H.R. 4872 - Reconciliation Act of 2010

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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:

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

3 ‘‘Health Care and Education Affordability Reconciliation

4 Act of 2010’’.

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

6 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—COVERAGE, MEDICARE, MEDICAID, AND REVENUES

Subtitle A—Coverage

Sec. 1001. Affordability.

Sec. 1002. Individual responsibility.

Sec. 1003. Employer responsibility.

Sec. 1004. Income definitions.

Sec. 1005. Implementation funding.

Subtitle B—Medicare

Sec. 1101. Closing the medicare prescription drug ‘‘donut hole’’.

Sec. 1102. Medicare Advantage payments.

Sec. 1103. Savings from limits on MA plan administrative costs.

Sec. 1104. Disproportionate share hospital (DSH) payments.

Sec. 1105. Market basket updates.

Sec. 1106. Physician ownership-referral.

Sec. 1107. Payment for imaging services.

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. CMS–IRS data match to identify fraudulent providers.

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

Sec. 1305. 90-day period of enhanced oversight for initial claims of DME suppliers.

Subtitle E—Provisions Relating to Revenue

Sec. 1401. High-cost plan excise tax.

Sec. 1402. Medicare tax.

Sec. 1403. Delay of limitation on health flexible spending arrangements under

cafeteria plans.

Sec. 1404. Brand name pharmaceuticals.

Sec. 1405. Excise tax on medical device manufacturers.

Sec. 1406. Health insurance providers.

Sec. 1407. Delay of elimination of deduction for expenses allocable to medicare

part D subsidy.

Sec. 1408. Elimination of unintended application of cellulosic biofuel producer

credit.

Sec. 1409. Codification of economic substance doctrine and penalties.

Sec. 1410. Time for payment of corporate estimated taxes.

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

Subtitle F—Other Provisions

Sec. 1501. Community college and career training grant program.

TITLE II—EDUCATION AND HEALTH

Subtitle A—Education

Sec. 2001. Short title; references.

PART I—INVESTING IN STUDENTS AND FAMILIES

Sec. 2101. Federal Pell Grants.

Sec. 2102. Student financial assistance.

Sec. 2103. College access challenge grant program.

Sec. 2104. Investment in historically black colleges and universities and minority-

serving institutions.

PART II—STUDENT LOAN REFORM

Sec. 2201. Termination of Federal Family Education Loan appropriations.

Sec. 2202. Termination of Federal loan insurance program.

Sec. 2203. Termination of applicable interest rates.

Sec. 2204. Termination of Federal payments to reduce student interest costs.

Sec. 2205. Termination of FFEL PLUS Loans.

Sec. 2206. Federal Consolidation Loans.

Sec. 2207. Termination of Unsubsidized Stafford Loans for middle-income borrowers.

Sec. 2208. Termination of special allowances.

Sec. 2209. Origination of Direct Loans at institutions outside the United

States.

Sec. 2210. Conforming amendments.

Sec. 2211. Terms and conditions of loans.

Sec. 2212. Contracts; mandatory funds.

Sec. 2213. Agreements with State-owned banks.

Sec. 2214. Income-based repayment.

Subtitle B—Health

Sec. 2301. Insurance reforms.

Sec. 2302. Drugs purchased by covered entities.

Sec. 2303. Community health centers.

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1 TITLE I—COVERAGE, MEDICARE,

2 MEDICAID, AND REVENUES

3 Subtitle A—Coverage

4 SEC. 1001. AFFORDABILITY.

5 (a) PREMIUM TAX CREDITS.—Section 36B of the In6

ternal Revenue Code of 1986, as added by section 1401

7 of the Patient Protection and Affordable Care Act and

8 amended by section 10105 of such Act, is amended—

9 (1) in subsection ( b )(3)(A)—

10 (A) in clause (i), by striking ''with respect

11 to any taxpayer'' and all that follows up to the

12 end period and inserting ''for any taxable year

13 shall be the percentage such that the applicable

14 percentage for any taxpayer whose household

15 income is within an income tier specified in the

16 following table shall increase, on a sliding scale

17 in a linear manner, from the initial premium

18 percentage to the final premium percentage

19 specified in such table for such income tier:

 

''In the case of household income

(expressed as a percent of

poverty line) within the following

income tier:

The initial premium

percentage is—

The final premium

percentage 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), and

2 inserting the following:

3 ''(ii) INDEXING.—

4 ''(I) IN GENERAL.—Subject to

5 subclause (II), in the case of taxable

6 years beginning in any calendar year

7 after 2014, the initial and final appli8

cable percentages under clause (i) (as

9 in effect for the preceding calendar

10 year after application of this clause)

11 shall be adjusted to reflect the excess

12 of the rate of premium growth for the

13 preceding calendar year over the rate

14 of income growth for the preceding

15 calendar year.

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16 ‘‘(II) ADDITIONAL ADJUST

17 MENT. — Except as provided in sub

18 clause (III), in the case of any cal

19 endar year after 2018, the percent

20 ages described in subclause (I) shall,

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1 in addition to the adjustment under

2 subclause (I), be adjusted to reflect

3 the excess (if any) of the rate of pre

4 mium growth estimated under sub

5 clause (I) for the preceding calendar

6 year over the rate of growth in the

7 consumer price index for the pre

8 ceding calendar year.

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9 ‘‘(III) FAILSAFE.—Subclause (II)

10 shall apply for any calendar year only

11 if the aggregate amount of premium

12 tax credits under this section and

13 cost-sharing reductions under section

14 1402 of the Patient Protection and

15 Affordable Care Act for the preceding

16 calendar year exceeds an amount

17 equal to 0.504 percent of the gross

18 domestic product for the preceding

19 calendar year.’’; and

20 (2) in subsection ( c )(2)( C )—

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

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

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

24 (iv) and inserting ‘‘( b )( 3 )( A )(ii)’’.

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1 ( b ) COST SHARING.—Section 1402( c ) of the Patient

2 Protection and Affordable Care Act is amended—

3 ( 1 ) in paragraph ( 1 )( B )( i )—

4 ( A ) in subclause (I), by striking ‘‘90’’ and

5 inserting ‘‘94’’;

6 ( B ) in subclause (II)—

7 (i) by striking ‘‘80’’ and inserting

8 ‘‘87’’; and

9 (ii) by striking ‘‘and’’; and

10 ( C ) by striking subclause (III) and insert11

ing the following:

12 ‘‘(III) 73 percent in the case of

13 an eligible insured whose household

14 income is more than 200 percent but

15 not more than 250 percent of the pov

16 erty line for a family of the size in

17 volved; and

18 ‘‘(IV) 70 percent in the case of

19 an eligible insured whose household

20 income is more than 250 percent but

21 not more than 400 percent of the pov

22 erty line for a family of the size in

23 volved.’’; and

24 ( 2 ) in paragraph ( 2 )—

25 ( A ) in subparagraph ( A )—

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1 ( i ) by striking ‘‘90’’ and inserting

2 ‘‘94’’; and

3 (ii) by striking ‘‘and’’;

4 ( B ) in subparagraph ( B )—

5 ( i ) by striking ‘‘80’’ and inserting

6 ‘‘87’’; and

7 (ii) by striking the period and insert

8 ing ‘‘; and’’; and

9 ( C ) by inserting after subparagraph ( B )

10 the following new subparagraph:

11 ‘‘( C ) in the case of an eligible insured

12 whose household income is more than 200 per

13 cent but not more than 250 percent of the pov

14 erty line for a family of the size involved, in

15 crease the plan’s share of the total allowed

16 costs of benefits provided under the plan to 73

17 percent of such costs.’’.

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18 SEC. 1002. INDIVIDUAL RESPONSIBILITY.

19 ( a ) AMOUNTS.—Section 5000 A ( c ) of the Internal

20 Revenue Code of 1986, as added by section 1501 ( b ) of

21 the Patient Protection and Affordable Care Act and

22 amended by section 10106 of such Act, is amended—

23 ( 1 ) in paragraph ( 2 )( B )—

24 ( A ) in the matter preceding clause ( i ),

25 by—

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1 ( i ) inserting ''the excess of'' before

2 ''the taxpayer's household income''; and

3 ( ii ) inserting ''for the taxable year

4 over the amount of gross income specified

5 in section 6012( a )(1) with respect to the

6 taxpayer'' before ''for the taxable year'';

7 ( B ) in clause (i), by striking ''0.5'' and in

8 serting ''1.0'';

9 ( C ) in clause (ii), by striking ''1.0'' and in

10 serting ''2.0''; and

11 ( D ) in clause (iii), by striking ''2.0'' and

12 inserting ''2.5''; and

13 ( 2 ) in paragraph (3)—

14 ( A ) in subparagraph (A), by striking

15 ''$750'' and inserting ''$695'';

16 ( B ) in subparagraph ( B ), by striking

17 ''$495'' and inserting ''$325''; and

18 ( C ) in subparagraph (D)—

19 ( i ) in the matter preceding clause (i),

20 by striking ''$750'' and inserting ''$695'';

21 and

22 ( ii ) in clause (i), by striking ''$750''

23 and inserting ''$695''.

24 ( b ) THRESHOLD.—Section 5000A of such Code, as

25 so added and amended, is amended—

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

2 ( 2 ) in subsection ( e )(2)—

3 ( A ) by striking ‘‘UNDER 100 PERCENT OF

4 POVERTY LINE’’ and inserting ‘‘BELOW FILING

5 THRESHOLD’’; and

6 ( B ) by striking all that follows ‘‘less than’’

7 and inserting ‘‘the amount of gross income

8 specified in section 6012( a )( 1 ) with respect to

9 the taxpayer.’’.

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10 SEC. 1003. EMPLOYER RESPONSIBILITY.

11 ( a ) PAYMENT CALCULATION.—Subparagraph ( D ) of

12 subsection ( d )( 2 ) of section 4980H of the Internal Rev

13 enue Code of 1986, as added by section 1513 of the Pa

14 tient Protection and Affordable Care Act and amended by

15 section 10106 of such Act, is amended to read as follows:

16 ‘‘(D) APPLICATION OF EMPLOYER SIZE TO

17 ASSESSABLE PENALTIES.—

18 ‘‘(i) IN GENERAL.—The number of in

19 dividuals employed by an applicable large

20 employer as full-time employees during any

21 month shall be reduced by 30 solely for

22 purposes of calculating—

23 ‘‘(I) the assessable payment

24 under subsection (a), or

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1 ‘‘(II) the overall limitation under

2 subsection ( b )( 2 ).

3 ‘‘(ii) AGGREGATION.—In the case of

4 persons treated as 1 employer under sub

5 paragraph ( C )(i), only 1 reduction under

6 subclause (I) or (II) shall be allowed with

7 respect to such persons and such reduction

8 shall be allocated among such persons rat

9 ably on the basis of the number of full

10 time employees employed by each such per

11 son.’’.

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12 ( b ) APPLICABLE PAYMENT AMOUNT.—Section

13 4980H of such Code, as so added and amended, is amend

14 ed—

15 ( 1 ) in the flush text following subsection

16 ( c )( 1 )( B ), by striking ''400 percent of the applicable

17 payment amount'' and inserting ''an amount equal

18 to 1⁄12 of $3,000'';

19 ( 2 ) in subsection ( d )( 1 ), by striking ''$750''

20 and inserting ''$2,000''; and

21 ( 3 ) in subsection ( d )( 5 )( A ), in the matter pre22

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

23 ( d )( 1 )'' and inserting ''subsection ( b ) and paragraph

24 ( 1 )''.

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1 ( c ) COUNTING PART-TIME WORKERS IN SETTING

2 THE THRESHOLD FOR EMPLOYER RESPONSIBILITY.—

3 Section 4980H( d )( 2 ) of such Code, as so added and

4 amended and as amended by subsection ( a ), is amended

5 by adding at the end the following new subparagraph:

6 ‘‘( E ) FULL-TIME EQUIVALENTS TREATED

7 AS FULL-TIME EMPLOYEES.—Solely for pur

8 poses of determining whether an employer is an

9 applicable large employer under this paragraph,

10 an employer shall, in addition to the number of

11 full-time employees for any month otherwise de

12 termined, include for such month a number of

13 full-time employees determined by dividing the

14 aggregate number of hours of service of employ

15 ees who are not full-time employees for the

16 month by 120.’’.

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17 ( d ) ELIMINATING WAITING PERIOD ASSESSMENT.—

18 Section 4980H of such Code, as so added and amended

19 and as amended by the preceding subsections, is amended

20 by striking subsection ( b ) and redesignating subsections

21 ( c ), ( d ), and ( e ) as subsections ( b ), ( c ), and ( d ), respec

22 tively.

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23 SEC. 1004. INCOME DEFINITIONS.

24 ( a ) MODIFIED ADJUSTED GROSS INCOME.—

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1 ( 1 ) IN GENERAL.—The following provisions of

2 the Internal Revenue Code of 1986 are each amend3

ed by striking ''modified gross'' each place it ap4

pears and inserting ''modified adjusted gross'':

5 ( A ) Clauses (i) and (ii) of section

6 36B( d )( 2 )( A ), as added by section 1401 of the

7 Patient Protection and Affordable Care Act.

8 ( B ) Section 6103( l )( 21 )( A )( iv ), as added

9 by section 1414 of such Act.

10 ( C ) Clauses (i) and (ii) of section

11 5000A( c )(4), as added by section 1501( b ) of

12 such Act.

13 ( 2 ) DEFINITION.—

14 ( A ) Section 36B( d )( 2 )( B ) of such Code, as

15 so added, is amended to read as follows:

16 ''( B ) MODIFIED ADJUSTED GROSS IN

17 COME.—The term 'modified adjusted gross in

18 come' means adjusted gross income increased

19 by—

20 ''(i) any amount excluded from gross

21 income under section 911, and

22 ''(ii) any amount of interest received

23 or accrued by the taxpayer during the tax

24 able year which is exempt from tax.''.

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

2 as so added, is amended to read as follows:

3 ‘‘( C ) MODIFIED ADJUSTED GROSS IN

4 COME.—The term ‘modified adjusted gross in

5 come’ means adjusted gross income increased

6 by—

7 ‘‘(i) any amount excluded from gross

8 income under section 911, and

9 ‘‘(ii) any amount of interest received

10 or accrued by the taxpayer during the tax

11 able year which is exempt from tax.’’.

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12 ( b ) MODIFIED ADJUSTED GROSS INCOME DEFINI

13 TION.—

14 (1) MEDICAID.—Section 1902 of the Social Se

15 curity Act (42 U.S.C. 1396a) is amended by striking

16 ''modified gross income'' each place it appears in the

17 text and headings of the following provisions and in

18 serting ''modified adjusted gross income'':

19 (A) Paragraph (14) of subsection (e), as

20 added by section 2002(a) of the Patient Protec

21 tion and Affordable Care Act.

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

23 section 2001( b ) of such Act.

24 (2) CHIP.—

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1 (A) STATE PLAN REQUIREMENTS.—Section

2 2102( b )(1)( B )(v) of the Social Security Act (42

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

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

5 Affordable Care Act, is amended by striking

6 ‘‘modified gross income’’ and inserting ‘‘modi

7 fied adjusted gross income’’.

8 ( B ) PLAN ADMINISTRATION.—Section

9 2107(e)(1)(E) of the Social Security Act (42

10 U.S.C. 1397gg(e)(1)(E)), as added by section

11 2101(d)(2) of the Patient Protection and Af

12 fordable Care Act, is amended by striking

13 ‘‘modified gross income’’ and inserting ‘‘modi

14 fied adjusted gross income’’.

15 © NO EXCESS PAYMENTS.—Section 36B(f) of the

16 Internal Revenue Code of 1986, as added by section

17 1401(a) of the Patient Protection and Affordable Care

18 Act, is amended by adding at the end the following new

19 paragraph:

20 ‘‘(3) INFORMATION REQUIREMENT.—Each Ex

21 change (and any other person specified by the Sec

22 retary) shall provide the following information to the

23 Secretary and to the taxpayer with respect to any

24 health plan provided through the Exchange:

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1 ''(A) The level of coverage described in sec

2 tion 1302(d) of the Patient Protection and Af

3 fordable Care Act and the period such coverage

4 was in effect.

5 ''( B ) The total premium for the coverage

6 without regard to the credit under this section

7 or cost-sharing reductions under section 1402

8 of such Act.

9 ''( C ) The aggregate amount of any ad

10 vance payment of such credit or reductions

11 under section 1412 of such Act.

12 ''(D) The name, address, and TIN of the

13 primary insured and the name and TIN of each

14 other individual obtaining coverage under the

15 policy.

16 ''(E) Any information provided to the Ex

17 change, including any change of circumstances,

18 necessary to determine eligibility for, and the

19 amount of, such credit.

20 ''(F) Any other similar information nec

21 essary to carry out this subsection and deter

22 mine whether a taxpayer has received excess

23 advance payments.''.

24 (d) ADULT DEPENDENTS.—

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1 (1) EXCLUSION OF AMOUNTS EXPENDED FOR

2 MEDICAL CARE.—The first sentence of section

3 105( b ) of the Internal Revenue Code of 1986 (relat

4 ing to amounts expended for medical care) is amend

5 ed—

6 (A) by striking ‘‘and his dependents’’ and

7 inserting ‘‘his dependents’’; and

8 ( B ) by inserting before the period the fol

9 lowing: ‘‘, and any child (as defined in section

10 152(f)(1)) of the taxpayer who as of the end of

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

12 (2) SELF-EMPLOYED HEALTH INSURANCE DE

13 DUCTION.—Section 162(l)(1) of such Code is

14 amended to read as follows:

15 ‘‘(1) ALLOWANCE OF DEDUCTION.—In the case

16 of a taxpayer who is an employee within the mean

17 ing of section 401( c )(1), there shall be allowed as a

18 deduction under this section an amount equal to the

19 amount paid during the taxable year for insurance

20 which constitutes medical care for—

21 ‘‘(A) the taxpayer,

22 ‘‘( B ) the taxpayer’s spouse,

23 ‘‘( C ) the taxpayer’s dependents, and

 

1 ‘‘(D) any child (as defined in section

2 152(f)(1)) of the taxpayer who as of the end of

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

4 (3) CONFORMING AMENDMENTS.—

5 (A) INTERNAL REVENUE CODE.—Section

6 162(l)(2)( B ) of such Code is amended by in

7 serting ‘‘, or any dependent, or individual de

8 scribed in subparagraph (D) of paragraph (1)

9 with respect to,’’ after ‘‘spouse of’’.

10 ( B ) PUBLIC HEALTH SERVICE ACT.—Sec

11 tion 2714 of the Public Health Service Act, as

12 added by section 1001(5) of the Patient Protec

13 tion and Affordable Care Act, is amended by

14 striking subsection ( c ).

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15 (4) SICK AND ACCIDENT BENEFITS PROVIDED

16 TO MEMBERS OF A VOLUNTARY EMPLOYEES’ BENE

17 FICIARY ASSOCIATION AND THEIR DEPENDENTS.—

18 Section 501( c )(9) of such Code is amended by add

19 ing at the end the following new sentence: ‘‘For pur

20 poses of providing for the payment of sick and acci

21 dent benefits to members of such an association and

22 their dependents, the term ‘dependent’ shall include

23 any individual who is a child (as defined in section

24 152(f)(1)) of a member who as of the end of the cal

25 endar year has not attained age 27.’’.

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1 (5) MEDICAL AND OTHER BENEFITS FOR RE

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

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

4 purposes of this subsection, the term ‘dependent’

5 shall include any individual who is a child (as de

6 fined in section 152(f)(1)) of a retired employee who

7 as of the end of the calendar year has not attained

8 age 27.’’.

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9 (e) FIVE PERCENT INCOME DISREGARD FOR CER

10 TAIN INDIVIDUALS.—Section 1902(e)(14) of the Social

11 Security Act (42 U.S.C. 1396a(e)(14)), as amended by

12 subsection ( b )(1), is further amended—

13 (1) in subparagraph ( B ), by striking ‘‘No type’’

14 and inserting ‘‘Subject to subparagraph (I), no

15 type’’; and

16 (2) by adding at the end the following new sub

17 paragraph:

18 ‘‘(I) TREATMENT OF PORTION OF MODI

19 FIED ADJUSTED GROSS INCOME.—For purposes

20 of determining the income eligibility of an indi

21 vidual for medical assistance whose eligibility is

22 determined based on the application of modified

23 adjusted gross income under subparagraph (A),

24 the State shall—

 

1 ‘‘(i) determine the dollar equivalent of

2 the difference between the upper income

3 limit on eligibility for such an individual

4 (expressed as a percentage of the poverty

5 line) and such upper income limit in

6 creased by 5 percentage points; and

7 ‘‘(ii) notwithstanding the requirement

8 in subparagraph (A) with respect to use of

9 modified adjusted gross income, utilize as

10 the applicable income of such individual, in

11 determining such income eligibility, an

12 amount equal to the modified adjusted

13 gross income applicable to such individual

14 reduced by such dollar equivalent

15 amount.’’.