health care reconciliation bill
TRANSCRIPT
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AMENDMENT IN THE NATURE OF A SUBSTITUTE
TO H.R. 4872, AS REPORTED
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.1
(a) SHORT
TITLE
.This Act may be cited as the2
Health Care and Education Affordability Reconciliation3
Act of 2010.4
(b) TABLE OF CONTENTS.The table of contents of5
this Act is as follows:6
Sec. 1. Short title; table of contents.
TITLE ICOVERAGE, MEDICARE, MEDICAID, AND REVENUES
Subtitle ACoverage
Sec. 1001. Affordability.
Sec. 1002. Individual responsibility.
Sec. 1003. Employer responsibility.
Sec. 1004. Income definitions.
Sec. 1005. Implementation funding.
Subtitle BMedicare
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.
Subtitle CMedicaid
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.
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Sec. 1205. Delay in Community First Choice option.
Sec. 1206. Drug rebates for new formulations of existing drugs.
Subtitle DReducing Fraud, Waste, and Abuse
Sec. 1301. Community mental health centers.
Sec. 1302. Medicare prepayment medical review limitations .
Sec. 1303. CMSIRS data match to identify fraudulent providers.Sec. 1304. Funding to fight fraud, waste, and abuse.
Sec. 1305. 90-day period of enhanced oversight for initial claims of DME sup-
pliers.
Subtitle EProvisions Relating to Revenue
Sec. 1401. High-cost plan excise tax.
Sec. 1402. Medicare tax.
Sec. 1403. Delay of limitation on health flexible spending arrangements under
cafeteria plans.
Sec. 1404. Brand name pharmaceuticals.
Sec. 1405. Excise tax on medical device manufacturers.
Sec. 1406. Health insurance providers.Sec. 1407. Delay of elimination of deduction for expenses allocable to medicare
part D subsidy.
Sec. 1408. Elimination of unintended application of cellulosic biofuel producer
credit.
Sec. 1409. Codification of economic substance doctrine and penalties.
Sec. 1410. Time for payment of corporate estimated taxes.
Sec. 1411. No impact on Social Security trust funds.
Subtitle FOther Provisions
Sec. 1501. Community college and career training grant program.
TITLE IIEDUCATION AND HEALTH
Subtitle AEducation
Sec. 2001. Short title; references.
PART IINVESTING IN STUDENTS AND FAMILIES
Sec. 2101. Federal Pell Grants.
Sec. 2102. Student financial assistance.
Sec. 2103. College access challenge grant program.
Sec. 2104. Investment in historically black colleges and universities and minor-
ity-serving institutions.
PART IISTUDENT 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 bor-
rowers.
Sec. 2208. Termination of special allowances.
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Sec. 2209. Origination of Direct Loans at institutions outside the United
States.
Sec. 2210. Conforming amendments.
Sec. 2211. Terms and conditions of loans.
Sec. 2212. Contracts; mandatory funds.
Sec. 2213. Agreements with State-owned banks.
Sec. 2214. Income-based repayment.
Subtitle BHealth
Sec. 2301. Insurance reforms.
Sec. 2302. Drugs purchased by covered entities.
Sec. 2303. Community health centers.
TITLE ICOVERAGE, MEDICARE,1
MEDICAID, AND REVENUES2
Subtitle ACoverage3
SEC. 1001. AFFORDABILITY.4
(a) PREMIUM TAX CREDITS.Section 36B of the In-5
ternal Revenue Code of 1986, as added by section 14016
of the Patient Protection and Affordable Care Act and7
amended by section 10105 of such Act, is amended8
(1) in subsection (b)(3)(A)9
(A) in clause (i), by striking with respect10
to any taxpayer and all that follows up to the11
end period and inserting for any taxable year12
shall be the percentage such that the applicable13
percentage for any taxpayer whose household14
income is within an income tier specified in the15
following table shall increase, on a sliding scale16
in a linear manner, from the initial premium17
percentage to the final premium percentage18
specified in such table for such income tier:19
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In the case of household in-come (expressed as a percent ofpoverty line) within the fol-lowing income tier:
The initial premiumpercentage is
The final premiumpercentage is
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), and1
inserting the following:2
(ii) INDEXING.3
(I) IN GENERAL.Subject to4subclause (II), in the case of taxable5
years beginning in any calendar year6
after 2014, the initial and final appli-7
cable percentages under clause (i) (as8
in effect for the preceding calendar9
year after application of this clause)10
shall be adjusted to reflect the excess11
of the rate of premium growth for the12
preceding calendar year over the rate13
of income growth for the preceding14
calendar year.15
(II) ADDITIONAL ADJUST-16
MENT.Except as provided in sub-17
clause (III), in the case of any cal-18
endar year after 2018, the percent-19
ages described in subclause (I) shall,20
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in addition to the adjustment under1
subclause (I), be adjusted to reflect2
the excess (if any) of the rate of pre-3
mium growth estimated under sub-4
clause (I) for the preceding calendar5
year over the rate of growth in the6
consumer price index for the pre-7
ceding calendar year.8
(III) FAILSAFE.Subclause (II)9
shall apply for any calendar year only10
if the aggregate amount of premium11
tax credits under this section and12
cost-sharing reductions under section13
1402 of the Patient Protection and14
Affordable Care Act for the preceding15
calendar year exceeds an amount16
equal to 0.504 percent of the gross17
domestic product for the preceding18
calendar year.; and19
(2) in subsection (c)(2)(C)20
(A) by striking 9.8 percent in clauses21
(i)(II) and (iv) and inserting 9.5 percent, and22
(B) by striking (b)(3)(A)(iii) in clause23
(iv) and inserting (b)(3)(A)(ii).24
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(b) COST SHARING.Section 1402(c) of the Patient1
Protection and Affordable Care Act is amended2
(1) in paragraph (1)(B)(i)3
(A) in subclause (I), by striking 90 and4
inserting 94;5
(B) in subclause (II)6
(i) by striking 80 and inserting7
87; and8
(ii) by striking and; and9
(C) by striking subclause (III) and insert-10
ing the following:11
(III) 73 percent in the case of12
an eligible insured whose household13
income is more than 200 percent but14
not more than 250 percent of the pov-15
erty line for a family of the size in-16
volved; and17
(IV) 70 percent in the case of18
an eligible insured whose household19
income is more than 250 percent but20
not more than 400 percent of the pov-21
erty line for a family of the size in-22
volved.; and23
(2) in paragraph (2)24
(A) in subparagraph (A)25
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(i) by striking 90 and inserting1
94; and2
(ii) by striking and;3
(B) in subparagraph (B)4
(i) by striking 80 and inserting5
87; and6
(ii) by striking the period and insert-7
ing ; and; and8
(C) by inserting after subparagraph (B)9
the following new subparagraph:10
(C) in the case of an eligible insured11
whose household income is more than 200 per-12
cent but not more than 250 percent of the pov-13
erty line for a family of the size involved, in-14
crease the plans share of the total allowed15
costs of benefits provided under the plan to 7316
percent of such costs..17
SEC. 1002. INDIVIDUAL RESPONSIBILITY.18
(a) AMOUNTS.Section 5000A(c) of the Internal19
Revenue Code of 1986, as added by section 1501(b) of20
the Patient Protection and Affordable Care Act and21
amended by section 10106 of such Act, is amended22
(1) in paragraph (2)(B)23
(A) in the matter preceding clause (i),24
by25
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(i) inserting the excess of before1
the taxpayers household income; and2
(ii) inserting for the taxable year3
over the amount of gross income specified4
in section 6012(a)(1) with respect to the5
taxpayer before for the taxable year;6
(B) in clause (i), by striking 0.5 and in-7
serting 1.0;8
(C) in clause (ii), by striking 1.0 and in-9
serting 2.0; and10
(D) in clause (iii), by striking 2.0 and11
inserting 2.5; and12
(2) in paragraph (3)13
(A) in subparagraph (A), by striking14
$750 and inserting $695;15
(B) in subparagraph (B), by striking16
$495 and inserting $325; and17
(C) in subparagraph (D)18
(i) in the matter preceding clause (i),19
by striking $750 and inserting $695;20
and21
(ii) in clause (i), by striking $75022
and inserting $695.23
(b) THRESHOLD.Section 5000A of such Code, as24
so added and amended, is amended25
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(1) by striking subsection (c)(4)(D); and1
(2) in subsection (e)(2)2
(A) by striking UNDER 100 PERCENT OF3
POVERTY LINE and inserting BELOW FILING4
THRESHOLD; and5
(B) by striking all that follows less than6
and inserting the amount of gross income7
specified in section 6012(a)(1) with respect to8
the taxpayer..9
SEC. 1003. EMPLOYER RESPONSIBILITY.10
(a) PAYMENT CALCULATION.Subparagraph (D) of11
subsection (d)(2) of section 4980H of the Internal Rev-12
enue Code of 1986, as added by section 1513 of the Pa-13
tient Protection and Affordable Care Act and amended by14
section 10106 of such Act, is amended to read as follows:15
(D) APPLICATION OF EMPLOYER SIZE TO16
ASSESSABLE PENALTIES.17
(i) IN GENERAL.The number of in-18
dividuals employed by an applicable large19
employer as full-time employees during any20
month shall be reduced by 30 solely for21
purposes of calculating22
(I) the assessable payment23
under subsection (a), or24
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(II) the overall limitation under1
subsection (b)(2).2
(ii) AGGREGATION.In the case of3
persons treated as 1 employer under sub-4
paragraph (C)(i), only 1 reduction under5
subclause (I) or (II) shall be allowed with6
respect to such persons and such reduction7
shall be allocated among such persons rat-8
ably on the basis of the number of full-9
time employees employed by each such per-10
son..11
(b) APPLICABLE PAYMENT AMOUNT.Section12
4980H of such Code, as so added and amended, is amend-13
ed14
(1) in the flush text following subsection15
(c)(1)(B), by striking 400 percent of the applicable16
payment amount and inserting an amount equal17
to 112 of $3,000;18
(2) in subsection (d)(1), by striking $75019
and inserting $2,000; and20
(3) in subsection (d)(5)(A), in the matter pre-21
ceding clause (i), by striking subsection (b)(2) and22
(d)(1) and inserting subsection (b) and paragraph23
(1).24
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(c) COUNTING PART-TIME WORKERS IN SETTING1
THE THRESHOLD FOR EMPLOYER RESPONSIBILITY.2
Section 4980H(d)(2) of such Code, as so added and3
amended and as amended by subsection (a), is amended4
by adding at the end the following new subparagraph:5
(E) FULL-TIME EQUIVALENTS TREATED6
AS FULL-TIME EMPLOYEES.Solely for pur-7
poses of determining whether an employer is an8
applicable large employer under this paragraph,9
an employer shall, in addition to the number of10
full-time employees for any month otherwise de-11
termined, include for such month a number of12
full-time employees determined by dividing the13
aggregate number of hours of service of employ-14
ees who are not full-time employees for the15
month by 120..16
(d) ELIMINATING WAITING PERIOD ASSESSMENT.17
Section 4980H of such Code, as so added and amended18
and as amended by the preceding subsections, is amended19
by striking subsection (b) and redesignating subsections20
(c), (d), and (e) as subsections (b), (c), and (d), respec-21
tively.22
SEC. 1004. INCOME DEFINITIONS.23
(a) MODIFIEDADJUSTED GROSS INCOME.24
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(1) IN GENERAL.The following provisions of1
the Internal Revenue Code of 1986 are each amend-2
ed by striking modified gross each place it ap-3
pears and inserting modified adjusted gross:4
(A) Clauses (i) and (ii) of section5
36B(d)(2)(A), as added by section 1401 of the6
Patient Protection and Affordable Care Act.7
(B) Section 6103(l)(21)(A)(iv), as added8
by section 1414 of such Act.9
(C) Clauses (i) and (ii) of section10
5000A(c)(4), as added by section 1501(b) of11
such Act.12
(2) DEFINITION.13
(A) Section 36B(d)(2)(B) of such Code, as14
so added, is amended to read as follows:15
(B) MODIFIED ADJUSTED GROSS IN-16
COME.The term modified adjusted gross in-17
come means adjusted gross income increased18
by19
(i) any amount excluded from gross20
income under section 911, and21
(ii) any amount of interest received22
or accrued by the taxpayer during the tax-23
able year which is exempt from tax..24
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(B) Section 5000A(c)(4)(C) of such Code,1
as so added, is amended to read as follows:2
(C) MODIFIED ADJUSTED GROSS IN-3
COME.The term modified adjusted gross in-4
come means adjusted gross income increased5
by6
(i) any amount excluded from gross7
income under section 911, and8
(ii) any amount of interest received9
or accrued by the taxpayer during the tax-10
able year which is exempt from tax..11
(b) MODIFIED ADJUSTED GROSS INCOME DEFINI-12
TION.13
(1) MEDICAID.Section 1902 of the Social Se-14
curity Act (42 U.S.C. 1396a) is amended by striking15
modified gross income each place it appears in the16
text and headings of the following provisions and in-17
serting modified adjusted gross income:18
(A) Paragraph (14) of subsection (e), as19
added by section 2002(a) of the Patient Protec-20
tion and Affordable Care Act.21
(B) Subsection (gg)(4)(A), as added by22
section 2001(b) of such Act.23
(2) CHIP.24
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(A) STATE PLAN REQUIREMENTS.Section1
2102(b)(1)(B)(v) of the Social Security Act (422
U.S.C. 1397bb(b)(1)(B)(v)), as added by sec-3
tion 2101(d)(1) of the Patient Protection and4
Affordable Care Act, is amended by striking5
modified gross income and inserting modi-6
fied adjusted gross income.7
(B) PLAN ADMINISTRATION.Section8
2107(e)(1)(E) of the Social Security Act (429
U.S.C. 1397gg(e)(1)(E)), as added by section10
2101(d)(2) of the Patient Protection and Af-11
fordable Care Act, is amended by striking12
modified gross income and inserting modi-13
fied adjusted gross income.14
(c) NO EXCESS PAYMENTS.Section 36B(f) of the15
Internal Revenue Code of 1986, as added by section16
1401(a) of the Patient Protection and Affordable Care17
Act, is amended by adding at the end the following new18
paragraph:19
(3) INFORMATION REQUIREMENT.Each Ex-20
change (and any other person specified by the Sec-21
retary) shall provide the following information to the22
Secretary and to the taxpayer with respect to any23
health plan provided through the Exchange:24
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(A) The level of coverage described in sec-1
tion 1302(d) of the Patient Protection and Af-2
fordable Care Act and the period such coverage3
was in effect.4
(B) The total premium for the coverage5
without regard to the credit under this section6
or cost-sharing reductions under section 14027
of such Act.8
(C) The aggregate amount of any ad-9
vance payment of such credit or reductions10
under section 1412 of such Act.11
(D) The name, address, and TIN of the12
primary insured and the name and TIN of each13
other individual obtaining coverage under the14
policy.15
(E) Any information provided to the Ex-16
change, including any change of circumstances,17
necessary to determine eligibility for, and the18
amount of, such credit.19
(F) Any other similar information nec-20
essary to carry out this subsection and deter-21
mine whether a taxpayer has received excess22
advance payments..23
(d) ADULT DEPENDENTS.24
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(1) EXCLUSION OF AMOUNTS EXPENDED FOR1
MEDICAL CARE.The first sentence of section2
105(b) of the Internal Revenue Code of 1986 (relat-3
ing to amounts expended for medical care) is amend-4
ed5
(A) by striking and his dependents and6
inserting his dependents; and7
(B) by inserting before the period the fol-8
lowing: , and any child (as defined in section9
152(f)(1)) of the taxpayer who as of the end of10
the taxable year has not attained age 27.11
(2) SELF-EMPLOYED HEALTH INSURANCE DE-12
DUCTION.Section 162(l)(1) of such Code is13
amended to read as follows:14
(1) ALLOWANCE OF DEDUCTION.In the case15
of a taxpayer who is an employee within the mean-16
ing of section 401(c)(1), there shall be allowed as a17
deduction under this section an amount equal to the18
amount paid during the taxable year for insurance19
which constitutes medical care for20
(A) the taxpayer,21
(B) the taxpayers spouse,22
(C) the taxpayers dependents, and23
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(D) any child (as defined in section1
152(f)(1)) of the taxpayer who as of the end of2
the taxable year has not attained age 27..3
(3) CONFORMING AMENDMENTS.4
(A) INTERNAL REVENUE CODE.Section5
162(l)(2)(B) of such Code is amended by in-6
serting , or any dependent, or individual de-7
scribed in subparagraph (D) of paragraph (1)8
with respect to, after spouse of.9
(B) PUBLIC HEALTH SERVICE ACT.Sec-10
tion 2714 of the Public Health Service Act, as11
added by section 1001(5) of the Patient Protec-12
tion and Affordable Care Act, is amended by13
striking subsection (c).14
(4) SICK AND ACCIDENT BENEFITS PROVIDED15
TO MEMBERS OF A VOLUNTARY EMPLOYEES BENE-16
FICIARY ASSOCIATION AND THEIR DEPENDENTS.17
Section 501(c)(9) of such Code is amended by add-18
ing at the end the following new sentence: For pur-19
poses of providing for the payment of sick and acci-20
dent benefits to members of such an association and21
their dependents, the term dependent shall include22
any individual who is a child (as defined in section23
152(f)(1)) of a member who as of the end of the cal-24
endar year has not attained age 27..25
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(5) MEDICAL AND OTHER BENEFITS FOR RE-1
TIRED EMPLOYEES.Section 401(h) of such Code is2
amended by adding at the end the following: For3
purposes of this subsection, the term dependent4
shall include any individual who is a child (as de-5
fined in section 152(f)(1)) of a retired employee who6
as of the end of the calendar year has not attained7
age 27..8
(e) FIVE PERCENT INCOME DISREGARD FOR CER-9
TAIN INDIVIDUALS.Section 1902(e)(14) of the Social10
Security Act (42 U.S.C. 1396a(e)(14)), as amended by11
subsection (b)(1), is further amended12
(1) in subparagraph (B), by striking No type13
and inserting Subject to subparagraph (I), no14
type; and15
(2) by adding at the end the following new sub-16
paragraph:17
(I) TREATMENT OF PORTION OF MODI-18
FIED ADJUSTED GROSS INCOME.For purposes19
of determining the income eligibility of an indi-20
vidual for medical assistance whose eligibility is21
determined based on the application of modified22
adjusted gross income under subparagraph (A),23
the State shall24
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(i) determine the dollar equivalent of1
the difference between the upper income2
limit on eligibility for such an individual3
(expressed as a percentage of the poverty4
line) and such upper income limit in-5
creased by 5 percentage points; and6
(ii) notwithstanding the requirement7
in subparagraph (A) with respect to use of8
modified adjusted gross income, utilize as9
the applicable income of such individual, in10
determining such income eligibility, an11
amount equal to the modified adjusted12
gross income applicable to such individual13
reduced by such dollar equivalent14
amount..15
SEC. 1005. IMPLEMENTATION FUNDING.16
(a) IN GENERAL.There is hereby established a17
Health Insurance Reform Implementation Fund (referred18
to in this section as the Fund) within the Department19
of Health and Human Services to carry out the Patient20
Protection and Affordable Care Act and this Act (and the21
amendments made by such Acts).22
(b) FUNDING.There is appropriated to the Fund,23
out of any funds in the Treasury not otherwise appro-24
priated, $1,000,000,000 for Federal administrative ex-25
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penses to carry out such Act (and the amendments made1
by such Acts).2
Subtitle BMedicare3
SEC. 1101. CLOSING THE MEDICARE PRESCRIPTION DRUG4
DONUT HOLE.5
(a) COVERAGE GAP REBATE FOR 2010.6
(1) IN GENERAL.Section 1860D42 of the7
Social Security Act (42 U.S.C. 1395w152) is8
amended by adding at the end the following new9
subsection:10
(c) COVERAGE GAP REBATE FOR 2010.11
(1) IN GENERAL.In the case of an individual12
described in subparagraphs (A) through (D) of sec-13
tion 1860D14A(g)(1) who as of the last day of a14
calendar quarter in 2010 has incurred costs for cov-15
ered part D drugs so that the individual has exceed-16
ed the initial coverage limit under section 1860D17
2(b)(3) for 2010, the Secretary shall provide for18
payment from the Medicare Prescription Drug Ac-19
count of $250 to the individual by not later than the20
15th day of the third month following the end of21
such quarter.22
(2) LIMITATION.The Secretary shall provide23
only 1 payment under this subsection with respect to24
any individual..25
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(2) REPEAL OF PROVISION.Section 3315 of1
the Patient Protection and Affordable Care Act (in-2
cluding the amendments made by such section) is re-3
pealed, and any provision of law amended or re-4
pealed by such sections is hereby restored or revived5
as if such section had not been enacted into law.6
(b) CLOSING THE DONUT HOLE.Part D of title7
XVIII of the Social Security Act (42 U.S.C. 1395w1018
et seq.), as amended by section 3301 of the Patient Pro-9
tection and Affordable Care Act, is further amended10
(1) in section 1860D4311
(A) in subsection (b), by striking July 1,12
2010 and inserting January 1, 2011; and13
(B) in subsection (c)(2), by striking July14
1, 2010, and ending on December 31, 2010,15
and inserting January 1, 2011, and December16
31, 2011,;17
(2) in section 1860D14A18
(A) in subsection (a)19
(i) by striking July 1, 2010 and in-20
serting January 1, 2011; and21
(ii) by striking April 1, 2010 and22
inserting 180 days after the date of the23
enactment of this section;24
(B) in subsection (b)(1)(C)25
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(i) in the heading, by striking 20101
AND;2
(ii) by striking July 1, 2010 and in-3
serting January 1, 2011; and4
(iii) by striking May 1, 2010 and5
inserting not later than 30 days after the6
date of the establishment of a model agree-7
ment under subsection (a);8
(C) in subsection (c)9
(i) in paragraph (1)(A)(iii), by strik-10
ing July 1, 2010, and ending on Decem-11
ber 31, 2011 and inserting January 1,12
2011, and ending on December 31, 2011;13
and14
(ii) in paragraph (2), by striking15
2010 and inserting 2011;16
(D) in subsection (d)(2)(B), by striking17
July 1, 2010, and ending on December 31,18
2010 and inserting January 1, 2011, and19
ending on December 31, 2011; and20
(E) in subsection (g)(1)21
(i) in the matter before subparagraph22
(A), by striking an applicable drug and23
inserting a covered part D drug;24
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(ii) by adding and at the end of1
subparagraph (C);2
(iii) by striking subparagraph (D);3
and4
(iv) by redesignating subparagraph5
(E) as subparagraph (D); and6
(3) in section 1860D2(b) 7
(A) in paragraph (2)(A), by striking The8
coverage and inserting Subject to subpara-9
graphs (C) and (D), the coverage;10
(B) in paragraph (2)(B), by striking sub-11
paragraph (A)(ii) and inserting subpara-12
graphs (A)(ii), (C), and (D);13
(C) by adding at the end of paragraph (2)14
the following new subparagraphs:15
(C) COVERAGE FOR GENERIC DRUGS IN16
COVERAGE GAP.17
(i) IN GENERAL.Except as pro-18
vided in paragraph (4), the coverage for an19
applicable beneficiary (as defined in section20
1860D14A(g)(1)) has coinsurance (for21
costs above the initial coverage limit under22
paragraph (3) and below the out-of-pocket23
threshold) for covered part D drugs that24
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are not applicable drugs under section1
1860D14A(g)(2) that is2
(I) equal to the generic-gap co-3
insurance percentage (specified in4
clause (ii)) for the year, or5
(II) actuarially equivalent6
(using processes and methods estab-7
lished under section 1860D11(c)) to8
an average expected payment of such9
percentage of such costs for covered10
part D drugs that are not applicable11
drugs under section 1860D12
14A(g)(2).13
(ii) GENERIC-GAP COINSURANCE14
PERCENTAGE.The generic-gap coinsur-15
ance percentage specified in this clause16
for17
(I) 2011 is 93 percent;18
(II) 2012 and each succeeding19
year before 2020 is the generic-gap20
coinsurance percentage under this21
clause for the previous year decreased22
by 7 percentage points; and23
(III) 2020 and each subsequent24
year is 25 percent.25
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(D) COVERAGE FOR APPLICABLE DRUGS1
IN COVERAGE GAP.2
(i) IN GENERAL.Except as pro-3
vided in paragraph (4), the coverage for an4
applicable beneficiary (as defined in section5
1860D14A(g)(1)) has coinsurance (for6
costs above the initial coverage limit under7
paragraph (3) and below the out-of-pocket8
threshold) for the negotiated price (as de-9
fined in section 1860D14A(g)(6)) of cov-10
ered part D drugs that are applicable11
drugs under section 1860D14A(g)(2) that12
is13
(I) equal to the difference be-14
tween the applicable gap percentage15
(specified in clause (ii) for the year)16
and the discount percentage specified17
in section 1860D14A(g)(4)(A) for18
such applicable drugs, or19
(II) actuarially equivalent20
(using processes and methods estab-21
lished under section 1860D11(c)) to22
an average expected payment of such23
percentage of such costs, for covered24
part D drugs that are applicable25
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drugs under section 1860D1
14A(g)(2).2
(ii) APPLICABLE GAP PERCENT-3
AGE.The applicable gap percentage spec-4
ified in this clause for5
(I) 2013 and 2014 is 97.5 per-6
cent;7
(II) 2015 and 2016 is 95 per-8
cent;9
(III) 2017 is 90 percent;10
(IV) 2018 is 85 percent;11
(V) 2019 is 80 percent; and12
(VI) 2020 and each subsequent13
year is 75 percent.;14
(D) in paragraph (3)(A), as restored under15
subsection (a)(2), by striking paragraph (4)16
and inserting paragraphs (2)(C), (2)(D), and17
(4);18
(E) in paragraph (4)(E), by inserting be-19
fore the period at the end the following: , ex-20
cept that incurred costs shall not include the21
portion of the negotiated price that represents22
the reduction in coinsurance resulting from the23
application of paragraph (2)(D); and24
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(4) in section 1860D22(a)(2)(A), by inserting1
before the period at the end the following: , not2
taking into account the value of any discount or cov-3
erage provided during the gap in prescription drug4
coverage that occurs between the initial coverage5
limit under section 1860D2(b)(3) during the year6
and the out-of-pocket threshold specified in section7
1860D2(b)(4)(B).8
(c) CONFORMING AMENDMENT TO AMP UNDER9
MEDICAID.Section 1927(k)(1)(B)(i) of the Social Secu-10
rity Act (42 U.S.C. 1396r8(k)(1)(B)(i)), as amended by11
section 2503(a)(2)(B) of the Patient Protection and Af-12
fordable Care Act, is amended13
(1) by striking and at the end of subclause14
(III);15
(2) by striking the period at the end of sub-16
clause (IV); and17
(3) by adding at the end the following new sub-18
clause:19
(V) discounts provided by man-20
ufacturers under section 1860D21
14A..22
SEC. 1102. MEDICARE ADVANTAGE PAYMENTS.23
(a) REPEAL.Effective as if included in the enact-24
ment of the Patient Protection and Affordable Care Act,25
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sections 3201 and 3203 of such Act (and the amendments1
made by such sections) are repealed.2
(b) PHASE-IN OF MODIFIED BENCHMARKS.Section3
1853 of the Social Security Act (42 U.S.C. 1395w23)4
is amended5
(1) in subsection (j)(1)(A), by striking (or, be-6
ginning with 2007, 112 of the applicable amount de-7
termined under subsection (k)(1)) for the area for8
the year and inserting for the area for the year9
(or, for 2007, 2008, 2009, and 2010, 112 of the ap-10
plicable amount determined under subsection (k)(1)11
for the area for the year; for 2011, 112 of the appli-12
cable amount determined under subsection (k)(1) for13
the area for 2010; and, beginning with 2012, 112 of14
the blended benchmark amount determined under15
subsection (n)(1) for the area for the year); and16
(2) by adding at the end the following new sub-17
section:18
(n) DETERMINATION OF BLENDED BENCHMARK19
AMOUNT.20
(1) IN GENERAL.For purposes of subsection21
(j), subject to paragraphs (3), (4), and (5), the term22
blended benchmark amount means for an area23
(A) for 2012 the sum of24
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(i) 12 of the applicable amount for1
the area and year; and2
(ii) 12 of the amount specified in3
paragraph (2)(A) for the area and year;4
and5
(B) for a subsequent year the amount6
specified in paragraph (2)(A) for the area and7
year.8
(2) SPECIFIED AMOUNT.9
(A) IN GENERAL.The amount specified10
in this subparagraph for an area and year is11
the product of12
(i) the base payment amount speci-13
fied in subparagraph (E) for the area and14
year adjusted to take into account the15
phase-out in the indirect costs of medical16
education from capitation rates described17
in subsection (k)(4); and18
(ii) the applicable percentage for the19
area for the year specified under subpara-20
graph (B).21
(B) APPLICABLE PERCENTAGE.Subject22
to subparagraph (D), the applicable percentage23
specified in this subparagraph for an area for24
a year in the case of an area that is ranked25
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(i) in the highest quartile under sub-1
paragraph (C) for the previous year is 952
percent;3
(ii) in the second highest quartile4
under such subparagraph for the previous5
year is 100 percent;6
(iii) in the third highest quartile7
under such subparagraph for the previous8
year is 107.5 percent; or9
(iv) in the lowest quartile under such10
subparagraph for the previous year is 11511
percent.12
(C) PERIODIC RANKING.For purposes13
of this paragraph in the case of an area lo-14
cated15
(i) in 1 of the 50 States or the Dis-16
trict of Columbia, the Secretary shall rank17
such area in each year specified under sub-18
section (c)(1)(D)(ii) based upon the level19
of the amount specified in subparagraph20
(A)(i) for such areas; or21
(ii) in a territory, the Secretary shall22
rank such areas in each such year based23
upon the level of the amount specified in24
subparagraph (A)(i) for such area relative25
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to quartile rankings computed under clause1
(i).2
(D) 1-YEAR TRANSITION FOR CHANGES IN3
APPLICABLE PERCENTAGE.If, for a year after4
2012, there is a change in the quartile in which5
an area is ranked compared to the previous6
year, the applicable percentage for the area in7
the year shall be the average of8
(i) the applicable percentage for the9
area for the previous year; and10
(ii) the applicable percentage that11
would otherwise apply for the area for the12
year.13
(E) BASE PAYMENT AMOUNT.Subject14
to subparagraph (F), the base payment amount15
specified in this subparagraph16
(i) for 2012 is the amount specified17
in subsection (c)(1)(D) for the area for the18
year; or19
(ii) for a subsequent year that20
(I) is not specified under sub-21
section (c)(1)(D)(ii), is the base22
amount specified in this subparagraph23
for the area for the previous year, in-24
creased by the national per capita MA25
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growth percentage, described in sub-1
section (c)(6) for that succeeding2
year, but not taking into account any3
adjustment under subparagraph (C)4
of such subsection for a year before5
2004; and6
(II) is specified under sub-7
section (c)(1)(D)(ii), is the amount8
specified in subsection (c)(1)(D) for9
the area for the year.10
(F) APPLICATION OF INDIRECT MEDICAL11
EDUCATION PHASE-OUT.The base payment12
amount specified in subparagraph (E) for a13
year shall be adjusted in the same manner14
under paragraph (4) of subsection (k) as the15
applicable amount is adjusted under such sub-16
section.17
(3) ALTERNATIVE PHASE-INS.18
(A) 4-YEAR PHASE-IN FOR CERTAIN19
AREAS.If the difference between the applica-20
ble amount (as defined in subsection (k)) for an21
area for 2010 and the projected 2010 bench-22
mark amount (as defined in subparagraph (C))23
for the area is at least $30 but less than $50,24
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the blended benchmark amount for the area1
is2
(i) for 2012 the sum of3
(I) 34 of the applicable amount4
for the area and year; and5
(II) 14 of the amount specified6
in paragraph (2)(A) for the area and7
year;8
(ii) for 2013 the sum of9
(I) 12 of the applicable amount10
for the area and year; and11
(II) 12 of the amount specified12
in paragraph (2)(A) for the area and13
year;14
(iii) for 2014 the sum of15
(I) 14 of the applicable amount16
for the area and year; and17
(II) 34 of the amount specified18
in paragraph (2)(A) for the area and19
year; and20
(iv) for a subsequent year the21
amount specified in paragraph (2)(A) for22
the area and year.23
(B) 6-YEAR PHASE-IN FOR CERTAIN24
AREAS.If the difference between the applica-25
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ble amount (as defined in subsection (k)) for an1
area for 2010 and the projected 2010 bench-2
mark amount (as defined in subparagraph (C))3
for the area is at least $50, the blended bench-4
mark amount for the area is5
(i) for 2012 the sum of6
(I) 56 of the applicable amount7
for the area and year; and8
(II) 16 of the amount specified9
in paragraph (2)(A) for the area and10
year;11
(ii) for 2013 the sum of12
(I) 23 of the applicable amount13
for the area and year; and14
(II) 13 of the amount specified15
in paragraph (2)(A) for the area and16
year;17
(iii) for 2014 the sum of18
(I) 12 of the applicable amount19
for the area and year; and20
(II) 12 of the amount specified21
in paragraph (2)(A) for the area and22
year;23
(iv) for 2015 the sum of24
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(I) 13 of the applicable amount1
for the area and year; and2
(II) 23 of the amount specified3
in paragraph (2)(A) for the area and4
year; and5
(v) for 2016 the sum of6
(I) 16 of the applicable amount7
for the area and year; and8
(II) 56 of the amount specified9
in paragraph (2)(A) for the area and10
year; and11
(vi) for a subsequent year the12
amount specified in paragraph (2)(A) for13
the area and year.14
(C) PROJECTED 2010 BENCHMARK15
AMOUNT.The projected 2010 benchmark16
amount described in this subparagraph for an17
area is equal to the sum of18
(i) 12 of the applicable amount (as19
defined in subsection (k)) for the area for20
2010; and21
(ii) 12 of the amount specified in22
paragraph (2)(A) for the area for 2010 but23
determined as if there were substituted for24
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the applicable percentage specified in1
clause (ii) of such paragraph the sum of2
(I) the applicable percent that3
would be specified under subpara-4
graph (B) of paragraph (2) (deter-5
mined without regard to subpara-6
graph (D) of such paragraph) for the7
area for 2010 if any reference in such8
paragraph to the previous year were9
deemed a reference to 2010; and10
(II) the applicable percentage11
increase that would apply to a quali-12
fying plan in the area under sub-13
section (o) as if any reference in such14
subsection to 2012 were deemed a ref-15
erence to 2010 and as if the deter-16
mination of a qualifying county under17
paragraph (3)(B) of such subsection18
were made for 2010.19
(4) CAP ON BENCHMARK AMOUNT.In no20
case shall the blended benchmark amount for an21
area for a year (determined taking into account sub-22
section (o)) be greater than the applicable amount23
that would (but for the application of this sub-24
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section) be determined under subsection (k)(1) for1
the area for the year.2
(5) NON-APPLICATION TO PACE PLANS.This3
subsection shall not apply to payments to a PACE4
program under section 1894..5
(c) APPLICABLE PERCENTAGE QUALITY IN-6
CREASES.Section 1853 of such Act (42 U.S.C. 1395w7
23), as amended by subsection (b), is amended8
(1) in subsection (j), by inserting subject to9
subsection (o), after For purposes of this part,;10
(2) in subsection (n)(2)(B), as added by sub-11
section (b), by inserting , subject to subsection (o)12
after as follows; and13
(3) by adding at the end the following new sub-14
section:15
(o) APPLICABLE PERCENTAGE QUALITY IN-16
CREASES.17
(1) IN GENERAL.Subject to the succeeding18
paragraphs, in the case of a qualifying plan with re-19
spect to a year beginning with 2012, the applicable20
percentage under subsection (n)(2)(B) shall be in-21
creased on a plan or contract level, as determined by22
the Secretary23
(A) for 2012, by 1.5 percentage points;24
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(B) for 2013, by 3.0 percentage points;1
and2
(C) for 2014 or a subsequent year, by 5.03
percentage points.4
(2) INCREASE FOR QUALIFYING PLANS IN5
QUALIFYING COUNTIES.The increase applied under6
paragraph (1) for a qualifying plan located in a7
qualifying county for a year shall be doubled.8
(3) QUALIFYING PLANS AND QUALIFYING9
COUNTY DEFINED; APPLICATION OF INCREASES TO10
LOW ENROLLMENT AND NEW PLANS.For purposes11
of this subsection:12
(A) QUALIFYING PLAN.13
(i) IN GENERAL.The term quali-14
fying plan means, for a year and subject15
to paragraph (4), a plan that had a quality16
rating under paragraph (4) of 4 stars or17
higher based on the most recent data avail-18
able for such year.19
(ii) APPLICATION OF INCREASES TO20
LOW ENROLLMENT PLANS.21
(I) 2012.For 2012, the term22
qualifying plan includes an MA plan23
that the Secretary determines is not24
able to have a quality rating under25
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paragraph (4) because of low enroll-1
ment.2
(II) 2013 AND SUBSEQUENT3
YEARS.For 2013 and subsequent4
years, for purposes of determining5
whether an MA plan with low enroll-6
ment (as defined by the Secretary) is7
included as a qualifying plan, the Sec-8
retary shall establish a method to9
apply to MA plans with low enroll-10
ment (as defined by the Secretary)11
the computation of quality rating and12
the rating system under paragraph13
(4).14
(iii) APPLICATION OF INCREASES TO15
NEW PLANS.16
(I) IN GENERAL.A new MA17
plan that meets criteria specified by18
the Secretary shall be treated as a19
qualifying plan, except that in apply-20
ing paragraph (1), the applicable per-21
centage under subsection (n)(2)(B)22
shall be increased23
(aa) for 2012, by 1.5 per-24
centage points;25
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(bb) for 2013, by 2.5 per-1
centage points; and2
(cc) for 2014 or a subse-3
quent year, by 3.5 percentage4
points.5
(II) NEW MA PLAN DEFINED.6
The term new MA plan means, with7
respect to a year, a plan offered by an8
organization or sponsor that has not9
had a contract as a Medicare Advan-10
tage organization in the preceding 3-11
year period.12
(B) QUALIFYING COUNTY.The term13
qualifying county means, for a year, a coun-14
ty15
(i) that has an MA capitation rate16
that, in 2004, was based on the amount17
specified in subsection (c)(1)(B) for a Met-18
ropolitan Statistical Area with a population19
of more than 250,000;20
(ii) for which, as of December 2009,21
of the Medicare Advantage eligible individ-22
uals residing in the county at least 25 per-23
cent of such individuals were enrolled in24
Medicare Advantage plans; and25
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(iii) that has per capita fee-for-serv-1
ice spending that is lower than the na-2
tional monthly per capita cost for expendi-3
tures for individuals enrolled under the4
original medicare fee-for-service program5
for the year.6
(4) QUALITY DETERMINATIONS FOR APPLICA-7
TION OF INCREASE.8
(A) QUALITY DETERMINATION.The9
quality rating for a plan shall be determined ac-10
cording to a 5-star rating system (based on the11
data collected under section 1852(e)).12
(B) PLANS THAT FAILED TO REPORT.13
An MA plan which does not report data that14
enables the Secretary to rate the plan for pur-15
poses of this paragraph shall be counted as hav-16
ing a rating of fewer than 3.5 stars.17
(5) EXCEPTION FOR PACE PLANS.This sub-18
section shall not apply to payments to a PACE pro-19
gram under section 1894..20
(4) DETERMINATION OF MEDICARE PART D21
LOW-INCOME BENCHMARK PREMIUM.Section22
1860D14(b)(2)(B)(iii) of the Social Security Act23
(42 U.S.C. 1395w114(b)(2)(B)(iii)) as amended by24
section 3302 of the Patient Protection and Afford-25
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able Care Act, is amended by striking , determined1
without regard to any reduction in such premium as2
a result of any beneficiary rebate under section3
1854(b)(1)(C) or bonus payment under section4
1853(n) and inserting the following: and deter-5
mined before the application of the monthly rebate6
computed under section 1854(b)(1)(C)(i) for that7
plan and year involved and, in the case of a quali-8
fying plan, before the application of the increase9
under section 1853(o) for that plan and year in-10
volved.11
(d) BENEFICIARY REBATES.Section 1854(b)(1)(C)12
of such Act (42 U.S.C. 1395w24(b)(1)(C)), as amended13
by section 3202(b) of the Patient Protection and Afford-14
able Care Act, is further amended15
(1) in clause (i), by inserting (or the applica-16
ble rebate percentage specified in clause (iii) in the17
case of plan years beginning on or after January 1,18
2012) after 75 percent; and19
(2) by striking clause (iii), by redesignating20
clauses (iv) and (v) as clauses (vii) and (viii), respec-21
tively, and by inserting after clause (ii) the following22
new clauses:23
(iii) APPLICABLE REBATE PERCENT-24
AGE.The applicable rebate percentage25
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specified in this clause for a plan for a1
year, based on the system under section2
1853(o)(4)(A), is the sum of3
(I) the product of the old phase-4
in proportion for the year under5
clause (iv) and 75 percent; and6
(II) the product of the new7
phase-in proportion for the year under8
clause (iv) and the final applicable re-9
bate percentage under clause (v).10
(iv) OLD AND NEW PHASE-IN PRO-11
PORTIONS.For purposes of clause (iv)12
(I) for 2012, the old phase-in13
proportion is 23 and the new phase-in14
proportion is 13;15
(II) for 2013, the old phase-in16
proportion is 13 and the new phase-in17
proportion is 23; and18
(III) for 2014 and any subse-19
quent year, the old phase-in propor-20
tion is 0 and the new phase-in propor-21
tion is 1.22
(v) FINAL APPLICABLE REBATE PER-23
CENTAGE.Subject to clause (vi), the final24
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applicable rebate percentage under this1
clause is2
(I) in the case of a plan with a3
quality rating under such system of at4
least 4.5 stars, 70 percent;5
(II) in the case of a plan with6
a quality rating under such system of7
at least 3.5 stars and less than 4.58
stars, 65 percent; and9
(III) in the case of a plan with10
a quality rating under such system of11
less than 3.5 stars, 50 percent.12
(vi) TREATMENT OF LOW ENROLL-13
MENT AND NEW PLANS.For purposes of14
clause (v)15
(I) for 2012, in the case of a16
plan described in subclause (I) of sub-17
section (o)(3)(A)(ii), the plan shall be18
treated as having a rating of 4.519
stars; and20
(II) for 2012 or a subsequent21
year, in the case of a new MA plan22
(as defined under subclause (III) of23
subsection (o)(3)(A)(iii))) that is24
treated as a qualifying plan pursuant25
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to subclause (I) of such subsection,1
the plan shall be treated as having a2
rating of 3.5 stars..3
(e) CODING INTENSITY ADJUSTMENT.Section4
1853(a)(1)(C)(ii) of such Act (42 U.S.C. 1395w5
23(a)(1)(C)(ii)) is amended6
(1) in the heading, by striking DURING PHASE-7
OUT OF BUDGET NEUTRALITY FACTOR and insert-8
ing OF CODING ADJUSTMENT;9
(2) in the matter before subclause (I), by strik-10
ing through 2010 and inserting and each subse-11
quent year; and12
(3) in subclause (II)13
(A) in the first sentence, by inserting an-14
nually before conduct an analysis;15
(B) in the second sentence16
(i) by inserting on a timely basis17
after are incorporated; and18
(ii) by striking only for 2008, 2009,19
and 2010 and inserting for 2008 and20
subsequent years;21
(C) in the third sentence, by inserting22
and updated as appropriate before the period23
at the end; and24
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(D) by adding at the end the following new1
subclauses:2
(III) In calculating each years3
adjustment for 2019 and subsequent4
years, the adjustment factor shall be5
no less than 5.7 percent.6
(IV) Such adjustment shall be7
applied to risk scores until the Sec-8
retary implements risk adjustment9
using Medicare Advantage diagnostic,10
cost, and use data..11
(f) REPEAL OF COMPARATIVE COST ADJUSTMENT12
PROGRAM.Section 1860C1 of the Social Security Act13
(42 U.S.C. 1395w29), as added by section 241(a) of the14
Medicare Prescription Drug, Improvement, and Mod-15
ernization Act of 2003 (Public Law 108173), is repealed.16
SEC. 1103. SAVINGS FROM LIMITS ON MA PLAN ADMINIS-17
TRATIVE COSTS.18
Section 1857(e) of the Social Security Act (42 U.S.C.19
1395w27(e)) is amended by adding at the end the fol-20
lowing new paragraph:21
(4) REQUIREMENT FOR MINIMUM MEDICAL22
LOSS RATIO.If the Secretary determines for a con-23
tract year (beginning with 2014) that an MA plan24
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has failed to have a medical loss ratio of at least1
.852
(A) the MA plan shall remit to the Sec-3
retary an amount equal to the product of4
(i) the total revenue of the MA plan5
under this part for the contract year; and6
(ii) the difference between .85 and7
the medical loss ratio;8
(B) for 3 consecutive contract years, the9
Secretary shall not permit the enrollment of10
new enrollees under the plan for coverage dur-11
ing the second succeeding contract year; and12
(C) the Secretary shall terminate the plan13
contract if the plan fails to have such a medical14
loss ratio for 5 consecutive contract years.15
Amounts collected pursuant to subparagraph (A)16
shall be deposited into the Centers for Medicare &17
Medicaid Program Management Account to be avail-18
able until expended..19
SEC. 1104. DISPROPORTIONATE SHARE HOSPITAL (DSH)20
PAYMENTS.21
Section 1886(r) of the Social Security Act (42 U.S.C.22
1395ww(r)), as added by section 3133 of the Patient Pro-23
tection and Affordable Care Act and as amended by sec-24
tion 10316 of such Act, is amended25
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(1) in paragraph (1), by striking 2015 and1
inserting 2014; and2
(2) in paragraph (2)3
(A) in the matter preceding subparagraph4
(A), by striking 2015 and inserting 2014;5
(B) in subparagraph (B)(i)6
(i) in the heading, by inserting 2014,7
after YEARS;8
(ii) in the matter preceding subclause9
(I), by inserting 2014, after each of fis-10
cal years;11
(iii) in subclause (I), by striking on12
such Act and inserting on the Health13
Care and Education Affordability Rec-14
onciliation Act of 2010; and15
(iv) in the matter following subclause16
(II), by striking minus 1.5 percentage17
points and inserting minus 0.1 percent-18
age points for fiscal year 2014 and minus19
0.2 percentage points for each of fiscal20
years 2015, 2016, and 2017; and21
(C) in subparagraph (B)(ii), in the matter22
following subclause (II), by striking and, for23
each of 2018 and 2019, minus 1.5 percentage24
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points and inserting minus 0.2 percentage1
points for each of fiscal years 2018 and 2019.2
SEC. 1105. MARKET BASKET UPDATES.3
(a) IPPS.Section 1886(b)(3)(B) of the Social Se-4
curity Act (42 U.S.C. 1395ww(b)(3)(B)), as amended by5
sections 3401(a)(4) and 10319(a) of the Patient Protec-6
tion and Affordable Care Act, is amended7
(1) in clause (xii)8
(A) by placing the subclause (II) (inserted9
by section 10319(a)(3) of the Patient Protec-10
tion and Affordable Care Act) immediately after11
subclause (I) and, in such subclause (II), by12
striking and at the end; and13
(B) by striking subclause (III) and insert-14
ing the following:15
(III) for fiscal year 2014, by 0.3 percentage16
point;17
(IV) for each of fiscal years 2015 and 2016,18
by 0.2 percentage point; and19
(V) for each of fiscal years 2017, 2018, and20
2019, by 0.75 percentage point.; and21
(2) by striking clause (xiii).22
(b) LONG-TERM CARE HOSPITALS.Section23
1886(m)(4) of the Social Security Act (42 U.S.C.24
1395ww(m)(4)), as added by section 3401(c) of the Pa-25
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tient Protection and Affordable Care Act and amended by1
section 10319(b) of such Act, is amended2
(1) in subparagraph (A)3
(A) in clause (iii), by striking and at the4
end; and5
(B) by striking clause (iv) and inserting6
the following:7
(iv) for rate year 2014, 0.3 percent-8
age point;9
(v) for each of rate years 2015 and10
2016, 0.2 percentage point; and11
(vi) for each of rate years 2017,12
2018, and 2019, 0.75 percentage point.;13
(2) by striking subparagraph (B); and14
(3) by striking (4) OTHER ADJUSTMENT.15
and all that follows through For purposes and in-16
serting (4) OTHER ADJUSTMENT.For purposes17
(and redesignating clauses (i) through (vi) as sub-18
paragraphs (A) through (F), respectively, with ap-19
propriate indentation).20
(c) INPATIENT REHABILITATION FACILITIES.Sec-21
tion 1886(j)(3)(D) of the Social Security Act (42 U.S.C.22
1395ww(j)(3)(D)), as added by section 3401(d)(2) of the23
Patient Protection and Affordable Care Act and amended24
by section 10319(c) of such Act, is amended25
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(1) in clause (i)1
(A) by placing the subclause (II) (inserted2
by section 10319(c)(3) of the Patient Protec-3
tion and Affordable Care Act) immediately after4
subclause (I) and, in such subclause (II), by5
striking and at the end; and6
(B) by striking subclause (III) and insert-7
ing the following:8
(III) for fiscal year 2014, 0.39
percentage point;10
(IV) for each of fiscal years11
2015 and 2016, 0.2 percentage point;12
and13
(V) for each of fiscal years14
2017, 2018, and 2019, 0.75 percent-15
age point.;16
(2) by striking clause (ii); and17
(3) by striking (D) OTHER ADJUSTMENT.18
and all that follows through For purposes and in-19
serting (D) OTHER ADJUSTMENT.For purposes20
(and redesignating subclauses (I) through (V) as21
clauses (i) through (v), respectively, with appropriate22
indentation).23
(d) PSYCHIATRIC HOSPITALS.Section 1886(s)(3) of24
the Social Security Act, as added by section 3401(f) of25
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the Patient Protection and Affordable Care Act and1
amended by section 10319(e) of such Act, is amended2
(1) in subparagraph (A)3
(A) by placing the clause (ii) (inserted by4
section 10319(e)(3) of the Patient Protection5
and Affordable Care Act) immediately after6
clause (i) and, in such clause (ii), by striking7
and at the end; and8
(B) by striking clause (iii) and inserting9
the following:10
(iii) for the rate year beginning in11
2014, 0.3 percentage point;12
(iv) for each of the rate years begin-13
ning in 2015 and 2016, 0.2 percentage14
point; and15
(v) for each of the rate years begin-16
ning in 2017, 2018, and 2019, 0.75 per-17
centage point.;18
(2) by striking subparagraph (B); and19
(3) by striking (3) OTHER ADJUSTMENT.20
and all that follows through For purposes and in-21
serting (3) OTHER ADJUSTMENT.For purposes22
(and redesignating clauses (i) through (v) as sub-23
paragraphs (A) through (E), respectively, with ap-24
propriate indentation).25
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(e) OUTPATIENT HOSPITALS.Section1
1833(t)(3)(G) of the Social Security Act (42 U.S.C.2
1395l(t)(3)(G)), as added by section 3401(i)(2) of the Pa-3
tient Protection and Affordable Care Act and amended by4
section 10319(g) of such Act, is amended5
(1) in clause (i)6
(A) by placing the subclause (II) (inserted7
by section 10319(g)(3) of the Patient Protec-8
tion and Affordable Care Act) immediately after9
subclause (I) and, in such subclause (II), by10
striking and at the end; and11
(B) by striking subclause (III) and insert-12
ing the following:13
(III) for 2014, 0.3 percentage14
point;15
(IV) for each of 2015 and 2016,16
0.2 percentage point; and17
(V) for each of 2017, 2018, and18
2019, 0.75 percentage point.;19
(2) by striking clause (ii); and20
(3) by striking (G) OTHER ADJUSTMENT.21
and all that follows through For purposes and in-22
serting (G) OTHER ADJUSTMENT.For purposes23
(and redesignating subclauses (I) through (V) as24
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clauses (i) through (v), respectively, with appropriate1
indentation).2
SEC. 1106. PHYSICIAN OWNERSHIP-REFERRAL.3
Section 1877(i) of the Social Security Act (42 U.S.C.4
1395nn(i)), as added by section 6001(a)(3) of the Patient5
Protection and Affordable Care Act and as amended by6
section 10601(a) of such Act, is amended7
(1) in paragraph (1)(A)(i), by striking August8
1, 2010 and inserting December 31, 2010; and9
(2) in paragraph (3)10
(A) in subparagraph (A)(i), by striking11
an applicable hospital (as defined in subpara-12
graph (E)) and inserting a hospital that is an13
applicable hospital (as defined in subparagraph14
(E)) or is a high Medicaid facility described in15
subparagraph (F);16
(B) in subparagraph (C)(iii), by inserting17
after date of enactment of this subsection the18
following: (or, in the case of a hospital that19
did not have a provider agreement in effect as20
of such date but does have such an agreement21
in effect on December 31, 2010, the effective22
date of such provider agreement);23
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(C) by redesignating subparagraphs (F)1
through (H) as subparagraphs (G) through (I),2
respectively; and3
(D) by inserting after subparagraph (E)4
the following new subparagraph:5
(F) HIGH MEDICAID FACILITY DE-6
SCRIBED.A high Medicaid facility described in7
this subparagraph is a hospital that8
(i) is not the sole hospital in a coun-9
ty;10
(ii) with respect to each of the 311
most recent years for which data are avail-12
able, has an annual percent of total inpa-13
tient admissions that represent inpatient14
admissions under title XIX that is esti-15
mated to be greater than such percent with16
respect to such admissions for any other17
hospital located in the county in which the18
hospital is located; and19
(iii) meets the conditions described20
in subparagraph (E)(iii)..21
SEC. 1107. PAYMENT FOR IMAGING SERVICES.22
Section 1848 of the Social Security Act (42 U.S.C.23
1395w4), as amended by section 3135(a) of the Patient24
Protection and Affordable Care Act, is amended25
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(1) in subsection (b)(4)1
(A) in subparagraph (B), by striking this2
paragraph and inserting subparagraph (A);3
and4
(B) by amending subparagraph (C) to read5
as follows:6
(C) ADJUSTMENT IN IMAGING UTILIZA-7
TION RATE.With respect to fee schedules es-8
tablished for 2011 and subsequent years, in the9
methodology for determining practice expense10
relative value units for expensive diagnostic im-11
aging equipment under the final rule published12
by the Secretary in the Federal Register on No-13
vember 25, 2009 (42 CFR 410, et al.), the Sec-14
retary shall use a 75 percent assumption in-15
stead of the utilization rates otherwise estab-16
lished in such final rule.; and17
(2) in subsection (c)(2)(B)(v), by striking sub-18
clauses (III), (IV), and (V) and inserting the fol-19
lowing new subclause:20
(III) CHANGE IN UTILIZATION21
RATE FOR CERTAIN IMAGING SERV-22
ICES.Effective for fee schedules es-23
tablished beginning with 2011, re-24
duced expenditures attributable to the25
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change in the utilization rate applica-1
ble to 2011, as described in subsection2
(b)(4)(C)..3
Subtitle CMedicaid4
SEC. 1201. FEDERAL FUNDING FOR STATES.5
Section 1905 of the Social Security Act (42 U.S.C.6
1396d), as amended by sections 2001(a)(3) and 10201(c)7
of the Patient Protection and Affordable Care Act, is8
amended9
(1) in subsection (y)10
(A) by redesignating subclause (II) of11
paragraph (1)(B)(ii) as paragraph (5) of sub-12
section (z) and realigning the left margins ac-13
cordingly; and14
(B) by striking paragraph (1) and insert-15
ing the following:16
(1) AMOUNT OF INCREASE.Notwithstanding17
subsection (b), the Federal medical assistance per-18
centage for a State that is one of the 50 States or19
the District of Columbia, with respect to amounts20
expended by such State for medical assistance for21
newly eligible individuals described in subclause22
(VIII) of section 1902(a)(10)(A)(i), shall be equal23
to24
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(A) 100 percent for calendar quarters in1
2014, 2015, and 2016;2
(B) 95 percent for calendar quarters in3
2017;4
(C) 94 percent for calendar quarters in5
2018;6
(D) 93 percent for calendar quarters in7
2019; and8
(E) 90 percent for calendar quarters in9
2020 and each year thereafter.; and10
(2) in subsection (z)11
(A) in paragraph (1), by striking Sep-12
tember 30, 2019 and inserting December 31,13
2015 and by striking subsection14
(y)(1)(B)(ii)(II) and inserting paragraph15
(3);16
(B) by striking paragraphs (2) through (4)17
and inserting the following:18
(2)(A) For calendar quarters in 2014 and19
each year thereafter, the Federal medical assistance20
percentage otherwise determined under subsection21
(b) for an expansion State described in paragraph22
(3) with respect to medical assistance for individuals23
described in section 1902(a)(10)(A)(i)(VIII) who are24
nonpregnant childless adults with respect to whom25
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the State may require enrollment in benchmark cov-1
erage under section 1937 shall be equal to the per-2
cent specified in subparagraph (B)(i) for such year.3
(B)(i) The percent specified in this subpara-4
graph for a State for a year is equal to the Federal5
medical assistance percentage (as defined in the first6
sentence of subsection (b)) for the State increased7
by a number of percentage points equal to the tran-8
sition percentage (specified in clause (ii) for the9
year) of the number of percentage points by which10
(I) such Federal medical assistance per-11
centage for the State, is less than12
(II) the percent specified in subsection13
(y)(1) for the year.14
(ii) The transition percentage specified in this15
clause for16
(I) 2014 is 50 percent;17
(II) 2015 is 60 percent;18
(III) 2016 is 70 percent;19
(IV) 2017 is 80 percent;20
(V) 2018 is 90 percent; and21
(VI) 2019 and each subsequent year is22
100 percent.; and23
(C) by redesignating paragraph (5) (as24
added by paragraph (1)(A) of this section) as25
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paragraph (3), realigning the left margins to1
align with paragraph (2), and striking the2
heading and all that follows through a State3
is and inserting A State is.4
SEC. 1202. PAYMENTS TO PRIMARY CARE PHYSICIANS.5
(a) IN GENERAL.6
(1) FEE-FOR-SERVICE PAYMENTS.Section7
1902 of the Social Security Act (42 U.S.C. 1396a),8
as amended by section 2303(a)(2) of the Patient9
Protection and Affordable Care Act, is amended10
(A) in subsection (a)(13)11
(i) by striking and at the end of12
subparagraph (A);13
(ii) by adding and at the end of14
subparagraph (B); and15
(iii) by adding at the end the fol-16
lowing new subparagraph:17
(C) payment for primary care services (as18
defined in subsection (jj)) furnished in 201319
and 2014 by a physician with a primary spe-20
cialty designation of family medicine, general21
internal medicine, or pediatric medicine at a22
rate not less than 100 percent of the payment23
rate that applies to such services and physician24
under part B of title XVIII (or, if greater, the25
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payment rate that would be applicable under1
such part if the conversion factor under section2
1848(d) for the year involved were the conver-3
sion factor under such section for 2009);; and4
(B) by adding at the end the following new5
subsection:6
(jj) PRIMARY CARE SERVICES DEFINED.For pur-7
poses of subsection (a)(13)(C), the term primary care8
services means9
(1) evaluation and management services that10
are procedure codes (for services covered under title11
XVIII) for services in the category designated Eval-12
uation and Management in the Healthcare Common13
Procedure Coding System (established by the Sec-14
retary under section 1848(c)(5) as of December 31,15
2009, and as subsequently modified); and16
(2) services related to immunization adminis-17
tration for vaccines and toxoids for which CPT codes18
90465, 90466, 90467, 90468, 90471, 90472, 90473,19
or 90474 (as subsequently modified) apply under20
such System..21
(2) UNDER MEDICAID MANAGED CARE22
PLANS.Section 1932(f) of such Act (42 U.S.C.23
1396u2(f)) is amended24
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(A) in the heading, by adding at the end1
the following: ; ADEQUACY OF PAYMENT FOR2
PRIMARY CARE SERVICES; and3
(B) by inserting before the period at the4
end the following: and, in the case of primary5
care services described in section6
1902(a)(13)(C), consistent with the minimum7
payment rates specified in such section (regard-8
less of the manner in which such payments are9
made, including in the form of capitation or10
partial capitation).11
(b) INCREASE IN PAYMENT USING INCREASED12
FMAP.Section 1905 of the Social Security Act, as13
amended by section 1004(b) of this Act and section14
10201(c)(6) of the Patient Protection and Affordable Care15
Act, is amended by adding at the end the following new16
subsection:17
(dd) INCREASED FMAP FORADDITIONAL EXPEND-18
ITURES FOR PRIMARY CARE SERVICES.Notwithstanding19
subsection (b), with respect to the portion of the amounts20
expended for medical assistance for services described in21
section 1902(a)(13)(C) furnished on or after January 1,22
2013, and before January 1, 2015, that is attributable to23
the amount by which the minimum payment rate required24
under such section (or, by application, section 1932(f)) ex-25
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ceeds the payment rate applicable to such services under1
the State plan as of July 1, 2009, the Federal medical2
assistance percentage for a State that is one of the 503
States or the District of Columbia shall be equal to 1004
percent. The preceding sentence does not prohibit the pay-5
ment of Federal financial participation based on the Fed-6
eral medical assistance percentage for amounts in excess7
of those specified in such sentence..8
SEC. 1203. DISPROPORTIONATE SHARE HOSPITAL PAY-9
MENTS.10
(a) IN GENERAL.Section 1923(f) of the Social Se-11
curity Act (42 U.S.C. 1396r4(f)), as amended by sections12
2551(a)(4) and 10201(e)(1)