Puerto Rico Recovery Act of 2016

To provide for the adjustment of the debts of the Commonwealth of Puerto Rico, and for other purposes. 1. Short title This Act may be cited as Puerto Rico Recovery Act of 2016 2. Table of contents The table of contents for this Act is as follows: Sec. 1. Short title. Sec. 2. Table of contents. TITLE I—Tax provisions Sec. 101. Puerto Rico residents eligible for earned income tax credit. Sec. 102. Equitable treatment for residents of Puerto Rico with respect to the refundable portion of the child tax credit. TITLE II—Health care parity Subtitle A—Medicaid Sec. 201. Elimination of general Medicaid funding limitations ( cap Sec. 202. Elimination of specific Federal medical assistance percentage (FMAP) limitation for territories. Sec. 203. Application of Medicaid waiver authority to all of the territories. Sec. 204. Application of 100 percent Federal poverty line (FPL) limitation to territories. Sec. 205. Permitting Medicaid DSH allotments for territories. Subtitle B—Medicare Sec. 211. Calculation of Medicare DSH payments for IPPS hospitals in Puerto Rico. Sec. 212. Application of part B deemed enrollment process to residents of Puerto Rico; special enrollment period and limit on late enrollment penalties. Sec. 213. Puerto Rico practice expense GPCI improvement. Sec. 214. Adjustment in benchmark for low base payment counties in Puerto Rico. Sec. 215. Eliminating exclusion of part D eligible individuals residing in territories from eligibility for premium and cost-sharing subsidies. Sec. 216. Report on treatment of territories under Medicare part D. Subtitle C—Miscellaneous Sec. 221. Report on exclusion of territories from Exchanges. I Tax provisions 101. Puerto Rico residents eligible for earned income tax credit (a) In general Section 32 (n) Residents of Puerto Rico (1) In general In the case of residents of Puerto Rico— (A) the United States shall be treated as including Puerto Rico for purposes of subsections (c)(1)(A)(ii)(I) and (c)(3)(C), (B) subsection (c)(1)(D) shall not apply to nonresident alien individuals who are residents of Puerto Rico, and (C) adjusted gross income and gross income shall be computed without regard to section 933 for purposes of subsections (a)(2)(B) and (c)(2)(A)(i). (2) Limitation The credit allowed under this section by reason of this subsection for any taxable year shall not exceed the amount, determined under regulations or other guidance promulgated by the Secretary, that a similarly situated taxpayer would receive if residing in a State. . (b) Child tax credit not reduced Subclause (II) of section 24(d)(1)(B)(ii) of such Code is amended by inserting before the period (determined without regard to section 32(n) in the case of residents of Puerto Rico) (c) Effective date The amendment made shall apply to taxable years beginning after December 31, 2015. 102. Equitable treatment for residents of Puerto Rico with respect to the refundable portion of the child tax credit (a) In general Section 24(d)(1) or section 933 section 112 (b) Effective date The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2015. II Health care parity A Medicaid 201. Elimination of general Medicaid funding limitations ( cap (a) In general Section 1108 of the Social Security Act ( 42 U.S.C. 1308 (1) in subsection (f), in the matter before paragraph (1), by striking subsection (g) subsections (g) and (h) (2) in subsection (g)(2), in the matter before subparagraph (A), by inserting and subsection (h) paragraphs (3) and (5) (3) by adding at the end the following new subsection: (h) Sunset of Medicaid funding limitations for Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa Subsections (f) and (g) shall not apply to Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa beginning with fiscal year 2017. . (b) Conforming amendments (1) Section 1902(j) of the Social Security Act ( 42 U.S.C. 1396a(j) , the limitation in section 1108(f), (2) Section 1903(u) of the Social Security Act ( 42 U.S.C. 1396b(u) (3) Section 1323(c)(1) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18043(c)(1) 2019 2016 (c) Effective date The amendments made by this section shall apply beginning with fiscal year 2017. 202. Elimination of specific Federal medical assistance percentage (FMAP) limitation for territories Section 1905 of the Social Security Act ( 42 U.S.C. 1396d (1) in subsection (b)(2), by inserting for fiscal years before fiscal year 2017 American Samoa (2) in subsection (y)(1), in the matter preceding subparagraph (A)— (A) by inserting , for fiscal years before fiscal year 2017, is one of the (B) by inserting and, for fiscal year 2017 and subsequent fiscal years, is one of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, or American Samoa, the District of Columbia 203. Application of Medicaid waiver authority to all of the territories (a) In general Section 1902(j) of the Social Security Act ( 42 U.S.C. 1396a(j) (1) by striking American Samoa and the Northern Mariana Islands Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa (2) by striking American Samoa or the Northern Mariana Islands Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, or American Samoa (3) by inserting (1) (j) (4) by inserting except as otherwise provided in this subsection, Notwithstanding any other requirement of this title (5) by adding at the end the following: (2) The Secretary may not waive under this subsection the requirement of subsection (a)(10)(A)(i)(IX) (relating to coverage of adults formerly under foster care) with respect to any territory. . (b) Effective date The amendments made by this section shall apply beginning October 1, 2016. 204. Application of 100 percent Federal poverty line (FPL) limitation to territories (a) In general Section 1902 of the Social Security Act ( 42 U.S.C. 1396a (1) in subsection (a)(10)(A)(i)(VIII), by inserting (or, subject to subsection (j), 100 percent in the case of Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa) 133 percent (2) in subsection (j), as amended by section 203, by adding at the end the following new paragraph: (3) (A) Subject to subparagraph (B), Federal financial participation shall not be available to Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, or American Samoa for medical assistance for an individual whose family income exceeds 100 percent of the official poverty line for a family of the size involved, except in the case of individuals qualifying for medical assistance under subsection (a)(10)(A)(i)(IX). (B) The Secretary may, under paragraph (1) or section 1115, waive the limitation under subparagraph (A) in the case of a territory other than Puerto Rico. In carrying out this subparagraph, the Secretary shall take into account the eligibility levels established under the State plan of the territory involved before the date of the enactment of this paragraph. . (b) Not applying 5 percent disregard Section 1902(e)(14)(I) of the Social Security Act ( 42 U.S.C. 1396b(e)(14)(I) The previous sentence shall only apply to a State that is one of the 50 States or the District of Columbia. . (c) Effective date The amendments made by this section shall apply with respect to eligibility determinations made with respect to items and services furnished on or after October 1, 2016. 205. Permitting Medicaid DSH allotments for territories Section 1923(f) of the Social Security Act ( 42 U.S.C. 1396 (1) in paragraph (6), by adding at the end the following new subparagraph: (C) Territories (i) Fiscal year 2017 For fiscal year 2017, with respect to the territories of Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa, the DSH allotment determined for each such territory shall bear the same ratio to $150,000,000 as the ratio of the number of individuals who are low-income or uninsured and residing in each such respective territory (as estimated from time to time by the Secretary) bears to the sums of the number of such individuals residing in all of the territories. (ii) Subsequent fiscal year For each subsequent fiscal year, the DSH allotment for each such territory is subject to an increase or reduction in accordance with paragraphs (3) and (7). ; (2) in paragraph (7)(A), by striking clause (iv) and redesignating clause (v) as clause (iv); and (3) in paragraph (9), by inserting before the period at the end the following: , and includes, beginning with fiscal year 2017, Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa B Medicare 211. Calculation of Medicare DSH payments for IPPS hospitals in Puerto Rico Section 1886(d)(9)(D)(iii) of the Social Security Act ( 42 U.S.C. 1395ww(d)(9)(D)(iii) (iii) Subparagraph (F) (relating to disproportionate share payments), including application of subsection (r), except that for this purpose— (I) the sum described in clause (ii) of this subparagraph shall be substituted for the sum referred to in paragraph (5)(F)(ii)(I); and (II) for discharges occurring on or after October 1, 2015, subclause (I) of paragraph (5)(F)(vi) shall be applied by substituting for the numerator described in such subclause the number of subsection (d) Puerto Rico hospital’s patient days for the cost reporting period involved which were made up of patients who (for such days) were entitled to benefits under part A of this title and were— (aa) entitled to supplementary security income benefits (excluding any State supplementation) under title XVI of this Act; (bb) eligible for medical assistance under a State plan under title XIX; or (cc) receiving aid or assistance under any plan of the State approved under title I, X, XIV, or XVI. . 212. Application of part B deemed enrollment process to residents of Puerto Rico; special enrollment period and limit on late enrollment penalties (a) Application of part B deemed enrollment process to residents of Puerto Rico Section 1837(f)(3) of the Social Security Act ( 42 U.S.C. 1395p(f)(3) , exclusive of Puerto Rico (b) Effective date The amendment made by subsection (a) shall apply to individuals whose initial enrollment period under section 1837(d) of the Social Security Act begins on or after the first day of the effective month, specified by the Secretary of Health and Human Services under section 1839(j)(1)(C) of such Act, as added by subsection (c)(2). (c) Transition providing special enrollment period and limit on late enrollment penalties for certain Medicare beneficiaries Section 1839 of the Social Security Act ( 42 U.S.C. 1395r (1) in the first sentence of subsection (b), by inserting subject to section 1839(j)(2), subsection (i)(4) or (l) of section 1837, (2) by adding at the end the following new subsection: (j) Special rules for certain residents of Puerto Rico (1) Special enrollment period, coverage period for residents who are eligible but not enrolled (A) In general In the case of a transition individual (as defined in paragraph (3)) who is not enrolled under this part as of the day before the first day of the effective month (as defined in subparagraph (C)), the Secretary shall provide for a special enrollment period under section 1837 of 7 months beginning with such effective month during which the individual may be enrolled under this part. (B) Coverage period In the case of such an individual who enrolls during such special enrollment period, the coverage period under section 1838 shall begin on the first day of the second month after the month in which the individual enrolls. (C) Effective month defined In this section, the term effective month (2) Reduction in late enrollment penalties for current enrollees and individuals enrolling during transition (A) In general In the case of a transition individual who is enrolled under this part as of the day before the first day of the effective month or who enrolls under this part on or after the date of the enactment of this subsection but before the end of the special enrollment period under paragraph (1)(A), the amount of the late enrollment penalty imposed under section 1839(b) shall be recalculated by reducing the penalty to 15 percent of the penalty otherwise established. (B) Application Subparagraph (A) shall be applied in the case of a transition individual who— (i) is enrolled under this part as of the month before the effective month, for premiums for months beginning with such effective month; or (ii) enrolls under this part on or after the date of the enactment of this Act and before the end of the special enrollment period under paragraph (1)(A), for premiums for months during the coverage period under this part which occur during or after the effective month. (C) Loss of reduction if individual terminates enrollment Subparagraph (A) shall not apply to a transition individual if the individual terminates enrollment under this part after the end of the special enrollment period under paragraph (1). (3) Transition individual defined In this section, the term transition individual . 213. Puerto Rico practice expense GPCI improvement Section 1848(e)(1) of the Social Security Act ( 42 U.S.C. 1395w–4(e)(1) (1) in subparagraph (A), by striking and (I) (I), and (J) (2) by adding at the end the following new subparagraph: (J) Floor for practice expense index for services furnished in Puerto Rico (i) In general For purposes of payment for services furnished in Puerto Rico in a year (beginning with 2016), after calculating the practice expense index in subparagraph (A)(i) for Puerto Rico, if such index is below the reference index (as defined in clause (ii)) for the year, the Secretary shall increase such index for Puerto Rico to equal the value of the reference index for the year. The preceding sentence shall not be applied in a budget neutral manner. (ii) Reference index defined In this subparagraph, the term reference index . 214. Adjustment in benchmark for low base payment counties in Puerto Rico Section 1853(n) of the Social Security Act ( 42 U.S.C. 1395w–23(n) (1) in paragraph (1), by striking and (5) , (5), and (6) (2) in paragraph (4), by striking In no case Subject to paragraph (6), in no case (3) by adding at the end the following new paragraph: (6) Special rules for blended benchmark amount for territories (A) In general Subject to paragraph (2), the blended benchmark amount for an area in a territory for a year (beginning with 2016) shall not be less than 80 percent of the national average of the base payment amounts specified in subparagraph (2)(E) for such year for areas within the 50 States and the District of Columbia. (B) Limitation In no case shall the blended benchmark amount for an area in a territory for a year under subparagraph (A) exceed the lowest blended benchmark amount for any area within the 50 States and the District of Columbia for such year. . 215. Eliminating exclusion of part D eligible individuals residing in territories from eligibility for premium and cost-sharing subsidies (a) In general Section 1860D–14(a)(3) of the Social Security Act ( 42 U.S.C. 1395w–114(a)(3) (1) in subparagraph (A), in the matter preceding clause (i), by striking subject to subparagraph (F), (2) in subparagraph (B)(v), in the matter preceding subclause (I), by striking Subject to subparagraph (F), the Secretary The Secretary (3) in subparagraph (C), by adding at the end the following new sentence: In the case of an individual who is not a resident of the 50 States or the District of Columbia, the poverty line (as such term is defined in clause (ii)) that shall apply to such individual shall be the poverty line for the 48 contiguous States and the District of Columbia. (4) by striking subparagraph (F). (b) Application of Medicaid provisions Section 1935 of the Social Security Act ( 42 U.S.C. 1396u–5 (1) in subsection (a), by striking subject to subsection (e) (2) by striking subsection (e). (c) Conforming amendment Section 1108(f) of the Social Security Act ( 42 U.S.C. 1308(f) and section 1935(e)(1)(B) (d) Effective date The amendments made by this section shall take effect on January 1, 2017. 216. Report on treatment of territories under Medicare part D Paragraph (4) of section 1935(e) of the Social Security Act ( 42 U.S.C. 1396u–5(e) (4) Report on application of subsection (A) In general Not later than May 1, 2018, the Secretary shall submit to Congress a report on the application of this subsection during the period beginning with fiscal year 2006 and ending with December 31, 2017. (B) Information to be included in report Such report shall include— (i) program guidance issued by the Secretary to implement this subsection; (ii) for each of Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa, information on the increased amount under paragraph (3) and how the territory has applied such amount, including the territory’s program design, expenditures, and number of individuals (and dual-eligible individuals) assisted; and (iii) a description of the differences between how such territories are treated under part D of title XVIII and under this title compared with the treatment of the 50 States and the District of Columbia under such part and this title for different fiscal years within the period covered under the report. (C) Recommendations Such report shall include recommendations for improving prescription drug coverage for low-income individuals in each territory identified in subparagraph (B)(ii), including recommendations regarding each of the following alternative approaches: (i) Adjusting the aggregate amount specified in paragraph (3)(B). (ii) Allowing residents of the territories to be subsidy eligible individuals under section 1860D–14, notwithstanding subsection (a)(3)(F) of such section, or providing substantially equivalent low-income prescription drug subsidies to such residents. . C Miscellaneous 221. Report on exclusion of territories from Exchanges (a) In general Not later than February 1, 2018, the Secretary of Health and Human Services shall submit to Congress a report that details the adverse impacts in each territory from the practical exclusion of the territories from the provisions of part II of subtitle D of title I of the Patient Protection and Affordable Care Act insofar as such provisions provide for the establishment of an American Health Benefit Exchange or the administration of a federally facilitated Exchange in each State and in the District of Columbia for the purpose of making health insurance more affordable and accessible for individuals and small businesses. (b) Information in report The report shall include information on the following: (1) An estimate of the total number of uninsured and underinsured individuals residing in each territory with respect to health insurance coverage. (2) A description of the number of health insurance issuers in each territory and the health insurance plans these issuers offer. (3) An estimate of the number of individuals residing in each territory who are denied premium and cost-sharing assistance that would otherwise be available to them for obtaining health insurance coverage through an Exchange if they resided in one of the 50 States or in the District of Columbia. (4) An estimate of the amount of Federal assistance described in paragraph (3) that is not being made available to residents of each territory. (5) An estimate of the number of small employers in each territory that would be eligible to purchase health insurance coverage through a Small Business Health Options Program (SHOP) Marketplace that would operate as part of an Exchange if the employers were in one of the 50 States or in the District of Columbia.

Summary: Puerto Rico Recovery Act of 2016 This bill amends the Internal Revenue Code to make citizens of Puerto Rico eligible for the federal earned income tax credit and allow them to claim the refundable portion of the child tax credit on the same basis as U.S. taxpayers. Title XIX (Medicaid) of the Social Security Act (SSAct) is amended to terminate the limitations on general Medicaid funding, as well as the specific federal medical assistance percentage (FMAP, or matching rate), beginning FY2017 for Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa (territories). The authority to waive or modify certain Medicaid requirements in American Samoa and the Northern Mariana Islands shall now extend as well to Puerto Rico, the U.S. Virgin Islands, and Guam. Federal financial participation shall not be available to a territory, however, for medical assistance (with certain exceptions) for an individual whose family income exceeds 100% percent of the official poverty line. The bill prescribes a formula for Medicaid disproportionate share hospital (DSH) payments to the territories beginning FY2017, and revises a formula element for calculating Medicare DSH payments under the inpatient prospective payment system (IPPS) for subsection (d) hospitals in Puerto Rico. (Generally, a subsection [d] hospital is an acute care hospital, particularly one that receives payments under Medicare's IPPS when providing covered inpatient services to eligible beneficiaries.) The bill repeals the exclusion of Puerto Rico residents from deemed enrollment under part B (Supplementary Medical Insurance Benefits), permitting them now to be deemed enrolled. The Department of Health and Human Services (HHS) shall extend such residents a special seven-month enrollment period. The late enrollment penalty shall be recalculated to 15% of the usual penalty for residents of Puerto Rico who are current enrollees or who enroll during a specified transition period. HHS shall increase the geographic adjustment practice expense index for Puerto Rico. The blended benchmark component of payments to Medicare+Choice organizations for an area in a territory under SSAct title XVIII part C (Medicare+Choice) shall be at least 80% of the national average of specified base payment amounts for the year (but never more than the lowest blended benchmark amount). The bill also eliminates the exclusion from eligibility for premium and cost-sharing subsidies of territory residents otherwise eligible for Medicare part D (Voluntary Prescription Drug Benefit Program) benefits. HHS shall report to Congress on: the treatment of territories under Medicare part D, and the adverse impacts in each territory from practical exclusion from the establishment of American Health Benefit Exchanges or the administration of a federally facilitated exchange.