I 

114TH CONGRESS 

1ST SESSION H. R. 3777 

To provide for relief from sequester under the Balanced Budget and Emergency Deficit Control Act of 1985 and offsets to such relief through 

reforms in certain revenue and direct spending programs, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 21, 2015 

Mr. RIGELL introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committees on the Budget, 

Energy and Commerce, the Judiciary, Education and the Workforce, 

Oversight and Government Reform, Homeland Security, Financial Services, and Agriculture, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To provide for relief from sequester under the Balanced 

Budget and Emergency Deficit Control Act of 1985 and 

offsets to such relief through reforms in certain revenue 

and direct spending programs, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘America First Act’’. 


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1 SEC. 2. TABLE OF CONTENTS. 

2 The table of contents of this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

TITLE I—SEQUESTER RELIEF 

Sec. 101. Amendments to the Balanced Budget and Emergency Deficit Control 

Act of 1985. 

TITLE II—REVENUE 

Sec. 201. Permanent extension of modifications to earned income tax credit. 

Sec. 202. 35-percent limitation on certain deductions and exclusions. 

Sec. 203. Repeal of medical device tax. 

TITLE III—HEALTHCARE SAVINGS 

Subtitle A—Medicare and Medicaid Provisions 

Sec. 301. Freeze income-related thresholds in calculation of Medicare part B 

and part D premiums. 

Sec. 302. Adjustment to applicable percentage increase for Medicare part B 

and D premiums for high-income beneficiaries. 

Sec. 303. Improved benefit structure. 

Sec. 304. Prohibition on first-dollar coverage under medigap policies and development of new standards for medigap policies. 

Sec. 305. Adjust Post-Acute Payment Updates. 

Sec. 306. Payment bundling for post-acute care (PAC) under Medicare. 

Sec. 307. Reduction of bad debt treated as an allowable cost. 

Sec. 308. Reduce Excess Subsidies to Teaching Hospitals. 

Sec. 309. Equalizing payment for certain covered OPD services and physicians’ 

services. 

Sec. 310. Medicare Advantage coding intensity adjustment. 

Sec. 311. Modifications to cost-sharing reductions under Medicare part D for 

low-income individuals. 

Sec. 312. Rebase Medicare payments at post-sequester levels. 

Sec. 313. Phased-in reduction of allowable provider taxes under Medicaid. 

Subtitle B—Medical Malpractice Reform 

Sec. 321. Definitions. 

Sec. 322. Encouraging speedy resolution of claims. 

Sec. 323. Compensating patient injury. 

Sec. 324. Maximizing patient recovery. 

Sec. 325. Additional HEALTH benefits. 

Sec. 326. Effect on other laws. 

Sec. 327. State flexibility and protection of States’ rights. 

Sec. 328. State demonstration programs to evaluate alternatives to current 

medical tort litigation. 

Sec. 329. Affirmative defense based on compliance with best practice guidelines. 

Sec. 330. Medical malpractice reform State incentive fund. 

Sec. 331. Sense of Congress concerning additional reforms. 

Sec. 332. Applicability; effective date. 


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TITLE IV—SOCIAL SECURITY SAVINGS 

Sec. 401. Adjustments in supplemental security income benefits for certain 

long-time beneficiaries. 

TITLE V—OTHER MANDATORY SAVINGS AND RECEIPTS 

Sec. 501. Conversion to chained CPI. 

Sec. 502. Adjustment for inflation of fees for certain customs services. 

Sec. 503. Adjustment for inflation of TSA service security fees and fee levels. 

Sec. 504. Dividends and surplus funds of reserve banks. 

Sec. 505. Cost-saving reforms for Federal Crop Insurance Program. 

Sec. 506. Federal employee annuities. 

Sec. 507. Repayment plans. 

Sec. 508. REPAYE. 

Sec. 509. Public service loan forgiveness. 

1 TITLE I—SEQUESTER RELIEF 

2 SEC. 101. AMENDMENTS TO THE BALANCED BUDGET AND 

3 EMERGENCY DEFICIT CONTROL ACT OF 1985. 

4 (a) DISCRETIONARY SPENDING LIMITS.—Section 

5 251(c) of the Balanced Budget and Emergency Deficit 

6 Control Act of 1985 (2 U.S.C. 901(c)) is amended by 

7 striking paragraphs (3) through (8) and inserting the fol8 lowing: 

9 ‘‘(3) for fiscal year 2016— 

10 ‘‘(A) for the revised security category, 

11 $564,000,000,000 in new budget authority; and 

12 ‘‘(B) for the revised nonsecurity category, 

13 $521,000,000,000 in new budget authority; 

14 ‘‘(4) for fiscal year 2017— 

15 ‘‘(A) for the revised security category, 

16 $577,000,000,000 in new budget authority; and 

17 ‘‘(B) for the revised nonsecurity category, 

18 $532,000,000,000 in new budget authority; 


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1 ‘‘(5) for fiscal year 2018— 

2 ‘‘(A) for the revised security category, 

3 $590,000,000,000 in new budget authority; and 

4 ‘‘(B) for the revised nonsecurity category, 

5 $544,000,000,000 in new budget authority; 

6 ‘‘(6) for fiscal year 2019— 

7 ‘‘(A) for the revised security category, 

8 $603,000,000,000 in new budget authority; and 

9 ‘‘(B) for the revised nonsecurity category, 

10 $557,000,000,000 in new budget authority; 

11 ‘‘(7) for fiscal year 2020— 

12 ‘‘(A) for the revised security category, 

13 $617,000,000,000 in new budget authority; and 

14 ‘‘(B) for the revised nonsecurity category, 

15 $569,000,000,000 in new budget authority; 

16 ‘‘(8) for fiscal year 2021— 

17 ‘‘(A) for the revised security category, 

18 $631,000,000,000 in new budget authority; and 

19 ‘‘(B) for the revised nonsecurity category, 

20 $581,000,000,000 in new budget authority; 

21 ‘‘(9) for fiscal year 2022— 

22 ‘‘(A) for the revised security category, 

23 $646,000,000,000 in new budget authority; and 

24 ‘‘(B) for the revised nonsecurity category, 

25 $596,000,000,000 in new budget authority; 


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1 ‘‘(10) for fiscal year 2023— 

2 ‘‘(A) for the revised security category, 

3 $662,000,000,000 in new budget authority; and 

4 ‘‘(B) for the revised nonsecurity category, 

5 $610,000,000,000 in new budget authority; 

6 ‘‘(11) for fiscal year 2024— 

7 ‘‘(A) for the revised security category, 

8 $679,000,000,000 in new budget authority; and 

9 ‘‘(B) for the revised nonsecurity category, 

10 $626,000,000,000 in new budget authority; and 

11 ‘‘(12) for fiscal year 2025— 

12 ‘‘(A) for the revised security category, 

13 $695,000,000,000 in new budget authority; and 

14 ‘‘(B) for the revised nonsecurity category, 

15 $641,000,000,000 in new budget authority;’’. 

16 (b) ELIMINATION OF DIRECT SPENDING SEQUESTER

17 AND OTHER ADJUSTMENTS.— 

18 (1) IN GENERAL.—Section 251A of the Bal19 anced Budget and Emergency Deficit Control Act of 

20 1985 (2 U.S.C. 901a) is repealed. 

21 (2) CLARIFICATION.—Any order issued by the 

22 Director of the Office of Management and Budget to 

23 reduce the discretionary spending limit for fiscal 

24 year 2016 under such section (as in effect on the 


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1 date before the date of enactment of this Act) shall 

2 have no force or effect. 

3 (c) ADJUSTMENTS TO DISCRETIONARY SPENDING

4 LIMITS.—Section 251(b)(2) of the Balanced Budget and 

5 Emergency Deficit Control Act of 1985 (2 U.S.C. 

6 901(b)(2)) is amended as follows: 

7 (1) In subparagraph (B)— 

8 (A) in subclause (IX), by striking ‘‘and’’ at 

9 the end; 

10 (B) in subclause (X), by striking the pe11 riod at the end and inserting ‘‘; and’’; and 

12 (C) by adding at the end the following: 

13 ‘‘(XI) for fiscal year 2022, 

14 $1,309,000,000 in additional new 

15 budget authority; 

16 ‘‘(XII) for fiscal year 2023, 

17 $1,309,000,000 in additional new 

18 budget authority; 

19 ‘‘(XIII) for fiscal year 2024, 

20 $1,309,000,000 in additional new 

21 budget authority; and 

22 ‘‘(XIV) for fiscal year 2025, 

23 $1,309,000,000 in additional new 

24 budget authority.’’. 

25 (2) In subparagraph (C)— 


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1 (A) in subclause (IX), by striking ‘‘and’’ at 

2 the end; 

3 (B) in subclause (X), by striking the pe4 riod at the end and inserting ‘‘; and’’; and 

5 (C) by adding at the end the following: 

6 ‘‘(XI) for fiscal year 2022, 

7 $496,000,000 in additional new budg8 et authority; 

9 ‘‘(XII) for fiscal year 2023, 

10 $496,000,000in additional new budget 

11 authority; 

12 ‘‘(XIII) for fiscal year 2024, 

13 $496,000,000 in additional new budg14 et authority; and 

15 ‘‘(XIV) for fiscal year 2025, 

16 $496,000,000 in additional new budg17 et authority.’’. 

18 (3) In subparagraph (D), by striking ‘‘fiscal 

19 years 2012 through 2021’’ and inserting ‘‘fiscal 

20 years 2012 through 2025’’. 

21 (d) CLERICAL AMENDMENT.—Section 250(a) of the 

22 Balanced Budget and Emergency Deficit Control Act of 

23 1985 (2 U.S.C. 900(a)) is amended by striking the item 

24 relating to section 251A. 


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1 TITLE II—REVENUE 

2 SEC. 201. PERMANENT EXTENSION OF MODIFICATIONS TO 

3 EARNED INCOME TAX CREDIT. 

4 (a) INCREASE IN CREDIT PERCENTAGE FOR FAMI5 LIES WITH 3 OR MORE CHILDREN.—Section 32(b)(1) of 

6 the Internal Revenue Code of 1986 is amended— 

7 (1) by striking ‘‘PERCENTAGES.—The credit 

8 percentage and’’ and inserting the following: ‘‘PER9 CENTAGES.— 

10 ‘‘(A) IN GENERAL.—The credit percentage 

11 and’’; and 

12 (2) by adding at the end the following new sub13 paragraph: 

14 ‘‘(B) INCREASED CREDIT PERCENTAGE

15 FOR FAMILIES WITH 3 OR MORE QUALIFYING

16 CHILDREN.—In the case of an eligible indi17 vidual with 3 or more qualifying children, the 

18 table in subparagraph (A) shall be applied by 

19 substituting ‘45’ for ‘40’ in the second column 

20 thereof.’’. 

21 (b) JOINT RETURNS.— 

22 (1) IN GENERAL.—Section 32(b)(2)(B) of the 

23 Internal Revenue Code of 1986 is amended by strik24 ing ‘‘increased by’’ and all that follows and inserting 

25 ‘‘increased by $5,000.’’. 


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1 (2) INFLATION ADJUSTMENTS.—Section 

2 32(j)(1)(B)(ii) of such Code is amended— 

3 (A) by striking ‘‘$3,000’’ and inserting 

4 ‘‘$5,000’’; 

5 (B) by striking ‘‘subsection (b)(2)(B)(iii)’’ 

6 and inserting ‘‘subsection (b)(2)(B)’’; and 

7 (C) by striking ‘‘calendar year 2007’’ and 

8 inserting ‘‘calendar year 2008’’. 

9 (c) CONFORMING AMENDMENT.—Section 32(b) of 

10 such Code is amended by striking paragraph (3). 

11 (d) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to taxable years beginning after 

13 December 31, 2015. 

14 SEC. 202. 35-PERCENT LIMITATION ON CERTAIN DEDUC15 TIONS AND EXCLUSIONS. 

16 (a) IN GENERAL.—Part I of subchapter B of chapter 

17 1 of the Internal Revenue Code of 1986 is amended by 

18 adding at the end the following new section: 

19 ‘‘SEC. 69. LIMITATION ON ITEMIZED DEDUCTIONS. 

20 ‘‘In the case of an individual, for any taxable year 

21 with respect to which the highest rate of tax imposed 

22 under section 1 exceeds 35 percent, the tax imposed by 

23 such section shall be increased by the excess (if any) of— 


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1 ‘‘(1) the tax which would be imposed under 

2 such section if taxable income were determined with3 out regard to itemized deductions, over 

4 ‘‘(2) the tax which would be determined under 

5 paragraph (1) if the highest rate of tax imposed 

6 under such section on amounts in excess of the tax7 payer’s taxable income (determined without regard 

8 to this section) was 35 percent.’’. 

9 (b) CLERICAL AMENDMENT.—The table of sections 

10 for part I of subchapter B of chapter 1 of such Code is 

11 amended by adding at the end the following new item: 

‘‘Sec. 69. Limitation on itemized deductions.’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2015. 

15 SEC. 203. REPEAL OF MEDICAL DEVICE TAX. 

16 (a) IN GENERAL.—Chapter 32 of the Internal Rev17 enue Code of 1986 is amended by striking subchapter E. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall apply to sales after the date of the enact20 ment of this Act. 


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1 TITLE III—HEALTHCARE 

2 SAVINGS 

3 Subtitle A—Medicare and Medicaid 

4 Provisions 

5 SEC. 301. FREEZE INCOME-RELATED THRESHOLDS IN CAL6 CULATION OF MEDICARE PART B AND PART 

7 D PREMIUMS. 

8 Section 1839(i)(5) of the Social Security Act (42 

9 U.S.C. 1395r(i)(5)) is amended— 

10 (1) in subparagraph (A)— 

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

12 striking ‘‘and 2019’’ and inserting ‘‘and each 

13 subsequent year before the target year’’; and 

14 (B) in clause (ii), by striking ‘‘beginning 

15 with 2020, August 2018’’ and inserting ‘‘begin16 ning with the target year, August of the cal17 endar year that is two years before the target 

18 year’’; and 

19 (2) by adding at the end the following new sub20 paragraph: 

21 ‘‘(C) TARGET YEAR.—For purposes of this 

22 paragraph, the term ‘target year’ means the 

23 first calendar year after the calendar year in 

24 which at least 25 percent of individuals enrolled 

25 under this part are subject to a reduction under 


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1 this subsection to the monthly amount of the 

2 premium subsidy applicable to the premium 

3 under this section.’’. 

4 SEC. 302. ADJUSTMENT TO APPLICABLE PERCENTAGE IN5 CREASE FOR MEDICARE PART B AND D PRE6 MIUMS FOR HIGH-INCOME BENEFICIARIES. 

7 (a) IN GENERAL.—Section 1839(i) of the Social Se8 curity Act (42 U.S.C. 1395r(i)) is amended— 

9 (1) in paragraph (3)(A)(i), by striking ‘‘para10 graph (6)’’ and inserting ‘‘paragraphs (6) and (7)’’; 

11 (2) by redesignating paragraph (7) as para12 graph (8); and 

13 (3) by inserting after paragraph (6) the fol14 lowing new paragraph: 

15 ‘‘(7) ADJUSTMENT TO APPLICABLE PERCENT16 AGE INCREASE BEGINNING IN 2016.—Notwith17 standing any other provision of this subsection, for 

18 months beginning with January 2016, in applying 

19 the applicable percentages specified in the applicable 

20 table in paragraph (3)(C)(i)— 

21 ‘‘(A) during 2016, the references in the 

22 table in subparagraph (I) of such paragraph to 

23 ‘35 percent’, ‘50 percent’, ‘65 percent’, and ‘80 

24 percent’ shall be deemed to be references to 


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1 ‘37.625 percent’, ‘53.75 percent’, ‘69.875 per2 cent’, and ‘85 percent’, respectively; and 

3 ‘‘(B) during 2017 or a subsequent year, 

4 the references in the table in subparagraph (I) 

5 of such paragraph and the table in subpara6 graph (II) of such paragraph, as applicable, to 

7 ‘35 percent’, ‘50 percent’, ‘65 percent’, and ‘80 

8 percent’ shall be deemed to be references to 

9 ‘40.25 percent’, ‘57.5 percent’, ‘74.75 percent’, 

10 and ‘90 percent’, respectively.’’. 

11 (b) PART D CONFORMING AMENDMENTS.—Section 

12 1860D–13(a)(7)(B)(i)(I) of such Act (42 U.S.C. 1395w– 

13 113(a)(7)(B)(i)(I)) is amended by striking ‘‘paragraph 

14 (5)’’ and inserting ‘‘paragraphs (5) and (7)’’. 

15 SEC. 303. IMPROVED BENEFIT STRUCTURE. 

16 (a) IN GENERAL.—Title XVIII of the Social Security 

17 Act (42 U.S.C. 1395 et seq.) is amended by adding at 

18 the end the following new sections: 

19 ‘‘UNIFIED PART A AND B DEDUCTIBLE

20 ‘‘SEC. 1899B. (a) IN GENERAL.—Notwithstanding 

21 any other provision of this title, for a year (beginning with 

22 2018), in the case of an individual entitled to, or enrolled 

23 for, benefits under part A or enrolled in part B— 

24 ‘‘(1) the amount otherwise payable under part 

25 A and the total amount of expenses incurred by the 

26 individual during a year which would (except for this 


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1 section) constitute incurred expenses for which bene2 fits payable under section 1833(a) are determinable, 

3 shall be reduced by the amount of the unified de4 ductible under subsection (b); and 

5 ‘‘(2) the individual shall be responsible for pay6 ment of such amount. 

7 ‘‘(b) AMOUNT OF UNIFIED DEDUCTIBLE.— 

8 ‘‘(1) IN GENERAL.—The amount of the unified 

9 deductible under this section shall be— 

10 ‘‘(A) for 2018, $650; or 

11 ‘‘(B) for a subsequent year, the amount 

12 specified in this subsection for the preceding 

13 year increased by the percentage increase in the 

14 medical care component of the consumer price 

15 index for all urban consumers (U.S. city aver16 age) as estimated by the Secretary for the 12- 

17 month period ending with the midpoint of the 

18 year involved. 

19 ‘‘(2) ROUNDING.—If any amount determined 

20 under paragraph (1) is not a multiple of $1, such 

21 amount shall be rounded to the nearest multiple of 

22 $1. 

23 ‘‘(c) APPLICATION TO ALL ITEMS AND SERVICES.— 

24 The unified deductible under this section for a year shall 

25 be applied as follows: 


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1 ‘‘(1) With respect to items and services covered 

2 under part A, such unified deductible shall be ap3 plied on the basis of the amount that is payable for 

4 such items and services without regard to any copay5 ments or coinsurance and before the application of 

6 any such copayments or coinsurance. 

7 ‘‘(2) With respect to items and services covered 

8 under part B, such unified deductible shall be ap9 plied on the basis of the total amount of the ex10 penses incurred by the individual during a year 

11 which would, except for the application of the unified 

12 deductible, constitute incurred expenses for which 

13 items and services are payable under part B, without 

14 regard to any copayments or coinsurance and before 

15 the application of any such copayments or coinsur16 ance. 

17 ‘‘(3)(A) Except as provided in subparagraph 

18 (B), such unified deductible shall be applied with re19 spect to all items and services covered under parts 

20 A and B and in lieu of the deductibles described in 

21 sections 1813(b) and 1833(b) or otherwise. 

22 ‘‘(B) Such unified deductible shall not be ap23 plied to preventive services and additional preventive 

24 services (as those terms are defined in section 

25 1861(ddd)). 


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1 ‘‘(d) ANNOUNCEMENT OF UNIFIED DEDUCTIBLE

2 AND ANNUAL OUT-OF-POCKET LIMIT.—The Secretary 

3 shall (beginning in 2017) announce (in a manner intended 

4 to provide notice to all interested parties) the unified de5 ductible under this section and the annual out-of-pocket 

6 limit under section 1899D that will be applicable for the 

7 succeeding year. 

8 ‘‘UNIFORM PART A AND B COINSURANCE RATE

9 ‘‘SEC. 1899C. (a) IN GENERAL.—Notwithstanding 

10 any other provision of this title, in the case of an indi11 vidual entitled to, or enrolled for, benefits under part A 

12 or enrolled in part B, after the application of the unified 

13 deductible under section 1899B and subject to the limit 

14 on annual out-of-pocket expenses under section 1899D, 

15 the amount otherwise payable under part A and the total 

16 amount of expenses incurred by the individual during a 

17 year (beginning with 2018) which would (except for this 

18 section) constitute incurred expenses for which benefits 

19 are payable under part B, shall be reduced by a coinsur20 ance of 20 percent of such amount. 

21 ‘‘(b) APPLICATION TO ALL ITEMS AND SERVICES.— 

22 The uniform coinsurance under this section for a year 

23 shall be applied as follows: 

24 ‘‘(1) With respect to items and services covered 

25 under part A, such uniform coinsurance shall be apVerDate Sep 11 2014 04:01 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H3777.IH H3777

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1 plied on the basis of the amount that is payable for 

2 such items and services. 

3 ‘‘(2) With respect to items and services covered 

4 under part B, such uniform coinsurance shall be ap5 plied on the basis of the total amount of the ex6 penses incurred by the individual during a year 

7 which would, except for the application of the unified 

8 deductible, constitute incurred expenses from which 

9 items and services are payable under part B. 

10 ‘‘(3)(A) Except as provided in subparagraph 

11 (B), such uniform coinsurance shall be applied with 

12 respect to all items and services covered under parts 

13 A and B and in lieu of any other copayments or co14 insurance under such parts. 

15 ‘‘(B) Such uniform coinsurance shall not be ap16 plied to preventive services and additional preventive 

17 services (as those terms are defined in section 

18 1861(ddd)). 

19 ‘‘PROTECTION AGAINST HIGH OUT-OF-POCKET

20 EXPENDITURES FOR FEE-FOR-SERVICE BENEFITS

21 ‘‘SEC. 1899D. (a) IN GENERAL.—Notwithstanding 

22 any other provision of this title, in the case of an indi23 vidual entitled to benefits under part A or enrolled in part 

24 B, if the amount of the out-of-pocket cost-sharing of such 

25 individual for a year (beginning with 2018) equals or ex26 ceeds the annual out-of-pocket limit under subsection (b) 


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1 for such year, there shall not be any additional reduction 

2 under section 1899C for the remainder of the year. 

3 ‘‘(b) AMOUNT OF ANNUAL OUT-OF-POCKET LIM4 ITS.— 

5 ‘‘(1) IN GENERAL.—The amount of the annual 

6 out-of-pocket limit under this subsection shall be— 

7 ‘‘(A) for 2018, $6,500; or 

8 ‘‘(B) for a subsequent year, the amount 

9 specified in this subsection for the preceding 

10 year increased by the percentage increase in the 

11 medical care component of the consumer price 

12 index for all urban consumers (U.S. city aver13 age) as estimated by the Secretary for the 12- 

14 month period ending with the midpoint of the 

15 year involved. 

16 ‘‘(2) ROUNDING.—If any amount determined 

17 under paragraph (1) is not a multiple of $50, such 

18 amount shall be rounded to the nearest multiple of 

19 $50. 

20 ‘‘(c) OUT-OF-POCKET COST-SHARING DEFINED.— 

21 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

22 in this section, the term ‘out-of-pocket cost-sharing’ 

23 means, with respect to an individual, the amount of 

24 expenses incurred by the individual that are attrib25 utable to deductibles, coinsurance, and copayments 


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1 applicable under part A or B, without regard to 

2 whether the individual or another person, including 

3 a State program or other third-party coverage, has 

4 paid for such expenses. 

5 ‘‘(2) ITEMS AND SERVICES NOT FURNISHED ON

6 AN ASSIGNMENT-RELATED BASIS.—If an item or 

7 service is furnished to an individual under this title 

8 and is not furnished on an assignment-related basis, 

9 any additional expenses the individual incurs above 

10 the amount the individual would have incurred if the 

11 item or service was furnished on an assignment-re12 lated basis shall not be considered incurred expenses 

13 for purposes of determining out-of-pocket cost-shar14 ing under paragraph (1).’’. 

15 (b) CLARIFICATION REGARDING APPLICATION

16 UNDER MEDICARE ADVANTAGE.—Section 

17 1852(a)(1)(B)(iii) of the Social Security Act (42 U.S.C. 

18 1395w–22(a)(1)(B)(iii)) is amended by adding at the end 

19 the following new sentence: ‘‘For plan year 2018 and sub20 sequent plan years, the preceding sentence shall be applied 

21 to take into account the application of sections 1899B, 

22 1899C, and 1899D.’’. 

23 (c) CONFORMING AMENDMENTS.— 

24 (1) Section 1813 of the Social Security Act (42 

25 U.S.C. 1395e) is amended— 


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1 (A) in subsection (a), by inserting ‘‘Subject 

2 to sections 1899B, 1899C, and 1899D:’’ before 

3 paragraph (1); and 

4 (B) in subsection (b), by inserting ‘‘Sub5 ject to sections 1899B, 1899C, and 1899D:’’ 

6 before paragraph (1). 

7 (2) Section 1833 of the Social Security Act (42 

8 U.S.C. 1395l) is amended— 

9 (A) in subsection (a), in the matter pre10 ceding paragraph (1), by inserting ‘‘and sec11 tions 1899B, 1899C, and 1899D’’ after ‘‘suc12 ceeding provisions of this section’’; 

13 (B) in subsection (b), in the first sentence, 

14 by striking ‘‘Before applying’’ and inserting 

15 ‘‘Subject to sections 1899B, 1899C, and 

16 1899D, before applying’’; 

17 (C) in subsection (c)(1), in the matter pre18 ceding subparagraph (A), by inserting ‘‘subject 

19 to sections 1899B, 1899C, and 1899D,’’ after 

20 ‘‘this part,’’; 

21 (D) in subsection (f), by striking ‘‘In es22 tablishing’’ and inserting ‘‘Subject to sections 

23 1899B, 1899C, and 1899D, in establishing’’; 

24 and 


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1 (E) in subsection (g)(1), by inserting ‘‘and 

2 sections 1899B, 1899C, and 1899D’’ and 

3 ‘‘paragraphs (4) and (5)’’. 

4 (3) Section 1905(p)(3) of the Social Security 

5 Act (42 U.S.C. 1396d(p)(3)) is amended— 

6 (A) in subparagraph (B), striking ‘‘section 

7 1813’’ and inserting ‘‘sections 1813 and 

8 1899C’’; and 

9 (B) in subparagraph (C), by striking ‘‘and 

10 section 1833(b)’’ and inserting ‘‘, 1833(b), and 

11 1899C’’. 

12 SEC. 304. PROHIBITION ON FIRST-DOLLAR COVERAGE 

13 UNDER MEDIGAP POLICIES AND DEVELOP14 MENT OF NEW STANDARDS FOR MEDIGAP 

15 POLICIES. 

16 Section 1882 of the Social Security Act (42 U.S.C. 

17 1395ss) is amended by adding at the end the following 

18 new subsection: 

19 ‘‘(z) PROHIBITION ON FIRST-DOLLAR COVERAGE

20 AND DEVELOPMENT OF NEW STANDARDS FOR MEDICARE

21 SUPPLEMENTAL POLICIES.— 

22 ‘‘(1) DEVELOPMENT.—The Secretary shall re23 quest the National Association of Insurance Com24 missioners to review and revise the standards for 

25 benefit packages under subsection (p)(1), taking into 


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1 account the changes in benefits resulting from the 

2 enactment of the America First Act and to otherwise 

3 update standards to include the requirements for 

4 cost sharing described in paragraph (2). Such revi5 sions shall be made consistent with the rules applica6 ble under subsection (p)(1)(E) with the reference to 

7 the ‘1991 NAIC Model Regulation’ deemed a ref8 erence to the NAIC Model Regulation as published 

9 in the Federal Register on December 4, 1998, and 

10 as subsequently updated by the National Association 

11 of Insurance Commissioners to reflect previous 

12 changes in law and the reference to ‘date of enact13 ment of this subsection’ deemed a reference to the 

14 date of enactment of the America First Act. To the 

15 extent practicable, such revision shall provide for the 

16 implementation of revised standards for benefit 

17 packages as of January 1, 2018. 

18 ‘‘(2) COST SHARING REQUIREMENTS.—The cost 

19 sharing requirements described in this paragraph 

20 are that, notwithstanding any other provision of law, 

21 no medicare supplemental policy may provide for 

22 coverage of— 

23 ‘‘(A) any portion of the unified deductible 

24 under section 1899B(b) for the year; and 


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1 ‘‘(B) more than 50 percent of the cost2 sharing (excluding premiums) otherwise appli3 cable under parts A and B after the individual 

4 has met the unified deductible under section 

5 1899B(b) for the year and before the individual 

6 has reached the annual out-of-pocket limit 

7 under section 1899D(b) for the year. 

8 ‘‘(3) RENEWABILITY.—The renewability re9 quirement under subsection (q)(1) shall be satisfied 

10 with the renewal of the revised package under para11 graph (1) that most closely matches the policy in 

12 which the individual was enrolled prior to such revi13 sion.’’. 

14 SEC. 305. ADJUST POST-ACUTE PAYMENT UPDATES. 

15 (a) REVISION OF INPATIENT REHABILITATION FA16 CILITY PERCENTAGE INCREASE FOR 2016 THROUGH

17 2025.—Section 1886(j) of the Social Security Act (42 

18 U.S.C. 1395ww(j)) is amended— 

19 (1) in paragraph (3)— 

20 (A) in subparagraph (C), by striking 

21 clause (iii) and inserting the following: 

22 ‘‘(iii) ADDITIONAL ADJUSTMENT.— 

23 For fiscal years 2016 through 2025, after 

24 establishing the increase factor for a fiscal 

25 year pursuant to clauses (i) and (ii), if 


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1 such increase factor is greater than 0.0 

2 percent the Secretary shall reduce the in3 crease factor by an additional amount de4 scribed in subparagraph (E).’’; and 

5 (B) by inserting at the end the following 

6 new subparagraph: 

7 ‘‘(E) ADDITIONAL ADJUSTMENT.—If the 

8 increase factor, as established pursuant to 

9 clauses (i) and (ii) of subparagraph (C), is 

10 greater than zero, for purposes of subparagraph 

11 (C)(iii), the additional adjustment described in 

12 this subparagraph is 1.1 percentage point for 

13 each of fiscal years 2016 through 2025. If the 

14 application of the additional adjustment in sub15 paragraph (C)(iii) would result in an increase 

16 factor that is less than 0.0 for a fiscal year, the 

17 additional adjustment shall be reduced such 

18 that the increase factor after its application is 

19 0.0. If, in any of fiscal years 2016 through 

20 2025, the increase factor as adjusted by clauses 

21 (i) and (ii) of subparagraph (C) is less than or 

22 equal to zero, the additional adjustment de23 scribed in subparagraph (C)(iii) for such year is 

24 0.0 percentage point.’’; and 


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1 (2) in paragraph (7)(A)(i), by striking ‘‘and 

2 (D)’’ and inserting ‘‘, (D), and (E)’’. 

3 (b) REVISION OF LONG-TERM CARE HOSPITAL MAR4 KET BASKET UPDATES FOR 2016 THROUGH 2025.—Sec5 tion 1886(m) of the Social Security Act (42 U.S.C. 

6 1395ww(m)) is amended— 

7 (1) in paragraph (3)— 

8 (A) in subparagraph (A)— 

9 (i) in clause (i), by striking ‘‘and’’ at 

10 the end; 

11 (ii) in clause (ii), by striking the pe12 riod at the end and inserting ‘‘; and’’; and 

13 (iii) by adding at the end the fol14 lowing new clause: 

15 ‘‘(iii) for each of rate years 2016 

16 through 2025, by the additional adjust17 ment described in subparagraph (C).’’; and 

18 (B) by striking subparagraph (C) and in19 serting the following: 

20 ‘‘(C) ADDITIONAL ADJUSTMENT.—If the 

21 annual update, as established pursuant to 

22 clauses (i) and (ii) of paragraph (3)(A), is 

23 greater than zero, for purposes of clause (iii) of 

24 such paragraph, the additional adjustment is 

25 1.1 percentage point for each of fiscal years 


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1 2016 through 2025. If the application of the 

2 additional adjustment in paragraph (3)(A)(iii) 

3 would result in an annual update that is less 

4 than 0.0 for a fiscal year, the additional adjust5 ment shall be reduced such that the annual up6 date after its application is 0.0. If, in any of the 

7 fiscal years 2016 through 2025, the annual up8 date, as established pursuant to clauses (i) and 

9 (ii) of paragraph (3)(A), is less than or equal 

10 to zero, the additional adjustment described in 

11 paragraph (3)(A)(iii) for such year is 0.0 per12 centage point.’’; and 

13 (2) by adding at the end the following new 

14 paragraph: 

15 ‘‘(7) USE OF TERMINOLOGY.—With respect to 

16 discharges occurring on or after October 1, 2010, 

17 the term ‘rate year’ under this subsection shall mean 

18 ‘fiscal year’.’’. 

19 (c) REVISION OF SKILLED NURSING FACILITY MAR20 KET BASKET UPDATES FOR 2016 THROUGH 2025.—Sec21 tion 1888(e)(5)(B) of the Social Security Act (42 U.S.C. 

22 1395yy(e)(5)(B)) is amended— 

23 (1) by striking clause (ii) and inserting the fol24 lowing new clause: 


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1 ‘‘(ii) PRODUCTIVITY AND OTHER AD2 JUSTMENT.—The Secretary shall reduce 

3 the percentage determined in clause (i) by 

4 the following amounts: 

5 ‘‘(I) For fiscal year 2012 and 

6 each subsequent fiscal year, by the 

7 productivity adjustment described in 

8 section 1886(b)(3)(B)(xi)(II). 

9 ‘‘(II) For each of fiscal years 

10 2016 through 2025, by the other ad11 justment described in clause (iii). 

12 Such percentage shall be reduced first by 

13 the productivity adjustment in subclause 

14 (I). The application of the productivity ad15 justment described in subclause (I) may 

16 result in such percentage being less than 

17 0.0 for a fiscal year, and may result in 

18 payment rates under this subsection for a 

19 fiscal year being less than such payment 

20 rates for the preceding fiscal year. If the 

21 application of the productivity adjustment 

22 in subclause (I) results in such percentage 

23 being 0.0 or less than 0.0 for a fiscal year, 

24 the other adjustment described in sub25 clause (II) shall not apply.’’; and 


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1 (2) by striking clause (iii) and inserting the fol2 lowing: 

3 ‘‘(iii) CALCULATING OTHER ADJUST4 MENT.—For purposes of clause (ii)(II), the 

5 other adjustment described in this clause is 

6 ¥2.5 percentage points in each of fiscal 

7 years 2016 and 2017, ¥2.0 percentage 

8 points in each of fiscal years 2018 and 

9 2019, ¥1.5 percentage points in each of 

10 fiscal years 2020 through 2022, and 

11 ¥0.97 percentage point in each of fiscal 

12 years 2023 through 2025. The other ad13 justment shall be applied to the percentage 

14 under clause (i) as reduced by the produc15 tivity adjustment in clause (ii)(I). If the 

16 application of the adjustment in clause 

17 (ii)(II) would result in the percentage 

18 under clause (i) being less than 0.0 for a 

19 fiscal year, the other adjustment shall be 

20 reduced such that the final percentage 

21 after its application is 0.0 percentage 

22 point.’’. 

23 (d) REVISION OF HOME HEALTH MARKET BASKET

24 UPDATES FOR 2016 THROUGH 2025.—Section 


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1 1895(b)(3)(B) of the Social Security Act (42 U.S.C. 

2 1395fff(b)(3)(B)) is amended— 

3 (1) in clause (iii), by striking the last sentence; 

4 (2) by striking clause (vi) and inserting the fol5 lowing new clause: 

6 ‘‘(vi) ADJUSTMENTS.—After deter7 mining the home health market basket per8 centage increase under clause (iii), and 

9 after application of clause (v), the Sec10 retary shall reduce such percentage— 

11 ‘‘(I) for 2015 and each subse12 quent year, by the productivity adjust13 ment described in section 

14 1886(b)(3)(B)(xi)(II); 

15 ‘‘(II) for each of 2011 and 2012, 

16 by 1 percentage point; and 

17 ‘‘(III) for each of 2016 through 

18 2025, by the other adjustment de19 scribed in subparagraph (vii). 

20 The application of subclauses (I) and (II) 

21 may result in the home health market bas22 ket percentage increase under clause (iii) 

23 being less than 0.0 for a year, and may re24 sult in payment rates under the system 

25 under this subsection for a year being less 


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1 than such payment rates for the preceding 

2 year. In such case, the other adjustment in 

3 subclause (III) shall not apply.’’; and 

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

5 clause: 

6 ‘‘(vii) OTHER ADJUSTMENTS.—For 

7 purposes of clause (vi)(III), the other ad8 justment described in this clause is 1.1 

9 percentage point for each of 2016 through 

10 2025. If the application of the other ad11 justment in clause (vi)(III) would result in 

12 the home health market basket percentage 

13 increase being less than 0.0 for a year, the 

14 other adjustment shall be reduced such 

15 that the final market basket percentage in16 crease after its application of the other ad17 justment is 0.0. If, in any of years 2016 

18 through 2025, the home health market 

19 basket as adjusted by subclauses (I) and 

20 (II) is less than or equal to zero, the other 

21 adjustment for such year is 0.0 percentage 

22 point.’’. 


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1 SEC. 306. PAYMENT BUNDLING FOR POST-ACUTE CARE 

2 (PAC) UNDER MEDICARE. 

3 Title XVIII of the Social Security Act is amended by 

4 adding at the end the following new section: 

5 ‘‘POST-ACUTE CARE (PAC) PAYMENT BUNDLING SYSTEM

6 ‘‘SEC. 1899C. (a) ESTABLISHMENT OF SYSTEM.— 

7 ‘‘(1) IN GENERAL.—The Secretary shall estab8 lish a retrospective bundled payment arrangement 

9 (in this section referred to as the ‘PAC bundled pay10 ment system’) under which, in accordance with the 

11 provisions of this section, actual payments made 

12 under this title to post-acute care providers with re13 spect to post-acute care services furnished to tar14 geted beneficiaries during a bundle period are ad15 justed (through additional payment or recoupment, 

16 as applicable), based on a benchmark established by 

17 the Secretary for such bundle. 

18 ‘‘(2) IMPLEMENTATION.—The PAC bundled 

19 payment system shall be established to be applied to 

20 services furnished in fiscal years beginning with fis21 cal year 2020. 

22 ‘‘(b) DEFINITIONS.—In this section: 

23 ‘‘(1) PAC BENEFICIARY.—The term ‘targeted 

24 beneficiary’ means an individual who is entitled to 

25 benefits under part A and enrolled under part B and 

26 not enrolled under part C. 


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1 ‘‘(2) POST-ACUTE CARE SERVICES.—The term 

2 ‘post-acute care services’ means post-acute care, in3 cluding home health services, skilled nursing serv4 ices, inpatient rehabilitation services, and inpatient 

5 hospital services, for which payment may otherwise 

6 be made under this title and which are furnished 

7 during a bundle period to a targeted beneficiary. 

8 ‘‘(3) POST-ACUTE CARE PROVIDER.—The terms 

9 ‘post-acute care provider’ means each of the fol10 lowing: 

11 ‘‘(A) A home health agency. 

12 ‘‘(B) A skilled nursing facility. 

13 ‘‘(C) A rehabilitation facility. 

14 ‘‘(D) A long-term care hospital. 

15 ‘‘(4) BUNDLE PERIOD.—The term ‘bundle pe16 riod’ means, with respect to a bundle of post-acute 

17 care services for a targeted beneficiary who was dis18 charged from an inpatient hospital stay, a period be19 ginning on the first date on which post-acute care 

20 services within a bundle specified under subsection 

21 (c) is furnished to an individual not later than 30 

22 days after such discharge and ending 30, 60, or 90 

23 days, as specified by the Secretary for such bundle, 

24 after such first date. 


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1 ‘‘(c) BUNDLES.—The Secretary shall establish under 

2 the PAC bundled payment system bundles of post-acute 

3 care services consisting of MS–DRGs, other than such 

4 MS–DRGs included under the Comprehensive Care for 

5 Joint Replacement Model carried out by the Centers for 

6 Medicare & Medicaid Services under section 1115A, that 

7 represent the highest 50 percent of expenditures under 

8 this title attributable to post acute care, and shall periodi9 cally update such bundles, based on the most recent avail10 able data. 

11 ‘‘(d) PAYMENT METHODOLOGY.—The PAC payment 

12 system shall be designed consistent with the following: 

13 ‘‘(1) PAYMENT OR RECOUPMENT BASED OFF OF

14 BENCHMARK.—The Secretary shall annually estab15 lish a payment benchmark for each bundle of post16 acute care services specified under subsection (c) for 

17 such year. The Secretary shall, through annual rec18 onciliation, adjust the payments made to a post19 acute care provider with respect to post-acute care 

20 services included within a bundle so specified fur21 nished to a targeted beneficiary during a bundle pe22 riod during the year so that total payments for such 

23 provider with respect to such services within such 

24 bundle furnished to such beneficiary during such pe25 riod equals such benchmark for such bundle. 


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1 ‘‘(2) CONSIDERATIONS.—In establishing the 

2 payment amount for a bundle of post-acute care 

3 services, the Secretary may consider patient charac4 teristics and other factors that are designed to take 

5 into account variations in treatment costs within the 

6 bundle. 

7 ‘‘(3) SAVINGS.—The payment rates established 

8 for such bundles shall be set to result in, in the ag9 gregate, a reduction in the spending otherwise made 

10 under parts A and B for post-acute care services in11 cluded in such bundles of 2.85 percent by not later 

12 than fiscal year 2025. 

13 ‘‘(4) ANNUAL UPDATES.—The payment rates 

14 for bundles of post-acute care services shall be up15 dated each fiscal year based on a market basket of 

16 the services included within such bundles. 

17 ‘‘(5) COVERAGE OF 50 PERCENT OF TOTAL PAY18 MENTS.—The bundles under this section, collec19 tively, shall be established by the Secretary so as to 

20 provide for payment for at least 50 percent of all 

21 post-acute care services provided under this title 

22 during each fiscal year under the PAC bundled pay23 ment system.’’. 


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1 SEC. 307. REDUCTION OF BAD DEBT TREATED AS AN AL2 LOWABLE COST. 

3 (a) HOSPITALS.—Section 1861(v)(1)(T) of the Social 

4 Security Act (42 U.S.C. 1395x(v)(1)(T)) is amended— 

5 (1) in clause (iv), by striking ‘‘and’’ at the end; 

6 (2) in clause (v)— 

7 (A) by striking ‘‘or a subsequent fiscal 

8 year’’ and inserting ‘‘, 2014, or 2015’’; and 

9 (B) by striking the period at the end and 

10 inserting a comma; and 

11 (3) by adding at the end the following: 

12 ‘‘(vi) for cost reporting periods beginning dur13 ing fiscal year 2016, by 50 percent of such amount 

14 otherwise allowable, 

15 ‘‘(vii) for cost reporting periods beginning dur16 ing fiscal year 2017, by 60 percent of such amount 

17 otherwise allowable, and 

18 ‘‘(viii) for cost reporting periods beginning dur19 ing fiscal year 2018 or a subsequent fiscal year, by 

20 75 percent of such amount otherwise allowable.’’. 

21 (b) SKILLED NURSING FACILITIES.—Section 

22 1861(v)(1)(V) of the Social Security Act (42 U.S.C. 

23 1395x(v)(1)(V)) is amended— 

24 (1) by moving subclauses (I) and (II) of clause 

25 (i) and subclauses (I) through (IV) of clause (ii) two 

26 ems to the right; 


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1 (2) in clause (i)— 

2 (A) in subclause (I), by striking ‘‘and’’ at 

3 the end; 

4 (B) in subclause (II)— 

5 (i) by striking ‘‘or a subsequent fiscal 

6 year’’ and inserting ‘‘, 2014, or 2015’’ ; 

7 and 

8 (ii) by striking the period at the end 

9 and inserting a semicolon; and 

10 (C) by adding at the end the following: 

11 ‘‘(III) for cost reporting periods beginning 

12 during fiscal year 2016, by 50 percent of such 

13 amount otherwise allowable; 

14 ‘‘(IV) for cost reporting periods beginning 

15 during fiscal year 2017, by 60 percent of such 

16 amount otherwise allowable; and 

17 ‘‘(V) for cost reporting periods beginning 

18 during fiscal year 2018 or a subsequent fiscal 

19 year, by 75 percent of such amount otherwise 

20 allowable.’’; and 

21 (3) in clause (ii)— 

22 (A) in subclause (IV)— 

23 (i) by striking ‘‘a subsequent fiscal 

24 year’’ and inserting ‘‘fiscal year 2015’’; 

25 and 


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1 (ii) by striking the period at the end 

2 and inserting a semicolon; and 

3 (B) by adding at the end the following: 

4 ‘‘(V) for cost reporting periods beginning 

5 during fiscal year 2016, by 50 percent of such 

6 amount otherwise allowable; 

7 ‘‘(VI) for cost reporting periods beginning 

8 during fiscal year 2017, by 60 percent of such 

9 amount otherwise allowable; and 

10 ‘‘(VII) for cost reporting periods beginning 

11 during fiscal year 2018 or a subsequent fiscal 

12 year, by 75 percent of such amount otherwise 

13 allowable.’’. 

14 (c) CERTAIN OTHER PROVIDERS.—Section 

15 1861(v)(1)(W)(i) of the Social Security Act (42 U.S.C. 

16 1395x(v)(1)(W)(i)) is amended— 

17 (1) in subclause (III)— 

18 (A) by striking ‘‘a subsequent fiscal year’’ 

19 and inserting ‘‘fiscal year 2015’’; and 

20 (B) by striking the period at the end and 

21 inserting a semicolon; and 

22 (2) by adding at the end the following: 

23 ‘‘(IV) for cost reporting periods beginning dur24 ing fiscal year 2016, by 50 percent of such amount 

25 otherwise allowable; 


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1 ‘‘(V) for cost reporting periods beginning dur2 ing fiscal year 2017, by 60 percent of such amount 

3 otherwise allowable; and 

4 ‘‘(VI) for cost reporting periods beginning dur5 ing fiscal year 2018 or a subsequent fiscal year, by 

6 75 percent of such amount otherwise allowable’’. 

7 SEC. 308. REDUCE EXCESS SUBSIDIES TO TEACHING HOS8 PITALS. 

9 Section 1886(d)(5)(B)(ii) of the Social Security Act 

10 (42 U.S.C. 1395ww) is amended— 

11 (1) in subclause (XI), by striking at the end 

12 ‘‘and’’; 

13 (2) in subclause (XII)— 

14 (A) by inserting ‘‘and before October 1, 

15 2016’’ after ‘‘October 1, 2007,’’; and 

16 (B) by striking the period at the end and 

17 inserting ‘‘; and’’; and 

18 (3) by adding at the end the following new sub19 clause: 

20 ‘‘(XIII) on or after October 1, 

21 2016, ‘c’ is equal to 1.22.’’. 

22 SEC. 309. EQUALIZING PAYMENT FOR CERTAIN COVERED 

23 OPD SERVICES AND PHYSICIANS’ SERVICES. 

24 Section 1833(t)(3) of the Social Security Act (42 

25 U.S.C. 1395l(t)(3)) is amended— 


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1 (1) in subparagraph (D), by striking ‘‘The Sec2 retary’’ and inserting ‘‘Subject to subparagraph (H), 

3 the Secretary’’; and 

4 (2) by adding at the end the following new sub5 paragraph: 

6 ‘‘(H) PAYMENT FOR CERTAIN COVERED

7 OPD SERVICES.— 

8 ‘‘(i) IN GENERAL.—In the case of ap9 plicable covered OPD services furnished on 

10 or after January 1, 2017, there shall be 

11 substituted for the medicare OPD fee 

12 schedule amount established under sub13 paragraph (D) for such service and year, 

14 determined prior to application of any geo15 graphic or other adjustments under this 

16 subsection (including adjustments under 

17 paragraph (17)), an amount equal to the 

18 payment amount under section 1848 for 

19 such service and year, determined prior to 

20 application of any geographic or other ad21 justments under such section. 

22 ‘‘(ii) APPLICABLE COVERED OPD

23 SERVICES DEFINED.—In this subpara24 graph, the term ‘applicable covered OPD 

25 services’ covered OPD services that are 


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1 evaluation and management services (as 

2 specified by the Secretary). 

3 ‘‘(iii) NOT BUDGET NEUTRAL IMPLE4 MENTATION.—In making any budget neu5 trality adjustments under this subsection 

6 for 2017 or a subsequent year, the Sec7 retary shall not take into account the re8 duced expenditures that result from the 

9 application of this subparagraph.’’. 

10 SEC. 310. MEDICARE ADVANTAGE CODING INTENSITY AD11 JUSTMENT. 

12 Section 1853(a)(1)(C)(ii)(III) of the Social Security 

13 Act (42 U.S.C. 1395w–23(a)(1)(C)(ii)(III)) is amended by 

14 striking ‘‘and for 2019 and each subsequent year, not less 

15 than 5.9 percent’’ and inserting ‘‘, for 2019 and 2020, 

16 not less than 5.9 percent, and for 2021 and subsequent 

17 years, not less than 8.76 percent’’. 

18 SEC. 311. MODIFICATIONS TO COST-SHARING REDUCTIONS 

19 UNDER MEDICARE PART D FOR LOW-INCOME 

20 INDIVIDUALS. 

21 (a) IN GENERAL.—Section 1860D–14(a)(1)(D) of 

22 the Social Security Act (42 U.S.C. 1395w–114(a)(1)(D)) 

23 is amended— 

24 (1) in clause (ii), by striking ‘‘$3’’ and inserting 

25 ‘‘$6’’; and 


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1 (2) in clause (iii), by inserting before the period 

2 at the end the following: ‘‘(or, in the case of a drug 

3 that is not a generic or a preferred drug that is a 

4 multiple source drug, twice the copayment amount 

5 specified under section 1860D–2(b)(4)(A)(i)(I) for 

6 the drug and year involved)’’. 

7 (b) APPLICATION OF CURRENT INDEXING TO DOL8 LAR AMOUNTS SPECIFIED.—Section 1860D–14(a)(4) of 

9 the Social Security Act (42 U.S.C. 1395w–114(a)(4)) is 

10 amended— 

11 (1) in subparagraph (A), by adding at the end 

12 the following new sentence: ‘‘This subparagraph 

13 shall be applied (for 2017 and subsequent years) as 

14 if the dollar amounts specified under paragraph 

15 (1)(D)(ii), pursuant to the amendments made by 

16 section 311 of the America First Act, were the dol17 lar amounts specified in such paragraph when clause 

18 (i) first applied.’’; and 

19 (2) by adding at the end the following new sub20 paragraph: 

21 ‘‘(C) COPAYMENT FOR OTHER INDIVID22 UALS.—The provisions of clause (ii) of section 

23 1860D–2(b)(4)(A) shall apply with respect to 

24 the dollar amounts specified in paragraph 

25 (1)(D)(iii) for 2017 and subsequent years in 


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1 the same manner as such provisions apply to 

2 the dollar amounts specified in clause (i)(I) of 

3 such section and the dollar amounts specified in 

4 paragraph (1)(D)(iii) shall be treated, for such 

5 purpose, as if they were the dollar amounts 

6 specified in such section for 2006.’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply with respect to plan years begin9 ning on or after January 1, 2017. 

10 SEC. 312. REBASE MEDICARE PAYMENTS AT POST-SEQUES11 TER LEVELS. 

12 In determining payment rates under title XVIII of 

13 the Social Security Act for years and fiscal years begin14 ning on or after October 1, 2015, the percentage reduc15 tions in payment rates effected for 2015 (and for fiscal 

16 year 2015) under the Balanced Budget and Emergency 

17 Deficit Control Act of 1985 shall be incorporated into and 

18 treated as part of the permanent payment rates for that 

19 year (or fiscal year) in determining the payment rates for 

20 subsequent years (and fiscal years). 

21 SEC. 313. PHASED-IN REDUCTION OF ALLOWABLE PRO22 VIDER TAXES UNDER MEDICAID. 

23 (a) IN GENERAL.—Clause (ii) of section 

24 1903(w)(4)(C) of the Social Security Act (42 U.S.C. 

25 1396b(w)(4)(C)) is amended to read as follows: 


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1 ‘‘(ii) For purposes of clause (i), a determination 

2 of the existence of an indirect guarantee shall be 

3 made under paragraph (3)(i) of section 433.68(f) of 

4 title 42, Code of Federal Regulations, as in effect on 

5 November 1, 2006, except that— 

6 ‘‘(I) for fiscal year 2017, ‘5.5 percent’ 

7 shall be substituted for ‘6 percent’ each place it 

8 appears; and 

9 ‘‘(II) for fiscal year 2018 and each fiscal 

10 year thereafter, ‘5 percent’ shall be substituted 

11 for ‘6 percent’ each place it appears.’’. 

12 (b) EFFECTIVE DATE.—The amendment made by 

13 subsection (a) shall take effect on October 1, 2016. 

14 Subtitle B—Medical Malpractice 

15 Reform 

16 SEC. 321. DEFINITIONS. 

17 In this subtitle: 

18 (1) ALTERNATIVE DISPUTE RESOLUTION SYS19 TEM; ADR.—The term ‘‘alternative dispute resolution 

20 system’’ or ‘‘ADR’’ means a system that provides 

21 for the resolution of health care lawsuits in a man22 ner other than through a civil action brought in a 

23 State or Federal court. 

24 (2) CLAIMANT.—The term ‘‘claimant’’ means 

25 any person who brings a health care lawsuit, includVerDate Sep 11 2014 04:01 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\H3777.IH H3777

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1 ing a person who asserts or claims a right to legal 

2 or equitable contribution, indemnity, or subrogation, 

3 arising out of a health care liability claim or action, 

4 and any person on whose behalf such a claim is as5 serted or such an action is brought, whether de6 ceased, incompetent, or a minor. 

7 (3) COLLATERAL SOURCE BENEFITS.—The 

8 term ‘‘collateral source benefits’’ means any amount 

9 paid or reasonably likely to be paid in the future to 

10 or on behalf of the claimant, or any service, product, 

11 or other benefit provided or reasonably likely to be 

12 provided in the future to or on behalf of the claim13 ant, as a result of the injury or wrongful death, pur14 suant to— 

15 (A) any State or Federal health, sickness, 

16 income-disability, accident, or workers’ com17 pensation law; 

18 (B) any health, sickness, income-disability, 

19 or accident insurance that provides health bene20 fits or income-disability coverage; 

21 (C) any contract or agreement of any 

22 group, organization, partnership, or corporation 

23 to provide, pay for, or reimburse the cost of 

24 medical, hospital, dental, or income-disability 

25 benefits; and 


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1 (D) any other publicly or privately funded 

2 program. 

3 (4) COMPENSATORY DAMAGES.—The term 

4 ‘‘compensatory damages’’ means objectively 

5 verifiable monetary losses incurred as a result of the 

6 provision of, use of, or payment for (or failure to 

7 provide, use, or pay for) health care services or med8 ical products, such as past and future medical ex9 penses, loss of past and future earnings, cost of ob10 taining domestic services, loss of employment, and 

11 loss of business or employment opportunities, dam12 ages for physical and emotional pain, suffering, in13 convenience, physical impairment, mental anguish, 

14 disfigurement, loss of enjoyment of life, loss of soci15 ety and companionship, loss of consortium (other 

16 than loss of domestic service), hedonic damages, in17 jury to reputation, and all other nonpecuniary losses 

18 of any kind or nature. The term ‘‘compensatory 

19 damages’’ includes economic damages and non20 economic damages, as such terms are defined in this 

21 section. 

22 (5) CONTINGENT FEE.—The term ‘‘contingent 

23 fee’’ includes all compensation to any person or per24 sons which is payable only if a recovery is effected 

25 on behalf of one or more claimants. 


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1 (6) ECONOMIC DAMAGES.—The term ‘‘economic 

2 damages’’ means objectively verifiable monetary 

3 losses incurred as a result of the provision of, use 

4 of, or payment for (or failure to provide, use, or pay 

5 for) health care services or medical products, such as 

6 past and future medical expenses, loss of past and 

7 future earnings, cost of obtaining domestic services, 

8 loss of employment, and loss of business or employ9 ment opportunities. 

10 (7) HEALTH CARE LAWSUIT.—The term 

11 ‘‘health care lawsuit’’ means any health care liability 

12 claim concerning the provision of health care goods 

13 or services or any medical product affecting inter14 state commerce, or any health care liability action 

15 concerning the provision of health care goods or 

16 services or any medical product affecting interstate 

17 commerce, brought in a State or Federal court or 

18 pursuant to an alternative dispute resolution system, 

19 against a health care provider, a health care organi20 zation, or the manufacturer, distributor, supplier, 

21 marketer, promoter, or seller of a medical product, 

22 regardless of the theory of liability on which the 

23 claim is based, or the number of claimants, plain24 tiffs, defendants, or other parties, or the number of 

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1 leges a health care liability claim. Such term does 

2 not include a claim or action which is based on 

3 criminal liability; which seeks civil fines or penalties 

4 paid to Federal, State, or local government; or which 

5 is grounded in antitrust. 

6 (8) HEALTH CARE LIABILITY ACTION.—The 

7 term ‘‘health care liability action’’ means a civil ac8 tion brought in a State or Federal court or pursuant 

9 to an alternative dispute resolution system, against 

10 a health care provider, a health care organization, or 

11 the manufacturer, distributor, supplier, marketer, 

12 promoter, or seller of a medical product, regardless 

13 of the theory of liability on which the claim is based, 

14 or the number of plaintiffs, defendants, or other par15 ties, or the number of causes of action, in which the 

16 claimant alleges a health care liability claim. 

17 (9) HEALTH CARE LIABILITY CLAIM.—The 

18 term ‘‘health care liability claim’’ means a demand 

19 by any person, whether or not pursuant to ADR, 

20 against a health care provider, health care organiza21 tion, or the manufacturer, distributor, supplier, mar22 keter, promoter, or seller of a medical product, in23 cluding, but not limited to, third-party claims, cross24 claims, counter-claims, or contribution claims, which 

25 are based upon the provision of, use of, or payment 


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1 for (or the failure to provide, use, or pay for) health 

2 care services or medical products, regardless of the 

3 theory of liability on which the claim is based, or the 

4 number of plaintiffs, defendants, or other parties, or 

5 the number of causes of action. 

6 (10) HEALTH CARE ORGANIZATION.—The term 

7 ‘‘health care organization’’ means any person or en8 tity which is obligated to provide or pay for health 

9 benefits under any health plan, including any person 

10 or entity acting under a contract or arrangement 

11 with a health care organization to provide or admin12 ister any health benefit. 

13 (11) HEALTH CARE PROVIDER.—The term 

14 ‘‘health care provider’’ means any person or entity 

15 required by State or Federal laws or regulations to 

16 be licensed, registered, or certified to provide health 

17 care services, and being either so licensed, reg18 istered, or certified, or exempted from such require19 ment by other statute or regulation. 

20 (12) HEALTH CARE GOODS OR SERVICES.—The 

21 term ‘‘health care goods or services’’ means any 

22 goods or services provided by a health care organiza23 tion, provider, or by any individual working under 

24 the supervision of a health care provider, that relates 

25 to the diagnosis, prevention, or treatment of any 


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1 human disease or impairment, or the assessment or 

2 care of the health of human beings. 

3 (13) MEDICAL PRODUCT.—The term ‘‘medical 

4 product’’ means a drug, device, or biological product 

5 intended for humans, and the terms ‘‘drug’’, ‘‘de6 vice’’, and ‘‘biological product’’ have the meanings 

7 given such terms in sections 201(g)(1) and 201(h) 

8 of the Federal Food, Drug and Cosmetic Act (21 

9 U.S.C. 321(g)(1) and (h)) and section 351(a) of the 

10 Public Health Service Act (42 U.S.C. 262(a)), re11 spectively, including any component or raw material 

12 used therein, but excluding health care services. 

13 (14) NONECONOMIC DAMAGES.—The term 

14 ‘‘noneconomic damages’’ means damages for phys15 ical and emotional pain, suffering, inconvenience, 

16 physical impairment, mental anguish, disfigurement, 

17 loss of enjoyment of life, loss of society and compan18 ionship, loss of consortium (other than loss of do19 mestic service), hedonic damages, injury to reputa20 tion, and all other nonpecuniary losses of any kind 

21 or nature. 

22 (15) PUNITIVE DAMAGES.—The term ‘‘punitive 

23 damages’’ means damages awarded, for the purpose 

24 of punishment or deterrence, and not solely for com25 pensatory purposes, against a health care provider, 


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1 health care organization, or a manufacturer, dis2 tributor, or supplier of a medical product. Punitive 

3 damages are neither economic nor noneconomic 

4 damages. 

5 (16) RECOVERY.—The term ‘‘recovery’’ means 

6 the net sum recovered after deducting any disburse7 ments or costs incurred in connection with prosecu8 tion or settlement of the claim, including all costs 

9 paid or advanced by any person. Costs of health care 

10 incurred by the plaintiff and the attorneys’ office 

11 overhead costs or charges for legal services are not 

12 deductible disbursements or costs for such purpose. 

13 (17) STATE.—The term ‘‘State’’ means each of 

14 the several States, the District of Columbia, the 

15 Commonwealth of Puerto Rico, the Virgin Islands, 

16 Guam, American Samoa, the Northern Mariana Is17 lands, the Trust Territory of the Pacific Islands, and 

18 any other territory or possession of the United 

19 States, or any political subdivision thereof. 

20 SEC. 322. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

21 The time for the commencement of a health care law22 suit shall be 3 years after the date of manifestation of 

23 injury or 1 year after the claimant discovers, or through 

24 the use of reasonable diligence should have discovered, the 

25 injury, whichever occurs first. In no event shall the time 


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1 for commencement of a health care lawsuit exceed 3 years 

2 after the date of manifestation of injury unless tolled for 

3 any of the following— 

4 (1) upon proof of fraud; 

5 (2) intentional concealment; or 

6 (3) the presence of a foreign body, which has no 

7 therapeutic or diagnostic purpose or effect, in the 

8 person of the injured person. 

9 Actions by a minor shall be commenced within 3 years 

10 from the date of the alleged manifestation of injury except 

11 that actions by a minor under the full age of 6 years shall 

12 be commenced within 3 years of manifestation of injury 

13 or prior to the minor’s 8th birthday, whichever provides 

14 a longer period. Such time limitation shall be tolled for 

15 minors for any period during which a parent or guardian 

16 and a health care provider or health care organization 

17 have committed fraud or collusion in the failure to bring 

18 an action on behalf of the injured minor. 

19 SEC. 323. COMPENSATING PATIENT INJURY. 

20 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

21 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

22 health care lawsuit, nothing in this subtitle shall limit a 

23 claimant’s recovery of the full amount of the available eco24 nomic damages. 


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1 (b) FAIR SHARE RULE.—In any health care lawsuit, 

2 each party shall be liable for that party’s several share 

3 of any damages only and not for the share of any other 

4 person. Each party shall be liable only for the amount of 

5 damages allocated to such party in direct proportion to 

6 such party’s percentage of responsibility. Whenever a 

7 judgment of liability is rendered as to any party, a sepa8 rate judgment shall be rendered against each such party 

9 for the amount allocated to such party. For purposes of 

10 this section, the trier of fact shall determine the propor11 tion of responsibility of each party for the claimant’s 

12 harm. 

13 SEC. 324. MAXIMIZING PATIENT RECOVERY. 

14 (a) COURT SUPERVISION OF SHARE OF DAMAGES

15 ACTUALLY PAID TO CLAIMANTS.—In any health care law16 suit, the court shall supervise the arrangements for pay17 ment of damages to protect against conflicts of interest 

18 that may have the effect of reducing the amount of dam19 ages awarded that are actually paid to claimants. In par20 ticular, in any health care lawsuit in which the attorney 

21 for a party claims a financial stake in the outcome by vir22 tue of a contingent fee, the court shall have the power 

23 to restrict the payment of a claimant’s damage recovery 

24 to such attorney, and to redirect such damages to the 

25 claimant based upon the interests of justice and principles 


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1 of equity. In no event shall the total of all contingent fees 

2 for representing all claimants in a health care lawsuit ex3 ceed the following limits: 

4 (1) Forty percent of the first $50,000 recovered 

5 by the claimant(s). 

6 (2) Thirty-three and one-third percent of the 

7 next $50,000 recovered by the claimant(s). 

8 (3) Twenty-five percent of the next $500,000 

9 recovered by the claimant(s). 

10 (4) Fifteen percent of any amount by which the 

11 recovery by the claimant(s) is in excess of $600,000. 

12 (b) APPLICABILITY.—The limitations in this section 

13 shall apply whether the recovery is by judgment, settle14 ment, mediation, arbitration, or any other form of alter15 native dispute resolution. In a health care lawsuit involv16 ing a minor or incompetent person, a court retains the 

17 authority to authorize or approve a fee that is less than 

18 the maximum permitted under this section. The require19 ment for court supervision in the first two sentences of 

20 subsection (a) applies only in civil actions. 

21 SEC. 325. ADDITIONAL HEALTH BENEFITS. 

22 In any health care lawsuit involving injury or wrong23 ful death, any party may introduce evidence of collateral 

24 source benefits. If a party elects to introduce such evi25 dence, any opposing party may introduce evidence of any 


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1 amount paid or contributed or reasonably likely to be paid 

2 or contributed in the future by or on behalf of the oppos3 ing party to secure the right to such collateral source bene4 fits. No provider of collateral source benefits shall recover 

5 any amount against the claimant or receive any lien or 

6 credit against the claimant’s recovery or be equitably or 

7 legally subrogated to the right of the claimant in a health 

8 care lawsuit involving injury or wrongful death. This sec9 tion shall apply to any health care lawsuit that is settled 

10 as well as a health care lawsuit that is resolved by a fact 

11 finder. This section shall not apply to section 1862(b) (42 

12 U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 

13 1396a(a)(25)) of the Social Security Act. 

14 SEC. 326. EFFECT ON OTHER LAWS. 

15 (a) VACCINE INJURY.— 

16 (1) To the extent that title XXI of the Public 

17 Health Service Act establishes a Federal rule of law 

18 applicable to a civil action brought for a vaccine-re19 lated injury or death— 

20 (A) this subtitle does not affect the appli21 cation of the rule of law to such an action; and 

22 (B) any rule of law prescribed by this sub23 title in conflict with a rule of law of such title 

24 XXI shall not apply to such action. 


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1 (2) If there is an aspect of a civil action 

2 brought for a vaccine-related injury or death to 

3 which a Federal rule of law under title XXI of the 

4 Public Health Service Act does not apply, then this 

5 subtitle or otherwise applicable law (as determined 

6 under this subtitle) will apply to such aspect of such 

7 action. 

8 (b) OTHER FEDERAL LAW.—Except as provided in 

9 this section, nothing in this subtitle shall be deemed to 

10 affect any defense available to a defendant in a health care 

11 lawsuit or action under any other provision of Federal law. 

12 SEC. 327. STATE FLEXIBILITY AND PROTECTION OF 

13 STATES’ RIGHTS. 

14 (a) HEALTH CARE LAWSUITS.—The provisions gov15 erning health care lawsuits set forth in this subtitle pre16 empt, subject to subsections (b) and (c), State law to the 

17 extent that State law prevents the application of any pro18 visions of law established by or under this subtitle. The 

19 provisions governing health care lawsuits set forth in this 

20 subtitle supersede chapter 171 of title 28, United States 

21 Code, to the extent that such chapter— 

22 (1) provides for a greater amount of damages 

23 or contingent fees, a longer period in which a health 

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1 cability or scope of periodic payment of future dam2 ages, than provided in this subtitle; or 

3 (2) prohibits the introduction of evidence re4 garding collateral source benefits, or mandates or 

5 permits subrogation or a lien on collateral source 

6 benefits. 

7 (b) PROTECTION OF STATES’ RIGHTS AND OTHER

8 LAWS.—(1) Any issue that is not governed by any provi9 sion of law established by or under this subtitle (including 

10 State standards of negligence) shall be governed by other11 wise applicable State or Federal law. 

12 (2) This subtitle shall not preempt or supersede any 

13 State or Federal law that imposes greater procedural or 

14 substantive protections for health care providers and 

15 health care organizations from liability, loss, or damages 

16 than those provided by this subtitle or create a cause of 

17 action. 

18 (c) STATE FLEXIBILITY.—No provision of this sub19 title shall be construed to preempt— 

20 (1) any State law (whether effective before, on, 

21 or after the date of the enactment of this Act) that 

22 specifies a particular monetary amount of compen23 satory or punitive damages (or the total amount of 

24 damages) that may be awarded in a health care law25 suit, regardless of whether such monetary amount is 


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1 greater or lesser than is provided for under this sub2 title, notwithstanding section 4(a); or 

3 (2) any defense available to a party in a health 

4 care lawsuit under any other provision of State or 

5 Federal law. 

6 SEC. 328. STATE DEMONSTRATION PROGRAMS TO EVALU7 ATE ALTERNATIVES TO CURRENT MEDICAL 

8 TORT LITIGATION. 

9 Part P of title III of the Public Health Service Act 

10 (42 U.S.C. 280g et seq.) is amended by adding at the end 

11 the following: 

12 ‘‘SEC. 399V–6. STATE DEMONSTRATION PROGRAMS TO 

13 EVALUATE ALTERNATIVES TO CURRENT 

14 MEDICAL TORT LITIGATION. 

15 ‘‘(a) IN GENERAL.—The Secretary is authorized to 

16 award demonstration grants to States for the develop17 ment, implementation, and evaluation of alternatives to 

18 current tort litigation for resolving disputes over injuries 

19 allegedly caused by health care providers or health care 

20 organizations. 

21 ‘‘(b) DURATION.—The Secretary may award up to 10 

22 grants under subsection (a) and each grant awarded under 

23 such subsection may not exceed a period of 5 years. 

24 ‘‘(c) CONDITIONS FOR DEMONSTRATION GRANTS.— 


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1 ‘‘(1) REQUIREMENTS.—Each State desiring a 

2 grant under subsection (a) shall— 

3 ‘‘(A) develop an alternative to current tort 

4 litigation for resolving disputes over injuries al5 legedly caused by health care providers or 

6 health care organizations that may be 1 of the 

7 models described in subsection (d); and 

8 ‘‘(B) promote a reduction of health care 

9 errors by allowing for patient safety data re10 lated to disputes resolved under subparagraph 

11 (A) to be collected and analyzed by organiza12 tions that engage in voluntary efforts to im13 prove patient safety and the quality of health 

14 care delivery. 

15 ‘‘(2) ALTERNATIVE TO CURRENT TORT LITIGA16 TION.—Each State desiring a grant under sub17 section (a) shall demonstrate how the proposed al18 ternative described in paragraph (1)(A)— 

19 ‘‘(A) makes the medical liability system 

20 more reliable through prompt and fair resolu21 tion of disputes; 

22 ‘‘(B) encourages the early disclosure of 

23 health care errors; 

24 ‘‘(C) enhances patient safety; and 


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1 ‘‘(D) maintains access to liability insur2 ance. 

3 ‘‘(3) SOURCES OF COMPENSATION.—Each State 

4 desiring a grant under subsection (a) shall identify 

5 the sources from and methods by which compensa6 tion would be paid for claims resolved under the pro7 posed alternative to current tort litigation, which 

8 may include public or private funding sources, or a 

9 combination of such sources. Funding methods shall 

10 to the extent practicable provide financial incentives 

11 for activities that improve patient safety. 

12 ‘‘(4) SCOPE.— 

13 ‘‘(A) IN GENERAL.—Each State desiring a 

14 grant under subsection (a) may establish a 

15 scope of jurisdiction (such as a designated geo16 graphic region, a designated area of health care 

17 practice, or a designated group of health care 

18 providers or health care organizations) for the 

19 proposed alternative to current tort litigation 

20 that is sufficient to evaluate the effects of the 

21 alternative. 

22 ‘‘(B) NOTIFICATION OF PATIENTS.—A 

23 State proposing a scope of jurisdiction under 

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1 tients would be notified that they are receiving 

2 health care services that fall within such scope. 

3 ‘‘(5) PREFERENCE IN AWARDING DEMONSTRA4 TION GRANTS.—In awarding grants under sub5 section (a), the Secretary shall give preference to 

6 States— 

7 ‘‘(A) that have developed the proposed al8 ternative through substantive consultation with 

9 relevant stakeholders; and 

10 ‘‘(B) in which State law at the time of the 

11 application would not prohibit the adoption of 

12 an alternative to current tort litigation. 

13 ‘‘(d) MODELS.— 

14 ‘‘(1) IN GENERAL.—Any State desiring a grant 

15 under subsection (a) that proposes an alternative de16 scribed in paragraph (2), (3), or (4) shall be deemed 

17 to meet the criteria under subsection (c)(2). 

18 ‘‘(2) EARLY DISCLOSURE AND COMPENSATION

19 MODEL.—In the early disclosure and compensation 

20 model, the State shall— 

21 ‘‘(A) require that health care providers or 

22 health care organizations notify a patient (or an 

23 immediate family member or designee of the 

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1 cation shall not constitute an acknowledgment 

2 or an admission of liability; 

3 ‘‘(B) provide immunity from tort liability 

4 to any health care provider or health care orga5 nization that offers in good faith to pay com6 pensation in accordance with this section to a 

7 patient for an injury incurred in the provision 

8 of health care services (limited to claims arising 

9 out of the same nucleus of operative facts as 

10 the injury, and except in cases of fraud related 

11 to the provision of health care services, or in 

12 cases of criminal or intentional harm); 

13 ‘‘(C) set a limited time period during 

14 which a health care provider or health care or15 ganization may make an offer of compensation 

16 benefits under subparagraph (B), with consider17 ation for instances where prompt recognition of 

18 an injury is unlikely or impossible; 

19 ‘‘(D) require that the compensation pro20 vided under subparagraph (B) include— 

21 ‘‘(i) payment for the net economic loss 

22 of the patient, on a periodic basis, reduced 

23 by any payments received by the patient 

24 under— 


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1 ‘‘(I) any health or accident insur2 ance; 

3 ‘‘(II) any wage or salary continu4 ation plan; or 

5 ‘‘(III) any disability income in6 surance; 

7 ‘‘(ii) payment for the non-economic 

8 damages of the patient, if appropriate for 

9 the injury, based on a defined payment 

10 schedule developed by the State in con11 sultation with relevant experts and with 

12 the Secretary in accordance with sub13 section (g); and 

14 ‘‘(iii) reasonable attorney’s fees; 

15 ‘‘(E) not abridge the right of an injured 

16 patient to seek redress through the State tort 

17 system if a health care provider does not enter 

18 into a compensation agreement with the patient 

19 in accordance with subparagraph (B) or if the 

20 compensation offered does not meet the require21 ments of subparagraph (D) or is not offered in 

22 good faith; 

23 ‘‘(F) permit a health care provider or 

24 health care organization that offers in good 

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1 vidual under subparagraph (B) to join in the 

2 payment of the compensation benefits any 

3 health care provider or health care organization 

4 that is potentially liable, in whole or in part, for 

5 the injury; and 

6 ‘‘(G) permit any health care provider or 

7 health care organization to contribute volun8 tarily in the payment of compensation benefits 

9 to an individual under subparagraph (B). 

10 ‘‘(3) ADMINISTRATIVE DETERMINATION OF

11 COMPENSATION MODEL.— 

12 ‘‘(A) IN GENERAL.—In the administrative 

13 determination of compensation model— 

14 ‘‘(i) the State shall— 

15 ‘‘(I) designate an administrative 

16 entity (in this paragraph referred to 

17 as the ‘Board’) that shall include rep18 resentatives of— 

19 ‘‘(aa) relevant State licens20 ing boards; 

21 ‘‘(bb) patient advocacy 

22 groups; 

23 ‘‘(cc) health care providers 

24 and health care organizations; 

25 and 


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1 ‘‘(dd) attorneys in relevant 

2 practice areas; 

3 ‘‘(II) set up classes of avoidable 

4 injuries, in consultation with relevant 

5 experts and with the Secretary in ac6 cordance with subsection (g), that will 

7 be used by the Board to determine 

8 compensation under clause (ii)(II); 

9 ‘‘(III) modify tort liability, 

10 through statute or contract, to bar 

11 negligence claims in court against 

12 health care providers and health care 

13 organizations for the classes of inju14 ries established under subclause (II), 

15 except in cases of fraud related to an 

16 injury, or in cases of criminal or in17 tentional harm; 

18 ‘‘(IV) outline a procedure for in19 forming patients about the modified 

20 liability system described in this para21 graph and, in systems where partici22 pation by the health care provider, 

23 health care organization, or patient is 

24 voluntary, allow for the decision by 

25 the provider, organization, or patient 


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1 of whether to participate to be made 

2 prior to the provision of, use of, or 

3 payment for the health care service; 

4 ‘‘(V) provide for an appeals proc5 ess to allow for review of decisions; 

6 and 

7 ‘‘(VI) establish procedures to co8 ordinate settlement payments with 

9 other sources of payment; 

10 ‘‘(ii) the Board shall— 

11 ‘‘(I) resolve health care liability 

12 claims for certain classes of avoidable 

13 injuries as determined by the State 

14 and determine compensation for such 

15 claims; 

16 ‘‘(II) develop a schedule of com17 pensation to be used in making such 

18 determinations that includes— 

19 ‘‘(aa) payment for the net 

20 economic loss of the patient, on a 

21 periodic basis, reduced by any 

22 payments received by the patient 

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1 tinuation plan, or any disability 

2 income insurance; 

3 ‘‘(bb) payment for the non4 economic damages of the patient, 

5 if appropriate for the injury, 

6 based on a defined payment 

7 schedule developed by the State 

8 in consultation with relevant ex9 perts and with the Secretary in 

10 accordance with subsection (g); 

11 and 

12 ‘‘(cc) reasonable attorney’s 

13 fees; and 

14 ‘‘(III) update the schedule under 

15 subclause (II) on a regular basis. 

16 ‘‘(B) APPEALS.—The State, in establishing 

17 the appeals process described in subparagraph 

18 (A)(i)(V), may choose whether to allow for de 

19 novo review, review with deference, or some op20 portunity for parties to reject determinations by 

21 the Board and elect to file a civil action after 

22 such rejection. Any State desiring to adopt the 

23 model described in this paragraph shall indicate 

24 how such review method meets the criteria 

25 under subsection (c)(2). 


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1 ‘‘(C) TIMELINESS.—The State shall estab2 lish timeframes to ensure that claims handled 

3 under the system described in this paragraph 

4 provide for adjudication that is more timely and 

5 expedited than adjudication in a traditional tort 

6 system. 

7 ‘‘(4) SPECIAL HEALTH CARE COURT MODEL.— 

8 In the special health care court model, the State 

9 shall— 

10 ‘‘(A) establish a special court for the time11 ly adjudication of disputes over injuries alleg12 edly caused by health care providers or health 

13 care organizations in the provision of health 

14 care services; 

15 ‘‘(B) ensure that such court is presided 

16 over by judges with health care expertise who 

17 meet applicable State standards for judges and 

18 who agree to preside over such court volun19 tarily; 

20 ‘‘(C) provide authority to such judges to 

21 make binding rulings on causation, compensa22 tion, standards of care, and related issues with 

23 reliance on independent expert witnesses com24 missioned by the court; 


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1 ‘‘(D) provide for an appeals process to 

2 allow for review of decisions; and 

3 ‘‘(E) at its option, establish an administra4 tive entity similar to the entity described in 

5 paragraph (3)(A)(i)(I) to provide advice and 

6 guidance to the special court. 

7 ‘‘(e) APPLICATION.— 

8 ‘‘(1) IN GENERAL.—Each State desiring a 

9 grant under subsection (a) shall submit to the Sec10 retary an application, at such time, in such manner, 

11 and containing such information as the Secretary 

12 may require. 

13 ‘‘(2) REVIEW PANEL.— 

14 ‘‘(A) IN GENERAL.—In reviewing applica15 tions under paragraph (1), the Secretary shall 

16 consult with a review panel composed of rel17 evant experts appointed by the Comptroller 

18 General. 

19 ‘‘(B) COMPOSITION.— 

20 ‘‘(i) NOMINATIONS.—The Comptroller 

21 General shall solicit nominations from the 

22 public for individuals to serve on the re23 view panel. 

24 ‘‘(ii) APPOINTMENT.—The Comp25 troller General shall appoint, at least 11 


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1 but not more than 15, highly qualified and 

2 knowledgeable individuals to serve on the 

3 review panel and shall ensure that the fol4 lowing entities receive fair representation 

5 on such panel: 

6 ‘‘(I) Patient advocates. 

7 ‘‘(II) Health care providers and 

8 health care organizations. 

9 ‘‘(III) Attorneys with expertise in 

10 representing patients and health care 

11 providers. 

12 ‘‘(IV) Insurers. 

13 ‘‘(V) State officials. 

14 ‘‘(C) CHAIRPERSON.—The Comptroller 

15 General, or an individual within the Govern16 ment Accountability Office designated by the 

17 Comptroller General, shall be the chairperson of 

18 the review panel. 

19 ‘‘(D) AVAILABILITY OF INFORMATION.— 

20 The Comptroller General shall make available 

21 to the review panel such information, personnel, 

22 and administrative services and assistance as 

23 the review panel may reasonably require to 

24 carry out its duties. 


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1 ‘‘(E) INFORMATION FROM AGENCIES.—The 

2 review panel may request directly from any de3 partment or agency of the United States any 

4 information that such panel considers necessary 

5 to carry out its duties. To the extent consistent 

6 with applicable laws and regulations, the head 

7 of such department or agency shall furnish the 

8 requested information to the review panel. 

9 ‘‘(f) REPORT.—Each State receiving a grant under 

10 subsection (a) shall submit to the Secretary a report evalu11 ating the effectiveness of activities funded with grants 

12 awarded under such subsection at such time and in such 

13 manner as the Secretary may require. 

14 ‘‘(g) TECHNICAL ASSISTANCE.— 

15 ‘‘(1) IN GENERAL.—The Secretary shall provide 

16 technical assistance to the States awarded grants 

17 under subsection (a). 

18 ‘‘(2) REQUIREMENTS.—Technical assistance 

19 under paragraph (1) shall include— 

20 ‘‘(A) the development of a defined payment 

21 schedule for non-economic damages (including 

22 guidance on the consideration of individual 

23 facts and circumstances in determining appro24 priate payment), the development of classes of 


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1 avoidable injuries, and guidance on early disclo2 sure to patients of adverse events; and 

3 ‘‘(B) the development, in consultation with 

4 States, of common definitions, formats, and 

5 data collection infrastructure for States receiv6 ing grants under this section to use in reporting 

7 to facilitate aggregation and analysis of data 

8 both within and between States. 

9 ‘‘(3) USE OF COMMON DEFINITIONS, FORMATS, 

10 AND DATA COLLECTION INFRASTRUCTURE.—States 

11 not receiving grants under this section may also use 

12 the common definitions, formats, and data collection 

13 infrastructure developed under paragraph (2)(B). 

14 ‘‘(h) EVALUATION.— 

15 ‘‘(1) IN GENERAL.—The Secretary, in consulta16 tion with the review panel established under sub17 section (e)(2), shall enter into a contract with an ap18 propriate research organization to conduct an overall 

19 evaluation of the effectiveness of grants awarded 

20 under subsection (a) and to annually prepare and 

21 submit a report to the appropriate committees of 

22 Congress. Such an evaluation shall begin not later 

23 than 18 months following the date of implementa24 tion of the first program funded by a grant under 

25 subsection (a). 


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1 ‘‘(2) CONTENTS.—The evaluation under para2 graph (1) shall include— 

3 ‘‘(A) an analysis of the effect of the grants 

4 awarded under subsection (a) on the number, 

5 nature, and costs of health care liability claims; 

6 ‘‘(B) a comparison of the claim and cost 

7 information of each State receiving a grant 

8 under subsection (a); and 

9 ‘‘(C) a comparison between States receiv10 ing a grant under this section and States that 

11 did not receive such a grant, matched to ensure 

12 similar legal and health care environments, and 

13 to determine the effects of the grants and sub14 sequent reforms on— 

15 ‘‘(i) the liability environment; 

16 ‘‘(ii) health care quality; 

17 ‘‘(iii) patient safety; and 

18 ‘‘(iv) patient and health care provider 

19 and organization satisfaction with the re20 forms. 

21 ‘‘(i) OPTION TO PROVIDE FOR INITIAL PLANNING

22 GRANTS.—Of the funds appropriated pursuant to sub23 section (k), the Secretary may use a portion not to exceed 

24 $500,000 per State to provide planning grants to such 

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1 cations meeting the criteria described in subsection (c). 

2 In selecting States to receive such planning grants, the 

3 Secretary shall give preference to those States in which 

4 State law at the time of the application would not prohibit 

5 the adoption of an alternative to current tort litigation. 

6 ‘‘(j) DEFINITIONS.—In this section: 

7 ‘‘(1) HEALTH CARE SERVICES.—The term 

8 ‘health care services’ means any services provided by 

9 a health care provider, or by any individual working 

10 under the supervision of a health care provider, that 

11 relate to— 

12 ‘‘(A) the diagnosis, prevention, or treat13 ment of any human disease or impairment; or 

14 ‘‘(B) the assessment of the health of 

15 human beings. 

16 ‘‘(2) HEALTH CARE ORGANIZATION.—The term 

17 ‘health care organization’ means any individual or 

18 entity which is obligated to provide, pay for, or ad19 minister health benefits under any health plan. 

20 ‘‘(3) HEALTH CARE PROVIDER.—The term 

21 ‘health care provider’ means any individual or enti22 ty— 

23 ‘‘(A) licensed, registered, or certified under 

24 Federal or State laws or regulations to provide 

25 health care services; or 


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1 ‘‘(B) required to be so licensed, registered, 

2 or certified but that is exempted by other stat3 ute or regulation. 

4 ‘‘(4) NET ECONOMIC LOSS.—The term ‘net eco5 nomic loss’ means— 

6 ‘‘(A) reasonable expenses incurred for 

7 products, services, and accommodations needed 

8 for health care, training, and other remedial 

9 treatment and care of an injured individual; 

10 ‘‘(B) reasonable and appropriate expenses 

11 for rehabilitation treatment and occupational 

12 training; 

13 ‘‘(C) 100 percent of the loss of income 

14 from work that an injured individual would 

15 have performed if not injured, reduced by any 

16 income from substitute work actually per17 formed; and 

18 ‘‘(D) reasonable expenses incurred in ob19 taining ordinary and necessary services to re20 place services an injured individual would have 

21 performed for the benefit of the individual or 

22 the family of such individual if the individual 

23 had not been injured. 

24 ‘‘(5) NON-ECONOMIC DAMAGES.—The term 

25 ‘non-economic damages’ means losses for physical 


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1 and emotional pain, suffering, inconvenience, phys2 ical impairment, mental anguish, disfigurement, loss 

3 of enjoyment of life, loss of society and companion4 ship, loss of consortium (other than loss of domestic 

5 service), injury to reputation, and all other non-pe6 cuniary losses of any kind or nature, to the extent 

7 permitted under State law. 

8 ‘‘(k) AUTHORIZATION OF APPROPRIATIONS.—There 

9 are authorized to be appropriated to carry out this section 

10 such sums as may be necessary. Amounts appropriated 

11 pursuant to this subsection shall remain available until ex12 pended.’’. 

13 SEC. 329. AFFIRMATIVE DEFENSE BASED ON COMPLIANCE 

14 WITH BEST PRACTICE GUIDELINES. 

15 (a) SELECTION AND ISSUANCE OF BEST PRACTICES

16 GUIDELINES.— 

17 (1) IN GENERAL.—The Secretary of Health and 

18 Human Services (in this section referred to as the 

19 ‘‘Secretary’’) shall provide for the selection and 

20 issuance of best practice guidelines (each in this sub21 section referred to as a ‘‘guideline’’) in accordance 

22 with paragraphs (2) and (3). 

23 (2) DEVELOPMENT PROCESS.—Not later than 

24 90 days after the date of the enactment of this Act, 

25 the Secretary shall enter into a contract with a 


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1 qualified physician consensus-building organization 

2 (such as the Physician Consortium for Performance 

3 Improvement), in concert and agreement with physi4 cian specialty organizations, to develop guidelines for 

5 treatment of medical conditions for application 

6 under subsection (b). Under the contract, the orga7 nization shall take into consideration any endorsed 

8 performance-based quality measures utilized under 

9 title XVIII of the Social Security Act (42 U.S.C. 

10 1395 et seq.). Under the contract and not later than 

11 18 months after the date of the enactment of this 

12 Act, the organization shall submit best practice 

13 guidelines for issuance as guidelines under para14 graph (3). 

15 (3) ISSUANCE.— 

16 (A) IN GENERAL.—Not later than 2 years 

17 after the date of the enactment of this Act, the 

18 Secretary shall issue, by regulation, after notice 

19 and opportunity for public comment, guidelines 

20 that have been recommended under paragraph 

21 (2) for application under subsection (b). 

22 (B) LIMITATION.—The Secretary may not 

23 issue guidelines unless they have been approved 

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1 building organization involved and physician 

2 specialty organizations. 

3 (C) DISSEMINATION.—The Secretary shall 

4 broadly disseminate the guidelines so issued. 

5 (b) LIMITATION ON DAMAGES.— 

6 (1) LIMITATION ON NONECONOMIC DAMAGES.— 

7 In any health care lawsuit, no noneconomic damages 

8 may awarded with respect to treatment that is with9 in a guideline issued under subsection (a). 

10 (2) LIMITATION ON PUNITIVE DAMAGES.—In 

11 any health care lawsuit, no punitive damages may be 

12 awarded against a health care practitioner based on 

13 a claim that such treatment caused the claimant 

14 harm if— 

15 (A) such treatment was subject to the 

16 quality review by a qualified physician con17 sensus-building organization; 

18 (B) such treatment was approved in a 

19 guideline that underwent full review by such or20 ganization, public comment, approval by the 

21 Secretary, and dissemination as described in 

22 subparagraph (a); and 

23 (C) such medical treatment is generally 

24 recognized among qualified experts (including 

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1 cialty organizations) as safe, effective, and ap2 propriate. 

3 (c) USE.— 

4 (1) INTRODUCTION AS EVIDENCE.—Guidelines 

5 under subsection (a) may not be introduced as evi6 dence of negligence or deviation in the standard of 

7 care in any civil action unless they have previously 

8 been introduced by the defendant. 

9 (2) NO PRESUMPTION OF NEGLIGENCE.—There 

10 would be no presumption of negligence if a partici11 pating physician does not adhere to such guidelines. 

12 (d) CONSTRUCTION.—Nothing in this section shall be 

13 construed as preventing a State from— 

14 (1) replacing their current medical malpractice 

15 rules with rules that rely, as a defense, upon a 

16 health care provider’s compliance with a guideline 

17 issued under subsection (a); or 

18 (2) applying additional guidelines or safe-har19 bors that are in addition to, but not in lieu of, the 

20 guidelines issued under subsection (a). 

21 SEC. 330. MEDICAL MALPRACTICE REFORM STATE INCEN22 TIVE FUND. 

23 (a) GRANTS.—The Secretary of Health and Human 

24 Services (referred to in this section as the ‘‘Secretary’’) 


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1 shall award grants to eligible States to assist such States 

2 in implementing State-based medical malpractice reforms. 

3 (b) ELIGIBILITY.— 

4 (1) IN GENERAL.—To be eligible to receive a 

5 grant under subsection (a), a State shall— 

6 (A) submit to the Secretary an application, 

7 at such time, in such manner, and containing 

8 such information as the Secretary may require; 

9 and 

10 (B) shall certify, as part of the application 

11 under subparagraph (A), that the State has 

12 carried out activities, including enacting State 

13 laws, that have been demonstrated to lower 

14 medical malpractice claim or premiums costs 

15 for physicians or to lower health care costs for 

16 patients. 

17 (2) STUDY.—As part of a certification provided 

18 under paragraph (1)(B), the State shall include the 

19 results of at least one longitudinal, empirically based 

20 study or data based on an actuarial analysis that 

21 demonstrates cost reductions of the type described in 

22 such paragraph. Such results shall be provided in a 

23 manner that enables the Comptroller General of the 

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1 er such results are the reasonable and demonstrable 

2 conclusion of the State activities involved. 

3 (3) TYPES OF LAWS.—Laws described in para4 graph (1)(B) may include caps on non-economic 

5 damages, the establishment of health courts, the es6 tablishment of a comprehensive patient compensa7 tion program, providing for administrative deter8 minations of compensation, providing for early of9 fers, establishing safe harbors for the practice of evi10 dence-based medicine, or other demonstrated meth11 ods to reduce costs. 

12 (c) AUTHORIZATION OF APPROPRIATIONS.—There is 

13 authorized to be appropriated to carry out this section— 

14 (1) $500,000,000 for the period of fiscal years 

15 2016 through 2020; and 

16 (2) $500,000,000 for the period of fiscal years 

17 2021 through 2025. 

18 (d) SUNSET.—The authority established under this 

19 section shall not apply after September 30, 2026. 

20 SEC. 331. SENSE OF CONGRESS CONCERNING ADDITIONAL 

21 REFORMS. 

22 It is the sense of Congress that Congress should ex23 plore other options for health care-related tort reform, in24 cluding statutory caps on punitive and non-economic dam25 ages and measures to ensure savings resulting from tort 


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1 reforms go to reducing health care costs, as well as meas2 ures to encourage the reduction of medical errors. 

3 SEC. 332. APPLICABILITY; EFFECTIVE DATE. 

4 This subtitle shall apply to any health care lawsuit 

5 brought in a Federal or State court, or subject to an alter6 native dispute resolution system, that is initiated on or 

7 after the date of the enactment of this Act, except that 

8 any health care lawsuit arising from an injury occurring 

9 prior to the date of the enactment of this Act shall be 

10 governed by the applicable statute of limitations provisions 

11 in effect at the time the injury occurred. 

12 TITLE IV—SOCIAL SECURITY 

13 SAVINGS 

14 SEC. 401. ADJUSTMENTS IN SUPPLEMENTAL SECURITY IN15 COME BENEFITS FOR CERTAIN LONG-TIME 

16 BENEFICIARIES. 

17 (a) IN GENERAL.—Title XVI of the Social Security 

18 Act (42 U.S.C. 1381 et seq.) is amended by inserting after 

19 section 1617 the following: 

20 ‘‘ADJUSTMENTS IN BENEFITS FOR CERTAIN LONG-TIME

21 BENEFICIARIES

22 ‘‘SEC. 1617A. 

23 ‘‘(a) In the case of an eligible individual to whom ben24 efits under this title (or under section 211 of Public Law 

25 93–66) have been payable for at least 240 months (wheth26 er or not consecutive) and whose benefits under this title 


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1 (or under such section 211) have been increased under 

2 this section fewer than 5 times, whenever benefit amounts 

3 under title II are increased by any percentage effective 

4 with any month as a result of a determination made under 

5 section 215(i) of this Act— 

6 ‘‘(1) each of the dollar amounts in effect for the 

7 month with respect to the eligible individual under 

8 subsections (a)(1)(A), (a)(2)(A), (b)(1), and (b)(2) 

9 of section 1611 of this title, and subsection 

10 (a)(1)(A) of section 211 of Public Law 93–66, as 

11 specified in such subsections or as previously in12 creased under section 1617 of this title or this sec13 tion, shall be increased by the amount (if any) by 

14 which— 

15 ‘‘(A) the amount which would have been in 

16 effect under such subsections for the month 

17 with respect to the individual but for the round18 ing of the amount pursuant to section 

19 1617(a)(2) of this title or paragraph (2) of this 

20 subsection, exceeds 

21 ‘‘(B) the amount in effect for the month 

22 under such subsections with respect to the indi23 vidual; and 

24 ‘‘(2) the amount obtained under paragraph (1) 

25 with respect to each subsection with respect to the 


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1 individual shall be further increased by 1 percent of 

2 the amount so obtained with respect to the indi3 vidual the 1st time this section is applied with re4 spect to the individual, (and rounded, when not a 

5 multiple of $12, to the next lower multiple of $12), 

6 effective with respect to benefits for months after 

7 the month. 

8 ‘‘(b) The new dollar amounts to be in effect under 

9 section 1611 of this title and under section 211 of Public 

10 Law 93–66 by reason of the application of subsection (a) 

11 of this section with respect to eligible individuals shall be 

12 published in the Federal Register together with, and at 

13 the same time as, the material required by section 

14 215(i)(2)(D) of this Act to be published therein by reason 

15 of the determination involved.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) Subsections (a)(1)(A), (a)(2)(A), (b)(1), 

18 (b)(2), and (b)(6) of section 1611 of such Act (42 

19 U.S.C. 1382) are each amended by inserting ‘‘or 

20 1617A’’ after ‘‘1617’’. 

21 (2) Section 1617(a)(1) of such Act (42 U.S.C. 

22 1382f(a)(1)) is amended— 

23 (A) in the matter preceding subparagraph 

24 (A), by inserting ‘‘or section 1617A’’ after ‘‘this 

25 section’’; and 


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1 (B) in subparagraph (A), by inserting ‘‘or 

2 section 1617A(a)(2))’’ after ‘‘paragraph (2)’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply with respect to benefits payable 

5 for months beginning after calendar year in which this Act 

6 is enacted. 

7 TITLE V—OTHER MANDATORY 

8 SAVINGS AND RECEIPTS 

9 SEC. 501. CONVERSION TO CHAINED CPI. 

10 (a) CONSUMER PRICE INDEX ADJUSTMENTS APPLI11 CABLE TO THE INTERNAL REVENUE CODE PROVI12 SIONS.— 

13 (1) IN GENERAL.—Paragraph (3) of section 

14 1(f) of the Internal Revenue Code of 1986 is amend15 ed to read as follows: 

16 ‘‘(3) COST-OF-LIVING ADJUSTMENT.— 

17 ‘‘(A) IN GENERAL.—For purposes of para18 graph (2), the cost-of-living adjustment for any 

19 calendar year is— 

20 ‘‘(i) for adjustments first beginning 

21 before 2017, the product of— 

22 ‘‘(I) the CPI fraction for cal23 endar years before 2017, multiplied 

24 by 


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1 ‘‘(II) the Chained CPI fraction 

2 for calendar years after 2016, 

3 reduced by 1, and 

4 ‘‘(ii) for adjustments first beginning 

5 after 2016, the Chained CPI fraction for 

6 years after 2016. 

7 ‘‘(B) CPI FRACTION FOR CALENDAR

8 YEARS BEFORE 2017.—The CPI fraction for cal9 endar years before 2017 is the fraction— 

10 ‘‘(i) the numerator of which is the 

11 CPI for the calendar year 2015; and 

12 ‘‘(ii) the denominator of which is the 

13 CPI for the calendar year 1992. 

14 ‘‘(C) CHAINED CPI FRACTION FOR CAL15 ENDAR YEARS AFTER 2016.—The Chained CPI 

16 fraction for calendar years after 2016 is the 

17 fraction— 

18 ‘‘(i) the numerator of which is the 

19 Chained CPI for the preceding calendar 

20 year, and 

21 ‘‘(ii) the denominator of which is the 

22 Chained CPI for the calendar year 2015.’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) Paragraph (4) of section 1(f) of such 

25 Code is amended to read as follows: 


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1 ‘‘(4) CPI AND CHAINED CPI FOR ANY CAL2 ENDAR YEAR.—For purposes of paragraph (3)— 

3 ‘‘(A) CPI.—The CPI for any calendar year 

4 is the average of the Consumer Price Index as 

5 of the close of the 12-month period ending on 

6 August 31 of such calendar year. 

7 ‘‘(B) CHAINED CPI.—The Chained CPI for 

8 any calendar year is the average of the Chained 

9 Consumer Price Index as of the close of the 12- 

10 month period ending on August 31 of such cal11 endar year.’’. 

12 (B) Paragraph (5) of section 1(f) of such 

13 Code is amended to read as follows: 

14 ‘‘(5) CONSUMER PRICE INDEX AND CHAINED

15 CONSUMER PRICE INDEX.—For purposes of para16 graph (4)— 

17 ‘‘(A) CONSUMER PRICE INDEX.—The term 

18 ‘Consumer Price Index’ means the last Con19 sumer Price Index for all urban consumers pub20 lished by the Department of Labor. For pur21 poses of the preceding sentence, the revision of 

22 the Consumer Price Index which is most con23 sistent with the Consumer Price Index for cal24 endar year 1986 shall be used. 


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1 ‘‘(B) CHAINED CONSUMER PRICE INDEX.— 

2 The term ‘Chained Consumer Price Index’ 

3 means the most recent estimate of the Chained 

4 Consumer Price Index for all urban consumers 

5 published by the Department of Labor.’’. 

6 (C) Subclause (II) of section 

7 36B(b)(3)(A)(ii) of such Code is amended by 

8 striking ‘‘consumer price index’’ and inserting 

9 ‘‘Chained Consumer Price Index (as defined in 

10 section 1(f)(5)(B))’’. 

11 (D) Subclause (II) of section 

12 36B(f)(2)(B)(ii) of such Code is amended by 

13 striking ‘‘by substituting ‘calendar year 2017’ 

14 for ‘calendar year 1992’ in subparagraph (B) 

15 thereof’’ and inserting ‘‘by substituting ‘cal16 endar year 2017’ for ‘calendar year 2015’ in 

17 subparagraph (C) thereof’’. 

18 (E) Clause (ii) of section 45R(d)(3)(B) of 

19 such Code is amended by striking ‘‘by sub20 stituting ‘calendar year 2016’ for ‘calendar year 

21 1992’ in subparagraph (B) thereof’’ and insert22 ing ‘‘by substituting ‘calendar year 2016’ for 

23 ‘calendar year 2015’ in subparagraph (C) there24 of’’. 


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1 (F) Subparagraph (B) of section 125(i)(2) 

2 of such Code is amended by striking ‘‘by sub3 stituting ‘calendar year 2016’ for ‘calendar year 

4 1992’ in subparagraph (B) thereof’’ and insert5 ing ‘‘by substituting ‘calendar year 2016’ for 

6 ‘calendar year 2015’ in subparagraph (C) there7 of’’. 

8 (G) Subclause (II) of section 

9 4980I(b)(3)(C)(v) of such Code is amended by 

10 striking ‘‘for ‘1992’ in subparagraph (B) there11 of’’ and inserting ‘‘for ‘2015’ in subparagraph 

12 (C) thereof’’. 

13 (H) Clause (ii) of section 5000A(c)(3)(D) 

14 of such Code is amended by striking ‘‘by sub15 stituting ‘calendar year 2015’ for ‘calendar year 

16 1992’ in subparagraph (B) thereof’’ and insert17 ing ‘‘by substituting ‘calendar year 2015’ for 

18 ‘calendar year 2015’ in subparagraph (C) there19 of’’. 

20 (I) Paragraph (1) of section 6721(f) of 

21 such Code is amended by striking ‘‘determined 

22 by substituting ‘calendar year 2015’ for ‘cal23 endar year 1992’ in subparagraph (B) thereof’’. 

24 (J) Paragraph (1) of section 6722(f) of 

25 such Code is amended by striking ‘‘determined 


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1 by substituting ‘calendar year 2015’ for ‘cal2 endar year 1992’ in subparagraph (B) thereof’’. 

3 (3) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall apply to taxable years begin5 ning after December 31, 2016. 

6 (b) MODIFICATIONS TO COST-OF-LIVING INDEX7 ATION OF SOCIAL SECURITY BENEFITS.— 

8 (1) IN GENERAL.—Section 215(i)(1)(D) of the 

9 Social Security Act (42 U.S.C. 415(i)(1)(D)) is 

10 amended to read as follows: 

11 ‘‘(D) the term ‘CPI increase percentage’, with 

12 respect to a base quarter or cost-of-living computa13 tion quarter in any calendar year, means the per14 centage (rounded to the nearest one-tenth of 1 per15 cent) by which the Chained Consumer Price Index 

16 for All Urban Consumers (as published in its initial 

17 form by the Bureau of Labor Statistics of the De18 partment of Labor) for such base quarter or cost-of19 living computation quarter exceeds such index for 

20 the later of— 

21 ‘‘(i) the most recent calendar quarter 

22 (prior to such base quarter or cost-of-living 

23 computation quarter) which was a base quarter 

24 under subparagraph (A)(ii); or 


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1 ‘‘(ii) the most recent cost-of-living com2 putation quarter under subparagraph (B);’’. 

3 (2) DEFINITIONS.—Section 215(i)(1)(G) of 

4 such Act (42 U.S.C. 415(i)(1)(G)) is amended to 

5 read as follows: 

6 ‘‘(G) the Chained Consumer Price Index for All 

7 Urban Consumers for a base quarter, a cost-of-living 

8 computation quarter, or any other calendar quarter 

9 shall be the arithmetical mean of such index (as 

10 published in its initial form by the Bureau of Labor 

11 Statistics of the Department of Labor as of the end 

12 of such quarter) for the 12-month period ending 

13 with such quarter.’’. 

14 (3) CONFORMING CHANGES FOR PRE-1977

15 LAW.— 

16 (A) Section 215(i)(1) of such Act, as in ef17 fect in December 1978, and as applied in cer18 tain cases under the provisions of such Act as 

19 in effect after December 1978, is amended— 

20 (i) in subparagraph (B), by striking 

21 ‘‘and’’ after the semicolon; 

22 (ii) in subparagraph (C), by striking 

23 ‘‘for the 3 months in such quarter.’’ and 

24 inserting ‘‘for the 12 months in the 12- 


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1 month period ending with such quarter; 

2 and’’; and 

3 (iii) by adding at the end the fol4 lowing new subparagraph: 

5 ‘‘(D) the term ‘Consumer Price Index’ means 

6 the Chained Consumer Price Index for All Urban 

7 Consumers (C–CPI–U), as published in its initial 

8 form by the Bureau of Labor Statistics of the De9 partment of Labor.’’. 

10 (B) Section 215(i)(4) of the Social Secu11 rity Act (42 U.S.C. 415(i)(4)) is amended by 

12 inserting ‘‘ and by section 501(b) of the Amer13 ica First Act’’ after ‘‘1986,’’. 

14 (4) EFFECTIVE DATE.—The amendments made 

15 by this subsection shall apply with respect to in16 creases described in section 215(i) of the Social Se17 curity Act, and to increases under programs depend18 ent on Social Security cost-of-living adjustments, ef19 fective with the month of December for years after 

20 2015. 

21 (c) ADJUSTMENTS OF PROVISIONS UTILIZING THE

22 CONSUMER PRICE INDEX.— 

23 (1) IN GENERAL.—Notwithstanding any other 

24 provision of law, and except as provided in this sec25 tion, for purposes of determining the amount of any 


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1 cost-of-living increase or similar adjustment under a 

2 Federal program or law effective in the month of 

3 December 2016 and thereafter, any such increase 

4 for the period for which the percentage change is de5 termined shall be deemed to be, in lieu of the in6 crease otherwise determined under applicable law, 

7 the increase determined under such applicable law 

8 by substituting the Chained CPI for the CPI. 

9 (2) INCREASES DETERMINED FROM A CON10 STANT BASE YEAR.— 

11 (A) IN GENERAL.—In any case in which 

12 the amount of a cost-of-living increase effective 

13 in the month of December 2015 and thereafter 

14 is determined under applicable law by reference 

15 to a change in the CPI over a period which is 

16 determined by reference to a base period which 

17 remains constant from year to year, any such 

18 increase for any period shall be deemed to be, 

19 in lieu of the increase otherwise determined 

20 under applicable law, the increase, expressed as 

21 a percentage increase, equal to the product of— 

22 (i) the CPI fraction prior to 2017; 

23 multiplied by 

24 (ii) the Chained CPI fraction after 

25 2016, 


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1 reduced by 1. 

2 (B) CPI FRACTION PRIOR TO 2017.—The 

3 CPI fraction prior to 2017 is the fraction— 

4 (i) the numerator of which is the CPI 

5 for the period, ending with or during 2015, 

6 which corresponds to the base period; and 

7 (ii) the denominator of which is the 

8 CPI for the base period. 

9 (C) CHAINED CPI FRACTION AFTER 2016.— 

10 The Chained CPI fraction after 2016 is the 

11 fraction— 

12 (i) the numerator of which is the 

13 Chained CPI for the period, ending with or 

14 during the year preceding the year in 

15 which the determination takes effect, which 

16 corresponds to the base period; and 

17 (ii) the denominator of which is the 

18 most recently published estimate of the 

19 Chained CPI for the period, ending with or 

20 during 2015, which corresponds to the 

21 base period. 

22 (3) SPECIAL PROVISIONS AND EXCEPTIONS.— 

23 (A) PROGRAMS TIED TO SOCIAL SECU24 RITY.—Subject to subparagraph (B) and the ef25 fective date under subsection (b)(4), this section 


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1 and the amendments made by this section shall 

2 apply to any cost-of-living increase or other ad3 justment which is determined by reference to an 

4 adjustment made under section 215(i) of the 

5 Social Security Act (42 U.S.C. 415(i)). 

6 (B) NONAPPLICATION TO COST-OF-LIVING

7 INDEXATION OF SSI BENEFITS.— 

8 (i) IN GENERAL.—Section 1617 of the 

9 Social Security Act (42 U.S.C. 1382f) is 

10 amended— 

11 (I) in subsection (a), in the mat12 ter preceding paragraph (1), by strik13 ing ‘‘Whenever’’ and inserting ‘‘Sub14 ject to subsection (d), whenever’’; and 

15 (II) by adding at the end the fol16 lowing: 

17 ‘‘(d)(1) Notwithstanding subsection (a), with respect 

18 to benefits payable under this title for December 2016 and 

19 months thereafter, whenever benefit amounts under title 

20 II are increased by any percentage effective with any 

21 month as a result of a determination made under section 

22 215(i), each of the dollar amounts in effect for such month 

23 under subsections (a)(1)(A), (a)(2)(A), (b)(1), and (b)(2) 

24 of section 1611, and subsection (a)(1)(A) of section 211 

25 of Public Law 93–66, as specified in such subsections or 


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1 as previously increased under this section, shall be increased by 1 2 ⁄12 of the cost-of-living adjustment determined 

3 under paragraph (2) for the most recent prior calendar 

4 year (and rounded, when not a multiple of $12, to the 

5 next lower multiple of $12). 

6 ‘‘(2) The cost-of-living adjustment determined under 

7 this paragraph is, with respect to a calendar year, the per8 centage equal to the sum of— 

9 ‘‘(A) the Chained CPI increase percentage de10 termined under paragraph (3) for the year; and 

11 ‘‘(B) the difference of— 

12 ‘‘(i) the product of the CPI increase per13 centage determined under paragraph (4) for the 

14 year and the applicable transition factor under 

15 paragraph (5); and 

16 ‘‘(ii) the product of the Chained CPI in17 crease percentage determined under paragraph 

18 (3) for the year and the applicable transition 

19 factor under paragraph (5). 

20 ‘‘(3) The Chained CPI increase percentage deter21 mined under this paragraph for a calendar year is the 

22 fraction (expressed as a percentage)— 

23 ‘‘(A) the numerator of which is the Chained 

24 Consumer Price Index for All Urban Consumers for 

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1 reau of Labor Statistics of the Department of 

2 Labor); and 

3 ‘‘(B) the denominator of which is the Chained 

4 Consumer Price Index for All Urban Consumers for 

5 calendar year 2015 (as so published). 

6 ‘‘(4) The CPI increase percentage determined under 

7 this paragraph for a calendar year is the fraction (ex8 pressed as a percentage)— 

9 ‘‘(A) the numerator of which is the Consumer 

10 Price Index for all urban consumers for the pre11 ceding calendar year (as published by the Bureau of 

12 Labor Statistics of the Department of Labor); and 

13 ‘‘(B) the denominator of which is the Consumer 

14 Price Index for all urban consumers for calendar 

15 year 2015 (as so published). 

16 ‘‘(5) The applicable transition factor under this para17 graph is— 

18 ‘‘(A) for benefits effective for months beginning 

19 after November 30, 2016, and before December 1, 

20 2017, 0.8; 

21 ‘‘(B) for benefits effective for months beginning 

22 after November 30, 2017, and before December 1, 

23 2018, 0.6; 


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1 ‘‘(C) for benefits effective for months beginning 

2 after November 30, 2018, and before December 1, 

3 2019, 0.4; 

4 ‘‘(D) for benefits effective for months beginning 

5 after November 30, 2019, and before December 1, 

6 2020, 0.2; and 

7 ‘‘(E) for benefits effective for months beginning 

8 after November 30, 2020, 0.0.’’. 

9 (ii) CONFORMING AMENDMENT.—Sec10 tion 1617(b) of such Act (42 U.S.C. 

11 1382f(b)) is amended by inserting ‘‘or 

12 (d)’’after ‘‘subsection (a)’’. 

13 (C) POVERTY LINE.—This subsection shall 

14 apply to revisions to the poverty line made pur15 suant to 42 U.S.C. 9902(2), and any programs 

16 for which adjustments or eligibility thresholds 

17 are based upon the poverty line as defined in 

18 that section. 

19 (4) CPI AND CHAINED CPI.—For purposes of 

20 this subsection— 

21 (A) the CPI for any period means the av22 erage monthly Consumer Price Index for such 

23 period, or a component thereof, as determined 

24 under the applicable law in connection with any 

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1 quired for such period (without regard to this 

2 subsection); and 

3 (B) the Chained CPI for any period 

4 means, except as provided in paragraph 

5 (2)(C)(ii), the Chained Consumer Price Index 

6 for all urban consumers (as published in its ini7 tial form by the Bureau of Labor Statistics of 

8 the Department of Labor) for such period, or a 

9 component thereof, determined under applicable 

10 law in the same manner as the CPI for such pe11 riod would be determined. 

12 (d) CHANGE TO 12-MONTH PERIOD FOR COST-OF13 LIVING INDEXATION FOR FEDERAL CIVIL SERVICE AND

14 MILITARY RETIREMENT PROGRAMS.— 

15 (1) IN GENERAL.— 

16 (A) FEDERAL CIVIL SERVICE.—Sections 

17 8340(a)(2) and 8462(a)(2) of title 5, United 

18 States Code, are each amended by striking ‘‘3 

19 months comprising such quarter’’ and inserting 

20 ‘‘12-month period ending with such quarter’’. 

21 (B) MILITARY.—Section 1401a(h) of title 

22 10, United States Code, is amended by striking 

23 ‘‘three months comprising that quarter’’ and in24 serting ‘‘12-month period ending with such 

25 quarter’’. 


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1 (2) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply with respect to cost3 of-living increases effective with the month of De4 cember of years after 2015. 

5 SEC. 502. ADJUSTMENT FOR INFLATION OF FEES FOR CER6 TAIN CUSTOMS SERVICES. 

7 (a) IN GENERAL.—Section 13031 of the Consolidated 

8 Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 

9 58c) is amended by adding at the end the following: 

10 ‘‘(l) ADJUSTMENT OF FEES FOR INFLATION.— 

11 ‘‘(1) IN GENERAL.—The Secretary of the 

12 Treasury shall adjust the fees established under sub13 section (a), and the limitations on such fees under 

14 paragraphs (2), (3), (5), (6), (8), and (9) of sub15 section (b), on October 1, 2015, and annually there16 after, to reflect the percentage (if any) of the in17 crease in the average of the chained Consumer Price 

18 Index for the preceding 12-month period compared 

19 to the chained Consumer Price Index for fiscal year 

20 2014. 

21 ‘‘(2) SPECIAL RULES FOR CALCULATION OF AD22 JUSTMENT.—In adjusting under paragraph (1) the 

23 amount of the fees established under subsection (a), 

24 and the limitations on such fees under paragraphs 


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1 (2), (3), (5), (6), (8), and (9) of subsection (b), the 

2 Secretary— 

3 ‘‘(A) shall round the amount of any in4 crease in the Consumer Price Index to the near5 est dollar; and 

6 ‘‘(B) may ignore any such increase of less 

7 than 1 percent. 

8 ‘‘(3) CHAINED CONSUMER PRICE INDEX DE9 FINED.—For purposes of this subsection, the term 

10 ‘chained Consumer Price Index’ means the Chained 

11 Consumer Price Index for All Urban Consumers (C– 

12 CPI–U), as published in its initial form by the Bu13 reau of Labor Statistics of the Department of 

14 Labor.’’. 

15 (b) DEPOSITS INTO CUSTOMS USER FEE AC16 COUNT.—Section 13031(f) of the Consolidated Omnibus 

17 Budget Reconciliation Act of 1985 (19 U.S.C. 58c(f)) is 

18 amended— 

19 (1) in paragraph (1), in the matter preceding 

20 subparagraph (A), by striking ‘‘all fees collected 

21 under subsection (a)’’ and inserting ‘‘the amount of 

22 fees collected under subsection (a) (determined with23 out regard to any adjustment made under subsection 

24 (l))’’; and 


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1 (2) in paragraph (3)(A), in the matter pre2 ceding clause (i)— 

3 (A) by striking ‘‘fees collected’’ and insert4 ing ‘‘amount of fees collected’’; and 

5 (B) by striking ‘‘), each appropriation’’ 

6 and inserting ‘‘, and determined without regard 

7 to any adjustment made under subsection (l)), 

8 each appropriation’’. 

9 (c) CONFORMING AMENDMENTS.—Section 13031 of 

10 the Consolidated Omnibus Budget Reconciliation Act of 

11 1985 (19 U.S.C. 58c), as amended by subsections (a) and 

12 (b), is further amended— 

13 (1) in subsection (a), in the matter preceding 

14 paragraph (1), by inserting ‘‘(subject to adjustment 

15 under subsection (l))’’ after ‘‘following fees’’; and 

16 (2) in subsection (b)— 

17 (A) in paragraph (2), by inserting ‘‘(sub18 ject to adjustment under subsection (l))’’ after 

19 ‘‘in fees’’; 

20 (B) in paragraph (3), by inserting ‘‘(sub21 ject to adjustment under subsection (l))’’ after 

22 ‘‘in fees’’; 

23 (C) in paragraph (5)(A), by inserting 

24 ‘‘(subject to adjustment under subsection (l))’’ 

25 after ‘‘in fees’’; 


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1 (D) in paragraph (6), by inserting ‘‘(sub2 ject to adjustment under subsection (l))’’ after 

3 ‘‘in fees’’; 

4 (E) in paragraph (8)(A)— 

5 (i) in clause (i), by inserting ‘‘or (l)’’ 

6 after ‘‘subsection (a)(9)(B)’’; and 

7 (ii) in clause (ii), by inserting ‘‘(sub8 ject to adjustment under subsection (l))’’ 

9 after ‘‘$3’’; and 

10 (F) in paragraph (9)— 

11 (i) in subparagraph (A)— 

12 (I) in the matter preceding clause 

13 (i), by inserting ‘‘and subject to ad14 justment under subsection (l)’’ after 

15 ‘‘Tariff Act of 1930’’; and 

16 (II) in clause (ii)(I), by inserting 

17 ‘‘(subject to adjustment under sub18 section (l))’’ after ‘‘bill of lading’’; and 

19 (ii) in subparagraph (B)(i), by insert20 ing ‘‘(subject to adjustment under sub21 section (l))’’ after ‘‘bill of lading’’. 


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1 SEC. 503. ADJUSTMENT FOR INFLATION OF TSA SERVICE 

2 SECURITY FEES AND FEE LEVELS. 

3 (a) LIMITATION ON FEES.—Subsection (c) of section 

4 44940 of title 49, United States Code, is amended by add5 ing at the end the following new paragraph: 

6 ‘‘(3) ADJUSTMENT OF FEE AMOUNT.—For fis7 cal year 2016 and each subsequent fiscal year, the 

8 amount of a fee under this subsection shall be ad9 justed to reflect the percentage (if any) of the aver10 age of the chained Consumer Price Index for the 

11 preceding 12-month period compared to the chained 

12 Consumer Price Index for the preceding fiscal 

13 year.’’. 

14 (b) FEE LEVELS.—Subsection (i)(4) of such section 

15 is amended by adding at the end the following new sub16 paragraph: 

17 ‘‘(M) For fiscal year 2026, and each subse18 quent fiscal year, the amount in effect for the 

19 preceding fiscal year, as adjusted to reflect the 

20 percentage (if any) in the average of the 

21 chained Consumer Price Index for the pre22 ceding 12-month period compared to the 

23 chained Consumer Price Index for preceding 

24 fiscal year.’’. 


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1 (c) CHAINED CONSUMER PRICE INDEX.—Such sec2 tion is further amended by adding at the end the following 

3 new subsection: 

4 ‘‘(j) CALCULATION OF CHAINED CONSUMER PRICE

5 INDEX.— 

6 ‘‘(1) SPECIAL RULES FOR CALCULATION OF AD7 JUSTMENT.—In calculating the amount of the fee 

8 under subsection (c) and the fiscal year amounts 

9 under subsection (i)(4)(K), the Under Secretary— 

10 ‘‘(A) shall round the amount of any in11 crease in the Consumer Price Index to the near12 est dollar; and 

13 ‘‘(B) may ignore any such increase of less 

14 than 1 percent. 

15 ‘‘(2) CHAINED CONSUMER PRICE INDEX DE16 FINED.—For purposes of this section, the term 

17 ‘chained Consumer Price Index’ means the Chained 

18 Consumer Price Index for All Urban Consumers (C– 

19 CPI–U), as published in its initial form by the Bu20 reau of Labor Statistics of the Department of 

21 Labor.’’. 

22 SEC. 504. DIVIDENDS AND SURPLUS FUNDS OF RESERVE 

23 BANKS. 

24 Section 7(a)(1)(A) of the Federal Reserve Act (12 

25 U.S.C. 289(a)(1)(A)) is amended by striking ‘‘6 percent’’ 


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1 and inserting ‘‘6 percent (1.5 percent in the case of a 

2 stockholder having total consolidated assets of more than 

3 $1,000,000,000 (determined as of September 30 of the 

4 preceding fiscal year))’’. 

5 SEC. 505. COST-SAVING REFORMS FOR FEDERAL CROP IN6 SURANCE PROGRAM. 

7 (a) REDUCTION IN PREMIUM SUBSIDY FOR HARVEST

8 PRICE POLICIES.—Section 508(e) of the Federal Crop In9 surance Act (7 U.S.C. 1508(e)) is amended by adding at 

10 the end the following new paragraph: 

11 ‘‘(9) REDUCED PREMIUM SUBSIDY FOR HAR12 VEST PRICE POLICIES.—Notwithstanding any other 

13 provision of this subsection regarding payment of a 

14 portion of premiums, effective beginning with the 

15 2016 reinsurance year, the level of premium subsidy 

16 for revenue-based plans of insurance that provide 

17 protection for upward price movements at harvest 

18 time shall be at least 10 percentage points less than 

19 the premium subsidy available for the same coverage 

20 for the 2015 reinsurance year.’’. 

21 (b) ADJUSTMENT IN PREVENTED PLANTING PAY22 MENT COVERAGE LEVELS.—Section 508(i) of the Federal 

23 Crop Insurance Act (7 U.S.C. 1508(i)) is amended by add24 ing at the end the following new paragraph: 


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1 ‘‘(5) ADJUSTMENT IN PREVENTED PLANTING

2 PAYMENT COVERAGE LEVELS.—The Corporation 

3 shall adjust, as soon as practicable, prevented plant4 ing coverage levels on a crop-by-crop basis to im5 prove the actuarial soundness of the insurance oper6 ations of the Corporation.’’. 

7 (c) ELIMINATION OF OPTIONAL ADDITIONAL PRE8 VENTED PLANTING COVERAGE.—Section 508(l) of the 

9 Federal Crop Insurance Act (7 U.S.C. 1508(l)) is amend10 ed— 

11 (1) by striking ‘‘The Corporation’’ and insert12 ing the following: 

13 ‘‘(1) IN GENERAL.—The Corporation’’; and 

14 (2) by adding at the end the following new 

15 paragraph: 

16 ‘‘(2) LIMITATION ON OPTIONAL ADDITIONAL

17 PREVENTED PLANTING COVERAGE.—The Corpora18 tion may not provide an option for producers to pur19 chase additional prevented planting coverage levels 

20 in excess of the base coverage provided in the pol21 icy.’’. 

22 (d) CONSISTENT CALCULATION OF ACTUAL PRODUC23 TION HISTORY FOR PRODUCERS THAT RECEIVE A PRE24 VENTING PLANTING PAYMENT.—Section 508A(c)(3) of 

25 the Federal Crop Insurance Act (7 U.S.C. 1508a(c)(3)) 


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1 is amended by striking ‘‘make an election under paragraph 

2 (1)(B) for a crop year,’’ and inserting ‘‘collects an indem3 nity under prevented planting coverage for a first crop for 

4 a crop year, whether or not the producer elects to plant 

5 a second crop,’’ 

6 (e) APPLICATION OF AMENDMENTS.—The amend7 ments made by this section shall apply beginning with the 

8 2016 reinsurance year. 

9 SEC. 506. FEDERAL EMPLOYEE ANNUITIES. 

10 (a) CIVIL SERVICE RETIREMENT SYSTEM.—Section 

11 8334(c) of title 5, United States Code, is amended to read 

12 as follows: 

13 ‘‘(c) Each employee or Member credited with civilian 

14 service after July 31, 1920, for which retirement deduc15 tions or deposits have not been made, may deposit with 

16 interest an amount equal to the following percentages of 

17 his basic pay received for that service: 

‘‘Employee 7 January 1, 2001 to December 31, 2016. 

7.5 January 1, 2017 to December 31, 2017. 

7.9 January 1, 2018 to December 31, 2018. 

8.3 After December 31, 2018. 

Member or employee 

for congressional 

service 

7.5 January 1, 2001 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018. 

Member for Member 

service 

8 January 1, 2001 to December 31, 2016. 

8.5 January 1, 2017 to December 31, 2017. 

8.9 January 1, 2018 to December 31, 2018. 

9.3 After December 31, 2018. 


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Law enforcement officer for law enforcement service, member of the Supreme 

Court Police for 

Supreme Court Police service, and 

firefighter for firefighter service 

7.5 January 1, 2001 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018. 

Bankruptcy judge 8 January 1, 2001 to December 31, 2016. 

8.5 January 1, 2017 to December 31, 2017. 

8.9 January 1, 2018 to December 31, 2018. 

9.3 After December 31, 2018. 

Judge of the United 

States Court of Appeals for the Armed 

Forces for service 

as a judge of that 

court 

8 January 1, 2001 to December 31, 2016. 

8.5 January 1, 2017 to December 31, 2017. 

8.9 January 1, 2018 to December 31, 2018. 

9.3 After December 31, 2018. 

United States Magistrate judge 8 January 1, 2001 to December 31, 2016. 

8.5 January 1, 2017 to December 31, 2017. 

8.9 January 1, 2018 to December 31, 2018. 

9.3 After December 31, 2018. 

Court of Federal 

Claims Judge 

8 January 1, 2001 to December 31, 2016. 

8.5 January 1, 2017 to December 31, 2017. 

8.9 January 1, 2018 to December 31, 2018. 

9.3 After December 31, 2018. 

Member of the Capitol 

Police 

7.5 January 1, 2001 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018. 

Nuclear materials 

courier 

7.5 January 1, 2001 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018. 

Customs and border 

protection officer 

7.5 June 30, 2008 to December 30, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018.’’. 

1 (b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM.— 


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1 (1) INDIVIDUAL CONTRIBUTIONS.—Section 

2 8422(a)(3)(A) of title 5, United States Code, is 

3 amended to read as follows: 

4 ‘‘(3)(A) The applicable percentage under this 

5 paragraph for civilian service by employees or Mem6 bers other than revised annuity employees or further 

7 revised annuity employees shall be as follows: 

‘‘Employee 7 January 1, 2001 to December 31, 2016. 

7.5 January 1, 2017 to December 31, 2017. 

7.9 January 1, 2018 to December 31, 2018. 

8.3 After December 31, 2018. 

Congressional employee 7.5 January 1, 2001 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018. 

Member 7.5 January 31, 2000 to December 31, 2016. 

8 January 1, 2016 to December 31, 2017. 

8.4 January 1, 2017 to December 31, 2018. 

8.8 After December 31, 2018. 

Law enforcement officer, firefighter, 

member of the Capitol Police, member 

of the Supreme 

Court Police, or air 

traffic controller 

7.5 December 31, 2000 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018. 

Nuclear materials 

courier 

7.5 December 31, 2000 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2019. 

Customs and border 

protection officer 

7.5 June 30, 2008 to December 31, 2016. 

8 January 1, 2017 to December 31, 2017. 

8.4 January 1, 2018 to December 31, 2018. 

8.8 After December 31, 2018.’’. 

8 (2) GOVERNMENT CONTRIBUTIONS.—Section 

9 8423(a)(2)(B)(i) of title 5, United States Code, is 


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1 amended by inserting after ‘‘2013’’ the following: 

2 ‘‘and section 506 of the America First Act’’. 

3 (c) FOREIGN SERVICE PENSION SYSTEM.— 

4 (1) EMPLOYEE CONTRIBUTIONS.—Section 

5 856(a)(2)(A) of the Foreign Service Act of 1980 (22 

6 U.S.C. 4071e(a)(2)(A)) is amended to read as fol7 lows: 

8 ‘‘(2)(A) The applicable percentage for a partici9 pant other than a revised annuity participant or a 

10 further revised annuity participant shall be as fol11 lows: 

‘‘ 7.55 January 12, 2003 to December 31, 2016. 

8.05 January 1, 2017 to December 31, 2017. 

8.45 January 1, 2018 to December 31, 2018. 

8.85 After December 31, 2018.’’. 

12 (2) GOVERNMENT CONTRIBUTIONS.—Section 

13 857 of the Foreign Service Act of 1980 (22 U.S.C. 

14 4071f) is amended by inserting after ‘‘2013’’ the fol15 lowing: ‘‘and section 506 of the America First Act’’. 

16 SEC. 507. REPAYMENT PLANS. 

17 Section 455(d)(1) of the Higher Education Act of 

18 1965 (20 U.S.C. 1087e(d)(1)) is amended— 

19 (1) in subparagraph (D)— 

20 (A) by inserting before the semicolon at 

21 the end the following: ‘‘, and with respect to 

22 loans made on or after July 1, 2016, the re23 vised pay as you earn repayment plan under 


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1 section 493E shall be the only income contin2 gent repayment plan’’; and 

3 (B) by striking ‘‘and’’ at the end; and 

4 (2) in subparagraph (E), by inserting ‘‘and only 

5 for loans made before July 1, 2016,’’ after ‘‘2009,’’. 

6 SEC. 508. REPAYE. 

7 Part G of title IV of the Higher Education Act of 

8 1965 is amended by adding at the end the following: 

9 ‘‘SEC. 493E. REVISED PAY AS YOU EARN REPAYMENT PLAN. 

10 ‘‘(a) DEFINITIONS.— 

11 ‘‘(1) ELIGIBLE LOAN.—The term ‘eligible loan’ 

12 means any outstanding loan made under part D or 

13 part B, except for a defaulted loan, an excepted 

14 PLUS loan, or an excepted consolidation loan. 

15 ‘‘(2) EXCEPTED PLUS LOAN; EXCEPTED CON16 SOLIDATION LOAN.—The terms ‘excepted plus loan’ 

17 and ‘excepted consolidation loan’ have the meanings 

18 given such terms in section 493C. 

19 ‘‘(3) PARTIAL FINANCIAL HARDSHIP.—The 

20 term ‘partial financial hardship’— 

21 ‘‘(A) when used with respect to an unmar22 ried borrower— 

23 ‘‘(i) means that for such borrower the 

24 annual amount due on the total amount of 

25 eligible loans, as calculated under the 


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1 standard repayment plan under section 

2 455(d)(1)(A), based on a 10-year repay3 ment period, and using the greater of— 

4 ‘‘(I) the amount due on such 

5 loans at the time the borrower entered 

6 repayment for such loans; or 

7 ‘‘(II) the amount due on such 

8 loans at the time the borrower elected 

9 the plan under this section; exceeds 

10 ‘‘(ii) 10 percent of the result obtained 

11 by calculating, on at least an annual basis, 

12 the amount by which— 

13 ‘‘(I) the borrower’s adjusted 

14 gross income; exceeds 

15 ‘‘(II) 150 percent of the poverty 

16 line applicable to the borrower’s fam17 ily size as determined under section 

18 673(2) of the Community Services 

19 Block Grant Act (42 U.S.C. 9902(2)); 

20 and 

21 ‘‘(B) when used with respect to a married 

22 borrower— 

23 ‘‘(i) means that for such borrower the 

24 annual amount due on the total amount of 

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1 cable, the borrower’s spouse’s eligible 

2 loans, as calculated under the standard re3 payment plan under section 455(d)(1)(A), 

4 based on a 10-year repayment period, and 

5 using the greater of— 

6 ‘‘(I) the amount due on such 

7 loans at the time the borrower or bor8 rower’s spouse entered repayment on 

9 such loans; or 

10 ‘‘(II) the amount due on such 

11 loans at the time the borrower or the 

12 borrower’s spouse elected the plan 

13 under this section; exceeds 

14 ‘‘(ii) 10 percent of the result obtained 

15 by calculating, on at least an annual basis, 

16 the amount by which— 

17 ‘‘(I) the difference between the 

18 borrower’s and borrower’s spouse’s 

19 adjusted gross income; exceeds 

20 ‘‘(II) 150 percent of the poverty 

21 line applicable to the borrower’s fam22 ily size as determined under section 

23 673(2) of the Community Services 

24 Block Grant Act (42 U.S.C. 9902(2)). 


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1 ‘‘(4) PAY AS YOU EARN REPAYMENT PLAN.— 

2 The term ‘Pay As You Earn repayment plan’ means 

3 the Pay As You Earn repayment plan described in 

4 section 685.209 of title 34, Code of Federal Regula5 tions (as in effect on the date of enactment of Amer6 ica First Act). 

7 ‘‘(b) REVISED PAY AS YOU EARN REPAYMENT PLAN

8 AUTHORIZED.—Notwithstanding any other provision of 

9 this Act, the Secretary shall carry out a program that 

10 meets the following requirements: 

11 ‘‘(1) MONTHLY PAYMENT AMOUNT.—Except as 

12 otherwise provided in this subsection, a borrower of 

13 any eligible loan may elect to have the borrower’s 

14 aggregate monthly payment for all such loans not to 

15 exceed the result described in subsection (a)(3) di16 vided by 12. 

17 ‘‘(2) ADJUSTED MONTHLY PAYMENT

18 AMOUNT.—The Secretary adjusts the aggregate 

19 monthly payment under paragraph (1), if— 

20 ‘‘(A) the borrower’s eligible loans are not 

21 solely loans made under part D, in which case 

22 the Secretary determines the borrower’s ad23 justed monthly payment by multiplying the ag24 gregate monthly payment by the percentage of 

25 the total outstanding principal amount of the 


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1 borrower’s eligible loans that are loans made 

2 under part D; 

3 ‘‘(B) the borrower and borrower’s spouse 

4 have eligible loans, in which case the Secretary 

5 determines— 

6 ‘‘(i) each borrower’s percentage of the 

7 couple’s total eligible loan debt; 

8 ‘‘(ii) the adjusted monthly payment 

9 for each borrower by multiplying the cal10 culated payment by the percentage deter11 mined under clause (i) applicable to the 

12 borrower; and 

13 ‘‘(iii) if the borrower’s loans are held 

14 by multiple holders, the borrower’s ad15 justed monthly payment for part D loans 

16 by multiplying the adjusted monthly pay17 ment determined under clause (ii) by the 

18 percentage of the total outstanding prin19 cipal amount of the borrower’s eligible 

20 loans that are made under part D; 

21 ‘‘(C) the calculated monthly payment 

22 amount under paragraph (1) or this paragraph 

23 is less than $5.00, in which case the borrower’s 

24 monthly payment is $0.00; or 


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1 ‘‘(D) the calculated monthly payment 

2 amount under paragraph (1) or this paragraph 

3 or is equal to or greater than $5.00 but less 

4 than $10.00, in which case the borrower’s 

5 monthly payment is $10.00. 

6 ‘‘(3) ACCRUED INTEREST.— 

7 ‘‘(A) IN GENERAL.—If the borrower’s 

8 monthly payment amount under paragraph (1) 

9 or (2) is not sufficient to pay the accrued inter10 est on the borrower’s loan— 

11 ‘‘(i) for a subsidized loan made under 

12 part D or the subsidized portion of a Fed13 eral Direct Consolidation Loan— 

14 ‘‘(I) the Secretary does not 

15 charge the borrower the remaining ac16 crued interest for a period not to ex17 ceed three consecutive years from the 

18 established repayment period start 

19 date on that loan; and 

20 ‘‘(II) after the three-year period, 

21 the Secretary charges the borrower 50 

22 percent of the remaining accrued in23 terest on such subsidized loan or por24 tion of a Federal Direct Consolidation 

25 Loan; and 


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1 ‘‘(ii) for an unsubsidized loan made 

2 under part D, a Federal Direct PLUS 

3 Loan made to a graduate or professional 

4 student, or the unsubsidized portion of a 

5 Federal Direct Consolidation Loan, or for 

6 a subsidized loan made under part D or 

7 the subsidized portion of a Federal Direct 

8 Consolidation Loan for which the borrower 

9 has become responsible for accruing inter10 est in accordance with section 455(q)(2), 

11 the Secretary charges the borrower 50 per12 cent of the remaining accrued interest. 

13 ‘‘(B) THREE-YEAR PERIOD DEFINED.— 

14 The three-year period described in subpara15 graph (A)(i)— 

16 ‘‘(i) does not include any period dur17 ing which the borrower receives an eco18 nomic hardship deferment; 

19 ‘‘(ii) includes any prior period of re20 payment under an income-based repayment 

21 plan under section 493C or the Pay-As22 You-Earn repayment plan; and 

23 ‘‘(iii) for a Federal Direct Consolida24 tion Loan, includes any period in which the 

25 underlying loans were repaid under a plan 


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1 described in clause (ii) of this subpara2 graph. 

3 ‘‘(C) CAPITALIZATION OF ACCRUED INTER4 EST.— 

5 ‘‘(i) TIMING.—Accrued interest is cap6 italized— 

7 ‘‘(I) when the Secretary deter8 mines that a borrower does not have 

9 a partial financial hardship; or 

10 ‘‘(II) at the time a borrower 

11 leaves the program under this section. 

12 ‘‘(ii) CAPITALIZATION.— 

13 ‘‘(I) LIMITATION.—The amount 

14 of accrued interest capitalized under 

15 clause (i)(I) is limited to 10 percent of 

16 the original principal balance at the 

17 time the borrower entered repayment 

18 under the program under this section. 

19 ‘‘(II) PARTICIPATION.—After the 

20 amount of accrued interest reaches 

21 the limit described in subclause (I), 

22 interest continues to accrue, but is not 

23 capitalized while the borrower partici24 pates in the program under this sec25 tion. 


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1 ‘‘(4) POSTPONEMENT OF PRINCIPAL PAY2 MENT.—If the borrower’s monthly payment amount 

3 is not sufficient to pay any of the principal due, the 

4 payment of that principal is postponed until the bor5 rower leaves the program under this section or the 

6 Secretary determines the borrower does not have a 

7 partial financial hardship. 

8 ‘‘(5) SELECTION OF DIFFERENT REPAYMENT

9 PLAN.—A borrower who no longer wishes to repay 

10 under the program under this section may change to 

11 a different repayment plan in accordance with sec12 tion 455(d)(3). 

13 ‘‘(6) PAYMENT APPLICATION AND PREPAY14 MENT.— 

15 ‘‘(A) IN GENERAL.—The Secretary applies 

16 any payment made under the program under 

17 this section in the following order: 

18 ‘‘(i) Accrued interest. 

19 ‘‘(ii) Collection costs. 

20 ‘‘(iii) Late charges. 

21 ‘‘(iv) Loan principal. 

22 ‘‘(B) PREPAYMENT AUTHORIZED.—The 

23 borrower may prepay all or part of a loan at 

24 any time without penalty, as authorized under 

25 section 455(d)(1). 


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1 ‘‘(C) APPLICATION OF PREPAYMENT.—If 

2 the prepayment amount equals or exceeds— 

3 ‘‘(i) a monthly payment amount of 

4 $10.00 or more under the repayment 

5 schedule established for the loan, the Sec6 retary applies the prepayment consistent 

7 with the requirements of section 455(d)(1); 

8 or 

9 ‘‘(ii) a monthly payment amount of 

10 $0.00 under the repayment schedule estab11 lished for the loan, the Secretary applies 

12 the prepayment consistent with the re13 quirements of subparagraph (A). 

14 ‘‘(7) ELIGIBILITY DOCUMENTATION, 

15 VERIFICATION, AND NOTIFICATIONS.— 

16 ‘‘(A) DOCUMENTATION.— 

17 ‘‘(i) AGI.—The Secretary requires the 

18 borrower to provide documentation, accept19 able to the Secretary, of the borrower’s ad20 justed gross income. 

21 ‘‘(ii) OTHER DOCUMENTATION.—If 

22 the borrower’s adjusted gross income is not 

23 available, or if the Secretary believes that 

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1 rower’s current income, the borrower must 

2 provide other documentation to verify in3 come. 

4 ‘‘(iii) FAMILY SIZE.—Unless otherwise 

5 directed by the Secretary, the borrower 

6 must annually certify the borrower’s family 

7 size. If the borrower fails to certify family 

8 size, the Secretary assumes a family size of 

9 one for the applicable year. 

10 ‘‘(B) NOTIFICATIONS.— 

11 ‘‘(i) IN GENERAL.—Each year that 

12 the borrower participates in the program 

13 under this section, the Secretary sends the 

14 borrower a written notification that pro15 vides the borrower with— 

16 ‘‘(I) the borrower’s monthly pay17 ment amount, as calculated under 

18 paragraph (1) or (2), and the time pe19 riod during which such monthly pay20 ment amount will apply (annual pay21 ment period); 

22 ‘‘(II) information about the re23 quirement for the borrower to annu24 ally provide the information described 

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1 nation that the borrower will be noti2 fied in advance of the date by which 

3 the Secretary must receive this infor4 mation; 

5 ‘‘(III) an explanation of the con6 sequences, as described under sub7 paragraph (F), if the borrower does 

8 not provide the required information; 

9 and 

10 ‘‘(IV) information about the bor11 rower’s option to request, at any time 

12 during the borrower’s annual payment 

13 period, that the Secretary recalculate 

14 the borrower’s monthly payment 

15 amount if the borrower’s financial cir16 cumstances have changed and the in17 come amount that was used to cal18 culate the borrower’s current monthly 

19 payment no longer reflects the bor20 rower’s current income. 

21 ‘‘(ii) RECALCULATION.—If the Sec22 retary recalculates the borrower’s monthly 

23 payment amount based on the borrower’s 

24 request, the Secretary sends the borrower 


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1 a written notification that includes the in2 formation described in this subparagraph. 

3 ‘‘(C) SUBSEQUENT YEARS.— 

4 ‘‘(i) IN GENERAL.—For each year fol5 lowing the first year in which a borrower 

6 participating in the plan under this sec7 tion, the Secretary notifies the borrower in 

8 writing of the requirements of subpara9 graph (A) not later than 60 days and not 

10 earlier than 90 days prior to the date spec11 ified in clause (ii)(I). 

12 ‘‘(ii) CONTENTS.—The notification 

13 under clause (i) shall provide the borrower 

14 with— 

15 ‘‘(I) the date, no earlier than 35 

16 days before the end of the borrower’s 

17 annual payment period, by which the 

18 Secretary must receive all of the docu19 mentation described in subparagraph 

20 (A) (annual deadline); and 

21 ‘‘(II) the consequences if the Sec22 retary does not receive the informa23 tion within 10 days following the an24 nual deadline specified in the notice, 

25 as described under subparagraph (F). 


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1 ‘‘(D) NO PARTIAL FINANCIAL HARD2 SHIP.—Each time the Secretary makes a deter3 mination that a borrower does not have a par4 tial financial hardship for each year following 

5 the first year for which borrower wishes to par6 ticipate in the program under this section, the 

7 Secretary sends the borrower a written notifica8 tion that unpaid interest will be capitalized in 

9 accordance with paragraph (3)(C). 

10 ‘‘(E) NO DOCUMENTATION PROVIDED.—If 

11 a borrower who is currently repaying under an12 other repayment plan elects the program under 

13 this section but does not provide the docu14 mentation described in subparagraph (A), the 

15 borrower remains on his or her current repay16 ment plan. 

17 ‘‘(F) ALTERNATE REPAYMENT PLAN.— 

18 ‘‘(i) IN GENERAL.—If a borrower who 

19 is currently repaying under the program 

20 under this section elects to participate in 

21 such program for a subsequent year but 

22 the Secretary does not receive the docu23 mentation described in subparagraph (A) 

24 not later than 10 days after the specified 

25 annual deadline, the Secretary removes the 


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1 borrower from the program under this sec2 tion and places the borrower on an alter3 native repayment plan under which the 

4 borrower’s required monthly payment is 

5 the amount necessary to repay the bor6 rower’s eligible loans in full within the ear7 lier of— 

8 ‘‘(I) 10 years from the date the 

9 borrower begins repayment under the 

10 alternative repayment plan; or 

11 ‘‘(II) the ending date of the 20- 

12 year period as described in paragraph 

13 (8)(A)(i)(II). 

14 ‘‘(ii) NOTIFICATION.—If the Secretary 

15 places the borrower on an alternative re16 payment plan in accordance with clause 

17 (i), the Secretary sends the borrower a 

18 written notification informing the borrower 

19 that— 

20 ‘‘(I) the borrower has been 

21 placed on an alternative repayment 

22 plan; 

23 ‘‘(II) the borrower’s monthly pay24 ment amount has been recalculated 

25 under clause (i); or 


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1 ‘‘(III) the borrower may change 

2 to another repayment plan in accord3 ance with section 455(d)(3). 

4 ‘‘(iii) RETURN TO PROGRAM.—A bor5 rower who has been removed from the pro6 gram under this section or changes to an7 other repayment plan may return to the 

8 program under this section if the borrower 

9 provides the documentation under subpara10 graph (A), necessary for the Secretary to 

11 calculate the borrower’s current monthly 

12 payment amount and the monthly amount 

13 the borrower would have been required to 

14 pay under the program during the period 

15 when the borrower was on the alternative 

16 repayment plan or any other repayment 

17 plan. 

18 ‘‘(iv) ADJUSTMENT OF MONTHLY PAY19 MENT AMOUNT.—If the Secretary deter20 mines that the total amount of the pay21 ments the borrower was required to make 

22 while on the alternative repayment plan or 

23 any other repayment plan are less than the 

24 total amount the borrower would have been 

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1 ing that period, the Secretary will adjust 

2 the borrower’s monthly payment amount to 

3 ensure that the difference between the two 

4 amounts is paid in full by the end of the 

5 20-year period described in paragraph 

6 (8)(A)(i)(II). 

7 ‘‘(v) APPLICATION OF LOAN FORGIVE8 NESS.—If the borrower returns to the pro9 gram under this section or changes to the 

10 Pay As You Earn Repayment plan, the in11 come-contingent repayment plan; or the in12 come-based repayment plan, any payments 

13 that the borrower made under the alter14 native repayment plan after the borrower 

15 was removed from the program under this 

16 section will count towards forgiveness 

17 under such program or such other repay18 ment plans. 

19 ‘‘(vi) PSLF.—Payments made under 

20 the alternative repayment plan described in 

21 clause (i) will not count towards public 

22 service loan forgiveness under section 

23 455(m). 

24 ‘‘(vii) EXCEPTION.—The Secretary 

25 does not take the action described in clause 


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1 (i) if the Secretary receives the documenta2 tion described in subparagraph (A) more 

3 than 10 days after the specified annual 

4 deadline, but is able to determine the bor5 rower’s new monthly payment amount be6 fore the end of the borrower’s current an7 nual payment period. 

8 ‘‘(viii) MONTHLY PAYMENT

9 AMOUNT.—If the Secretary receives the 

10 documentation described in subparagraph 

11 (A) within 10 days of the specified annual 

12 deadline— 

13 ‘‘(I) the Secretary promptly de14 termines the borrower’s new scheduled 

15 monthly payment amount and main16 tains the borrower’s current scheduled 

17 monthly payment amount until the 

18 new scheduled monthly payment 

19 amount is determined; 

20 ‘‘(II) if the new monthly payment 

21 amount is less than the borrower’s 

22 previously calculated plan monthly 

23 payment amount, and the borrower 

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1 culated amount after the end of the 

2 most recent annual payment period— 

3 ‘‘(aa) the Secretary makes 

4 the appropriate adjustment to 

5 the borrower’s account; and 

6 ‘‘(bb) unless the borrower 

7 requests otherwise, the Secretary 

8 applies the excess payment 

9 amounts made after the end of 

10 the most recent annual payment 

11 period in accordance with the re12 quirements of paragraph (6)(A); 

13 ‘‘(III) if the new monthly pay14 ment amount is equal to or greater 

15 than the borrower’s previously cal16 culated monthly payment amount, and 

17 the borrower made payments at the 

18 previously calculated payment amount 

19 after the end of the most recent an20 nual payment period, the Secretary 

21 does not make any adjustment to the 

22 borrower’s account; 

23 ‘‘(IV) any payments that the bor24 rower continued to make at the pre25 viously calculated payment amount 


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1 after the end of the prior annual pay2 ment period and before the new 

3 monthly payment amount is calculated 

4 are considered to be qualifying pay5 ments for purposes of public service 

6 loan forgiveness under section 

7 455(m), provided that the payments 

8 otherwise meet the requirements de9 scribed in such section 455(m); and 

10 ‘‘(V) the new annual payment pe11 riod begins on the day after the end 

12 of the most recent annual payment 

13 period. 

14 ‘‘(8) LOAN FORGIVENESS.— 

15 ‘‘(A) IN GENERAL.— 

16 ‘‘(i) CANCELLATION.—The Secretary 

17 cancels any remaining outstanding balance 

18 of principal and accrued interest on a bor19 rower’s loans made under part D that are 

20 being repaid under the program under this 

21 section after— 

22 ‘‘(I) the borrower has made the 

23 equivalent of 240 qualifying monthly 

24 payments as defined in subparagraph 

25 (B); and 


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1 ‘‘(II) 20 years have elapsed, be2 ginning on the date determined in ac3 cordance with subparagraph (C). 

4 ‘‘(ii) DETERMINATION.—The Sec5 retary determines when a borrower has 

6 met the loan forgiveness requirements 

7 under clause (i) and does not require the 

8 borrower to submit a request for loan for9 giveness. 

10 ‘‘(B) QUALIFYING MONTHLY PAYMENT DE11 FINED.— 

12 ‘‘(i) IN GENERAL.—For purposes of 

13 this paragraph, a qualifying monthly pay14 ment is— 

15 ‘‘(I) a monthly payment under 

16 the program under this section, in17 cluding a monthly payment amount of 

18 $0.00, as provided under paragraph 

19 (2)(C); or 

20 ‘‘(II) a month during which the 

21 borrower was not required to make a 

22 payment due to receiving an economic 

23 hardship deferment on his or her eli24 gible loans that are made under part 

25 D. 


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1 ‘‘(ii) DEFAULTED LOANS EX2 CLUDED.—Any payments made on a de3 faulted loan are not qualifying monthly 

4 payments and are not counted toward the 

5 20-year forgiveness period. 

6 ‘‘(C) DETERMINATION OF BEGINNING

7 DATE.—For a borrower who qualifies for the 

8 program under this section, the beginning date 

9 for the 20-year repayment period is— 

10 ‘‘(i) for a borrower who has an eligible 

11 Federal Direct Consolidation Loan, the 

12 date the borrower made a qualifying 

13 monthly payment on the consolidation 

14 loan, before the date the borrower qualified 

15 for the program under this section; 

16 ‘‘(ii) for a borrower who has one or 

17 more other eligible Direct Loans, the date 

18 the borrower made a qualifying monthly 

19 payment on that loan, before the date the 

20 borrower qualified for the program under 

21 this section; 

22 ‘‘(iii) for a borrower who did not make 

23 a qualifying monthly payment under clause 

24 (i) or (ii), the date the borrower made a 


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1 payment on the loan under the program 

2 under this section; or 

3 ‘‘(iv) if the borrower consolidates his 

4 or her eligible loans, the date the borrower 

5 made a qualifying monthly payment on the 

6 Federal Direct Consolidation Loan. 

7 ‘‘(D) NOTIFICATION.— 

8 ‘‘(i) PRIOR TO LOAN CANCELLA9 TION.—Not later than 6 months prior to 

10 the anticipated date that the borrower will 

11 meet the forgiveness requirements, the 

12 Secretary sends the borrower a written no13 tice that includes— 

14 ‘‘(I) an explanation that the bor15 rower is approaching the date that the 

16 borrower is expected to meet the re17 quirements to receive loan forgiveness; 

18 ‘‘(II) a reminder that the bor19 rower must continue to make the bor20 rower’s scheduled monthly payments; 

21 and 

22 ‘‘(III) general information on the 

23 current treatment of the forgiveness 

24 amount for tax purposes, and instruc25 tions for the borrower to contact the 


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1 Internal Revenue Service for more in2 formation. 

3 ‘‘(ii) AFTER LOAN CANCELLATION.— 

4 After determining that a borrower has sat5 isfied the loan forgiveness requirements, 

6 the Secretary— 

7 ‘‘(I) notifies the borrower that 

8 the borrower’s obligation on the loans 

9 is satisfied; 

10 ‘‘(II) provides the borrower with 

11 the information described in clause 

12 (i)(III); and 

13 ‘‘(III) returns to the sender any 

14 payment received on a loan after loan 

15 forgiveness has been granted.’’. 

16 SEC. 509. PUBLIC SERVICE LOAN FORGIVENESS. 

17 Section 455(m)(2) of the Higher Education Act of 

18 1965 (20 U.S.C. 1087e(m)(2)) is amended— 

19 (1) by striking ‘‘After’’ and inserting the fol20 lowing: 

21 ‘‘(A) IN GENERAL.—Except as provided 

22 under subparagraph (B), after’’; and 

23 (2) by adding at the end the following: 

24 ‘‘(B) UNDERGRADUATE CAP.—The Sec25 retary shall not cancel under this paragraph an 


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1 amount greater than $57,500 of principal and 

2 interest due on an eligible Federal Direct Loan 

3 made to a borrower for a program of under4 graduate education’’. 

Æ 


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