subsection (f)--
(i) by striking ``minus'' at the end of
paragraph (2) and inserting ``plus''; and
(ii) by redesignating paragraph (3) as
paragraph (4) and inserting after paragraph (2)
the following new paragraph:
``(3) the taxes imposed by chapter 2A, minus''.
(3) Clerical amendment.--The table of chapters for subtitle
A of chapter 1 of the Internal Revenue Code of 1986 is amended
by inserting after the item relating to chapter 2 the following
new item:
[[Page 124 STAT.1063]]
``Chapter 2A--Unearned Income Medicare Contribution''.
(4) <<NOTE: 26 USC 1411 note.>> Effective dates.--The
amendments made by this subsection shall apply to taxable years
beginning after December 31, 2012.
(b) Earned Income.--
(1) Threshold.--
(A) FICA.--Paragraph (2) of section 3101(b) of the
Internal Revenue Code of 1986, as added by section 9015
of the Patient Protection and Affordable Care Act and
amended by section 10906 of such Act, <<NOTE: 26 USC
3101.>> is amended by striking ``and'' at the end of
subparagraph (A), by redesignating subparagraph (B) as
subparagraph (C), and by inserting after subparagraph
(A) the following new subparagraph:
``(B) in the case of a married taxpayer (as defined
in section 7703) filing a separate return, \1/2\ of the
dollar amount determined under subparagraph (A), and''.
(B) SECA.--Section 1401(b)(2) of the Internal
Revenue Code of 1986, as added by section 9015 of the
Patient Protection and Affordable Care Act and amended
by section 10906 of such Act, <<NOTE: 26 USC 1401.>> is
amended--
(i) in subparagraph (A), by striking ``and''
at the end of clause (i), by redesignating clause
(ii) as clause (iii), and by inserting after
clause (i) the following new clause:
``(ii) in the case of a married taxpayer (as
defined in section 7703) filing a separate return,
\1/2\ of the dollar amount determined under clause
(i), and''; and
(ii) in subparagraph (B), by striking ``under
clauses (i) and (ii)'' and inserting ``under
clause (i), (ii), or (iii) (whichever is
applicable)''.
(2) Estimated taxes.--Section 6654 of the Internal Revenue
Code of 1986 <<NOTE: 26 USC 6654.>> is amended by redesignating
subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
``(m) Special Rule for Medicare Tax.--For purposes of this section,
the tax imposed under section 3101(b)(2) (to the extent not withheld)
shall be treated as a tax imposed under chapter 2.''.
(3) <<NOTE: Applicability. 26 USC 1401 note.>> Effective
date.--The amendments made by this subsection shall apply with
respect to remuneration received, and taxable years beginning
after, December 31, 2012.
SEC. 1403. DELAY OF LIMITATION ON HEALTH FLEXIBLE SPENDING
ARRANGEMENTS UNDER CAFETERIA PLANS.
(a) In General.--Section 10902(b) of the Patient Protection and
Affordable Care Act <<NOTE: Ante, p. 1016.>> is amended by striking
``December 31, 2010'' and inserting ``December 31, 2012''.
(b) Inflation Adjustment.--Paragraph (2) of section 125(i) of the
Internal Revenue Code of 1986, as added by section 9005 of the Patient
Protection and Affordable Care Act and amended by section 10902 of such
Act, <<NOTE: Ante, p. 855, 1016.>> is amended--
(1) in the matter preceding subparagraph (A), by striking
``December 31, 2011'' and inserting ``December 31, 2013''; and
(2) in subparagraph (B), by striking ``2010'' and inserting
``2012''.
[[Page 124 STAT.1064]]
SEC. 1404. BRAND NAME PHARMACEUTICALS.
(a) In General.--Section 9008 of the Patient Protection and
Affordable Care <<NOTE: Ante, p. 859.>> Act is amended--
(1) in subsection (a)(1), by striking ``2009'' and inserting
``2010'';
(2) in subsection (b)--
(A) by striking ``$2,300,000,000'' in paragraph (1)
and inserting ``the applicable amount''; and
(B) by adding at the end the following new
paragraph:
``(4) Applicable amount.--For purposes of paragraph (1), the
applicable amount shall be determined in accordance with the
following table:
``Calendar year Applicable amount
2011................................. $2,500,000,000
2012................................. $2,800,000,000
2013................................. $2,800,000,000
2014................................. $3,000,000,000
2015................................. $3,000,000,000
2016................................. $3,000,000,000
2017................................. $4,000,000,000
2018................................. $4,100,000,000
2019 and thereafter.................. $2,800,000,000.'';
(3) in subsection (d), by adding at the end the following
new paragraph:
``(3) Joint and several liability.--If more than one person
is liable for payment of the fee under subsection (a) with
respect to a single covered entity by reason of the application
of paragraph (2), all such persons shall be jointly and
severally liable for payment of such fee.''; and
(4) by striking subsection (j) and inserting the following
new subsection:
``(j) Effective Date.--This section shall apply to calendar years
beginning after December 31, 2010.''.
(b) <<NOTE: 26 USC 4001 note prec.>> Effective Date.--The amendments
made by this section shall take effect as if included in section 9008 of
the Patient Protection and Affordable Care Act.
SEC. 1405. EXCISE TAX ON MEDICAL DEVICE MANUFACTURERS.
(a) In General.--Chapter 32 of the Internal Revenue Code of 1986 is
amended--
(1) by inserting after subchapter D the following new
subchapter:
``Subchapter E--Medical Devices
``Sec. 4191. <<NOTE: 26 USC 4191.>> Medical devices.
``SEC. 4191. MEDICAL DEVICES.
``(a) In General.--There is hereby imposed on the sale of any
taxable medical device by the manufacturer, producer, or importer a tax
equal to 2.3 percent of the price for which so sold.
``(b) Taxable Medical Device.--For purposes of this section--
``(1) In general.-- <<NOTE: Definition.>> The term `taxable
medical device' means any device (as defined in section 201(h)
of the Federal Food, Drug, and Cosmetic Act) intended for
humans.
``(2) Exemptions.--Such term shall not include--
[[Page 124 STAT.1065]]
``(A) eyeglasses,
``(B) contact lenses,
``(C) hearing aids, and
``(D) any other medical device determined by the
Secretary to be of a type which is generally purchased
by the general public at retail for individual use.'',
and
(2) by inserting after the item relating to subchapter D in
the table of subchapters for such chapter the following new
item:
``subchapter e. medical devices''.
(b) Certain Exemptions Not to Apply.--
(1) Section 4221(a) of the Internal Revenue Code of 1986
is <<NOTE: 26 USC 4221.>> amended by adding at the end the
following new sentence: ``In the case of the tax imposed by
section 4191, paragraphs (3), (4), (5), and (6) shall not
apply.''.
(2) Section 6416(b)(2) of such Code <<NOTE: 26 USC
6416.>> is amended by adding at the end the following: ``In the
case of the tax imposed by section 4191, subparagraphs (B), (C),
(D), and (E) shall not apply.''.
(c) <<NOTE: 26 USC 4191 note.>> Effective Date.--The amendments made
by this section shall apply to sales after December 31, 2012.
(d) Repeal of Section 9009 of the Patient Protection and Affordable
Care Act.-- <<NOTE: Effective date.>> Section 9009 of the Patient
Protection and Affordable Care Act, as amended by section 10904 of such
Act, <<NOTE: Ante, p. 862, 1016.>> is repealed effective as of the date
of enactment of that Act.
SEC. 1406. HEALTH INSURANCE PROVIDERS.
(a) In General.--Section 9010 of the Patient Protection and
Affordable Care Act, as amended by section 10905 of such Act,
is <<NOTE: Ante, p. 865, 1017.>> amended--
(1) in subsection (a)(1), by striking ``2010'' and inserting
``2013'';
(2) in subsection (b)(2)--
(A) by striking ``For purposes of paragraph (1), the
net premiums'' and inserting ``For purposes of paragraph
(1)--
``(A) In general.--The net premiums''; and
(B) by adding at the end the following subparagraph:
``(B) Partial exclusion for certain exempt
activities.--After the application of subparagraph (A),
only 50 percent of the remaining net premiums written
with respect to health insurance for any United States
health risk that are attributable to the activities
(other than activities of an unrelated trade or business
as defined in section 513 of the Internal Revenue Code
of 1986) of any covered entity qualifying under
paragraph (3), (4), (26), or (29) of section 501(c) of
such Code and exempt from tax under section 501(a) of
such Code shall be taken into account.'';
(3) in subsection (c)--
(A) by inserting ``during the calendar year in which
the fee under this section is due'' in paragraph (1)
after ``risk'';
(B) in paragraph (2), by striking subparagraphs (C),
(D), and (E) and inserting the following new
subparagraphs:
``(C) any entity--
[[Page 124 STAT.1066]]
``(i) which is incorporated as a nonprofit
corporation under a State law,
``(ii) no part of the net earnings of which
inures to the benefit of any private shareholder
or individual, no substantial part of the
activities of which is carrying on propaganda, or
otherwise attempting, to influence legislation
(except as otherwise provided in section 501(h) of
the Internal Revenue Code of 1986), and which does
not participate in, or intervene in (including the
publishing or distributing of statements), any
political campaign on behalf of (or in opposition
to) any candidate for public office, and
``(iii) more than 80 percent of the gross
revenues of which is received from government
programs that target low-income, elderly, or
disabled populations under titles XVIII, XIX, and
XXI of the Social Security Act, and
``(D) any entity which is described in section
501(c)(9) of such Code and which is established by an
entity (other than by an employer or employers) for
purposes of providing health care benefits.'';
(C) in paragraph (3)(A), by striking ``subparagraph
(C)(i)(I), (D)(i)(I), or (E)(i)'' and inserting
``subparagraph (C) or (D)''; and
(D) by adding at the end the following new
paragraph:
``(4) Joint and several liability.--If more than one person
is liable for payment of the fee under subsection (a) with
respect to a single covered entity by reason of the application
of paragraph (3), all such persons shall be jointly and
severally liable for payment of such fee.'';
(4) by striking subsection (e) and inserting the following:
``(e) Applicable Amount.--For purposes of subsection (b)(1)--
``(1) Years before 2019.-- <<NOTE: Determination.>> In the
case of calendar years beginning before 2019, the applicable
amount shall be determined in accordance with the following
table:
``Calendar year Applicable amount
2014................................. $8,000,000,000
2015................................. $11,300,000,000
2016................................. $11,300,000,000
2017................................. $13,900,000,000
2018................................. $14,300,000,000.
``(2) Years after 2018.--In the case of any calendar year
beginning after 2018, the applicable amount shall be the
applicable amount for the preceding calendar year increased by
the rate of premium growth (within the meaning of section
36B(b)(3)(A)(ii) of the Internal Revenue Code of 1986) for such
preceding calendar year.'';
(5) in subsection (g), by adding at the end the following
new paragraphs:
``(3) Accuracy-related penalty.--
``(A) In general.--In the case of any understatement
of a covered entity's net premiums written with respect
to health insurance for any United States health risk
for any calendar year, there shall be paid by the
covered entity making such understatement, an amount
equal to the excess of--
[[Page 124 STAT.1067]]
``(i) the amount of the covered entity's fee
under this section for the calendar year the
Secretary determines should have been paid in the
absence of any such understatement, over
``(ii) the amount of such fee the Secretary
determined based on such understatement.
``(B) Understatement.--For purposes of this
paragraph, an understatement of a covered entity's net
premiums written with respect to health insurance for
any United States health risk for any calendar year is
the difference between the amount of such net premiums
written as reported on the return filed by the covered
entity under paragraph (1) and the amount of such net
premiums written that should have been reported on such
return.
``(C) Treatment of penalty.--The penalty imposed
under subparagraph (A) shall be subject to the
provisions of subtitle F of the Internal Revenue Code of
1986 that apply to assessable penalties imposed under
chapter 68 of such Code.
``(4) Treatment of information.--Section 6103 of the
Internal Revenue Code of 1986 shall not apply to any information
reported under this subsection.''; and
(6) by striking subsection (j) and inserting the following
new subsection:
``(j) Effective Date.--This section shall apply to calendar years
beginning after December 31, 2013.''.
(b) <<NOTE: 26 USC 4001 note prec.>> Effective Date.--The amendments
made by this section shall take effect as if included in section 9010 of
the Patient Protection and Affordable Care Act.
SEC. 1407. DELAY OF ELIMINATION OF DEDUCTION FOR EXPENSES
ALLOCABLE TO MEDICARE PART D SUBSIDY.
Section 9012(b) of the Patient Protection and Affordable Care
Act <<NOTE: Ante, p. 868.>> is amended by striking ``2010'' and
inserting ``2012''.
SEC. 1408. ELIMINATION OF UNINTENDED APPLICATION OF CELLULOSIC
BIOFUEL PRODUCER CREDIT.
(a) In General.--Section 40(b)(6)(E) of the Internal Revenue Code of
1986 <<NOTE: 26 USC 40.>> is amended by adding at the end the following
new clause:
``(iii) Exclusion of unprocessed fuels.--The
term `cellulosic biofuel' shall not include any
fuel if--
``(I) more than 4 percent of such
fuel (determined by weight) is any
combination of water and sediment, or
``(II) the ash content of such fuel
is more than 1 percent (determined by
weight).''.
(b) <<NOTE: 26 USC 40 note.>> Effective Date.--The amendment made by
this section shall apply to fuels sold or used on or after January 1,
2010.
SEC. 1409. CODIFICATION OF ECONOMIC SUBSTANCE DOCTRINE AND
PENALTIES.
(a) In General.-- <<NOTE: 26 USC 7701.>> 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.--
[[Page 124 STAT.1068]]
``(1) Application of doctrine.--In the case of any
transaction to which the economic substance doctrine is
relevant, such transaction shall be treated as having economic
substance only if--
``(A) the transaction changes in a meaningful way
(apart from Federal income tax effects) the taxpayer's
economic position, and
``(B) the taxpayer has a substantial purpose (apart
from Federal income tax effects) for entering into such
transaction.
``(2) Special rule where taxpayer relies on profit
potential.--
``(A) In general.--The potential for profit of a
transaction shall be taken into account in determining
whether the requirements of subparagraphs (A) and (B) of
paragraph (1) are met with respect to the transaction
only if the present value of the reasonably expected
pre-tax profit from the transaction is substantial in
relation to the present value of the expected net tax
benefits that would be allowed if the transaction were
respected.
``(B) Treatment of fees and foreign taxes.--Fees and
other transaction expenses shall be taken into account
as expenses in determining pre-tax profit under
subparagraph (A). <<NOTE: Regulations.>> The Secretary
shall issue regulations requiring foreign taxes to be
treated as expenses in determining pre-tax profit in
appropriate cases.
``(3) State and local tax benefits.--For purposes of
paragraph (1), any State or local income tax effect which is
related to a Federal income tax effect shall be treated in the
same manner as a Federal income tax effect.
``(4) Financial accounting benefits.--For purposes of
paragraph (1)(B), achieving a financial accounting benefit shall
not be taken into account as a purpose for entering into a
transaction if the origin of such financial accounting benefit
is a reduction of Federal income tax.
``(5) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term
`economic substance doctrine' means the common law
doctrine under which tax benefits under subtitle A with
respect to a transaction are not allowable if the
transaction does not have economic substance or lacks a
business purpose.
``(B) Exception for personal transactions of
individuals.-- <<NOTE: Applicability.>> In the case of
an individual, paragraph (1) shall apply only to
transactions entered into in connection with a trade or
business or an activity engaged in for the production of
income.
``(C) Determination of application of doctrine not
affected.--The determination of whether the economic
substance doctrine is relevant to a transaction shall be
made in the same manner as if this subsection had never
been enacted.
``(D) Transaction.--The term `transaction' includes
a series of transactions.''.
(b) Penalty for Underpayments Attributable to Transactions Lacking
Economic Substance.--
[[Page 124 STAT.1069]]
(1) In general.--Subsection (b) of section 6662 <<NOTE: 26
USC 6662.>> is amended by inserting after paragraph (5) the
following new paragraph:
``(6) Any disallowance of claimed tax benefits by reason of
a transaction lacking economic substance (within the meaning of
section 7701(o)) or failing to meet the requirements of any
similar rule of law.''.
(2) Increased penalty for nondisclosed transactions.--
Section 6662 is amended by adding at the end the following new
subsection:
``(i) Increase in Penalty in Case of Nondisclosed Noneconomic
Substance Transactions.--
``(1) In general.-- <<NOTE: Applicability.>> In the case of
any portion of an underpayment which is attributable to one or
more nondisclosed noneconomic substance transactions, subsection
(a) shall be applied with respect to such portion by
substituting `40 percent' for `20 percent'.
``(2) Nondisclosed noneconomic substance transactions.--
<<NOTE: Definition.>> For purposes of this subsection, the term
`nondisclosed noneconomic substance transaction' means any
portion of a transaction described in subsection (b)(6) with
respect to which the relevant facts affecting the tax treatment
are not adequately disclosed in the return nor in a statement
attached to the return.
``(3) Special rule for amended returns.--In no event shall
any amendment or supplement to a return of tax be taken into
account for purposes of this subsection if the amendment or
supplement is filed after the earlier of the date the taxpayer
is first contacted by the Secretary regarding the examination of
the return or such other date as is specified by the
Secretary.''.
(3) Conforming amendment.--Subparagraph (B) of section
6662A(e)(2) <<NOTE: 26 USC 6662A.>> is amended--
(A) by striking ``section 6662(h)'' and inserting
``subsections (h) or (i) of section 6662''; and
(B) by striking ``gross valuation misstatement
penalty'' in the heading and inserting ``certain
increased underpayment penalties''.
(c) Reasonable Cause Exception Not Applicable to Noneconomic
Substance Transactions.--
(1) Reasonable cause exception for underpayments.--
Subsection (c) of section 6664 <<NOTE: 26 USC 6664.>> is
amended--
(A) by redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively;
(B) by striking ``paragraph (2)'' in paragraph
(4)(A), as so redesignated, and inserting ``paragraph
(3)''; and
(C) by inserting after paragraph (1) the following
new paragraph:
``(2) Exception.--Paragraph (1) shall not apply to any
portion of an underpayment which is attributable to one or more
transactions described in section 6662(b)(6).''.
(2) Reasonable cause exception for reportable transaction
understatements.--Subsection (d) of section 6664 is amended--
(A) by redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively;
(B) by striking ``paragraph (2)(C)'' in paragraph
(4), as so redesignated, and inserting ``paragraph
(3)(C)''; and
[[Page 124 STAT.1070]]
(C) by inserting after paragraph (1) the following
new paragraph:
``(2) Exception.--Paragraph (1) shall not apply to any
portion of a reportable transaction understatement which is
attributable to one or more transactions described in section
6662(b)(6).''.
(d) Application of Penalty for Erroneous Claim for Refund or Credit
to Noneconomic Substance Transactions.--Section 6676 <<NOTE: 26 USC
6676.>> is amended by redesignating subsection (c) as subsection (d) and
inserting after subsection (b) the following new subsection:
``(c) Noneconomic Substance Transactions Treated as Lacking
Reasonable Basis.--For purposes of this section, any excessive amount
which is attributable to any transaction described in section 6662(b)(6)
shall not be treated as having a reasonable basis.''.
(e) <<NOTE: Applicability. 26 USC 6662 note.>> Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
transactions entered into after the date of the enactment of
this Act.
(2) Underpayments.--The amendments made by subsections (b)
and (c)(1) shall apply to underpayments attributable to
transactions entered into after the date of the enactment of
this Act.
(3) Understatements.--The amendments made by subsection
(c)(2) shall apply to understatements attributable to
transactions entered into after the date of the enactment of
this Act.
(4) Refunds and credits.--The amendment made by subsection
(d) shall apply to refunds and credits attributable to
transactions entered into after the date of the enactment of
this Act.
SEC. 1410. <<NOTE: 26 USC 6655 note.>> TIME FOR PAYMENT OF
CORPORATE ESTIMATED TAXES.
The percentage under paragraph (1) of section 202(b) of the
Corporate Estimated Tax Shift Act of 2009 in effect on the date of the
enactment of this Act is increased by 15.75 percentage points.
Subtitle F--Other Provisions
SEC. 1501. COMMUNITY COLLEGE AND CAREER TRAINING GRANT PROGRAM.
Section 279(b) of the Trade Act of 1974 (19 U.S.C. 2372a(b)) is
amended by striking ``Supplement'' and all that follows through
``Funds'' and inserting ``There are'' and by striking ``pursuant'' and
all that follows and inserting ``$500,000,000 for each of fiscal years
2011, 2012, 2013, and 2014 to carry out this subchapter, except that the
limitations contained in section 278(a)(2) shall not apply to such funds
and each State shall receive not less than 0.5 percent of the amount
appropriated pursuant to this subsection for each such fiscal year.''.
[[Page 124 STAT.1071]]
TITLE II--EDUCATION AND HEALTH
Subtitle A-- <<NOTE: SAFRA Act.>> Education
SEC. 2001. SHORT TITLE; REFERENCES.
(a) <<NOTE: 20 USC 1001 note.>> Short Title.--This subtitle may be
cited as the ``SAFRA Act''.
(b) References.--Except as otherwise expressly provided, whenever in
this subtitle an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
PART I--INVESTING IN STUDENTS AND FAMILIES
SEC. 2101. FEDERAL PELL GRANTS.
(a) Amount of Grants.--Section 401(b) (20 U.S.C. 1070a(b)) is
amended--
(1) by amending paragraph (2)(A) to read as follows:
``(A) The amount of the Federal Pell Grant for a
student eligible under this part shall be--
``(i) the maximum Federal Pell Grant, as
specified in the last enacted appropriation Act
applicable to that award year, plus
``(ii) the amount of the increase calculated
under paragraph (8)(B) for that year, less
``(iii) an amount equal to the amount
determined to be the expected family contribution
with respect to that student for that year.''; and
(2) in paragraph (8)--
(A) in subparagraph (A)--
(i) in the matter preceding clause (i), by
striking ``, to carry out subparagraph (B) of this
paragraph''; and
(ii) by striking clauses (iii) through (x) and
inserting the following:
``(iii) to carry out subparagraph (B) of this
paragraph, such sums as may be necessary for
fiscal year 2010 and each subsequent fiscal year
to provide the amount of increase of the maximum
Federal Pell Grant required by clauses (ii) and
(iii) of subparagraph (B); and
``(iv) to carry out this section,
$13,500,000,000 for fiscal year 2011.'';
(B) in subparagraph (B)--
(i) in the matter preceding clause (i), by
striking ``subparagraph (A)'' and inserting
``clauses (i) through (iii) of subparagraph (A)'';
(ii) in clause (ii), by striking ``and 2011-
2012'' and inserting ``, 2011-2012, and 2012-
2013''; and
(iii) by striking clause (iii) and inserting
the following:
[[Page 124 STAT.1072]]
``(iii) the amount determined under
subparagraph (C) for each succeeding award
year.''; and
(C) by striking subparagraph (C) and inserting the
following:
``(C) Adjustment amounts.--
``(i) Award year 2013-2014.--For award year
2013-2014, the amount determined under this
subparagraph for purposes of subparagraph (B)(iii)
shall be equal to--
``(I) $5,550 or the total maximum
Federal Pell Grant for the preceding
award year (as determined under clause
(v)(II)), whichever is greater,
increased by a percentage equal to the
annual adjustment percentage for award
year 2013-2014, reduced by
``(II) $4,860 or the maximum Federal
Pell Grant for which a student was
eligible for the preceding award year,
as specified in the last enacted
appropriation Act applicable to that
year, whichever is greater; and
``(III) rounded to the nearest $5.
``(ii) Award years 2014-2015 through 2017-
2018.--For each of the award years 2014-2015
through 2017-2018, the amount determined under
this subparagraph for purposes of subparagraph
(B)(iii) shall be equal to--
``(I) the total maximum Federal Pell
Grant for the preceding award year (as
determined under clause (v)(II)),
increased by a percentage equal to the
annual adjustment percentage for the
award year for which the amount under
this subparagraph is being determined,
reduced by
``(II) $4,860 or the maximum Federal
Pell Grant for which a student was
eligible for the preceding award year,
as specified in the last enacted
appropriation Act applicable to that
year, whichever is greater; and
``(III) rounded to the nearest $5.
``(iii) Subsequent award years.--For award
year 2018-2019 and each subsequent award year, the
amount determined under this subparagraph for
purposes of subparagraph (B)(iii) shall be equal
to the amount determined under clause (ii) for
award year 2017-2018.
``(iv) Definitions.--For purposes of this
subparagraph--
``(I) the term `annual adjustment
percentage' as applied to an award year,
is equal to the estimated percentage
change in the Consumer Price Index (as
determined by the Secretary, using the
definition in section 478(f)) for the
most recent calendar year ending prior
to the beginning of that award year; and
``(II) the term `total maximum
Federal Pell Grant' as applied to a
preceding award year, is equal to the
sum of--
[[Page 124 STAT.1073]]
``(aa) the maximum Federal
Pell Grant for which a student
is eligible during an award
year, as specified in the last
enacted appropriation Act
applicable to that preceding
award year; and
``(bb) the amount of the
increase in the maximum Federal
Pell Grant required by this
paragraph for that preceding
award year.''.
(b) Conforming Amendments.--Title IV (20 U.S.C. 1070 et seq.) is
further amended--
(1) in section 401(b) (20 U.S.C. 1070a(b))--
(A) in paragraph (4)--
(i) by striking ``maximum basic grant level
specified in the appropriate appropriation Act''
and inserting ``maximum amount of a Federal Pell
Grant award determined under paragraph (2)(A)'';
and
(ii) by striking ``such level'' each place it
appears and inserting ``such Federal Pell Grant
amount'' in each such place; and
(B) in paragraph (6), by striking ``the grant level
specified in the appropriate Appropriation Act for this
subpart for such year'' and inserting ``the maximum
amount of a Federal Pell Grant award determined under
paragraph (2)(A), for which a student is eligible during
such award year'';
(2) in section 402D(d)(1) (20 U.S.C. 1070a-14(d)(1)), by
striking ``exceed the maximum'' and all that follows through
``Grant, for'' and inserting ``exceed the Federal Pell Grant
amount, determined under section 401(b)(2)(A), for which a
student is eligible, or be less than the minimum Federal Pell
Grant amount described in section 401(b)(4), for'';
(3) in section 435(a)(5)(A)(i)(I) (20 U.S.C.
1085(a)(5)(A)(i)(I)), by striking ``one-half the maximum Federal
Pell Grant award for which a student would be eligible'' and
inserting ``one-half the Federal Pell Grant amount, determined
under section 401(b)(2)(A), for which a student would be
eligible'';
(4) in section 483(e)(3)(A)(ii) (20 U.S.C.
1090(e)(3)(A)(ii)), by striking ``based on the maximum Federal
Pell Grant award at the time of application'' and inserting
``based on the Federal Pell Grant amount, determined under
section 401(b)(2)(A), for which a student is eligible at the
time of application'';
(5) in section 485E(b)(1)(A) (20 U.S.C. 1092f(b)(1)(A)), by
striking ``of such students' potential eligibility for a maximum
Federal Pell Grant under subpart 1 of part A'' and inserting
``of such students' potential eligibility for the Federal Pell
Grant amount, determined under section 401(b)(2)(A), for which
the student would be eligible''; and
(6) in section 894(f)(2)(C)(ii)(I) (20 U.S.C.
1161y(f)(2)(C)(ii)(I)), by striking ``the maximum Federal Pell
Grant for each award year'' and inserting ``the Federal Pell
Grant amount, determined under section 401(b)(2)(A), for which a
student may be eligible for each award year''.
(c) <<NOTE: 20 USC 1070a note.>> Effective Date.--The amendments
made by subsections (a) and (b) shall take effect on July 1, 2010.
SEC. 2102. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.
Section 781 (20 U.S.C. 1141) is amended--
[[Page 124 STAT.1074]]
(1) in the first sentence of subsection (a), by striking
``$66,000,000'' and all that follows through the period and
inserting ``$150,000,000 for each of the fiscal years 2010
through 2014. The authority to award grants under this section
shall expire at the end of fiscal year 2014.''; and
(2) in subsection (c)(2), by striking ``0.5 percent'' and
inserting ``1.0 percent''.
SEC. 2103. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND
UNIVERSITIES AND MINORITY-SERVING
INSTITUTIONS.
Section 371(b)(1)(A) (20 U.S.C. 1067q(b)(1)(A)) is amended by
striking ``and 2009.'' and all that follows and inserting ``through
2019. <<NOTE: Expiration date.>> The authority to award grants under
this section shall expire at the end of fiscal year 2019.''.
PART II--STUDENT LOAN REFORM
SEC. 2201. TERMINATION OF FEDERAL FAMILY EDUCATION LOAN
APPROPRIATIONS.
Section 421 (20 U.S.C. 1071) is amended--
(1) in subsection (b), in the first sentence of the matter
following paragraph (6), by inserting ``, except that no sums
may be expended after June 30, 2010, with respect to loans under
this part for which the first disbursement is after such date''
after ``expended''; and
(2) by adding at the end the following new subsection:
``(d) Termination of Authority to Make or Insure New Loans.--
Notwithstanding paragraphs (1) through (6) of subsection (b) or any
other provision of law--
``(1) no new loans (including consolidation loans) may be
made or insured under this part after June 30, 2010; and
``(2) no funds are authorized to be appropriated, or may be
expended, under this Act or any other Act to make or insure
loans under this part (including consolidation loans) for which
the first disbursement is after June 30, 2010,
except as expressly authorized by an Act of Congress enacted after the
date of enactment of the SAFRA Act.''.
SEC. 2202. TERMINATION OF FEDERAL LOAN INSURANCE PROGRAM.
Section 424(a) (20 U.S.C. 1074(a)) is amended by striking
``September 30, 1976,'' and all that follows and inserting ``September
30, 1976, for each of the succeeding fiscal years ending prior to
October 1, 2009, and for the period from October 1, 2009, to June 30,
2010, for loans first disbursed on or before June 30, 2010.''.
SEC. 2203. TERMINATION OF APPLICABLE INTEREST RATES.
Section 427A(l) (20 U.S.C. 1077a(l)) is amended--
(1) in the subsection heading, by inserting ``and Before
July 1, 2010'' after ``2006'';
(2) in paragraph (1), by inserting ``and before July 1,
2010,'' after ``July 1, 2006,'';
(3) in paragraph (2), by inserting ``and before July 1,
2010,'' after ``July 1, 2006,'';
(4) in paragraph (3), by inserting ``and that was disbursed
before July 1, 2010,'' after ``July 1, 2006,''; and
(5) in paragraph (4)--
(A) in the matter preceding subparagraph (A), by
striking ``July 1, 2012'' and inserting ``July 1,
2010''; and
[[Page 124 STAT.1075]]
(B) by repealing subparagraphs (D) and (E).
SEC. 2204. TERMINATION OF FEDERAL PAYMENTS TO REDUCE STUDENT
INTEREST COSTS.
(a) Higher Education Act of 1965.--Section 428 (20 U.S.C. 1078) is
amended--
(1) in subsection (a)--
(A) in paragraph (1), in the matter preceding
subparagraph (A), by inserting ``for which the first
disbursement is made before July 1, 2010, and'' after
``eligible institution''; and
(B) in paragraph (5), by striking ``September 30,
2014,'' and all that follows through the period and
inserting ``June 30, 2010.'';
(2) in subsection (b)(1)--
(A) in subparagraph (G)(ii), by inserting ``and
before July 1, 2010,'' after ``July 1, 2006,''; and
(B) in subparagraph (H)(ii), by inserting ``and that
are first disbursed before July 1, 2010,'' after ``July
1, 2006,'';
(3) in subsection (f)(1)(A)(ii)--
(A) by striking ``during fiscal years beginning'';
and
(B) by inserting ``and first disbursed before July
1, 2010,'' after ``October 1, 2003,''; and
(4) in subsection (j)(1), by inserting ``, before July 1,
2010,'' after ``section 435(d)(1)(D) of this Act shall''.
(b) College Cost Reduction and Access Act.--Section 303 of the
College Cost Reduction and Access Act (Public Law 110-84) <<NOTE: 20 USC
1078 and note.>> is repealed.
SEC. 2205. TERMINATION OF FFEL PLUS LOANS.
Section 428B(a)(1) (20 U.S.C. 1078-2(a)(1)) is amended by striking
``A graduate'' and inserting ``Prior to July 1, 2010, a graduate''.
SEC. 2206. FEDERAL CONSOLIDATION LOANS.
(a) In General.--Section 428C (20 U.S.C. 1078-3) is amended--
(1) in subsection (a)(4)(A), by inserting ``, and first
disbursed before July 1, 2010'' after ``under this part'';
(2) in subsection (b)--
(A) in paragraph (1)(E), by inserting before the
semicolon ``, and before July 1, 2010''; and
(B) in paragraph (5), by striking ``In the event
that'' and inserting ``If, before July 1, 2010,'';
(3) in subsection (c)(1)--
(A) in subparagraph (A)(ii), by inserting ``and that
is disbursed before July 1, 2010,'' after ``2006,''; and
(B) in subparagraph (C), by inserting ``and
disbursed before July 1, 2010,'' after ``1994,''; and
(4) in subsection (e), by striking ``September 30, 2014.''
and inserting ``June 30, 2010. No loan may be made under this
section for which the disbursement is on or after July 1,
2010.''.
(b) Temporary Loan Consolidation Authority.--Part D of title IV (20
U.S.C. 1087a et seq.) is amended by inserting after section 459A (20
U.S.C. 1087i) the following:
[[Page 124 STAT.1076]]
``SEC. 459B. <<NOTE: 20 USC 1087i-2.>> TEMPORARY LOAN
CONSOLIDATION AUTHORITY.
``(a) Temporary Loan Consolidation Authority.--
``(1) In general.--A borrower who has 1 or more loans in 2
or more of the categories described in paragraph (2), and who
has not yet entered repayment on 1 or more of those loans in any
of the categories, may consolidate all of the loans of the
borrower that are described in paragraph (2) into a Federal
Direct Consolidation Loan during the period described in
paragraph (3).
``(2) Categories of loans that may be consolidated.--The
categories of loans that may be consolidated under paragraph (1)
are--
``(A) loans made under this part;
``(B) loans purchased by the Secretary pursuant to
section 459A; and
``(C) loans made under part B that are held by an
eligible lender, as such term is defined in section
435(d).
``(3) Time period in which loans may be consolidated.--The
Secretary may make a Federal Direct Consolidation Loan under
this section to a borrower whose application for such Federal
Direct Consolidation Loan is received on or after July 1, 2010,
and before July 1, 2011.
``(b) Terms of Loans.--A Federal Direct Consolidation Loan made
under this section shall have the same terms and conditions as a Federal
Direct Consolidation Loan made under section 455(g), except that--
``(1) <<NOTE: Applicability.>> in determining the applicable
rate of interest on the Federal Direct Consolidation Loan made
under this section (other than on a Federal Direct Consolidation
Loan described in paragraph (2)), section 427A(l)(3) shall be
applied without rounding the weighted average of the interest
rate on the loans consolidated to the nearest higher one-eighth
of 1 percent as described in subparagraph (A) of section
427A(l)(3); and
``(2) if a Federal Direct Consolidation Loan made under this
section that repays a loan which is subject to an interest rate
determined under section 427A(g)(2), (j)(2), or (k)(2), then the
interest rate for such Federal Direct Consolidation Loan shall
be calculated--
``(A) by using the applicable rate of interest
described in section 427A(g)(2), (j)(2), or (k)(2),
respectively; and
``(B) in accordance with section 427A(l)(3).''.
SEC. 2207. TERMINATION OF UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE-
INCOME BORROWERS.
Section 428H (20 U.S.C. 1078-8) is amended--
(1) in subsection (a), by inserting ``that are first
disbursed before July 1, 2010,'' after ``under this part'';
(2) in subsection (b)--
(A) by striking ``Any student'' and inserting
``Prior to July 1, 2010, any student''; and
(B) by inserting ``for which the first disbursement
is made before such date'' after ``unsubsidized Federal
Stafford Loan''; and
(3) in subsection (h), by inserting ``and that are first
disbursed before July 1, 2010,'' after ``July 1, 2006,''.
[[Page 124 STAT.1077]]
SEC. 2208. TERMINATION OF SPECIAL ALLOWANCES.
Section 438 (20 U.S.C. 1087-1) is amended--
(1) in subsection (b)(2)(I)--
(A) in the subclause heading, by inserting ``, and
before july 1, 2010'' after ``2000'';
(B) in clause (i), by inserting ``and before July 1,
2010,'' after ``2000,'';
(C) in clause (ii)(II), by inserting ``and before
July 1, 2010,'' after ``2006,'';
(D) in clause (iii), by inserting ``and before July
1, 2010,'' after ``2000,'';
(E) in clause (iv), by inserting ``and that is
disbursed before July 1, 2010,'' after ``2000,'';
(F) in clause (v)(I), by inserting ``and before July
1, 2010,'' after ``2006,''; and
(G) in clause (vi)--
(i) in the clause heading, by inserting ``,
and before july 1, 2010'' after ``2007''; and
(ii) in the matter preceding subclause (I), by
inserting ``and before July 1, 2010,'' after
``2007,'';
(2) in subsection (c)--
(A) in paragraph (2)(B)--
(i) in clause (iii), by inserting ``and''
after the semicolon;
(ii) in clause (iv), by striking ``; and'' and
inserting a period; and
(iii) by striking clause (v); and
(B) in paragraph (6), by inserting ``and first
disbursed before July 1, 2010,'' after ``1992,''; and
(3) in subsection (d)(2)(B), by inserting ``, and before
July 1, 2010'' after ``2007''.
SEC. 2209. ORIGINATION OF DIRECT LOANS AT INSTITUTIONS OUTSIDE THE
UNITED STATES.
(a) Loans for Students Attending Institutions Outside the United
States.--Section 452 (20 U.S.C. 1087b) is amended by adding at the end
the following:
``(d) Institutions Outside the United States.--Loan funds for
students (and parents of students) attending institutions outside the
United States shall be disbursed through a financial institution located
or operating in the United States and designated by the Secretary to
serve as the agent of such institutions with respect to the receipt of
the disbursements of such loan funds and the transfer of such funds to
such institutions. To be eligible to receive funds under this part, an
institution outside the United States shall make arrangements with the
agent designated by the Secretary under this subsection to receive funds
under this part.''.
(b) Conforming Amendments.--
(1) Amendments.--Section 102 (20 U.S.C. 1002), as amended by
section 102 of the Higher Education Opportunity Act (Public Law
110-315) and section 101 of Public Law 111-39, is amended--
(A) by striking ``part B'' each place the term
appears and inserting ``part D'';
(B) in subsection (a)(1)(C), by inserting ``,
consistent with the requirements of section 452(d)''
before the period at the end; and
[[Page 124 STAT.1078]]
(C) in subsection (a)(2)(A)--
(i) in the second sentence of the matter
preceding clause (i), by striking ``made, insured,
or guaranteed'' and inserting ``made''; and
(ii) in clause (iii)--
(I) in subclause (III), by striking
``only Federal Stafford'' and all that
follows through ``section 428B'' and
inserting ``only Federal Direct Stafford
Loans under section 455(a)(2)(A),
Federal Direct Unsubsidized Stafford
Loans under section 455(a)(2)(D), or
Federal Direct PLUS Loans under section
455(a)(2)(B)''; and
(II) in subclause (V), by striking
``a Federal Stafford'' and all that
follows through ``section 428B'' and
inserting ``a Federal Direct Stafford
Loan under section 455(a)(2)(A), a
Federal Direct Unsubsidized Stafford
Loan under section 455(a)(2)(D), or a
Federal Direct PLUS Loan under section
455(a)(2)(B)''.
(2) <<NOTE: 20 USC 1002 note.>> Effective date.--The
amendments made by subparagraph (C) of paragraph (1) shall be
effective on July 1, 2010, as if enacted as part of section
102(a)(1) of the Higher Education Opportunity Act (Public Law
110-315) and subject to section 102(e) of such Act as amended by
section 101(a)(2) of Public Law 111-39 (20 U.S.C. 1002 note).
SEC. 2210. CONFORMING AMENDMENTS.
(a) Amendments.--Section 454 (20 U.S.C. 1087d) is amended--
(1) in subsection (a)--
(A) by striking paragraph (4); and
(B) by redesignating paragraphs (5) through (7) as
paragraphs (4) through (6), respectively; and
(2) in subsection (b)(2), by striking ``(5), (6), and (7)''
and inserting ``(5), and (6)''.
(b) <<NOTE: 20 USC 1087d note.>> Effective Date.--The amendments
made by subsection (a) shall take effect on July 1, 2010.
SEC. 2211. TERMS AND CONDITIONS OF LOANS.
(a) In General.--Section 455 (20 U.S.C. 1087e) is amended--
(1) in subsection (a)(1), by inserting ``, and first
disbursed on June 30, 2010,'' before ``under sections 428''; and
(2) in subsection (g)--
(A) by inserting ``, including any loan made under
part B and first disbursed before July 1, 2010'' after
``section 428C(a)(4)''; and
(B) by striking the third sentence.
(b) <<NOTE: Applicability.>> Effective Date.--The amendment made by
subsection (a)(1) shall apply with respect to loans first disbursed
under part D of title IV of the Higher Education Act of 1965 (20 U.S.C.
1087a et seq.) on or after July 1, 2010.
SEC. 2212. CONTRACTS; MANDATORY FUNDS.
(a) Contracts.--Section 456 (20 U.S.C. 1087f) is amended--
(1) in subsection (a)--
(A) by inserting after paragraph (3) the following
new paragraph:
``(4) Servicing by eligible not-for-profit servicers.--
``(A) Servicing contracts.--
[[Page 124 STAT.1079]]
``(i) In general.--The Secretary shall
contract with each eligible not-for-profit
servicer to service loans originated under this
part, if the servicer--
``(I) meets the standards for
servicing Federal assets that apply to
contracts awarded pursuant to paragraph
(1); and
``(II) has the capacity to service
the applicable loan volume allocation
described in subparagraph (B).
``(ii) Competitive market rate determination
for first 100,000 borrower accounts.--The
Secretary shall establish a separate pricing tier
for each of the first 100,000 borrower loan
accounts at a competitive market rate.
``(iii) Ineligibility.--An eligible not-for-
profit servicer shall no longer be eligible for a
contract under this paragraph after July 1, 2014,
if--
``(I) the servicer has not been
awarded such a contract before that
date; or
``(II) the servicer's contract was
terminated, and the servicer had not
reapplied for, and been awarded, a
contract under this paragraph.
``(B) Allocations.--
``(i) In general.--The Secretary shall (except
as provided in clause (ii)) allocate to an
eligible not-for-profit servicer, subject to the
contract of such servicer described in
subparagraph (A), the servicing rights for the
loan accounts of 100,000 borrowers (including
borrowers who borrowed loans in a prior year that
were serviced by the servicer).
``(ii) Servicer allocation.--The Secretary may
reallocate, increase, reduce, or terminate an
eligible not-for-profit servicer's allocation of
servicing rights under clause (i) based on the
performance of such servicer, on the same terms as
loan allocations provided by contracts awarded
pursuant to paragraph (1).''; and
(2) by adding at the end the following:
``(c) Definition of Eligible Not-for-profit Servicer.--In this
section:
``(1) In general.--The term `eligible not-for-profit
servicer' means an entity--
``(A) that is not owned or controlled in whole or in
part by--
``(i) a for-profit entity; or
``(ii) a nonprofit entity having its principal
place of business in another State; and
``(B) that--
``(i) as of July 1, 2009--
``(I) meets the definition of an
eligible not-for-profit holder under
section 435(p), except that such term
does not include eligible lenders
described in paragraph (1)(D) of such
section; and
``(II) was performing, or had
entered into a contract with a third
party servicer (as such term is defined
in section 481(c)) who was performing,
student loan servicing functions for
loans made under part B of this title;
[[Page 124 STAT.1080]]
``(ii) notwithstanding clause (i), as of July
1, 2009--
``(I) is the sole beneficial owner
of a loan for which the special
allowance rate is calculated under
section 438(b)(2)(I)(vi)(II) because the
loan is held by an eligible lender
trustee that is an eligible not-for-
profit holder as defined under section
435(p)(1)(D); and
``(II) was performing, or had
entered into a contract with a third
party servicer (as such term is defined
in section 481(c)) who was performing,
student loan servicing functions for
loans made under part B of this title;
or
``(iii) is an affiliated entity of an eligible
not-for-profit servicer described in clause (i) or
(ii) that--
``(I) directly employs, or will
directly employ (on or before the date
the entity begins servicing loans under
a contract awarded by the Secretary
pursuant to subsection (a)(3)(A)), the
majority of individuals who perform
borrower-specific student loan servicing
functions; and
``(II) as of July 1, 2009, was
performing, or had entered into a
contract with a third party servicer (as
such term is defined in section 481(c))
who was performing, student loan
servicing functions for loans made under
part B of this title.
``(2) Affiliated entity.--For the purposes of paragraph (1),
the term `affiliated entity'--
``(A) means an entity contracted to perform services
for an eligible not-for-profit servicer that--
``(i) is a nonprofit entity or is wholly owned
by a nonprofit entity; and
``(ii) is not owned or controlled, in whole or
in part, by--
``(I) a for-profit entity; or
``(II) an entity having its
principal place of business in another
State; and
``(B) may include an affiliated entity that is
established by an eligible not-for-profit servicer after
the date of enactment of the SAFRA Act, if such
affiliated entity is otherwise described in paragraph
(1)(B)(iii)(I) and subparagraph (A) of this
paragraph.''.
(b) Mandatory Funds.--
(1) Amendments.--Section 458(a) (20 U.S.C. 1087h(a)) is
amended--
(A) by redesignating paragraph (5) as paragraph (8);
(B) by redesignating paragraphs (2) through (4) as
paragraphs (3) through (5), respectively;
(C) by inserting after paragraph (1) the following
new paragraph:
``(2) Mandatory funds for eligible not-for-profit
servicers.--For fiscal years 2010 through 2019, there shall be
available to the Secretary, in addition to any other amounts
appropriated to carry out this paragraph and out of any money in
the Treasury not otherwise appropriated, funds to be obligated
for administrative costs of servicing contracts with eligible
not-for-profit servicers as described in section 456.''; and
[[Page 124 STAT.1081]]
(D) by inserting after paragraph (5), as
redesignated by subparagraph (B) of this paragraph, the
following:
``(6) Technical assistance to institutions of higher
education.--
``(A) Provision of assistance.--The Secretary shall
provide institutions of higher education participating,
or seeking to participate, in the loan programs under
this part with technical assistance in establishing and
administering such programs.
``(B) Funds.--There are authorized to be
appropriated, and there are appropriated, to carry out
this paragraph (in addition to any other amounts
appropriated to carry out this paragraph and out of any
money in the Treasury not otherwise appropriated),
$50,000,000 for fiscal year 2010.
``(C) Definition.--In this paragraph, the term
`assistance' means the provision of technical support,
training, materials, technical assistance, and financial
assistance.
``(7) Additional payments.--
``(A) Provision of assistance.--The Secretary shall
provide payments to loan servicers for retaining jobs at
locations in the United States where such servicers were
operating under part B on January 1, 2010.
``(B) Funds.--There are authorized to be
appropriated, and there are appropriated, to carry out
this paragraph (in addition to any other amounts
appropriated to carry out this paragraph and out of any
money in the Treasury not otherwise appropriated),
$25,000,000 for each of the fiscal years 2010 and
2011.''.
(2) Conforming amendment.--Section 458 (20 U.S.C. 1087h) is
further amended by striking ``subsection (a)(3)'' in subsection
(b) and inserting ``subsection (a)(4)''.
SEC. 2213. INCOME-BASED REPAYMENT.
Section 493C (20 U.S.C. 1098e) is amended by adding at the end the
following new subsection:
``(e) Special Terms for New Borrowers on and After July 1, 2014.--
<<NOTE: Effective date.>> With respect to any loan made to a new
borrower on or after July 1, 2014--
``(1) subsection (a)(3)(B) shall be applied by substituting
`10 percent' for `15 percent'; and
``(2) subsection (b)(7)(B) shall be applied by substituting
`20 years' for `25 years'.''.
Subtitle B--Health
SEC. 2301. INSURANCE REFORMS.
(a) Extending Certain Insurance Reforms to Grandfathered Plans.--
Section 1251(a) of the Patient Protection and Affordable Care Act, as
added by section 10103(d) of such Act, is <<NOTE: Ante, p. 161,
894.>> amended by adding at the end the following:
``(4) Application of certain provisions.--
``(A) In general.--The following provisions of the
Public Health Service Act (as added by this title) shall
[[Page 124 STAT.1082]]
apply to grandfathered health plans for plan years
beginning with the first plan year to which such
provisions would otherwise apply:
``(i) Section 2708 (relating to excessive
waiting periods).
``(ii) Those provisions of section 2711
relating to lifetime limits.
``(iii) Section 2712 (relating to
rescissions).
``(iv) Section 2714 (relating to extension of
dependent coverage).
``(B) Provisions applicable only to group health
plans.--
``(i) Provisions described.--Those provisions
of section 2711 relating to annual limits and the
provisions of section 2704 (relating to pre-
existing condition exclusions) of the Public
Health Service Act (as added by this subtitle)
shall apply to grandfathered health plans that are
group health plans for plan years beginning with
the first plan year to which such provisions
otherwise apply.
``(ii) Adult child coverage.--For plan years
beginning before January 1, 2014, the provisions
of section 2714 of the Public Health Service Act
(as added by this subtitle) shall apply in the
case of an adult child with respect to a
grandfathered health plan that is a group health
plan only if such adult child is not eligible to
enroll in an eligible employer-sponsored health
plan (as defined in section 5000A(f)(2) of the
Internal Revenue Code of 1986) other than such
grandfathered health plan.''.
(b) Clarification Regarding Dependent Coverage.--Section 2714(a) of
the Public Health Service Act, as added by section 1001(5) of the
Patient Protection and Affordable Care Act, <<NOTE: Ante, p. 130.>> is
amended by striking ``(who is not married)''.
SEC. 2302. DRUGS PURCHASED BY COVERED ENTITIES.
Section 340B of the Public Health Service Act (42 U.S.C. 256b), as
amended by sections 7101 and 7102 of the Patient Protection and
Affordable Care Act, is amended--
(1) in subsection (a)--
(A) in paragraphs (1), (2), (5), (7), and (9), by
striking the terms ``covered drug'' and ``covered
drugs'' each place either term appears and inserting
``covered outpatient drug'' or ``covered outpatient
drugs'', respectively;
(B) in paragraph (4)(L)--
(i) in clause (i), by striking ``and'' at the
end;
(ii) in clause (ii), by striking the period
and inserting ``; and''; and
(iii) by inserting after clause (ii), the
following:
``(iii) does not obtain covered outpatient
drugs through a group purchasing organization or
other group purchasing arrangement.''; and
(C) in paragraph (5)--
(i) by striking subparagraph (C);
(ii) by redesignating subparagraphs (D) and
(E) as subparagraphs (C) and (D), respectively;
and
[[Page 124 STAT.1083]]
(iii) in subparagraph (D), as so redesignated,
by striking ``subparagraph (D)'' and inserting
``subparagraph (C)'';
(2) by striking subsection (c);
(3) in subsection (d)--
(A) by striking ``covered drugs'' each place it
appears and inserting ``covered outpatient drugs'';
(B) by striking ``(a)(5)(D)'' each place it appears
and inserting ``(a)(5)(C)''; and
(C) by striking ``(a)(5)(E)'' each place it appears
and inserting ``(a)(5)(D)''; and
(4) by inserting after subsection (d) the following:
``(e) Exclusion of Orphan Drugs for Certain Covered Entities.--For
covered entities described in subparagraph (M), (N), or (O) of
subsection (a)(4), the term `covered outpatient drug' shall not include
a drug designated by the Secretary under section 526 of the Federal
Food, Drug, and Cosmetic Act for a rare disease or condition.''.
SEC. 2303. COMMUNITY HEALTH CENTERS.
Section 10503(b)(1) of the Patient Protection and Affordable Care
Act is <<NOTE: Ante, p. 1004.>> amended--
(1) in subparagraph (A), by striking ``700,000,000'' and
inserting ``1,000,000,000'';
(2) in subparagraph (B), by striking ``800,000,000'' and
inserting ``1,200,000,000'';
(3) in subparagraph (C), by striking ``1,000,000,000'' and
inserting ``1,500,000,000'';
(4) in subparagraph (D), by striking ``1,600,000,000'' and
inserting ``2,200,000,000''; and
(5) in subparagraph (E), by striking ``2,900,000,000'' and
inserting ``3,600,000,000''.
Approved March 30, 2010.
LEGISLATIVE HISTORY--H.R. 4872:
---------------------------------------------------------------------------
HOUSE REPORTS: No. 111-443 (Comm. on the Budget).
CONGRESSIONAL RECORD, Vol. 156 (2010):
Mar. 21, considered and passed House.
Mar. 23, 24, considered in Senate.
Mar. 25, considered and passed Senate, amended. House
concurred in Senate amendments.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2010):
Mar. 30, Presidential remarks.
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