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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3777 Introduced in House (IH)]

<DOC>

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``America First Act''.

SEC. 2. TABLE OF CONTENTS.

    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.
                   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.

                       TITLE I--SEQUESTER RELIEF

SEC. 101. AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT 
              CONTROL ACT OF 1985.

    (a) Discretionary Spending Limits.--Section 251(c) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 901(c)) is 
amended by striking paragraphs (3) through (8) and inserting the 
following:
            ``(3) for fiscal year 2016--
                    ``(A) for the revised security category, 
                $564,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $521,000,000,000 in new budget authority;
            ``(4) for fiscal year 2017--
                    ``(A) for the revised security category, 
                $577,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $532,000,000,000 in new budget authority;
            ``(5) for fiscal year 2018--
                    ``(A) for the revised security category, 
                $590,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $544,000,000,000 in new budget authority;
            ``(6) for fiscal year 2019--
                    ``(A) for the revised security category, 
                $603,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $557,000,000,000 in new budget authority;
            ``(7) for fiscal year 2020--
                    ``(A) for the revised security category, 
                $617,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $569,000,000,000 in new budget authority;
            ``(8) for fiscal year 2021--
                    ``(A) for the revised security category, 
                $631,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $581,000,000,000 in new budget authority;
            ``(9) for fiscal year 2022--
                    ``(A) for the revised security category, 
                $646,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $596,000,000,000 in new budget authority;
            ``(10) for fiscal year 2023--
                    ``(A) for the revised security category, 
                $662,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $610,000,000,000 in new budget authority;
            ``(11) for fiscal year 2024--
                    ``(A) for the revised security category, 
                $679,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $626,000,000,000 in new budget authority; and
            ``(12) for fiscal year 2025--
                    ``(A) for the revised security category, 
                $695,000,000,000 in new budget authority; and
                    ``(B) for the revised nonsecurity category, 
                $641,000,000,000 in new budget authority;''.
    (b) Elimination of Direct Spending Sequester and Other 
Adjustments.--
            (1) In general.--Section 251A of the Balanced Budget and 
        Emergency Deficit Control Act of 1985 (2 U.S.C. 901a) is 
        repealed.
            (2) Clarification.--Any order issued by the Director of the 
        Office of Management and Budget to reduce the discretionary 
        spending limit for fiscal year 2016 under such section (as in 
        effect on the date before the date of enactment of this Act) 
        shall have no force or effect.
    (c) Adjustments to Discretionary Spending Limits.--Section 
251(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 
1985 (2 U.S.C. 901(b)(2)) is amended as follows:
            (1) In subparagraph (B)--
                    (A) in subclause (IX), by striking ``and'' at the 
                end;
                    (B) in subclause (X), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                                    ``(XI) for fiscal year 2022, 
                                $1,309,000,000 in additional new budget 
                                authority;
                                    ``(XII) for fiscal year 2023, 
                                $1,309,000,000 in additional new budget 
                                authority;
                                    ``(XIII) for fiscal year 2024, 
                                $1,309,000,000 in additional new budget 
                                authority; and
                                    ``(XIV) for fiscal year 2025, 
                                $1,309,000,000 in additional new budget 
                                authority.''.
            (2) In subparagraph (C)--
                    (A) in subclause (IX), by striking ``and'' at the 
                end;
                    (B) in subclause (X), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                                    ``(XI) for fiscal year 2022, 
                                $496,000,000 in additional new budget 
                                authority;
                                    ``(XII) for fiscal year 2023, 
                                $496,000,000in additional new budget 
                                authority;
                                    ``(XIII) for fiscal year 2024, 
                                $496,000,000 in additional new budget 
                                authority; and
                                    ``(XIV) for fiscal year 2025, 
                                $496,000,000 in additional new budget 
                                authority.''.
            (3) In subparagraph (D), by striking ``fiscal years 2012 
        through 2021'' and inserting ``fiscal years 2012 through 
        2025''.
    (d) Clerical Amendment.--Section 250(a) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 U.S.C. 900(a)) is amended by 
striking the item relating to section 251A.

                           TITLE II--REVENUE

SEC. 201. PERMANENT EXTENSION OF MODIFICATIONS TO EARNED INCOME TAX 
              CREDIT.

    (a) Increase in Credit Percentage for Families With 3 or More 
Children.--Section 32(b)(1) of the Internal Revenue Code of 1986 is 
amended--
            (1) by striking ``Percentages.--The credit percentage and'' 
        and inserting the following: ``Percentages.--
                    ``(A) In general.--The credit percentage and''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Increased credit percentage for families with 
                3 or more qualifying children.--In the case of an 
                eligible individual with 3 or more qualifying children, 
                the table in subparagraph (A) shall be applied by 
                substituting `45' for `40' in the second column 
                thereof.''.
    (b) Joint Returns.--
            (1) In general.--Section 32(b)(2)(B) of the Internal 
        Revenue Code of 1986 is amended by striking ``increased by'' 
        and all that follows and inserting ``increased by $5,000.''.
            (2) Inflation adjustments.--Section 32(j)(1)(B)(ii) of such 
        Code is amended--
                    (A) by striking ``$3,000'' and inserting 
                ``$5,000'';
                    (B) by striking ``subsection (b)(2)(B)(iii)'' and 
                inserting ``subsection (b)(2)(B)''; and
                    (C) by striking ``calendar year 2007'' and 
                inserting ``calendar year 2008''.
    (c) Conforming Amendment.--Section 32(b) of such Code is amended by 
striking paragraph (3).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 202. 35-PERCENT LIMITATION ON CERTAIN DEDUCTIONS AND EXCLUSIONS.

    (a) In General.--Part I of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 69. LIMITATION ON ITEMIZED DEDUCTIONS.

    ``In the case of an individual, for any taxable year with respect 
to which the highest rate of tax imposed under section 1 exceeds 35 
percent, the tax imposed by such section shall be increased by the 
excess (if any) of--
            ``(1) the tax which would be imposed under such section if 
        taxable income were determined without regard to itemized 
        deductions, over
            ``(2) the tax which would be determined under paragraph (1) 
        if the highest rate of tax imposed under such section on 
        amounts in excess of the taxpayer's taxable income (determined 
        without regard to this section) was 35 percent.''.
    (b) Clerical Amendment.--The table of sections for part I of 
subchapter B of chapter 1 of such Code is amended by adding at the end 
the following new item:

``Sec. 69. Limitation on itemized deductions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 203. REPEAL OF MEDICAL DEVICE TAX.

    (a) In General.--Chapter 32 of the Internal Revenue Code of 1986 is 
amended by striking subchapter E.
    (b) Effective Date.--The amendment made by this section shall apply 
to sales after the date of the enactment of this Act.

                     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.

    Section 1839(i)(5) of the Social Security Act (42 U.S.C. 
1395r(i)(5)) is amended--
            (1) in subparagraph (A)--
                    (A) in the matter preceding clause (i), by striking 
                ``and 2019'' and inserting ``and each subsequent year 
                before the target year''; and
                    (B) in clause (ii), by striking ``beginning with 
                2020, August 2018'' and inserting ``beginning with the 
                target year, August of the calendar year that is two 
                years before the target year''; and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Target year.--For purposes of this paragraph, 
                the term `target year' means the first calendar year 
                after the calendar year in which at least 25 percent of 
                individuals enrolled under this part are subject to a 
                reduction under this subsection to the monthly amount 
                of the premium subsidy applicable to the premium under 
                this section.''.

SEC. 302. ADJUSTMENT TO APPLICABLE PERCENTAGE INCREASE FOR MEDICARE 
              PART B AND D PREMIUMS FOR HIGH-INCOME BENEFICIARIES.

    (a) In General.--Section 1839(i) of the Social Security Act (42 
U.S.C. 1395r(i)) is amended--
            (1) in paragraph (3)(A)(i), by striking ``paragraph (6)'' 
        and inserting ``paragraphs (6) and (7)'';
            (2) by redesignating paragraph (7) as paragraph (8); and
            (3) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Adjustment to applicable percentage increase 
        beginning in 2016.--Notwithstanding any other provision of this 
        subsection, for months beginning with January 2016, in applying 
        the applicable percentages specified in the applicable table in 
        paragraph (3)(C)(i)--
                    ``(A) during 2016, the references in the table in 
                subparagraph (I) of such paragraph to `35 percent', `50 
                percent', `65 percent', and `80 percent' shall be 
                deemed to be references to `37.625 percent', `53.75 
                percent', `69.875 percent', and `85 percent', 
                respectively; and
                    ``(B) during 2017 or a subsequent year, the 
                references in the table in subparagraph (I) of such 
                paragraph and the table in subparagraph (II) of such 
                paragraph, as applicable, to `35 percent', `50 
                percent', `65 percent', and `80 percent' shall be 
                deemed to be references to `40.25 percent', `57.5 
                percent', `74.75 percent', and `90 percent', 
                respectively.''.
    (b) Part D Conforming Amendments.--Section 1860D-13(a)(7)(B)(i)(I) 
of such Act (42 U.S.C. 1395w-113(a)(7)(B)(i)(I)) is amended by striking 
``paragraph (5)'' and inserting ``paragraphs (5) and (7)''.

SEC. 303. IMPROVED BENEFIT STRUCTURE.

    (a) In General.--Title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) is amended by adding at the end the following new 
sections:

                   ``unified part a and b deductible

    ``Sec. 1899B.  (a) In General.--Notwithstanding any other provision 
of this title, for a year (beginning with 2018), in the case of an 
individual entitled to, or enrolled for, benefits under part A or 
enrolled in part B--
            ``(1) the amount otherwise payable under part A and the 
        total amount of expenses incurred by the individual during a 
        year which would (except for this section) constitute incurred 
        expenses for which benefits payable under section 1833(a) are 
        determinable, shall be reduced by the amount of the unified 
        deductible under subsection (b); and
            ``(2) the individual shall be responsible for payment of 
        such amount.
    ``(b) Amount of Unified Deductible.--
            ``(1) In general.--The amount of the unified deductible 
        under this section shall be--
                    ``(A) for 2018, $650; or
                    ``(B) for a subsequent year, the amount specified 
                in this subsection for the preceding year increased by 
                the percentage increase in the medical care component 
                of the consumer price index for all urban consumers 
                (U.S. city average) as estimated by the Secretary for 
                the 12-month period ending with the midpoint of the 
                year involved.
            ``(2) Rounding.--If any amount determined under paragraph 
        (1) is not a multiple of $1, such amount shall be rounded to 
        the nearest multiple of $1.
    ``(c) Application to All Items and Services.--The unified 
deductible under this section for a year shall be applied as follows:
            ``(1) With respect to items and services covered under part 
        A, such unified deductible shall be applied on the basis of the 
        amount that is payable for such items and services without 
        regard to any copayments or coinsurance and before the 
        application of any such copayments or coinsurance.
            ``(2) With respect to items and services covered under part 
        B, such unified deductible shall be applied on the basis of the 
        total amount of the expenses incurred by the individual during 
        a year which would, except for the application of the unified 
        deductible, constitute incurred expenses for which items and 
        services are payable under part B, without regard to any 
        copayments or coinsurance and before the application of any 
        such copayments or coinsurance.
            ``(3)(A) Except as provided in subparagraph (B), such 
        unified deductible shall be applied with respect to all items 
        and services covered under parts A and B and in lieu of the 
        deductibles described in sections 1813(b) and 1833(b) or 
        otherwise.
            ``(B) Such unified deductible shall not be applied to 
        preventive services and additional preventive services (as 
        those terms are defined in section 1861(ddd)).
    ``(d) Announcement of Unified Deductible and Annual Out-of-Pocket 
Limit.--The Secretary shall (beginning in 2017) announce (in a manner 
intended to provide notice to all interested parties) the unified 
deductible under this section and the annual out-of-pocket limit under 
section 1899D that will be applicable for the succeeding year.

                ``uniform part a and b coinsurance rate

    ``Sec. 1899C.  (a) In General.--Notwithstanding any other provision 
of this title, in the case of an individual entitled to, or enrolled 
for, benefits under part A or enrolled in part B, after the application 
of the unified deductible under section 1899B and subject to the limit 
on annual out-of-pocket expenses under section 1899D, the amount 
otherwise payable under part A and the total amount of expenses 
incurred by the individual during a year (beginning with 2018) which 
would (except for this section) constitute incurred expenses for which 
benefits are payable under part B, shall be reduced by a coinsurance of 
20 percent of such amount.
    ``(b) Application to All Items and Services.--The uniform 
coinsurance under this section for a year shall be applied as follows:
            ``(1) With respect to items and services covered under part 
        A, such uniform coinsurance shall be applied on the basis of 
        the amount that is payable for such items and services.
            ``(2) With respect to items and services covered under part 
        B, such uniform coinsurance shall be applied on the basis of 
        the total amount of the expenses incurred by the individual 
        during a year which would, except for the application of the 
        unified deductible, constitute incurred expenses from which 
        items and services are payable under part B.
            ``(3)(A) Except as provided in subparagraph (B), such 
        uniform coinsurance shall be applied with respect to all items 
        and services covered under parts A and B and in lieu of any 
        other copayments or coinsurance under such parts.
            ``(B) Such uniform coinsurance shall not be applied to 
        preventive services and additional preventive services (as 
        those terms are defined in section 1861(ddd)).

   ``protection against high out-of-pocket expenditures for fee-for-
                            service benefits

    ``Sec. 1899D.  (a) In General.--Notwithstanding any other provision 
of this title, in the case of an individual entitled to benefits under 
part A or enrolled in part B, if the amount of the out-of-pocket cost-
sharing of such individual for a year (beginning with 2018) equals or 
exceeds the annual out-of-pocket limit under subsection (b) for such 
year, there shall not be any additional reduction under section 1899C 
for the remainder of the year.
    ``(b) Amount of Annual Out-of-Pocket Limits.--
            ``(1) In general.--The amount of the annual out-of-pocket 
        limit under this subsection shall be--
                    ``(A) for 2018, $6,500; or
                    ``(B) for a subsequent year, the amount specified 
                in this subsection for the preceding year increased by 
                the percentage increase in the medical care component 
                of the consumer price index for all urban consumers 
                (U.S. city average) as estimated by the Secretary for 
                the 12-month period ending with the midpoint of the 
                year involved.
            ``(2) Rounding.--If any amount determined under paragraph 
        (1) is not a multiple of $50, such amount shall be rounded to 
        the nearest multiple of $50.
    ``(c) Out-of-Pocket Cost-Sharing Defined.--
            ``(1) In general.--Subject to paragraph (2), in this 
        section, the term `out-of-pocket cost-sharing' means, with 
        respect to an individual, the amount of expenses incurred by 
        the individual that are attributable to deductibles, 
        coinsurance, and copayments applicable under part A or B, 
        without regard to whether the individual or another person, 
        including a State program or other third-party coverage, has 
        paid for such expenses.
            ``(2) Items and services not furnished on an assignment-
        related basis.--If an item or service is furnished to an 
        individual under this title and is not furnished on an 
        assignment-related basis, any additional expenses the 
        individual incurs above the amount the individual would have 
        incurred if the item or service was furnished on an assignment-
        related basis shall not be considered incurred expenses for 
        purposes of determining out-of-pocket cost-sharing under 
        paragraph (1).''.
    (b) Clarification Regarding Application Under Medicare Advantage.--
Section 1852(a)(1)(B)(iii) of the Social Security Act (42 U.S.C. 1395w-
22(a)(1)(B)(iii)) is amended by adding at the end the following new 
sentence: ``For plan year 2018 and subsequent plan years, the preceding 
sentence shall be applied to take into account the application of 
sections 1899B, 1899C, and 1899D.''.
    (c) Conforming Amendments.--
            (1) Section 1813 of the Social Security Act (42 U.S.C. 
        1395e) is amended--
                    (A) in subsection (a), by inserting ``Subject to 
                sections 1899B, 1899C, and 1899D:'' before paragraph 
                (1); and
                    (B) in subsection (b), by inserting ``Subject to 
                sections 1899B, 1899C, and 1899D:'' before paragraph 
                (1).
            (2) Section 1833 of the Social Security Act (42 U.S.C. 
        1395l) is amended--
                    (A) in subsection (a), in the matter preceding 
                paragraph (1), by inserting ``and sections 1899B, 
                1899C, and 1899D'' after ``succeeding provisions of 
                this section'';
                    (B) in subsection (b), in the first sentence, by 
                striking ``Before applying'' and inserting ``Subject to 
                sections 1899B, 1899C, and 1899D, before applying'';
                    (C) in subsection (c)(1), in the matter preceding 
                subparagraph (A), by inserting ``subject to sections 
                1899B, 1899C, and 1899D,'' after ``this part,'';
                    (D) in subsection (f), by striking ``In 
                establishing'' and inserting ``Subject to sections 
                1899B, 1899C, and 1899D, in establishing''; and
                    (E) in subsection (g)(1), by inserting ``and 
                sections 1899B, 1899C, and 1899D'' and ``paragraphs (4) 
                and (5)''.
            (3) Section 1905(p)(3) of the Social Security Act (42 
        U.S.C. 1396d(p)(3)) is amended--
                    (A) in subparagraph (B), striking ``section 1813'' 
                and inserting ``sections 1813 and 1899C''; and
                    (B) in subparagraph (C), by striking ``and section 
                1833(b)'' and inserting ``, 1833(b), and 1899C''.

SEC. 304. PROHIBITION ON FIRST-DOLLAR COVERAGE UNDER MEDIGAP POLICIES 
              AND DEVELOPMENT OF NEW STANDARDS FOR MEDIGAP POLICIES.

    Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is 
amended by adding at the end the following new subsection:
    ``(z) Prohibition on First-Dollar Coverage and Development of New 
Standards for Medicare Supplemental Policies.--
            ``(1) Development.--The Secretary shall request the 
        National Association of Insurance Commissioners to review and 
        revise the standards for benefit packages under subsection 
        (p)(1), taking into account the changes in benefits resulting 
        from the enactment of the America First Act and to otherwise 
        update standards to include the requirements for cost sharing 
        described in paragraph (2). Such revisions shall be made 
        consistent with the rules applicable under subsection (p)(1)(E) 
        with the reference to the `1991 NAIC Model Regulation' deemed a 
        reference to the NAIC Model Regulation as published in the 
        Federal Register on December 4, 1998, and as subsequently 
        updated by the National Association of Insurance Commissioners 
        to reflect previous changes in law and the reference to `date 
        of enactment of this subsection' deemed a reference to the date 
        of enactment of the America First Act. To the extent 
        practicable, such revision shall provide for the implementation 
        of revised standards for benefit packages as of January 1, 
        2018.
            ``(2) Cost sharing requirements.--The cost sharing 
        requirements described in this paragraph are that, 
        notwithstanding any other provision of law, no medicare 
        supplemental policy may provide for coverage of--
                    ``(A) any portion of the unified deductible under 
                section 1899B(b) for the year; and
                    ``(B) more than 50 percent of the cost-sharing 
                (excluding premiums) otherwise applicable under parts A 
                and B after the individual has met the unified 
                deductible under section 1899B(b) for the year and 
                before the individual has reached the annual out-of-
                pocket limit under section 1899D(b) for the year.
            ``(3) Renewability.--The renewability requirement under 
        subsection (q)(1) shall be satisfied with the renewal of the 
        revised package under paragraph (1) that most closely matches 
        the policy in which the individual was enrolled prior to such 
        revision.''.

SEC. 305. ADJUST POST-ACUTE PAYMENT UPDATES.

    (a) Revision of Inpatient Rehabilitation Facility Percentage 
Increase for 2016 Through 2025.--Section 1886(j) of the Social Security 
Act (42 U.S.C. 1395ww(j)) is amended--
            (1) in paragraph (3)--
                    (A) in subparagraph (C), by striking clause (iii) 
                and inserting the following:
                            ``(iii) Additional adjustment.--For fiscal 
                        years 2016 through 2025, after establishing the 
                        increase factor for a fiscal year pursuant to 
                        clauses (i) and (ii), if such increase factor 
                        is greater than 0.0 percent the Secretary shall 
                        reduce the increase factor by an additional 
                        amount described in subparagraph (E).''; and
                    (B) by inserting at the end the following new 
                subparagraph:
                    ``(E) Additional adjustment.--If the increase 
                factor, as established pursuant to clauses (i) and (ii) 
                of subparagraph (C), is greater than zero, for purposes 
                of subparagraph (C)(iii), the additional adjustment 
                described in this subparagraph is 1.1 percentage point 
                for each of fiscal years 2016 through 2025. If the 
                application of the additional adjustment in 
                subparagraph (C)(iii) would result in an increase 
                factor that is less than 0.0 for a fiscal year, the 
                additional adjustment shall be reduced such that the 
                increase factor after its application is 0.0. If, in 
                any of fiscal years 2016 through 2025, the increase 
                factor as adjusted by clauses (i) and (ii) of 
                subparagraph (C) is less than or equal to zero, the 
                additional adjustment described in subparagraph 
                (C)(iii) for such year is 0.0 percentage point.''; and
            (2) in paragraph (7)(A)(i), by striking ``and (D)'' and 
        inserting ``, (D), and (E)''.
    (b) Revision of Long-Term Care Hospital Market Basket Updates for 
2016 Through 2025.--Section 1886(m) of the Social Security Act (42 
U.S.C. 1395ww(m)) is amended--
            (1) in paragraph (3)--
                    (A) in subparagraph (A)--
                            (i) in clause (i), by striking ``and'' at 
                        the end;
                            (ii) in clause (ii), by striking the period 
                        at the end and inserting ``; and''; and
                            (iii) by adding at the end the following 
                        new clause:
                            ``(iii) for each of rate years 2016 through 
                        2025, by the additional adjustment described in 
                        subparagraph (C).''; and
                    (B) by striking subparagraph (C) and inserting the 
                following:
                    ``(C) Additional adjustment.--If the annual update, 
                as established pursuant to clauses (i) and (ii) of 
                paragraph (3)(A), is greater than zero, for purposes of 
                clause (iii) of such paragraph, the additional 
                adjustment is 1.1 percentage point for each of fiscal 
                years 2016 through 2025. If the application of the 
                additional adjustment in paragraph (3)(A)(iii) would 
                result in an annual update that is less than 0.0 for a 
                fiscal year, the additional adjustment shall be reduced 
                such that the annual update after its application is 
                0.0. If, in any of the fiscal years 2016 through 2025, 
                the annual update, as established pursuant to clauses 
                (i) and (ii) of paragraph (3)(A), is less than or equal 
                to zero, the additional adjustment described in 
                paragraph (3)(A)(iii) for such year is 0.0 percentage 
                point.''; and
            (2) by adding at the end the following new paragraph:
            ``(7) Use of terminology.--With respect to discharges 
        occurring on or after October 1, 2010, the term `rate year' 
        under this subsection shall mean `fiscal year'.''.
    (c) Revision of Skilled Nursing Facility Market Basket Updates for 
2016 Through 2025.--Section 1888(e)(5)(B) of the Social Security Act 
(42 U.S.C. 1395yy(e)(5)(B)) is amended--
            (1) by striking clause (ii) and inserting the following new 
        clause:
                            ``(ii) Productivity and other adjustment.--
                        The Secretary shall reduce the percentage 
                        determined in clause (i) by the following 
                        amounts:
                                    ``(I) For fiscal year 2012 and each 
                                subsequent fiscal year, by the 
                                productivity adjustment described in 
                                section 1886(b)(3)(B)(xi)(II).
                                    ``(II) For each of fiscal years 
                                2016 through 2025, by the other 
                                adjustment described in clause (iii).
                        Such percentage shall be reduced first by the 
                        productivity adjustment in subclause (I). The 
                        application of the productivity adjustment 
                        described in subclause (I) may result in such 
                        percentage being less than 0.0 for a fiscal 
                        year, and may result in payment rates under 
                        this subsection for a fiscal year being less 
                        than such payment rates for the preceding 
                        fiscal year. If the application of the 
                        productivity adjustment in subclause (I) 
                        results in such percentage being 0.0 or less 
                        than 0.0 for a fiscal year, the other 
                        adjustment described in subclause (II) shall 
                        not apply.''; and
            (2) by striking clause (iii) and inserting the following:
                            ``(iii) Calculating other adjustment.--For 
                        purposes of clause (ii)(II), the other 
                        adjustment described in this clause is -2.5 
                        percentage points in each of fiscal years 2016 
                        and 2017, -2.0 percentage points in each of 
                        fiscal years 2018 and 2019, -1.5 percentage 
                        points in each of fiscal years 2020 through 
                        2022, and -0.97 percentage point in each of 
                        fiscal years 2023 through 2025. The other 
                        adjustment shall be applied to the percentage 
                        under clause (i) as reduced by the productivity 
                        adjustment in clause (ii)(I). If the 
                        application of the adjustment in clause 
                        (ii)(II) would result in the percentage under 
                        clause (i) being less than 0.0 for a fiscal 
                        year, the other adjustment shall be reduced 
                        such that the final percentage after its 
                        application is 0.0 percentage point.''.
    (d) Revision of Home Health Market Basket Updates for 2016 Through 
2025.--Section 1895(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395fff(b)(3)(B)) is amended--
            (1) in clause (iii), by striking the last sentence;
            (2) by striking clause (vi) and inserting the following new 
        clause:
                            ``(vi) Adjustments.--After determining the 
                        home health market basket percentage increase 
                        under clause (iii), and after application of 
                        clause (v), the Secretary shall reduce such 
                        percentage--
                                    ``(I) for 2015 and each subsequent 
                                year, by the productivity adjustment 
                                described in section 
                                1886(b)(3)(B)(xi)(II);
                                    ``(II) for each of 2011 and 2012, 
                                by 1 percentage point; and
                                    ``(III) for each of 2016 through 
                                2025, by the other adjustment described 
                                in subparagraph (vii).
                        The application of subclauses (I) and (II) may 
                        result in the home health market basket 
                        percentage increase under clause (iii) being 
                        less than 0.0 for a year, and may result in 
                        payment rates under the system under this 
                        subsection for a year being less than such 
                        payment rates for the preceding year. In such 
                        case, the other adjustment in subclause (III) 
                        shall not apply.''; and
            (3) by adding at the end the following new clause:
                            ``(vii) Other adjustments.--For purposes of 
                        clause (vi)(III), the other adjustment 
                        described in this clause is 1.1 percentage 
                        point for each of 2016 through 2025. If the 
                        application of the other adjustment in clause 
                        (vi)(III) would result in the home health 
                        market basket percentage increase being less 
                        than 0.0 for a year, the other adjustment shall 
                        be reduced such that the final market basket 
                        percentage increase after its application of 
                        the other adjustment is 0.0. If, in any of 
                        years 2016 through 2025, the home health market 
                        basket as adjusted by subclauses (I) and (II) 
                        is less than or equal to zero, the other 
                        adjustment for such year is 0.0 percentage 
                        point.''.

SEC. 306. PAYMENT BUNDLING FOR POST-ACUTE CARE (PAC) UNDER MEDICARE.

    Title XVIII of the Social Security Act is amended by adding at the 
end the following new section:

            ``post-acute care (pac) payment bundling system

    ``Sec. 1899C.  (a) Establishment of System.--
            ``(1) In general.--The Secretary shall establish a 
        retrospective bundled payment arrangement (in this section 
        referred to as the `PAC bundled payment system') under which, 
        in accordance with the provisions of this section, actual 
        payments made under this title to post-acute care providers 
        with respect to post-acute care services furnished to targeted 
        beneficiaries during a bundle period are adjusted (through 
        additional payment or recoupment, as applicable), based on a 
        benchmark established by the Secretary for such bundle.
            ``(2) Implementation.--The PAC bundled payment system shall 
        be established to be applied to services furnished in fiscal 
        years beginning with fiscal year 2020.
    ``(b) Definitions.--In this section:
            ``(1) PAC beneficiary.--The term `targeted beneficiary' 
        means an individual who is entitled to benefits under part A 
        and enrolled under part B and not enrolled under part C.
            ``(2) Post-acute care services.--The term `post-acute care 
        services' means post-acute care, including home health 
        services, skilled nursing services, inpatient rehabilitation 
        services, and inpatient hospital services, for which payment 
        may otherwise be made under this title and which are furnished 
        during a bundle period to a targeted beneficiary.
            ``(3) Post-acute care provider.--The terms `post-acute care 
        provider' means each of the following:
                    ``(A) A home health agency.
                    ``(B) A skilled nursing facility.
                    ``(C) A rehabilitation facility.
                    ``(D) A long-term care hospital.
            ``(4) Bundle period.--The term `bundle period' means, with 
        respect to a bundle of post-acute care services for a targeted 
        beneficiary who was discharged from an inpatient hospital stay, 
        a period beginning on the first date on which post-acute care 
        services within a bundle specified under subsection (c) is 
        furnished to an individual not later than 30 days after such 
        discharge and ending 30, 60, or 90 days, as specified by the 
        Secretary for such bundle, after such first date.
    ``(c) Bundles.--The Secretary shall establish under the PAC bundled 
payment system bundles of post-acute care services consisting of MS-
DRGs, other than such MS-DRGs included under the Comprehensive Care for 
Joint Replacement Model carried out by the Centers for Medicare & 
Medicaid Services under section 1115A, that represent the highest 50 
percent of expenditures under this title attributable to post acute 
care, and shall periodically update such bundles, based on the most 
recent available data.
    ``(d) Payment Methodology.--The PAC payment system shall be 
designed consistent with the following:
            ``(1) Payment or recoupment based off of benchmark.--The 
        Secretary shall annually establish a payment benchmark for each 
        bundle of post-acute care services specified under subsection 
        (c) for such year. The Secretary shall, through annual 
        reconciliation, adjust the payments made to a post-acute care 
        provider with respect to post-acute care services included 
        within a bundle so specified furnished to a targeted 
        beneficiary during a bundle period during the year so that 
        total payments for such provider with respect to such services 
        within such bundle furnished to such beneficiary during such 
        period equals such benchmark for such bundle.
            ``(2) Considerations.--In establishing the payment amount 
        for a bundle of post-acute care services, the Secretary may 
        consider patient characteristics and other factors that are 
        designed to take into account variations in treatment costs 
        within the bundle.
            ``(3) Savings.--The payment rates established for such 
        bundles shall be set to result in, in the aggregate, a 
        reduction in the spending otherwise made under parts A and B 
        for post-acute care services included in such bundles of 2.85 
        percent by not later than fiscal year 2025.
            ``(4) Annual updates.--The payment rates for bundles of 
        post-acute care services shall be updated each fiscal year 
        based on a market basket of the services included within such 
        bundles.
            ``(5) Coverage of 50 percent of total payments.--The 
        bundles under this section, collectively, shall be established 
        by the Secretary so as to provide for payment for at least 50 
        percent of all post-acute care services provided under this 
        title during each fiscal year under the PAC bundled payment 
        system.''.

SEC. 307. REDUCTION OF BAD DEBT TREATED AS AN ALLOWABLE COST.

    (a) Hospitals.--Section 1861(v)(1)(T) of the Social Security Act 
(42 U.S.C. 1395x(v)(1)(T)) is amended--
            (1) in clause (iv), by striking ``and'' at the end;
            (2) in clause (v)--
                    (A) by striking ``or a subsequent fiscal year'' and 
                inserting ``, 2014, or 2015''; and
                    (B) by striking the period at the end and inserting 
                a comma; and
            (3) by adding at the end the following:
            ``(vi) for cost reporting periods beginning during fiscal 
        year 2016, by 50 percent of such amount otherwise allowable,
            ``(vii) for cost reporting periods beginning during fiscal 
        year 2017, by 60 percent of such amount otherwise allowable, 
        and
            ``(viii) for cost reporting periods beginning during fiscal 
        year 2018 or a subsequent fiscal year, by 75 percent of such 
        amount otherwise allowable.''.
    (b) Skilled Nursing Facilities.--Section 1861(v)(1)(V) of the 
Social Security Act (42 U.S.C. 1395x(v)(1)(V)) is amended--
            (1) by moving subclauses (I) and (II) of clause (i) and 
        subclauses (I) through (IV) of clause (ii) two ems to the 
        right;
            (2) in clause (i)--
                    (A) in subclause (I), by striking ``and'' at the 
                end;
                    (B) in subclause (II)--
                            (i) by striking ``or a subsequent fiscal 
                        year'' and inserting ``, 2014, or 2015'' ; and
                            (ii) by striking the period at the end and 
                        inserting a semicolon; and
                    (C) by adding at the end the following:
                    ``(III) for cost reporting periods beginning during 
                fiscal year 2016, by 50 percent of such amount 
                otherwise allowable;
                    ``(IV) for cost reporting periods beginning during 
                fiscal year 2017, by 60 percent of such amount 
                otherwise allowable; and
                    ``(V) for cost reporting periods beginning during 
                fiscal year 2018 or a subsequent fiscal year, by 75 
                percent of such amount otherwise allowable.''; and
            (3) in clause (ii)--
                    (A) in subclause (IV)--
                            (i) by striking ``a subsequent fiscal 
                        year'' and inserting ``fiscal year 2015''; and
                            (ii) by striking the period at the end and 
                        inserting a semicolon; and
                    (B) by adding at the end the following:
                    ``(V) for cost reporting periods beginning during 
                fiscal year 2016, by 50 percent of such amount 
                otherwise allowable;
                    ``(VI) for cost reporting periods beginning during 
                fiscal year 2017, by 60 percent of such amount 
                otherwise allowable; and
                    ``(VII) for cost reporting periods beginning during 
                fiscal year 2018 or a subsequent fiscal year, by 75 
                percent of such amount otherwise allowable.''.
    (c) Certain Other Providers.--Section 1861(v)(1)(W)(i) of the 
Social Security Act (42 U.S.C. 1395x(v)(1)(W)(i)) is amended--
            (1) in subclause (III)--
                    (A) by striking ``a subsequent fiscal year'' and 
                inserting ``fiscal year 2015''; and
                    (B) by striking the period at the end and inserting 
                a semicolon; and
            (2) by adding at the end the following:
            ``(IV) for cost reporting periods beginning during fiscal 
        year 2016, by 50 percent of such amount otherwise allowable;
            ``(V) for cost reporting periods beginning during fiscal 
        year 2017, by 60 percent of such amount otherwise allowable; 
        and
            ``(VI) for cost reporting periods beginning during fiscal 
        year 2018 or a subsequent fiscal year, by 75 percent of such 
        amount otherwise allowable''.

SEC. 308. REDUCE EXCESS SUBSIDIES TO TEACHING HOSPITALS.

    Section 1886(d)(5)(B)(ii) of the Social Security Act (42 U.S.C. 
1395ww) is amended--
            (1) in subclause (XI), by striking at the end ``and'';
            (2) in subclause (XII)--
                    (A) by inserting ``and before October 1, 2016'' 
                after ``October 1, 2007,''; and
                    (B) by striking the period at the end and inserting 
                ``; and''; and
            (3) by adding at the end the following new subclause:
                                    ``(XIII) on or after October 1, 
                                2016, `c' is equal to 1.22.''.

SEC. 309. EQUALIZING PAYMENT FOR CERTAIN COVERED OPD SERVICES AND 
              PHYSICIANS' SERVICES.

    Section 1833(t)(3) of the Social Security Act (42 U.S.C. 
1395l(t)(3)) is amended--
            (1) in subparagraph (D), by striking ``The Secretary'' and 
        inserting ``Subject to subparagraph (H), the Secretary''; and
            (2) by adding at the end the following new subparagraph:
                    ``(H) Payment for certain covered opd services.--
                            ``(i) In general.--In the case of 
                        applicable covered OPD services furnished on or 
                        after January 1, 2017, there shall be 
                        substituted for the medicare OPD fee schedule 
                        amount established under subparagraph (D) for 
                        such service and year, determined prior to 
                        application of any geographic or other 
                        adjustments under this subsection (including 
                        adjustments under paragraph (17)), an amount 
                        equal to the payment amount under section 1848 
                        for such service and year, determined prior to 
                        application of any geographic or other 
                        adjustments under such section.
                            ``(ii) Applicable covered opd services 
                        defined.--In this subparagraph, the term 
                        `applicable covered OPD services' covered OPD 
                        services that are evaluation and management 
                        services (as specified by the Secretary).
                            ``(iii) Not budget neutral 
                        implementation.--In making any budget 
                        neutrality adjustments under this subsection 
                        for 2017 or a subsequent year, the Secretary 
                        shall not take into account the reduced 
                        expenditures that result from the application 
                        of this subparagraph.''.

SEC. 310. MEDICARE ADVANTAGE CODING INTENSITY ADJUSTMENT.

    Section 1853(a)(1)(C)(ii)(III) of the Social Security Act (42 
U.S.C. 1395w-23(a)(1)(C)(ii)(III)) is amended by striking ``and for 
2019 and each subsequent year, not less than 5.9 percent'' and 
inserting ``, for 2019 and 2020, not less than 5.9 percent, and for 
2021 and subsequent years, not less than 8.76 percent''.

SEC. 311. MODIFICATIONS TO COST-SHARING REDUCTIONS UNDER MEDICARE PART 
              D FOR LOW-INCOME INDIVIDUALS.

    (a) In General.--Section 1860D-14(a)(1)(D) of the Social Security 
Act (42 U.S.C. 1395w-114(a)(1)(D)) is amended--
            (1) in clause (ii), by striking ``$3'' and inserting 
        ``$6''; and
            (2) in clause (iii), by inserting before the period at the 
        end the following: ``(or, in the case of a drug that is not a 
        generic or a preferred drug that is a multiple source drug, 
        twice the copayment amount specified under section 1860D-
        2(b)(4)(A)(i)(I) for the drug and year involved)''.
    (b) Application of Current Indexing to Dollar Amounts Specified.--
Section 1860D-14(a)(4) of the Social Security Act (42 U.S.C. 1395w-
114(a)(4)) is amended--
            (1) in subparagraph (A), by adding at the end the following 
        new sentence: ``This subparagraph shall be applied (for 2017 
        and subsequent years) as if the dollar amounts specified under 
        paragraph (1)(D)(ii), pursuant to the amendments made by 
        section 311 of the America First Act, were the dollar amounts 
        specified in such paragraph when clause (i) first applied.''; 
        and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Copayment for other individuals.--The 
                provisions of clause (ii) of section 1860D-2(b)(4)(A) 
                shall apply with respect to the dollar amounts 
                specified in paragraph (1)(D)(iii) for 2017 and 
                subsequent years in the same manner as such provisions 
                apply to the dollar amounts specified in clause (i)(I) 
                of such section and the dollar amounts specified in 
                paragraph (1)(D)(iii) shall be treated, for such 
                purpose, as if they were the dollar amounts specified 
                in such section for 2006.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after January 1, 2017.

SEC. 312. REBASE MEDICARE PAYMENTS AT POST-SEQUESTER LEVELS.

    In determining payment rates under title XVIII of the Social 
Security Act for years and fiscal years beginning on or after October 
1, 2015, the percentage reductions in payment rates effected for 2015 
(and for fiscal year 2015) under the Balanced Budget and Emergency 
Deficit Control Act of 1985 shall be incorporated into and treated as 
part of the permanent payment rates for that year (or fiscal year) in 
determining the payment rates for subsequent years (and fiscal years).

SEC. 313. PHASED-IN REDUCTION OF ALLOWABLE PROVIDER TAXES UNDER 
              MEDICAID.

    (a) In General.--Clause (ii) of section 1903(w)(4)(C) of the Social 
Security Act (42 U.S.C. 1396b(w)(4)(C)) is amended to read as follows:
            ``(ii) For purposes of clause (i), a determination of the 
        existence of an indirect guarantee shall be made under 
        paragraph (3)(i) of section 433.68(f) of title 42, Code of 
        Federal Regulations, as in effect on November 1, 2006, except 
        that--
                    ``(I) for fiscal year 2017, `5.5 percent' shall be 
                substituted for `6 percent' each place it appears; and
                    ``(II) for fiscal year 2018 and each fiscal year 
                thereafter, `5 percent' shall be substituted for `6 
                percent' each place it appears.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on October 1, 2016.

                 Subtitle B--Medical Malpractice Reform

SEC. 321. DEFINITIONS.

    In this subtitle:
            (1) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system that provides for the resolution of health care lawsuits 
        in a manner other than through a civil action brought in a 
        State or Federal court.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care lawsuit, including a person who asserts or 
        claims a right to legal or equitable contribution, indemnity, 
        or subrogation, arising out of a health care liability claim or 
        action, and any person on whose behalf such a claim is asserted 
        or such an action is brought, whether deceased, incompetent, or 
        a minor.
            (3) Collateral source benefits.--The term ``collateral 
        source benefits'' means any amount paid or reasonably likely to 
        be paid in the future to or on behalf of the claimant, or any 
        service, product, or other benefit provided or reasonably 
        likely to be provided in the future to or on behalf of the 
        claimant, as a result of the injury or wrongful death, pursuant 
        to--
                    (A) any State or Federal health, sickness, income-
                disability, accident, or workers' compensation law;
                    (B) any health, sickness, income-disability, or 
                accident insurance that provides health benefits or 
                income-disability coverage;
                    (C) any contract or agreement of any group, 
                organization, partnership, or corporation to provide, 
                pay for, or reimburse the cost of medical, hospital, 
                dental, or income-disability benefits; and
                    (D) any other publicly or privately funded program.
            (4) Compensatory damages.--The term ``compensatory 
        damages'' means objectively verifiable monetary losses incurred 
        as a result of the provision of, use of, or payment for (or 
        failure to provide, use, or pay for) health care services or 
        medical products, such as past and future medical expenses, 
        loss of past and future earnings, cost of obtaining domestic 
        services, loss of employment, and loss of business or 
        employment opportunities, damages for physical and emotional 
        pain, suffering, inconvenience, physical impairment, mental 
        anguish, disfigurement, loss of enjoyment of life, loss of 
        society and companionship, loss of consortium (other than loss 
        of domestic service), hedonic damages, injury to reputation, 
        and all other nonpecuniary losses of any kind or nature. The 
        term ``compensatory damages'' includes economic damages and 
        noneconomic damages, as such terms are defined in this section.
            (5) Contingent fee.--The term ``contingent fee'' includes 
        all compensation to any person or persons which is payable only 
        if a recovery is effected on behalf of one or more claimants.
            (6) Economic damages.--The term ``economic damages'' means 
        objectively verifiable monetary losses incurred as a result of 
        the provision of, use of, or payment for (or failure to 
        provide, use, or pay for) health care services or medical 
        products, such as past and future medical expenses, loss of 
        past and future earnings, cost of obtaining domestic services, 
        loss of employment, and loss of business or employment 
        opportunities.
            (7) Health care lawsuit.--The term ``health care lawsuit'' 
        means any health care liability claim concerning the provision 
        of health care goods or services or any medical product 
        affecting interstate commerce, or any health care liability 
        action concerning the provision of health care goods or 
        services or any medical product affecting interstate commerce, 
        brought in a State or Federal court or pursuant to an 
        alternative dispute resolution system, against a health care 
        provider, a health care organization, or the manufacturer, 
        distributor, supplier, marketer, promoter, or seller of a 
        medical product, regardless of the theory of liability on which 
        the claim is based, or the number of claimants, plaintiffs, 
        defendants, or other parties, or the number of claims or causes 
        of action, in which the claimant alleges a health care 
        liability claim. Such term does not include a claim or action 
        which is based on criminal liability; which seeks civil fines 
        or penalties paid to Federal, State, or local government; or 
        which is grounded in antitrust.
            (8) Health care liability action.--The term ``health care 
        liability action'' means a civil action brought in a State or 
        Federal court or pursuant to an alternative dispute resolution 
        system, against a health care provider, a health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, regardless 
        of the theory of liability on which the claim is based, or the 
        number of plaintiffs, defendants, or other parties, or the 
        number of causes of action, in which the claimant alleges a 
        health care liability claim.
            (9) Health care liability claim.--The term ``health care 
        liability claim'' means a demand by any person, whether or not 
        pursuant to ADR, against a health care provider, health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, including, 
        but not limited to, third-party claims, cross-claims, counter-
        claims, or contribution claims, which are based upon the 
        provision of, use of, or payment for (or the failure to 
        provide, use, or pay for) health care services or medical 
        products, regardless of the theory of liability on which the 
        claim is based, or the number of plaintiffs, defendants, or 
        other parties, or the number of causes of action.
            (10) Health care organization.--The term ``health care 
        organization'' means any person or entity which is obligated to 
        provide or pay for health benefits under any health plan, 
        including any person or entity acting under a contract or 
        arrangement with a health care organization to provide or 
        administer any health benefit.
            (11) Health care provider.--The term ``health care 
        provider'' means any person or entity required by State or 
        Federal laws or regulations to be licensed, registered, or 
        certified to provide health care services, and being either so 
        licensed, registered, or certified, or exempted from such 
        requirement by other statute or regulation.
            (12) Health care goods or services.--The term ``health care 
        goods or services'' means any goods or services provided by a 
        health care organization, provider, or by any individual 
        working under the supervision of a health care provider, that 
        relates to the diagnosis, prevention, or treatment of any human 
        disease or impairment, or the assessment or care of the health 
        of human beings.
            (13) Medical product.--The term ``medical product'' means a 
        drug, device, or biological product intended for humans, and 
        the terms ``drug'', ``device'', and ``biological product'' have 
        the meanings given such terms in sections 201(g)(1) and 201(h) 
        of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(g)(1) 
        and (h)) and section 351(a) of the Public Health Service Act 
        (42 U.S.C. 262(a)), respectively, including any component or 
        raw material used therein, but excluding health care services.
            (14) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages for physical and emotional pain, suffering, 
        inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), hedonic damages, injury to reputation, and all other 
        nonpecuniary losses of any kind or nature.
            (15) Punitive damages.--The term ``punitive damages'' means 
        damages awarded, for the purpose of punishment or deterrence, 
        and not solely for compensatory purposes, against a health care 
        provider, health care organization, or a manufacturer, 
        distributor, or supplier of a medical product. Punitive damages 
        are neither economic nor noneconomic damages.
            (16) Recovery.--The term ``recovery'' means the net sum 
        recovered after deducting any disbursements or costs incurred 
        in connection with prosecution or settlement of the claim, 
        including all costs paid or advanced by any person. Costs of 
        health care incurred by the plaintiff and the attorneys' office 
        overhead costs or charges for legal services are not deductible 
        disbursements or costs for such purpose.
            (17) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the Northern 
        Mariana Islands, the Trust Territory of the Pacific Islands, 
        and any other territory or possession of the United States, or 
        any political subdivision thereof.

SEC. 322. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

    The time for the commencement of a health care lawsuit shall be 3 
years after the date of manifestation of injury or 1 year after the 
claimant discovers, or through the use of reasonable diligence should 
have discovered, the injury, whichever occurs first. In no event shall 
the time for commencement of a health care lawsuit exceed 3 years after 
the date of manifestation of injury unless tolled for any of the 
following--
            (1) upon proof of fraud;
            (2) intentional concealment; or
            (3) the presence of a foreign body, which has no 
        therapeutic or diagnostic purpose or effect, in the person of 
        the injured person.
Actions by a minor shall be commenced within 3 years from the date of 
the alleged manifestation of injury except that actions by a minor 
under the full age of 6 years shall be commenced within 3 years of 
manifestation of injury or prior to the minor's 8th birthday, whichever 
provides a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian and a health 
care provider or health care organization have committed fraud or 
collusion in the failure to bring an action on behalf of the injured 
minor.

SEC. 323. COMPENSATING PATIENT INJURY.

    (a) Unlimited Amount of Damages for Actual Economic Losses in 
Health Care Lawsuits.--In any health care lawsuit, nothing in this 
subtitle shall limit a claimant's recovery of the full amount of the 
available economic damages.
    (b) Fair Share Rule.--In any health care lawsuit, each party shall 
be liable for that party's several share of any damages only and not 
for the share of any other person. Each party shall be liable only for 
the amount of damages allocated to such party in direct proportion to 
such party's percentage of responsibility. Whenever a judgment of 
liability is rendered as to any party, a separate judgment shall be 
rendered against each such party for the amount allocated to such 
party. For purposes of this section, the trier of fact shall determine 
the proportion of responsibility of each party for the claimant's harm.

SEC. 324. MAXIMIZING PATIENT RECOVERY.

    (a) Court Supervision of Share of Damages Actually Paid to 
Claimants.--In any health care lawsuit, the court shall supervise the 
arrangements for payment of damages to protect against conflicts of 
interest that may have the effect of reducing the amount of damages 
awarded that are actually paid to claimants. In particular, in any 
health care lawsuit in which the attorney for a party claims a 
financial stake in the outcome by virtue of a contingent fee, the court 
shall have the power to restrict the payment of a claimant's damage 
recovery to such attorney, and to redirect such damages to the claimant 
based upon the interests of justice and principles of equity. In no 
event shall the total of all contingent fees for representing all 
claimants in a health care lawsuit exceed the following limits:
            (1) Forty percent of the first $50,000 recovered by the 
        claimant(s).
            (2) Thirty-three and one-third percent of the next $50,000 
        recovered by the claimant(s).
            (3) Twenty-five percent of the next $500,000 recovered by 
        the claimant(s).
            (4) Fifteen percent of any amount by which the recovery by 
        the claimant(s) is in excess of $600,000.
    (b) Applicability.--The limitations in this section shall apply 
whether the recovery is by judgment, settlement, mediation, 
arbitration, or any other form of alternative dispute resolution. In a 
health care lawsuit involving a minor or incompetent person, a court 
retains the authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The requirement for court 
supervision in the first two sentences of subsection (a) applies only 
in civil actions.

SEC. 325. ADDITIONAL HEALTH BENEFITS.

    In any health care lawsuit involving injury or wrongful death, any 
party may introduce evidence of collateral source benefits. If a party 
elects to introduce such evidence, any opposing party may introduce 
evidence of any amount paid or contributed or reasonably likely to be 
paid or contributed in the future by or on behalf of the opposing party 
to secure the right to such collateral source benefits. No provider of 
collateral source benefits shall recover any amount against the 
claimant or receive any lien or credit against the claimant's recovery 
or be equitably or legally subrogated to the right of the claimant in a 
health care lawsuit involving injury or wrongful death. This section 
shall apply to any health care lawsuit that is settled as well as a 
health care lawsuit that is resolved by a fact finder. This section 
shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section 
1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act.

SEC. 326. EFFECT ON OTHER LAWS.

    (a) Vaccine Injury.--
            (1) To the extent that title XXI of the Public Health 
        Service Act establishes a Federal rule of law applicable to a 
        civil action brought for a vaccine-related injury or death--
                    (A) this subtitle does not affect the application 
                of the rule of law to such an action; and
                    (B) any rule of law prescribed by this subtitle in 
                conflict with a rule of law of such title XXI shall not 
                apply to such action.
            (2) If there is an aspect of a civil action brought for a 
        vaccine-related injury or death to which a Federal rule of law 
        under title XXI of the Public Health Service Act does not 
        apply, then this subtitle or otherwise applicable law (as 
        determined under this subtitle) will apply to such aspect of 
        such action.
    (b) Other Federal Law.--Except as provided in this section, nothing 
in this subtitle shall be deemed to affect any defense available to a 
defendant in a health care lawsuit or action under any other provision 
of Federal law.

SEC. 327. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

    (a) Health Care Lawsuits.--The provisions governing health care 
lawsuits set forth in this subtitle preempt, subject to subsections (b) 
and (c), State law to the extent that State law prevents the 
application of any provisions of law established by or under this 
subtitle. The provisions governing health care lawsuits set forth in 
this subtitle supersede chapter 171 of title 28, United States Code, to 
the extent that such chapter--
            (1) provides for a greater amount of damages or contingent 
        fees, a longer period in which a health care lawsuit may be 
        commenced, or a reduced applicability or scope of periodic 
        payment of future damages, than provided in this subtitle; or
            (2) prohibits the introduction of evidence regarding 
        collateral source benefits, or mandates or permits subrogation 
        or a lien on collateral source benefits.
    (b) Protection of States' Rights and Other Laws.--(1) Any issue 
that is not governed by any provision of law established by or under 
this subtitle (including State standards of negligence) shall be 
governed by otherwise applicable State or Federal law.
    (2) This subtitle shall not preempt or supersede any State or 
Federal law that imposes greater procedural or substantive protections 
for health care providers and health care organizations from liability, 
loss, or damages than those provided by this subtitle or create a cause 
of action.
    (c) State Flexibility.--No provision of this subtitle shall be 
construed to preempt--
            (1) any State law (whether effective before, on, or after 
        the date of the enactment of this Act) that specifies a 
        particular monetary amount of compensatory or punitive damages 
        (or the total amount of damages) that may be awarded in a 
        health care lawsuit, regardless of whether such monetary amount 
        is greater or lesser than is provided for under this subtitle, 
        notwithstanding section 4(a); or
            (2) any defense available to a party in a health care 
        lawsuit under any other provision of State or Federal law.

SEC. 328. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO 
              CURRENT MEDICAL TORT LITIGATION.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399V-6. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO 
              CURRENT MEDICAL TORT LITIGATION.

    ``(a) In General.--The Secretary is authorized to award 
demonstration grants to States for the development, implementation, and 
evaluation of alternatives to current tort litigation for resolving 
disputes over injuries allegedly caused by health care providers or 
health care organizations.
    ``(b) Duration.--The Secretary may award up to 10 grants under 
subsection (a) and each grant awarded under such subsection may not 
exceed a period of 5 years.
    ``(c) Conditions for Demonstration Grants.--
            ``(1) Requirements.--Each State desiring a grant under 
        subsection (a) shall--
                    ``(A) develop an alternative to current tort 
                litigation for resolving disputes over injuries 
                allegedly caused by health care providers or health 
                care organizations that may be 1 of the models 
                described in subsection (d); and
                    ``(B) promote a reduction of health care errors by 
                allowing for patient safety data related to disputes 
                resolved under subparagraph (A) to be collected and 
                analyzed by organizations that engage in voluntary 
                efforts to improve patient safety and the quality of 
                health care delivery.
            ``(2) Alternative to current tort litigation.--Each State 
        desiring a grant under subsection (a) shall demonstrate how the 
        proposed alternative described in paragraph (1)(A)--
                    ``(A) makes the medical liability system more 
                reliable through prompt and fair resolution of 
                disputes;
                    ``(B) encourages the early disclosure of health 
                care errors;
                    ``(C) enhances patient safety; and
                    ``(D) maintains access to liability insurance.
            ``(3) Sources of compensation.--Each State desiring a grant 
        under subsection (a) shall identify the sources from and 
        methods by which compensation would be paid for claims resolved 
        under the proposed alternative to current tort litigation, 
        which may include public or private funding sources, or a 
        combination of such sources. Funding methods shall to the 
        extent practicable provide financial incentives for activities 
        that improve patient safety.
            ``(4) Scope.--
                    ``(A) In general.--Each State desiring a grant 
                under subsection (a) may establish a scope of 
                jurisdiction (such as a designated geographic region, a 
                designated area of health care practice, or a 
                designated group of health care providers or health 
                care organizations) for the proposed alternative to 
                current tort litigation that is sufficient to evaluate 
                the effects of the alternative.
                    ``(B) Notification of patients.--A State proposing 
                a scope of jurisdiction under subparagraph (A) shall 
                demonstrate how patients would be notified that they 
                are receiving health care services that fall within 
                such scope.
            ``(5) Preference in awarding demonstration grants.--In 
        awarding grants under subsection (a), the Secretary shall give 
        preference to States--
                    ``(A) that have developed the proposed alternative 
                through substantive consultation with relevant 
                stakeholders; and
                    ``(B) in which State law at the time of the 
                application would not prohibit the adoption of an 
                alternative to current tort litigation.
    ``(d) Models.--
            ``(1) In general.--Any State desiring a grant under 
        subsection (a) that proposes an alternative described in 
        paragraph (2), (3), or (4) shall be deemed to meet the criteria 
        under subsection (c)(2).
            ``(2) Early disclosure and compensation model.--In the 
        early disclosure and compensation model, the State shall--
                    ``(A) require that health care providers or health 
                care organizations notify a patient (or an immediate 
                family member or designee of the patient) of an adverse 
                event that results in serious injury to the patient, 
                and that such notification shall not constitute an 
                acknowledgment or an admission of liability;
                    ``(B) provide immunity from tort liability to any 
                health care provider or health care organization that 
                offers in good faith to pay compensation in accordance 
                with this section to a patient for an injury incurred 
                in the provision of health care services (limited to 
                claims arising out of the same nucleus of operative 
                facts as the injury, and except in cases of fraud 
                related to the provision of health care services, or in 
                cases of criminal or intentional harm);
                    ``(C) set a limited time period during which a 
                health care provider or health care organization may 
                make an offer of compensation benefits under 
                subparagraph (B), with consideration for instances 
                where prompt recognition of an injury is unlikely or 
                impossible;
                    ``(D) require that the compensation provided under 
                subparagraph (B) include--
                            ``(i) payment for the net economic loss of 
                        the patient, on a periodic basis, reduced by 
                        any payments received by the patient under--
                                    ``(I) any health or accident 
                                insurance;
                                    ``(II) any wage or salary 
                                continuation plan; or
                                    ``(III) any disability income 
                                insurance;
                            ``(ii) payment for the non-economic damages 
                        of the patient, if appropriate for the injury, 
                        based on a defined payment schedule developed 
                        by the State in consultation with relevant 
                        experts and with the Secretary in accordance 
                        with subsection (g); and
                            ``(iii) reasonable attorney's fees;
                    ``(E) not abridge the right of an injured patient 
                to seek redress through the State tort system if a 
                health care provider does not enter into a compensation 
                agreement with the patient in accordance with 
                subparagraph (B) or if the compensation offered does 
                not meet the requirements of subparagraph (D) or is not 
                offered in good faith;
                    ``(F) permit a health care provider or health care 
                organization that offers in good faith to pay 
                compensation benefits to an individual under 
                subparagraph (B) to join in the payment of the 
                compensation benefits any health care provider or 
                health care organization that is potentially liable, in 
                whole or in part, for the injury; and
                    ``(G) permit any health care provider or health 
                care organization to contribute voluntarily in the 
                payment of compensation benefits to an individual under 
                subparagraph (B).
            ``(3) Administrative determination of compensation model.--
                    ``(A) In general.--In the administrative 
                determination of compensation model--
                            ``(i) the State shall--
                                    ``(I) designate an administrative 
                                entity (in this paragraph referred to 
                                as the `Board') that shall include 
                                representatives of--
                                            ``(aa) relevant State 
                                        licensing boards;
                                            ``(bb) patient advocacy 
                                        groups;
                                            ``(cc) health care 
                                        providers and health care 
                                        organizations; and
                                            ``(dd) attorneys in 
                                        relevant practice areas;
                                    ``(II) set up classes of avoidable 
                                injuries, in consultation with relevant 
                                experts and with the Secretary in 
                                accordance with subsection (g), that 
                                will be used by the Board to determine 
                                compensation under clause (ii)(II);
                                    ``(III) modify tort liability, 
                                through statute or contract, to bar 
                                negligence claims in court against 
                                health care providers and health care 
                                organizations for the classes of 
                                injuries established under subclause 
                                (II), except in cases of fraud related 
                                to an injury, or in cases of criminal 
                                or intentional harm;
                                    ``(IV) outline a procedure for 
                                informing patients about the modified 
                                liability system described in this 
                                paragraph and, in systems where 
                                participation by the health care 
                                provider, health care organization, or 
                                patient is voluntary, allow for the 
                                decision by the provider, organization, 
                                or patient of whether to participate to 
                                be made prior to the provision of, use 
                                of, or payment for the health care 
                                service;
                                    ``(V) provide for an appeals 
                                process to allow for review of 
                                decisions; and
                                    ``(VI) establish procedures to 
                                coordinate settlement payments with 
                                other sources of payment;
                            ``(ii) the Board shall--
                                    ``(I) resolve health care liability 
                                claims for certain classes of avoidable 
                                injuries as determined by the State and 
                                determine compensation for such claims;
                                    ``(II) develop a schedule of 
                                compensation to be used in making such 
                                determinations that includes--
                                            ``(aa) payment for the net 
                                        economic loss of the patient, 
                                        on a periodic basis, reduced by 
                                        any payments received by the 
                                        patient under any health or 
                                        accident insurance, any wage or 
                                        salary continuation plan, or 
                                        any disability income 
                                        insurance;
                                            ``(bb) payment for the non-
                                        economic damages of the 
                                        patient, if appropriate for the 
                                        injury, based on a defined 
                                        payment schedule developed by 
                                        the State in consultation with 
                                        relevant experts and with the 
                                        Secretary in accordance with 
                                        subsection (g); and
                                            ``(cc) reasonable 
                                        attorney's fees; and
                                    ``(III) update the schedule under 
                                subclause (II) on a regular basis.
                    ``(B) Appeals.--The State, in establishing the 
                appeals process described in subparagraph (A)(i)(V), 
                may choose whether to allow for de novo review, review 
                with deference, or some opportunity for parties to 
                reject determinations by the Board and elect to file a 
                civil action after such rejection. Any State desiring 
                to adopt the model described in this paragraph shall 
                indicate how such review method meets the criteria 
                under subsection (c)(2).
                    ``(C) Timeliness.--The State shall establish 
                timeframes to ensure that claims handled under the 
                system described in this paragraph provide for 
                adjudication that is more timely and expedited than 
                adjudication in a traditional tort system.
            ``(4) Special health care court model.--In the special 
        health care court model, the State shall--
                    ``(A) establish a special court for the timely 
                adjudication of disputes over injuries allegedly caused 
                by health care providers or health care organizations 
                in the provision of health care services;
                    ``(B) ensure that such court is presided over by 
                judges with health care expertise who meet applicable 
                State standards for judges and who agree to preside 
                over such court voluntarily;
                    ``(C) provide authority to such judges to make 
                binding rulings on causation, compensation, standards 
                of care, and related issues with reliance on 
                independent expert witnesses commissioned by the court;
                    ``(D) provide for an appeals process to allow for 
                review of decisions; and
                    ``(E) at its option, establish an administrative 
                entity similar to the entity described in paragraph 
                (3)(A)(i)(I) to provide advice and guidance to the 
                special court.
    ``(e) Application.--
            ``(1) In general.--Each State desiring a grant under 
        subsection (a) shall submit to the Secretary an application, at 
        such time, in such manner, and containing such information as 
        the Secretary may require.
            ``(2) Review panel.--
                    ``(A) In general.--In reviewing applications under 
                paragraph (1), the Secretary shall consult with a 
                review panel composed of relevant experts appointed by 
                the Comptroller General.
                    ``(B) Composition.--
                            ``(i) Nominations.--The Comptroller General 
                        shall solicit nominations from the public for 
                        individuals to serve on the review panel.
                            ``(ii) Appointment.--The Comptroller 
                        General shall appoint, at least 11 but not more 
                        than 15, highly qualified and knowledgeable 
                        individuals to serve on the review panel and 
                        shall ensure that the following entities 
                        receive fair representation on such panel:
                                    ``(I) Patient advocates.
                                    ``(II) Health care providers and 
                                health care organizations.
                                    ``(III) Attorneys with expertise in 
                                representing patients and health care 
                                providers.
                                    ``(IV) Insurers.
                                    ``(V) State officials.
                    ``(C) Chairperson.--The Comptroller General, or an 
                individual within the Government Accountability Office 
                designated by the Comptroller General, shall be the 
                chairperson of the review panel.
                    ``(D) Availability of information.--The Comptroller 
                General shall make available to the review panel such 
                information, personnel, and administrative services and 
                assistance as the review panel may reasonably require 
                to carry out its duties.
                    ``(E) Information from agencies.--The review panel 
                may request directly from any department or agency of 
                the United States any information that such panel 
                considers necessary to carry out its duties. To the 
                extent consistent with applicable laws and regulations, 
                the head of such department or agency shall furnish the 
                requested information to the review panel.
    ``(f) Report.--Each State receiving a grant under subsection (a) 
shall submit to the Secretary a report evaluating the effectiveness of 
activities funded with grants awarded under such subsection at such 
time and in such manner as the Secretary may require.
    ``(g) Technical Assistance.--
            ``(1) In general.--The Secretary shall provide technical 
        assistance to the States awarded grants under subsection (a).
            ``(2) Requirements.--Technical assistance under paragraph 
        (1) shall include--
                    ``(A) the development of a defined payment schedule 
                for non-economic damages (including guidance on the 
                consideration of individual facts and circumstances in 
                determining appropriate payment), the development of 
                classes of avoidable injuries, and guidance on early 
                disclosure to patients of adverse events; and
                    ``(B) the development, in consultation with States, 
                of common definitions, formats, and data collection 
                infrastructure for States receiving grants under this 
                section to use in reporting to facilitate aggregation 
                and analysis of data both within and between States.
            ``(3) Use of common definitions, formats, and data 
        collection infrastructure.--States not receiving grants under 
        this section may also use the common definitions, formats, and 
        data collection infrastructure developed under paragraph 
        (2)(B).
    ``(h) Evaluation.--
            ``(1) In general.--The Secretary, in consultation with the 
        review panel established under subsection (e)(2), shall enter 
        into a contract with an appropriate research organization to 
        conduct an overall evaluation of the effectiveness of grants 
        awarded under subsection (a) and to annually prepare and submit 
        a report to the appropriate committees of Congress. Such an 
        evaluation shall begin not later than 18 months following the 
        date of implementation of the first program funded by a grant 
        under subsection (a).
            ``(2) Contents.--The evaluation under paragraph (1) shall 
        include--
                    ``(A) an analysis of the effect of the grants 
                awarded under subsection (a) on the number, nature, and 
                costs of health care liability claims;
                    ``(B) a comparison of the claim and cost 
                information of each State receiving a grant under 
                subsection (a); and
                    ``(C) a comparison between States receiving a grant 
                under this section and States that did not receive such 
                a grant, matched to ensure similar legal and health 
                care environments, and to determine the effects of the 
                grants and subsequent reforms on--
                            ``(i) the liability environment;
                            ``(ii) health care quality;
                            ``(iii) patient safety; and
                            ``(iv) patient and health care provider and 
                        organization satisfaction with the reforms.
    ``(i) Option To Provide for Initial Planning Grants.--Of the funds 
appropriated pursuant to subsection (k), the Secretary may use a 
portion not to exceed $500,000 per State to provide planning grants to 
such States for the development of demonstration project applications 
meeting the criteria described in subsection (c). In selecting States 
to receive such planning grants, the Secretary shall give preference to 
those States in which State law at the time of the application would 
not prohibit the adoption of an alternative to current tort litigation.
    ``(j) Definitions.--In this section:
            ``(1) Health care services.--The term `health care 
        services' means any services provided by a health care 
        provider, or by any individual working under the supervision of 
        a health care provider, that relate to--
                    ``(A) the diagnosis, prevention, or treatment of 
                any human disease or impairment; or
                    ``(B) the assessment of the health of human beings.
            ``(2) Health care organization.--The term `health care 
        organization' means any individual or entity which is obligated 
        to provide, pay for, or administer health benefits under any 
        health plan.
            ``(3) Health care provider.--The term `health care 
        provider' means any individual or entity--
                    ``(A) licensed, registered, or certified under 
                Federal or State laws or regulations to provide health 
                care services; or
                    ``(B) required to be so licensed, registered, or 
                certified but that is exempted by other statute or 
                regulation.
            ``(4) Net economic loss.--The term `net economic loss' 
        means--
                    ``(A) reasonable expenses incurred for products, 
                services, and accommodations needed for health care, 
                training, and other remedial treatment and care of an 
                injured individual;
                    ``(B) reasonable and appropriate expenses for 
                rehabilitation treatment and occupational training;
                    ``(C) 100 percent of the loss of income from work 
                that an injured individual would have performed if not 
                injured, reduced by any income from substitute work 
                actually performed; and
                    ``(D) reasonable expenses incurred in obtaining 
                ordinary and necessary services to replace services an 
                injured individual would have performed for the benefit 
                of the individual or the family of such individual if 
                the individual had not been injured.
            ``(5) Non-economic damages.--The term `non-economic 
        damages' means losses for physical and emotional pain, 
        suffering, inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), injury to reputation, and all other non-pecuniary 
        losses of any kind or nature, to the extent permitted under 
        State law.
    ``(k) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary. 
Amounts appropriated pursuant to this subsection shall remain available 
until expended.''.

SEC. 329. AFFIRMATIVE DEFENSE BASED ON COMPLIANCE WITH BEST PRACTICE 
              GUIDELINES.

    (a) Selection and Issuance of Best Practices Guidelines.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        provide for the selection and issuance of best practice 
        guidelines (each in this subsection referred to as a 
        ``guideline'') in accordance with paragraphs (2) and (3).
            (2) Development process.--Not later than 90 days after the 
        date of the enactment of this Act, the Secretary shall enter 
        into a contract with a qualified physician consensus-building 
        organization (such as the Physician Consortium for Performance 
        Improvement), in concert and agreement with physician specialty 
        organizations, to develop guidelines for treatment of medical 
        conditions for application under subsection (b). Under the 
        contract, the organization shall take into consideration any 
        endorsed performance-based quality measures utilized under 
        title XVIII of the Social Security Act (42 U.S.C. 1395 et 
        seq.). Under the contract and not later than 18 months after 
        the date of the enactment of this Act, the organization shall 
        submit best practice guidelines for issuance as guidelines 
        under paragraph (3).
            (3) Issuance.--
                    (A) In general.--Not later than 2 years after the 
                date of the enactment of this Act, the Secretary shall 
                issue, by regulation, after notice and opportunity for 
                public comment, guidelines that have been recommended 
                under paragraph (2) for application under subsection 
                (b).
                    (B) Limitation.--The Secretary may not issue 
                guidelines unless they have been approved or endorsed 
                by qualified physician consensus-building organization 
                involved and physician specialty organizations.
                    (C) Dissemination.--The Secretary shall broadly 
                disseminate the guidelines so issued.
    (b) Limitation on Damages.--
            (1) Limitation on noneconomic damages.--In any health care 
        lawsuit, no noneconomic damages may awarded with respect to 
        treatment that is within a guideline issued under subsection 
        (a).
            (2) Limitation on punitive damages.--In any health care 
        lawsuit, no punitive damages may be awarded against a health 
        care practitioner based on a claim that such treatment caused 
        the claimant harm if--
                    (A) such treatment was subject to the quality 
                review by a qualified physician consensus-building 
                organization;
                    (B) such treatment was approved in a guideline that 
                underwent full review by such organization, public 
                comment, approval by the Secretary, and dissemination 
                as described in subparagraph (a); and
                    (C) such medical treatment is generally recognized 
                among qualified experts (including medical providers 
                and relevant physician specialty organizations) as 
                safe, effective, and appropriate.
    (c) Use.--
            (1) Introduction as evidence.--Guidelines under subsection 
        (a) may not be introduced as evidence of negligence or 
        deviation in the standard of care in any civil action unless 
        they have previously been introduced by the defendant.
            (2) No presumption of negligence.--There would be no 
        presumption of negligence if a participating physician does not 
        adhere to such guidelines.
    (d) Construction.--Nothing in this section shall be construed as 
preventing a State from--
            (1) replacing their current medical malpractice rules with 
        rules that rely, as a defense, upon a health care provider's 
        compliance with a guideline issued under subsection (a); or
            (2) applying additional guidelines or safe-harbors that are 
        in addition to, but not in lieu of, the guidelines issued under 
        subsection (a).

SEC. 330. MEDICAL MALPRACTICE REFORM STATE INCENTIVE FUND.

    (a) Grants.--The Secretary of Health and Human Services (referred 
to in this section as the ``Secretary'') shall award grants to eligible 
States to assist such States in implementing State-based medical 
malpractice reforms.
    (b) Eligibility.--
            (1) In general.--To be eligible to receive a grant under 
        subsection (a), a State shall--
                    (A) submit to the Secretary an application, at such 
                time, in such manner, and containing such information 
                as the Secretary may require; and
                    (B) shall certify, as part of the application under 
                subparagraph (A), that the State has carried out 
                activities, including enacting State laws, that have 
                been demonstrated to lower medical malpractice claim or 
                premiums costs for physicians or to lower health care 
                costs for patients.
            (2) Study.--As part of a certification provided under 
        paragraph (1)(B), the State shall include the results of at 
        least one longitudinal, empirically based study or data based 
        on an actuarial analysis that demonstrates cost reductions of 
        the type described in such paragraph. Such results shall be 
        provided in a manner that enables the Comptroller General of 
        the United States to make a determination as to whether such 
        results are the reasonable and demonstrable conclusion of the 
        State activities involved.
            (3) Types of laws.--Laws described in paragraph (1)(B) may 
        include caps on non-economic damages, the establishment of 
        health courts, the establishment of a comprehensive patient 
        compensation program, providing for administrative 
        determinations of compensation, providing for early offers, 
        establishing safe harbors for the practice of evidence-based 
        medicine, or other demonstrated methods to reduce costs.
    (c) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section--
            (1) $500,000,000 for the period of fiscal years 2016 
        through 2020; and
            (2) $500,000,000 for the period of fiscal years 2021 
        through 2025.
    (d) Sunset.--The authority established under this section shall not 
apply after September 30, 2026.

SEC. 331. SENSE OF CONGRESS CONCERNING ADDITIONAL REFORMS.

    It is the sense of Congress that Congress should explore other 
options for health care-related tort reform, including statutory caps 
on punitive and non-economic damages and measures to ensure savings 
resulting from tort reforms go to reducing health care costs, as well 
as measures to encourage the reduction of medical errors.

SEC. 332. APPLICABILITY; EFFECTIVE DATE.

    This subtitle shall apply to any health care lawsuit brought in a 
Federal or State court, or subject to an alternative dispute resolution 
system, that is initiated on or after the date of the enactment of this 
Act, except that any health care lawsuit arising from an injury 
occurring prior to the date of the enactment of this Act shall be 
governed by the applicable statute of limitations provisions in effect 
at the time the injury occurred.

                   TITLE IV--SOCIAL SECURITY SAVINGS

SEC. 401. ADJUSTMENTS IN SUPPLEMENTAL SECURITY INCOME BENEFITS FOR 
              CERTAIN LONG-TIME BENEFICIARIES.

    (a) In General.--Title XVI of the Social Security Act (42 U.S.C. 
1381 et seq.) is amended by inserting after section 1617 the following:

     ``adjustments in benefits for certain long-time beneficiaries

    ``Sec. 1617A. 
    ``(a) In the case of an eligible individual to whom benefits under 
this title (or under section 211 of Public Law 93-66) have been payable 
for at least 240 months (whether or not consecutive) and whose benefits 
under this title (or under such section 211) have been increased under 
this section fewer than 5 times, whenever benefit amounts under title 
II are increased by any percentage effective with any month as a result 
of a determination made under section 215(i) of this Act--
            ``(1) each of the dollar amounts in effect for the month 
        with respect to the eligible individual under subsections 
        (a)(1)(A), (a)(2)(A), (b)(1), and (b)(2) of section 1611 of 
        this title, and subsection (a)(1)(A) of section 211 of Public 
        Law 93-66, as specified in such subsections or as previously 
        increased under section 1617 of this title or this section, 
        shall be increased by the amount (if any) by which--
                    ``(A) the amount which would have been in effect 
                under such subsections for the month with respect to 
                the individual but for the rounding of the amount 
                pursuant to section 1617(a)(2) of this title or 
                paragraph (2) of this subsection, exceeds
                    ``(B) the amount in effect for the month under such 
                subsections with respect to the individual; and
            ``(2) the amount obtained under paragraph (1) with respect 
        to each subsection with respect to the individual shall be 
        further increased by 1 percent of the amount so obtained with 
        respect to the individual the 1st time this section is applied 
        with respect to the individual, (and rounded, when not a 
        multiple of $12, to the next lower multiple of $12), effective 
        with respect to benefits for months after the month.
    ``(b) The new dollar amounts to be in effect under section 1611 of 
this title and under section 211 of Public Law 93-66 by reason of the 
application of subsection (a) of this section with respect to eligible 
individuals shall be published in the Federal Register together with, 
and at the same time as, the material required by section 215(i)(2)(D) 
of this Act to be published therein by reason of the determination 
involved.''.
    (b) Conforming Amendments.--
            (1) Subsections (a)(1)(A), (a)(2)(A), (b)(1), (b)(2), and 
        (b)(6) of section 1611 of such Act (42 U.S.C. 1382) are each 
        amended by inserting ``or 1617A'' after ``1617''.
            (2) Section 1617(a)(1) of such Act (42 U.S.C. 1382f(a)(1)) 
        is amended--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``or section 1617A'' after ``this section''; 
                and
                    (B) in subparagraph (A), by inserting ``or section 
                1617A(a)(2))'' after ``paragraph (2)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to benefits payable for months beginning after 
calendar year in which this Act is enacted.

             TITLE V--OTHER MANDATORY SAVINGS AND RECEIPTS

SEC. 501. CONVERSION TO CHAINED CPI.

    (a) Consumer Price Index Adjustments Applicable to the Internal 
Revenue Code Provisions.--
            (1) In general.--Paragraph (3) of section 1(f) of the 
        Internal Revenue Code of 1986 is amended to read as follows:
            ``(3) Cost-of-living adjustment.--
                    ``(A) In general.--For purposes of paragraph (2), 
                the cost-of-living adjustment for any calendar year 
                is--
                            ``(i) for adjustments first beginning 
                        before 2017, the product of--
                                    ``(I) the CPI fraction for calendar 
                                years before 2017, multiplied by
                                    ``(II) the Chained CPI fraction for 
                                calendar years after 2016,
                        reduced by 1, and
                            ``(ii) for adjustments first beginning 
                        after 2016, the Chained CPI fraction for years 
                        after 2016.
                    ``(B) CPI fraction for calendar years before 
                2017.--The CPI fraction for calendar years before 2017 
                is the fraction--
                            ``(i) the numerator of which is the CPI for 
                        the calendar year 2015; and
                            ``(ii) the denominator of which is the CPI 
                        for the calendar year 1992.
                    ``(C) Chained cpi fraction for calendar years after 
                2016.--The Chained CPI fraction for calendar years 
                after 2016 is the fraction--
                            ``(i) the numerator of which is the Chained 
                        CPI for the preceding calendar year, and
                            ``(ii) the denominator of which is the 
                        Chained CPI for the calendar year 2015.''.
            (2) Conforming amendments.--
                    (A) Paragraph (4) of section 1(f) of such Code is 
                amended to read as follows:
            ``(4) CPI and chained cpi for any calendar year.--For 
        purposes of paragraph (3)--
                    ``(A) CPI.--The CPI for any calendar year is the 
                average of the Consumer Price Index as of the close of 
                the 12-month period ending on August 31 of such 
                calendar year.
                    ``(B) Chained cpi.--The Chained CPI for any 
                calendar year is the average of the Chained Consumer 
                Price Index as of the close of the 12-month period 
                ending on August 31 of such calendar year.''.
                    (B) Paragraph (5) of section 1(f) of such Code is 
                amended to read as follows:
            ``(5) Consumer price index and chained consumer price 
        index.--For purposes of paragraph (4)--
                    ``(A) Consumer price index.--The term `Consumer 
                Price Index' means the last Consumer Price Index for 
                all urban consumers published by the Department of 
                Labor. For purposes of the preceding sentence, the 
                revision of the Consumer Price Index which is most 
                consistent with the Consumer Price Index for calendar 
                year 1986 shall be used.
                    ``(B) Chained consumer price index.--The term 
                `Chained Consumer Price Index' means the most recent 
                estimate of the Chained Consumer Price Index for all 
                urban consumers published by the Department of 
                Labor.''.
                    (C) Subclause (II) of section 36B(b)(3)(A)(ii) of 
                such Code is amended by striking ``consumer price 
                index'' and inserting ``Chained Consumer Price Index 
                (as defined in section 1(f)(5)(B))''.
                    (D) Subclause (II) of section 36B(f)(2)(B)(ii) of 
                such Code is amended by striking ``by substituting 
                `calendar year 2017' for `calendar year 1992' in 
                subparagraph (B) thereof'' and inserting ``by 
                substituting `calendar year 2017' for `calendar year 
                2015' in subparagraph (C) thereof''.
                    (E) Clause (ii) of section 45R(d)(3)(B) of such 
                Code is amended by striking ``by substituting `calendar 
                year 2016' for `calendar year 1992' in subparagraph (B) 
                thereof'' and inserting ``by substituting `calendar 
                year 2016' for `calendar year 2015' in subparagraph (C) 
                thereof''.
                    (F) Subparagraph (B) of section 125(i)(2) of such 
                Code is amended by striking ``by substituting `calendar 
                year 2016' for `calendar year 1992' in subparagraph (B) 
                thereof'' and inserting ``by substituting `calendar 
                year 2016' for `calendar year 2015' in subparagraph (C) 
                thereof''.
                    (G) Subclause (II) of section 4980I(b)(3)(C)(v) of 
                such Code is amended by striking ``for `1992' in 
                subparagraph (B) thereof'' and inserting ``for `2015' 
                in subparagraph (C) thereof''.
                    (H) Clause (ii) of section 5000A(c)(3)(D) of such 
                Code is amended by striking ``by substituting `calendar 
                year 2015' for `calendar year 1992' in subparagraph (B) 
                thereof'' and inserting ``by substituting `calendar 
                year 2015' for `calendar year 2015' in subparagraph (C) 
                thereof''.
                    (I) Paragraph (1) of section 6721(f) of such Code 
                is amended by striking ``determined by substituting 
                `calendar year 2015' for `calendar year 1992' in 
                subparagraph (B) thereof''.
                    (J) Paragraph (1) of section 6722(f) of such Code 
                is amended by striking ``determined by substituting 
                `calendar year 2015' for `calendar year 1992' in 
                subparagraph (B) thereof''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2016.
    (b) Modifications to Cost-of-Living Indexation of Social Security 
Benefits.--
            (1) In general.--Section 215(i)(1)(D) of the Social 
        Security Act (42 U.S.C. 415(i)(1)(D)) is amended to read as 
        follows:
            ``(D) the term `CPI increase percentage', with respect to a 
        base quarter or cost-of-living computation quarter in any 
        calendar year, means the percentage (rounded to the nearest 
        one-tenth of 1 percent) by which the Chained Consumer Price 
        Index for All Urban Consumers (as published in its initial form 
        by the Bureau of Labor Statistics of the Department of Labor) 
        for such base quarter or cost-of-living computation quarter 
        exceeds such index for the later of--
                    ``(i) the most recent calendar quarter (prior to 
                such base quarter or cost-of-living computation 
                quarter) which was a base quarter under subparagraph 
                (A)(ii); or
                    ``(ii) the most recent cost-of-living computation 
                quarter under subparagraph (B);''.
            (2) Definitions.--Section 215(i)(1)(G) of such Act (42 
        U.S.C. 415(i)(1)(G)) is amended to read as follows:
            ``(G) the Chained Consumer Price Index for All Urban 
        Consumers for a base quarter, a cost-of-living computation 
        quarter, or any other calendar quarter shall be the 
        arithmetical mean of such index (as published in its initial 
        form by the Bureau of Labor Statistics of the Department of 
        Labor as of the end of such quarter) for the 12-month period 
        ending with such quarter.''.
            (3) Conforming changes for pre-1977 law.--
                    (A) Section 215(i)(1) of such Act, as in effect in 
                December 1978, and as applied in certain cases under 
                the provisions of such Act as in effect after December 
                1978, is amended--
                            (i) in subparagraph (B), by striking 
                        ``and'' after the semicolon;
                            (ii) in subparagraph (C), by striking ``for 
                        the 3 months in such quarter.'' and inserting 
                        ``for the 12 months in the 12-month period 
                        ending with such quarter; and''; and
                            (iii) by adding at the end the following 
                        new subparagraph:
            ``(D) the term `Consumer Price Index' means the Chained 
        Consumer Price Index for All Urban Consumers (C-CPI-U), as 
        published in its initial form by the Bureau of Labor Statistics 
        of the Department of Labor.''.
                    (B) Section 215(i)(4) of the Social Security Act 
                (42 U.S.C. 415(i)(4)) is amended by inserting `` and by 
                section 501(b) of the America First Act'' after 
                ``1986,''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply with respect to increases described in section 
        215(i) of the Social Security Act, and to increases under 
        programs dependent on Social Security cost-of-living 
        adjustments, effective with the month of December for years 
        after 2015.
    (c) Adjustments of Provisions Utilizing the Consumer Price Index.--
            (1) In general.--Notwithstanding any other provision of 
        law, and except as provided in this section, for purposes of 
        determining the amount of any cost-of-living increase or 
        similar adjustment under a Federal program or law effective in 
        the month of December 2016 and thereafter, any such increase 
        for the period for which the percentage change is determined 
        shall be deemed to be, in lieu of the increase otherwise 
        determined under applicable law, the increase determined under 
        such applicable law by substituting the Chained CPI for the 
        CPI.
            (2) Increases determined from a constant base year.--
                    (A) In general.--In any case in which the amount of 
                a cost-of-living increase effective in the month of 
                December 2015 and thereafter is determined under 
                applicable law by reference to a change in the CPI over 
                a period which is determined by reference to a base 
                period which remains constant from year to year, any 
                such increase for any period shall be deemed to be, in 
                lieu of the increase otherwise determined under 
                applicable law, the increase, expressed as a percentage 
                increase, equal to the product of--
                            (i) the CPI fraction prior to 2017; 
                        multiplied by
                            (ii) the Chained CPI fraction after 2016,
                reduced by 1.
                    (B) CPI fraction prior to 2017.--The CPI fraction 
                prior to 2017 is the fraction--
                            (i) the numerator of which is the CPI for 
                        the period, ending with or during 2015, which 
                        corresponds to the base period; and
                            (ii) the denominator of which is the CPI 
                        for the base period.
                    (C) Chained cpi fraction after 2016.--The Chained 
                CPI fraction after 2016 is the fraction--
                            (i) the numerator of which is the Chained 
                        CPI for the period, ending with or during the 
                        year preceding the year in which the 
                        determination takes effect, which corresponds 
                        to the base period; and
                            (ii) the denominator of which is the most 
                        recently published estimate of the Chained CPI 
                        for the period, ending with or during 2015, 
                        which corresponds to the base period.
            (3) Special provisions and exceptions.--
                    (A) Programs tied to social security.--Subject to 
                subparagraph (B) and the effective date under 
                subsection (b)(4), this section and the amendments made 
                by this section shall apply to any cost-of-living 
                increase or other adjustment which is determined by 
                reference to an adjustment made under section 215(i) of 
                the Social Security Act (42 U.S.C. 415(i)).
                    (B) Nonapplication to cost-of-living indexation of 
                ssi benefits.--
                            (i) In general.--Section 1617 of the Social 
                        Security Act (42 U.S.C. 1382f) is amended--
                                    (I) in subsection (a), in the 
                                matter preceding paragraph (1), by 
                                striking ``Whenever'' and inserting 
                                ``Subject to subsection (d), 
                                whenever''; and
                                    (II) by adding at the end the 
                                following:
    ``(d)(1) Notwithstanding subsection (a), with respect to benefits 
payable under this title for December 2016 and months thereafter, 
whenever benefit amounts under title II are increased by any percentage 
effective with any month as a result of a determination made under 
section 215(i), each of the dollar amounts in effect for such month 
under subsections (a)(1)(A), (a)(2)(A), (b)(1), and (b)(2) of section 
1611, and subsection (a)(1)(A) of section 211 of Public Law 93-66, as 
specified in such subsections or as previously increased under this 
section, shall be increased by \1/12\ of the cost-of-living adjustment 
determined under paragraph (2) for the most recent prior calendar year 
(and rounded, when not a multiple of $12, to the next lower multiple of 
$12).
    ``(2) The cost-of-living adjustment determined under this paragraph 
is, with respect to a calendar year, the percentage equal to the sum 
of--
            ``(A) the Chained CPI increase percentage determined under 
        paragraph (3) for the year; and
            ``(B) the difference of--
                    ``(i) the product of the CPI increase percentage 
                determined under paragraph (4) for the year and the 
                applicable transition factor under paragraph (5); and
                    ``(ii) the product of the Chained CPI increase 
                percentage determined under paragraph (3) for the year 
                and the applicable transition factor under paragraph 
                (5).
    ``(3) The Chained CPI increase percentage determined under this 
paragraph for a calendar year is the fraction (expressed as a 
percentage)--
            ``(A) the numerator of which is the Chained Consumer Price 
        Index for All Urban Consumers for the preceding calendar year 
        (as published by the Bureau of Labor Statistics of the 
        Department of Labor); and
            ``(B) the denominator of which is the Chained Consumer 
        Price Index for All Urban Consumers for calendar year 2015 (as 
        so published).
    ``(4) The CPI increase percentage determined under this paragraph 
for a calendar year is the fraction (expressed as a percentage)--
            ``(A) the numerator of which is the Consumer Price Index 
        for all urban consumers for the preceding calendar year (as 
        published by the Bureau of Labor Statistics of the Department 
        of Labor); and
            ``(B) the denominator of which is the Consumer Price Index 
        for all urban consumers for calendar year 2015 (as so 
        published).
    ``(5) The applicable transition factor under this paragraph is--
            ``(A) for benefits effective for months beginning after 
        November 30, 2016, and before December 1, 2017, 0.8;
            ``(B) for benefits effective for months beginning after 
        November 30, 2017, and before December 1, 2018, 0.6;
            ``(C) for benefits effective for months beginning after 
        November 30, 2018, and before December 1, 2019, 0.4;
            ``(D) for benefits effective for months beginning after 
        November 30, 2019, and before December 1, 2020, 0.2; and
            ``(E) for benefits effective for months beginning after 
        November 30, 2020, 0.0.''.
                            (ii) Conforming amendment.--Section 1617(b) 
                        of such Act (42 U.S.C. 1382f(b)) is amended by 
                        inserting ``or (d)''after ``subsection (a)''.
                    (C) Poverty line.--This subsection shall apply to 
                revisions to the poverty line made pursuant to 42 
                U.S.C. 9902(2), and any programs for which adjustments 
                or eligibility thresholds are based upon the poverty 
                line as defined in that section.
            (4) CPI and chained cpi.--For purposes of this subsection--
                    (A) the CPI for any period means the average 
                monthly Consumer Price Index for such period, or a 
                component thereof, as determined under the applicable 
                law in connection with any cost-of-living increase or 
                similar adjustment required for such period (without 
                regard to this subsection); and
                    (B) the Chained CPI for any period means, except as 
                provided in paragraph (2)(C)(ii), the Chained Consumer 
                Price Index for all urban consumers (as published in 
                its initial form by the Bureau of Labor Statistics of 
                the Department of Labor) for such period, or a 
                component thereof, determined under applicable law in 
                the same manner as the CPI for such period would be 
                determined.
    (d) Change to 12-Month Period for Cost-of-Living Indexation for 
Federal Civil Service and Military Retirement Programs.--
            (1) In general.--
                    (A) Federal civil service.--Sections 8340(a)(2) and 
                8462(a)(2) of title 5, United States Code, are each 
                amended by striking ``3 months comprising such 
                quarter'' and inserting ``12-month period ending with 
                such quarter''.
                    (B) Military.--Section 1401a(h) of title 10, United 
                States Code, is amended by striking ``three months 
                comprising that quarter'' and inserting ``12-month 
                period ending with such quarter''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply with respect to cost-of-living increases effective 
        with the month of December of years after 2015.

SEC. 502. ADJUSTMENT FOR INFLATION OF FEES FOR CERTAIN CUSTOMS 
              SERVICES.

    (a) In General.--Section 13031 of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (19 U.S.C. 58c) is amended by adding at the 
end the following:
    ``(l) Adjustment of Fees for Inflation.--
            ``(1) In general.--The Secretary of the Treasury shall 
        adjust the fees established under subsection (a), and the 
        limitations on such fees under paragraphs (2), (3), (5), (6), 
        (8), and (9) of subsection (b), on October 1, 2015, and 
        annually thereafter, to reflect the percentage (if any) of the 
        increase in the average of the chained Consumer Price Index for 
        the preceding 12-month period compared to the chained Consumer 
        Price Index for fiscal year 2014.
            ``(2) Special rules for calculation of adjustment.--In 
        adjusting under paragraph (1) the amount of the fees 
        established under subsection (a), and the limitations on such 
        fees under paragraphs (2), (3), (5), (6), (8), and (9) of 
        subsection (b), the Secretary--
                    ``(A) shall round the amount of any increase in the 
                Consumer Price Index to the nearest dollar; and
                    ``(B) may ignore any such increase of less than 1 
                percent.
            ``(3) Chained consumer price index defined.--For purposes 
        of this subsection, the term `chained Consumer Price Index' 
        means the Chained Consumer Price Index for All Urban Consumers 
        (C-CPI-U), as published in its initial form by the Bureau of 
        Labor Statistics of the Department of Labor.''.
    (b) Deposits Into Customs User Fee Account.--Section 13031(f) of 
the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 
58c(f)) is amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by striking ``all fees collected under subsection (a)'' 
        and inserting ``the amount of fees collected under subsection 
        (a) (determined without regard to any adjustment made under 
        subsection (l))''; and
            (2) in paragraph (3)(A), in the matter preceding clause 
        (i)--
                    (A) by striking ``fees collected'' and inserting 
                ``amount of fees collected''; and
                    (B) by striking ``), each appropriation'' and 
                inserting ``, and determined without regard to any 
                adjustment made under subsection (l)), each 
                appropriation''.
    (c) Conforming Amendments.--Section 13031 of the Consolidated 
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c), as amended 
by subsections (a) and (b), is further amended--
            (1) in subsection (a), in the matter preceding paragraph 
        (1), by inserting ``(subject to adjustment under subsection 
        (l))'' after ``following fees''; and
            (2) in subsection (b)--
                    (A) in paragraph (2), by inserting ``(subject to 
                adjustment under subsection (l))'' after ``in fees'';
                    (B) in paragraph (3), by inserting ``(subject to 
                adjustment under subsection (l))'' after ``in fees'';
                    (C) in paragraph (5)(A), by inserting ``(subject to 
                adjustment under subsection (l))'' after ``in fees'';
                    (D) in paragraph (6), by inserting ``(subject to 
                adjustment under subsection (l))'' after ``in fees'';
                    (E) in paragraph (8)(A)--
                            (i) in clause (i), by inserting ``or (l)'' 
                        after ``subsection (a)(9)(B)''; and
                            (ii) in clause (ii), by inserting 
                        ``(subject to adjustment under subsection 
                        (l))'' after ``$3''; and
                    (F) in paragraph (9)--
                            (i) in subparagraph (A)--
                                    (I) in the matter preceding clause 
                                (i), by inserting ``and subject to 
                                adjustment under subsection (l)'' after 
                                ``Tariff Act of 1930''; and
                                    (II) in clause (ii)(I), by 
                                inserting ``(subject to adjustment 
                                under subsection (l))'' after ``bill of 
                                lading''; and
                            (ii) in subparagraph (B)(i), by inserting 
                        ``(subject to adjustment under subsection 
                        (l))'' after ``bill of lading''.

SEC. 503. ADJUSTMENT FOR INFLATION OF TSA SERVICE SECURITY FEES AND FEE 
              LEVELS.

    (a) Limitation on Fees.--Subsection (c) of section 44940 of title 
49, United States Code, is amended by adding at the end the following 
new paragraph:
            ``(3) Adjustment of fee amount.--For fiscal year 2016 and 
        each subsequent fiscal year, the amount of a fee under this 
        subsection shall be adjusted to reflect the percentage (if any) 
        of the average of the chained Consumer Price Index for the 
        preceding 12-month period compared to the chained Consumer 
        Price Index for the preceding fiscal year.''.
    (b) Fee Levels.--Subsection (i)(4) of such section is amended by 
adding at the end the following new subparagraph:
                    ``(M) For fiscal year 2026, and each subsequent 
                fiscal year, the amount in effect for the preceding 
                fiscal year, as adjusted to reflect the percentage (if 
                any) in the average of the chained Consumer Price Index 
                for the preceding 12-month period compared to the 
                chained Consumer Price Index for preceding fiscal 
                year.''.
    (c) Chained Consumer Price Index.--Such section is further amended 
by adding at the end the following new subsection:
    ``(j) Calculation of Chained Consumer Price Index.--
            ``(1) Special rules for calculation of adjustment.--In 
        calculating the amount of the fee under subsection (c) and the 
        fiscal year amounts under subsection (i)(4)(K), the Under 
        Secretary--
                    ``(A) shall round the amount of any increase in the 
                Consumer Price Index to the nearest dollar; and
                    ``(B) may ignore any such increase of less than 1 
                percent.
            ``(2) Chained consumer price index defined.--For purposes 
        of this section, the term `chained Consumer Price Index' means 
        the Chained Consumer Price Index for All Urban Consumers (C-
        CPI-U), as published in its initial form by the Bureau of Labor 
        Statistics of the Department of Labor.''.

SEC. 504. DIVIDENDS AND SURPLUS FUNDS OF RESERVE BANKS.

    Section 7(a)(1)(A) of the Federal Reserve Act (12 U.S.C. 
289(a)(1)(A)) is amended by striking ``6 percent'' and inserting ``6 
percent (1.5 percent in the case of a stockholder having total 
consolidated assets of more than $1,000,000,000 (determined as of 
September 30 of the preceding fiscal year))''.

SEC. 505. COST-SAVING REFORMS FOR FEDERAL CROP INSURANCE PROGRAM.

    (a) Reduction in Premium Subsidy for Harvest Price Policies.--
Section 508(e) of the Federal Crop Insurance Act (7 U.S.C. 1508(e)) is 
amended by adding at the end the following new paragraph:
            ``(9) Reduced premium subsidy for harvest price policies.--
        Notwithstanding any other provision of this subsection 
        regarding payment of a portion of premiums, effective beginning 
        with the 2016 reinsurance year, the level of premium subsidy 
        for revenue-based plans of insurance that provide protection 
        for upward price movements at harvest time shall be at least 10 
        percentage points less than the premium subsidy available for 
        the same coverage for the 2015 reinsurance year.''.
    (b) Adjustment in Prevented Planting Payment Coverage Levels.--
Section 508(i) of the Federal Crop Insurance Act (7 U.S.C. 1508(i)) is 
amended by adding at the end the following new paragraph:
            ``(5) Adjustment in prevented planting payment coverage 
        levels.--The Corporation shall adjust, as soon as practicable, 
        prevented planting coverage levels on a crop-by-crop basis to 
        improve the actuarial soundness of the insurance operations of 
        the Corporation.''.
    (c) Elimination of Optional Additional Prevented Planting 
Coverage.--Section 508(l) of the Federal Crop Insurance Act (7 U.S.C. 
1508(l)) is amended--
            (1) by striking ``The Corporation'' and inserting the 
        following:
            ``(1) In general.--The Corporation''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Limitation on optional additional prevented planting 
        coverage.--The Corporation may not provide an option for 
        producers to purchase additional prevented planting coverage 
        levels in excess of the base coverage provided in the 
        policy.''.
    (d) Consistent Calculation of Actual Production History for 
Producers That Receive a Preventing Planting Payment.--Section 
508A(c)(3) of the Federal Crop Insurance Act (7 U.S.C. 1508a(c)(3)) is 
amended by striking ``make an election under paragraph (1)(B) for a 
crop year,'' and inserting ``collects an indemnity under prevented 
planting coverage for a first crop for a crop year, whether or not the 
producer elects to plant a second crop,''
    (e) Application of Amendments.--The amendments made by this section 
shall apply beginning with the 2016 reinsurance year.

SEC. 506. FEDERAL EMPLOYEE ANNUITIES.

    (a) Civil Service Retirement System.--Section 8334(c) of title 5, 
United States Code, is amended to read as follows:
    ``(c) Each employee or Member credited with civilian service after 
July 31, 1920, for which retirement deductions or deposits have not 
been made, may deposit with interest an amount equal to the following 
percentages of 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     7.5                         January 1, 2001 to December 31, 2016.
 service
                                         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.
Law enforcement officer for law          7.5                         January 1, 2001 to December 31, 2016.
 enforcement service, member of the
 Supreme Court Police for Supreme Court
 Police service, and firefighter for
 firefighter service
                                         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      8                           January 1, 2001 to December 31, 2016.
 Appeals for the Armed Forces for
 service as a judge of that court
                                         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.''.
 

    (b) Federal Employees' Retirement System.--
            (1) Individual contributions.--Section 8422(a)(3)(A) of 
        title 5, United States Code, is amended to read as follows:
            ``(3)(A) The applicable percentage under this paragraph for 
        civilian service by employees or Members other than revised 
        annuity employees or further 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,    7.5                         December 31, 2000 to December 31, 2016.
 member of the Capitol Police, member
 of the Supreme Court Police, or air
 traffic controller
                                         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.''.
 

            (2) Government contributions.--Section 8423(a)(2)(B)(i) of 
        title 5, United States Code, is amended by inserting after 
        ``2013'' the following: ``and section 506 of the America First 
        Act''.
    (c) Foreign Service Pension System.--
            (1) Employee contributions.--Section 856(a)(2)(A) of the 
        Foreign Service Act of 1980 (22 U.S.C. 4071e(a)(2)(A)) is 
        amended to read as follows:
            ``(2)(A) The applicable percentage for a participant other 
        than a revised annuity participant or a further revised annuity 
        participant shall be as follows:

``                     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.''.
 

            (2) Government contributions.--Section 857 of the Foreign 
        Service Act of 1980 (22 U.S.C. 4071f) is amended by inserting 
        after ``2013'' the following: ``and section 506 of the America 
        First Act''.

SEC. 507. REPAYMENT PLANS.

    Section 455(d)(1) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(d)(1)) is amended--
            (1) in subparagraph (D)--
                    (A) by inserting before the semicolon at the end 
                the following: ``, and with respect to loans made on or 
                after July 1, 2016, the revised pay as you earn 
                repayment plan under section 493E shall be the only 
                income contingent repayment plan''; and
                    (B) by striking ``and'' at the end; and
            (2) in subparagraph (E), by inserting ``and only for loans 
        made before July 1, 2016,'' after ``2009,''.

SEC. 508. REPAYE.

    Part G of title IV of the Higher Education Act of 1965 is amended 
by adding at the end the following:

``SEC. 493E. REVISED PAY AS YOU EARN REPAYMENT PLAN.

    ``(a) Definitions.--
            ``(1) Eligible loan.--The term `eligible loan' means any 
        outstanding loan made under part D or part B, except for a 
        defaulted loan, an excepted PLUS loan, or an excepted 
        consolidation loan.
            ``(2) Excepted plus loan; excepted consolidation loan.--The 
        terms `excepted plus loan' and `excepted consolidation loan' 
        have the meanings given such terms in section 493C.
            ``(3) Partial financial hardship.--The term `partial 
        financial hardship'--
                    ``(A) when used with respect to an unmarried 
                borrower--
                            ``(i) means that for such borrower the 
                        annual amount due on the total amount of 
                        eligible loans, as calculated under the 
                        standard repayment plan under section 
                        455(d)(1)(A), based on a 10-year repayment 
                        period, and using the greater of--
                                    ``(I) the amount due on such loans 
                                at the time the borrower entered 
                                repayment for such loans; or
                                    ``(II) the amount due on such loans 
                                at the time the borrower elected the 
                                plan under this section; exceeds
                            ``(ii) 10 percent of the result obtained by 
                        calculating, on at least an annual basis, the 
                        amount by which--
                                    ``(I) the borrower's adjusted gross 
                                income; exceeds
                                    ``(II) 150 percent of the poverty 
                                line applicable to the borrower's 
                                family size as determined under section 
                                673(2) of the Community Services Block 
                                Grant Act (42 U.S.C. 9902(2)); and
                    ``(B) when used with respect to a married 
                borrower--
                            ``(i) means that for such borrower the 
                        annual amount due on the total amount of the 
                        borrower's eligible loans, and, if applicable, 
                        the borrower's spouse's eligible loans, as 
                        calculated under the standard repayment plan 
                        under section 455(d)(1)(A), based on a 10-year 
                        repayment period, and using the greater of--
                                    ``(I) the amount due on such loans 
                                at the time the borrower or borrower's 
                                spouse entered repayment on such loans; 
                                or
                                    ``(II) the amount due on such loans 
                                at the time the borrower or the 
                                borrower's spouse elected the plan 
                                under this section; exceeds
                            ``(ii) 10 percent of the result obtained by 
                        calculating, on at least an annual basis, the 
                        amount by which--
                                    ``(I) the difference between the 
                                borrower's and borrower's spouse's 
                                adjusted gross income; exceeds
                                    ``(II) 150 percent of the poverty 
                                line applicable to the borrower's 
                                family size as determined under section 
                                673(2) of the Community Services Block 
                                Grant Act (42 U.S.C. 9902(2)).
            ``(4) Pay as you earn repayment plan.--The term `Pay As You 
        Earn repayment plan' means the Pay As You Earn repayment plan 
        described in section 685.209 of title 34, Code of Federal 
        Regulations (as in effect on the date of enactment of America 
        First Act).
    ``(b) Revised Pay As You Earn Repayment Plan Authorized.--
Notwithstanding any other provision of this Act, the Secretary shall 
carry out a program that meets the following requirements:
            ``(1) Monthly payment amount.--Except as otherwise provided 
        in this subsection, a borrower of any eligible loan may elect 
        to have the borrower's aggregate monthly payment for all such 
        loans not to exceed the result described in subsection (a)(3) 
        divided by 12.
            ``(2) Adjusted monthly payment amount.--The Secretary 
        adjusts the aggregate monthly payment under paragraph (1), if--
                    ``(A) the borrower's eligible loans are not solely 
                loans made under part D, in which case the Secretary 
                determines the borrower's adjusted monthly payment by 
                multiplying the aggregate monthly payment by the 
                percentage of the total outstanding principal amount of 
                the borrower's eligible loans that are loans made under 
                part D;
                    ``(B) the borrower and borrower's spouse have 
                eligible loans, in which case the Secretary 
                determines--
                            ``(i) each borrower's percentage of the 
                        couple's total eligible loan debt;
                            ``(ii) the adjusted monthly payment for 
                        each borrower by multiplying the calculated 
                        payment by the percentage determined under 
                        clause (i) applicable to the borrower; and
                            ``(iii) if the borrower's loans are held by 
                        multiple holders, the borrower's adjusted 
                        monthly payment for part D loans by multiplying 
                        the adjusted monthly payment determined under 
                        clause (ii) by the percentage of the total 
                        outstanding principal amount of the borrower's 
                        eligible loans that are made under part D;
                    ``(C) the calculated monthly payment amount under 
                paragraph (1) or this paragraph is less than $5.00, in 
                which case the borrower's monthly payment is $0.00; or
                    ``(D) the calculated monthly payment amount under 
                paragraph (1) or this paragraph or is equal to or 
                greater than $5.00 but less than $10.00, in which case 
                the borrower's monthly payment is $10.00.
            ``(3) Accrued interest.--
                    ``(A) In general.--If the borrower's monthly 
                payment amount under paragraph (1) or (2) is not 
                sufficient to pay the accrued interest on the 
                borrower's loan--
                            ``(i) for a subsidized loan made under part 
                        D or the subsidized portion of a Federal Direct 
                        Consolidation Loan--
                                    ``(I) the Secretary does not charge 
                                the borrower the remaining accrued 
                                interest for a period not to exceed 
                                three consecutive years from the 
                                established repayment period start date 
                                on that loan; and
                                    ``(II) after the three-year period, 
                                the Secretary charges the borrower 50 
                                percent of the remaining accrued 
                                interest on such subsidized loan or 
                                portion of a Federal Direct 
                                Consolidation Loan; and
                            ``(ii) for an unsubsidized loan made under 
                        part D, a Federal Direct PLUS Loan made to a 
                        graduate or professional student, or the 
                        unsubsidized portion of a Federal Direct 
                        Consolidation Loan, or for a subsidized loan 
                        made under part D or the subsidized portion of 
                        a Federal Direct Consolidation Loan for which 
                        the borrower has become responsible for 
                        accruing interest in accordance with section 
                        455(q)(2), the Secretary charges the borrower 
                        50 percent of the remaining accrued interest.
                    ``(B) Three-year period defined.--The three-year 
                period described in subparagraph (A)(i)--
                            ``(i) does not include any period during 
                        which the borrower receives an economic 
                        hardship deferment;
                            ``(ii) includes any prior period of 
                        repayment under an income-based repayment plan 
                        under section 493C or the Pay-As-You-Earn 
                        repayment plan; and
                            ``(iii) for a Federal Direct Consolidation 
                        Loan, includes any period in which the 
                        underlying loans were repaid under a plan 
                        described in clause (ii) of this subparagraph.
                    ``(C) Capitalization of accrued interest.--
                            ``(i) Timing.--Accrued interest is 
                        capitalized--
                                    ``(I) when the Secretary determines 
                                that a borrower does not have a partial 
                                financial hardship; or
                                    ``(II) at the time a borrower 
                                leaves the program under this section.
                            ``(ii) Capitalization.--
                                    ``(I) Limitation.--The amount of 
                                accrued interest capitalized under 
                                clause (i)(I) is limited to 10 percent 
                                of the original principal balance at 
                                the time the borrower entered repayment 
                                under the program under this section.
                                    ``(II) Participation.--After the 
                                amount of accrued interest reaches the 
                                limit described in subclause (I), 
                                interest continues to accrue, but is 
                                not capitalized while the borrower 
                                participates in the program under this 
                                section.
            ``(4) Postponement of principal payment.--If the borrower's 
        monthly payment amount is not sufficient to pay any of the 
        principal due, the payment of that principal is postponed until 
        the borrower leaves the program under this section or the 
        Secretary determines the borrower does not have a partial 
        financial hardship.
            ``(5) Selection of different repayment plan.--A borrower 
        who no longer wishes to repay under the program under this 
        section may change to a different repayment plan in accordance 
        with section 455(d)(3).
            ``(6) Payment application and prepayment.--
                    ``(A) In general.--The Secretary applies any 
                payment made under the program under this section in 
                the following order:
                            ``(i) Accrued interest.
                            ``(ii) Collection costs.
                            ``(iii) Late charges.
                            ``(iv) Loan principal.
                    ``(B) Prepayment authorized.--The borrower may 
                prepay all or part of a loan at any time without 
                penalty, as authorized under section 455(d)(1).
                    ``(C) Application of prepayment.--If the prepayment 
                amount equals or exceeds--
                            ``(i) a monthly payment amount of $10.00 or 
                        more under the repayment schedule established 
                        for the loan, the Secretary applies the 
                        prepayment consistent with the requirements of 
                        section 455(d)(1); or
                            ``(ii) a monthly payment amount of $0.00 
                        under the repayment schedule established for 
                        the loan, the Secretary applies the prepayment 
                        consistent with the requirements of 
                        subparagraph (A).
            ``(7) Eligibility documentation, verification, and 
        notifications.--
                    ``(A) Documentation.--
                            ``(i) AGI.--The Secretary requires the 
                        borrower to provide documentation, acceptable 
                        to the Secretary, of the borrower's adjusted 
                        gross income.
                            ``(ii) Other documentation.--If the 
                        borrower's adjusted gross income is not 
                        available, or if the Secretary believes that 
                        the borrower's reported adjusted gross income 
                        does not reasonably reflect the borrower's 
                        current income, the borrower must provide other 
                        documentation to verify income.
                            ``(iii) Family size.--Unless otherwise 
                        directed by the Secretary, the borrower must 
                        annually certify the borrower's family size. If 
                        the borrower fails to certify family size, the 
                        Secretary assumes a family size of one for the 
                        applicable year.
                    ``(B) Notifications.--
                            ``(i) In general.--Each year that the 
                        borrower participates in the program under this 
                        section, the Secretary sends the borrower a 
                        written notification that provides the borrower 
                        with--
                                    ``(I) the borrower's monthly 
                                payment amount, as calculated under 
                                paragraph (1) or (2), and the time 
                                period during which such monthly 
                                payment amount will apply (annual 
                                payment period);
                                    ``(II) information about the 
                                requirement for the borrower to 
                                annually provide the information 
                                described in subparagraph (A), and an 
                                explanation that the borrower will be 
                                notified in advance of the date by 
                                which the Secretary must receive this 
                                information;
                                    ``(III) an explanation of the 
                                consequences, as described under 
                                subparagraph (F), if the borrower does 
                                not provide the required information; 
                                and
                                    ``(IV) information about the 
                                borrower's option to request, at any 
                                time during the borrower's annual 
                                payment period, that the Secretary 
                                recalculate the borrower's monthly 
                                payment amount if the borrower's 
                                financial circumstances have changed 
                                and the income amount that was used to 
                                calculate the borrower's current 
                                monthly payment no longer reflects the 
                                borrower's current income.
                            ``(ii) Recalculation.--If the Secretary 
                        recalculates the borrower's monthly payment 
                        amount based on the borrower's request, the 
                        Secretary sends the borrower a written 
                        notification that includes the information 
                        described in this subparagraph.
                    ``(C) Subsequent years.--
                            ``(i) In general.--For each year following 
                        the first year in which a borrower 
                        participating in the plan under this section, 
                        the Secretary notifies the borrower in writing 
                        of the requirements of subparagraph (A) not 
                        later than 60 days and not earlier than 90 days 
                        prior to the date specified in clause (ii)(I).
                            ``(ii) Contents.--The notification under 
                        clause (i) shall provide the borrower with--
                                    ``(I) the date, no earlier than 35 
                                days before the end of the borrower's 
                                annual payment period, by which the 
                                Secretary must receive all of the 
                                documentation described in subparagraph 
                                (A) (annual deadline); and
                                    ``(II) the consequences if the 
                                Secretary does not receive the 
                                information within 10 days following 
                                the annual deadline specified in the 
                                notice, as described under subparagraph 
                                (F).
                    ``(D) No partial financial hardship.--Each time the 
                Secretary makes a determination that a borrower does 
                not have a partial financial hardship for each year 
                following the first year for which borrower wishes to 
                participate in the program under this section, the 
                Secretary sends the borrower a written notification 
                that unpaid interest will be capitalized in accordance 
                with paragraph (3)(C).
                    ``(E) No documentation provided.--If a borrower who 
                is currently repaying under another repayment plan 
                elects the program under this section but does not 
                provide the documentation described in subparagraph 
                (A), the borrower remains on his or her current 
                repayment plan.
                    ``(F) Alternate repayment plan.--
                            ``(i) In general.--If a borrower who is 
                        currently repaying under the program under this 
                        section elects to participate in such program 
                        for a subsequent year but the Secretary does 
                        not receive the documentation described in 
                        subparagraph (A) not later than 10 days after 
                        the specified annual deadline, the Secretary 
                        removes the borrower from the program under 
                        this section and places the borrower on an 
                        alternative repayment plan under which the 
                        borrower's required monthly payment is the 
                        amount necessary to repay the borrower's 
                        eligible loans in full within the earlier of--
                                    ``(I) 10 years from the date the 
                                borrower begins repayment under the 
                                alternative repayment plan; or
                                    ``(II) the ending date of the 20-
                                year period as described in paragraph 
                                (8)(A)(i)(II).
                            ``(ii) Notification.--If the Secretary 
                        places the borrower on an alternative repayment 
                        plan in accordance with clause (i), the 
                        Secretary sends the borrower a written 
                        notification informing the borrower that--
                                    ``(I) the borrower has been placed 
                                on an alternative repayment plan;
                                    ``(II) the borrower's monthly 
                                payment amount has been recalculated 
                                under clause (i); or
                                    ``(III) the borrower may change to 
                                another repayment plan in accordance 
                                with section 455(d)(3).
                            ``(iii) Return to program.--A borrower who 
                        has been removed from the program under this 
                        section or changes to another repayment plan 
                        may return to the program under this section if 
                        the borrower provides the documentation under 
                        subparagraph (A), necessary for the Secretary 
                        to calculate the borrower's current monthly 
                        payment amount and the monthly amount the 
                        borrower would have been required to pay under 
                        the program during the period when the borrower 
                        was on the alternative repayment plan or any 
                        other repayment plan.
                            ``(iv) Adjustment of monthly payment 
                        amount.--If the Secretary determines that the 
                        total amount of the payments the borrower was 
                        required to make while on the alternative 
                        repayment plan or any other repayment plan are 
                        less than the total amount the borrower would 
                        have been required to make under the program 
                        during that period, the Secretary will adjust 
                        the borrower's monthly payment amount to ensure 
                        that the difference between the two amounts is 
                        paid in full by the end of the 20-year period 
                        described in paragraph (8)(A)(i)(II).
                            ``(v) Application of loan forgiveness.--If 
                        the borrower returns to the program under this 
                        section or changes to the Pay As You Earn 
                        Repayment plan, the income-contingent repayment 
                        plan; or the income-based repayment plan, any 
                        payments that the borrower made under the 
                        alternative repayment plan after the borrower 
                        was removed from the program under this section 
                        will count towards forgiveness under such 
                        program or such other repayment plans.
                            ``(vi) PSLF.--Payments made under the 
                        alternative repayment plan described in clause 
                        (i) will not count towards public service loan 
                        forgiveness under section 455(m).
                            ``(vii) Exception.--The Secretary does not 
                        take the action described in clause (i) if the 
                        Secretary receives the documentation described 
                        in subparagraph (A) more than 10 days after the 
                        specified annual deadline, but is able to 
                        determine the borrower's new monthly payment 
                        amount before the end of the borrower's current 
                        annual payment period.
                            ``(viii) Monthly payment amount.--If the 
                        Secretary receives the documentation described 
                        in subparagraph (A) within 10 days of the 
                        specified annual deadline--
                                    ``(I) the Secretary promptly 
                                determines the borrower's new scheduled 
                                monthly payment amount and maintains 
                                the borrower's current scheduled 
                                monthly payment amount until the new 
                                scheduled monthly payment amount is 
                                determined;
                                    ``(II) if the new monthly payment 
                                amount is less than the borrower's 
                                previously calculated plan monthly 
                                payment amount, and the borrower made 
                                payments at the previously calculated 
                                amount after the end of the most recent 
                                annual payment period--
                                            ``(aa) the Secretary makes 
                                        the appropriate adjustment to 
                                        the borrower's account; and
                                            ``(bb) unless the borrower 
                                        requests otherwise, the 
                                        Secretary applies the excess 
                                        payment amounts made after the 
                                        end of the most recent annual 
                                        payment period in accordance 
                                        with the requirements of 
                                        paragraph (6)(A);
                                    ``(III) if the new monthly payment 
                                amount is equal to or greater than the 
                                borrower's previously calculated 
                                monthly payment amount, and the 
                                borrower made payments at the 
                                previously calculated payment amount 
                                after the end of the most recent annual 
                                payment period, the Secretary does not 
                                make any adjustment to the borrower's 
                                account;
                                    ``(IV) any payments that the 
                                borrower continued to make at the 
                                previously calculated payment amount 
                                after the end of the prior annual 
                                payment period and before the new 
                                monthly payment amount is calculated 
                                are considered to be qualifying 
                                payments for purposes of public service 
                                loan forgiveness under section 455(m), 
                                provided that the payments otherwise 
                                meet the requirements described in such 
                                section 455(m); and
                                    ``(V) the new annual payment period 
                                begins on the day after the end of the 
                                most recent annual payment period.
            ``(8) Loan forgiveness.--
                    ``(A) In general.--
                            ``(i) Cancellation.--The Secretary cancels 
                        any remaining outstanding balance of principal 
                        and accrued interest on a borrower's loans made 
                        under part D that are being repaid under the 
                        program under this section after--
                                    ``(I) the borrower has made the 
                                equivalent of 240 qualifying monthly 
                                payments as defined in subparagraph 
                                (B); and
                                    ``(II) 20 years have elapsed, 
                                beginning on the date determined in 
                                accordance with subparagraph (C).
                            ``(ii) Determination.--The Secretary 
                        determines when a borrower has met the loan 
                        forgiveness requirements under clause (i) and 
                        does not require the borrower to submit a 
                        request for loan forgiveness.
                    ``(B) Qualifying monthly payment defined.--
                            ``(i) In general.--For purposes of this 
                        paragraph, a qualifying monthly payment is--
                                    ``(I) a monthly payment under the 
                                program under this section, including a 
                                monthly payment amount of $0.00, as 
                                provided under paragraph (2)(C); or
                                    ``(II) a month during which the 
                                borrower was not required to make a 
                                payment due to receiving an economic 
                                hardship deferment on his or her 
                                eligible loans that are made under part 
                                D.
                            ``(ii) Defaulted loans excluded.--Any 
                        payments made on a defaulted loan are not 
                        qualifying monthly payments and are not counted 
                        toward the 20-year forgiveness period.
                    ``(C) Determination of beginning date.--For a 
                borrower who qualifies for the program under this 
                section, the beginning date for the 20-year repayment 
                period is--
                            ``(i) for a borrower who has an eligible 
                        Federal Direct Consolidation Loan, the date the 
                        borrower made a qualifying monthly payment on 
                        the consolidation loan, before the date the 
                        borrower qualified for the program under this 
                        section;
                            ``(ii) for a borrower who has one or more 
                        other eligible Direct Loans, the date the 
                        borrower made a qualifying monthly payment on 
                        that loan, before the date the borrower 
                        qualified for the program under this section;
                            ``(iii) for a borrower who did not make a 
                        qualifying monthly payment under clause (i) or 
                        (ii), the date the borrower made a payment on 
                        the loan under the program under this section; 
                        or
                            ``(iv) if the borrower consolidates his or 
                        her eligible loans, the date the borrower made 
                        a qualifying monthly payment on the Federal 
                        Direct Consolidation Loan.
                    ``(D) Notification.--
                            ``(i) Prior to loan cancellation.--Not 
                        later than 6 months prior to the anticipated 
                        date that the borrower will meet the 
                        forgiveness requirements, the Secretary sends 
                        the borrower a written notice that includes--
                                    ``(I) an explanation that the 
                                borrower is approaching the date that 
                                the borrower is expected to meet the 
                                requirements to receive loan 
                                forgiveness;
                                    ``(II) a reminder that the borrower 
                                must continue to make the borrower's 
                                scheduled monthly payments; and
                                    ``(III) general information on the 
                                current treatment of the forgiveness 
                                amount for tax purposes, and 
                                instructions for the borrower to 
                                contact the Internal Revenue Service 
                                for more information.
                            ``(ii) After loan cancellation.--After 
                        determining that a borrower has satisfied the 
                        loan forgiveness requirements, the Secretary--
                                    ``(I) notifies the borrower that 
                                the borrower's obligation on the loans 
                                is satisfied;
                                    ``(II) provides the borrower with 
                                the information described in clause 
                                (i)(III); and
                                    ``(III) returns to the sender any 
                                payment received on a loan after loan 
                                forgiveness has been granted.''.

SEC. 509. PUBLIC SERVICE LOAN FORGIVENESS.

    Section 455(m)(2) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(m)(2)) is amended--
            (1) by striking ``After'' and inserting the following:
                    ``(A) In general.--Except as provided under 
                subparagraph (B), after''; and
            (2) by adding at the end the following:
                    ``(B) Undergraduate cap.--The Secretary shall not 
                cancel under this paragraph an amount greater than 
                $57,500 of principal and interest due on an eligible 
                Federal Direct Loan made to a borrower for a program of 
                undergraduate education''.
                                 <all>
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