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•AMDT. NO. 2786 
‘‘(I) the list of patents that the 
subsection 
(k) 
applicant 
believes 
should be the subject of an action for 
patent infringement under paragraph 
(6); and 
‘‘(II) the list of patents, in ac-
cordance with clause (ii), that the ref-
erence product sponsor believes should 
be the subject of an action for patent 
infringement under paragraph (6). 
‘‘(ii) NUMBER OF PATENTS LISTED BY 
REFERENCE PRODUCT SPONSOR.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), the number of patents 
listed by the reference product spon-
sor under clause (i)(II) may not ex-
ceed the number of patents listed by 
the subsection (k) applicant under 
clause (i)(I). 
‘‘(II) EXCEPTION.—If a sub-
section (k) applicant does not list any 
patent under clause (i)(I), the ref-
erence product sponsor may list 1 pat-
ent under clause (i)(II). 
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•AMDT. NO. 2786 
‘‘(6) IMMEDIATE PATENT INFRINGEMENT AC-
TION.— 
‘‘(A) ACTION IF AGREEMENT ON PATENT 
LIST.—If the subsection (k) applicant and the 
reference product sponsor agree on patents as 
described in paragraph (4), not later than 30 
days after such agreement, the reference prod-
uct sponsor shall bring an action for patent in-
fringement with respect to each such patent. 
‘‘(B) ACTION IF NO AGREEMENT ON PAT-
ENT LIST.—If the provisions of paragraph (5) 
apply to the parties as described in paragraph 
(4)(B), not later than 30 days after the ex-
change of lists under paragraph (5)(B), the ref-
erence product sponsor shall bring an action for 
patent infringement with respect to each patent 
that is included on such lists. 
‘‘(C) NOTIFICATION AND PUBLICATION OF 
COMPLAINT.— 
‘‘(i) NOTIFICATION TO SECRETARY.— 
Not later than 30 days after a complaint 
is served to a subsection (k) applicant in 
an action for patent infringement described 
under this paragraph, the subsection (k) 
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•AMDT. NO. 2786 
applicant shall provide the Secretary with 
notice and a copy of such complaint. 
‘‘(ii) PUBLICATION BY SECRETARY.— 
The Secretary shall publish in the Federal 
Register notice of a complaint received 
under clause (i). 
‘‘(7) NEWLY ISSUED OR LICENSED PATENTS.— 
In the case of a patent that— 
‘‘(A) is issued to, or exclusively licensed by, 
the reference product sponsor after the date 
that the reference product sponsor provided the 
list to the subsection (k) applicant under para-
graph (3)(A); and 
‘‘(B) the reference product sponsor reason-
ably believes that, due to the issuance of such 
patent, a claim of patent infringement could 
reasonably be asserted by the reference product 
sponsor if a person not licensed by the ref-
erence product sponsor engaged in the making, 
using, offering to sell, selling, or importing into 
the United States of the biological product that 
is the subject of the subsection (k) application, 
not later than 30 days after such issuance or licens-
ing, the reference product sponsor shall provide to 
the subsection (k) applicant a supplement to the list 
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•AMDT. NO. 2786 
provided by the reference product sponsor under 
paragraph (3)(A) that includes such patent, not 
later than 30 days after such supplement is pro-
vided, the subsection (k) applicant shall provide a 
statement to the reference product sponsor in ac-
cordance with paragraph (3)(B), and such patent 
shall be subject to paragraph (8). 
‘‘(8) NOTICE OF COMMERCIAL MARKETING AND 
PRELIMINARY INJUNCTION.— 
‘‘(A) 
NOTICE
OF
COMMERCIAL
MAR-
KETING.—The subsection (k) applicant shall 
provide notice to the reference product sponsor 
not later than 180 days before the date of the 
first commercial marketing of the biological 
product licensed under subsection (k). 
‘‘(B) PRELIMINARY
INJUNCTION.—After 
receiving the notice under subparagraph (A) 
and before such date of the first commercial 
marketing of such biological product, the ref-
erence product sponsor may seek a preliminary 
injunction prohibiting the subsection (k) appli-
cant from engaging in the commercial manufac-
ture or sale of such biological product until the 
court decides the issue of patent validity, en-
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•AMDT. NO. 2786 
forcement, and infringement with respect to any 
patent that is— 
‘‘(i) included in the list provided by 
the reference product sponsor under para-
graph (3)(A) or in the list provided by the 
subsection (k) applicant under paragraph 
(3)(B); and 
‘‘(ii) not included, as applicable, on— 
‘‘(I) the list of patents described 
in paragraph (4); or 
‘‘(II) the lists of patents de-
scribed in paragraph (5)(B). 
‘‘(C) REASONABLE COOPERATION.—If the 
reference product sponsor has sought a prelimi-
nary injunction under subparagraph (B), the 
reference product sponsor and the subsection 
(k) applicant shall reasonably cooperate to ex-
pedite such further discovery as is needed in 
connection with the preliminary injunction mo-
tion. 
‘‘(9) LIMITATION ON DECLARATORY JUDGMENT 
ACTION.— 
‘‘(A) SUBSECTION (k) APPLICATION PRO-
VIDED.—If a subsection (k) applicant provides 
the application and information required under 
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•AMDT. NO. 2786 
paragraph (2)(A), neither the reference product 
sponsor nor the subsection (k) applicant may, 
prior to the date notice is received under para-
graph (8)(A), bring any action under section 
2201 of title 28, United States Code, for a dec-
laration of infringement, validity, or enforce-
ability of any patent that is described in clauses 
(i) and (ii) of paragraph (8)(B). 
‘‘(B) SUBSEQUENT
FAILURE
TO
ACT
BY 
SUBSECTION (k) APPLICANT.—If a subsection 
(k) applicant fails to complete an action re-
quired of the subsection (k) applicant under 
paragraph (3)(B)(ii), paragraph (5), paragraph 
(6)(C)(i), paragraph (7), or paragraph (8)(A), 
the reference product sponsor, but not the sub-
section (k) applicant, may bring an action 
under section 2201 of title 28, United States 
Code, for a declaration of infringement, validity, 
or enforceability of any patent included in the 
list described in paragraph (3)(A), including as 
provided under paragraph (7). 
‘‘(C) SUBSECTION (k) APPLICATION
NOT 
PROVIDED.—If a subsection (k) applicant fails 
to provide the application and information re-
quired under paragraph (2)(A), the reference 
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•AMDT. NO. 2786 
product sponsor, but not the subsection (k) ap-
plicant, may bring an action under section 2201 
of title 28, United States Code, for a declara-
tion of infringement, validity, or enforceability 
of any patent that claims the biological product 
or a use of the biological product.’’. 
(b) DEFINITIONS.—Section 351(i) of the Public 
Health Service Act (42 U.S.C. 262(i)) is amended— 
(1) by striking ‘‘In this section, the term ‘bio-
logical product’ means’’ and inserting the following: 
‘‘In this section: 
‘‘(1) The term ‘biological product’ means’’; 
(2) in paragraph (1), as so designated, by in-
serting ‘‘protein (except any chemically synthesized 
polypeptide),’’ after ‘‘allergenic product,’’; and 
(3) by adding at the end the following: 
‘‘(2) The term ‘biosimilar’ or ‘biosimilarity’, in 
reference to a biological product that is the subject 
of an application under subsection (k), means— 
‘‘(A) that the biological product is highly 
similar to the reference product notwith-
standing minor differences in clinically inactive 
components; and 
‘‘(B) there are no clinically meaningful dif-
ferences between the biological product and the 
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•AMDT. NO. 2786 
reference product in terms of the safety, purity, 
and potency of the product. 
‘‘(3) The term ‘interchangeable’ or ‘inter-
changeability’, in reference to a biological product 
that is shown to meet the standards described in 
subsection (k)(4), means that the biological product 
may be substituted for the reference product without 
the intervention of the health care provider who pre-
scribed the reference product. 
‘‘(4) The term ‘reference product’ means the 
single biological product licensed under subsection 
(a) against which a biological product is evaluated in 
an application submitted under subsection (k).’’. 
(c) CONFORMING AMENDMENTS RELATING TO PAT-
ENTS.— 
(1) PATENTS.—Section 271(e) of title 35, 
United States Code, is amended— 
(A) in paragraph (2)— 
(i) in subparagraph (A), by striking 
‘‘or’’ at the end; 
(ii) in subparagraph (B), by adding 
‘‘or’’ at the end; and 
(iii) by inserting after subparagraph 
(B) the following: 
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•AMDT. NO. 2786 
‘‘(C)(i) with respect to a patent that is identi-
fied in the list of patents described in section 
351(l)(3) of the Public Health Service Act (including 
as provided under section 351(l)(7) of such Act), an 
application seeking approval of a biological product, 
or 
‘‘(ii) if the applicant for the application fails to 
provide the application and information required 
under section 351(l)(2)(A) of such Act, an applica-
tion seeking approval of a biological product for a 
patent that could be identified pursuant to section 
351(l)(3)(A)(i) of such Act,’’; and 
(iv) in the matter following subpara-
graph (C) (as added by clause (iii)), by 
striking ‘‘or veterinary biological product’’ 
and inserting ‘‘, veterinary biological prod-
uct, or biological product’’; 
(B) in paragraph (4)— 
(i) in subparagraph (B), by— 
(I) striking ‘‘or veterinary bio-
logical product’’ and inserting ‘‘, vet-
erinary biological product, or biologi-
cal product’’; and 
(II) striking ‘‘and’’ at the end; 
(ii) in subparagraph (C), by— 
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•AMDT. NO. 2786 
(I) striking ‘‘or veterinary bio-
logical product’’ and inserting ‘‘, vet-
erinary biological product, or biologi-
cal product’’; and 
(II) striking the period and in-
serting ‘‘, and’’; 
(iii) by inserting after subparagraph 
(C) the following: 
‘‘(D) the court shall order a permanent injunc-
tion prohibiting any infringement of the patent by 
the biological product involved in the infringement 
until a date which is not earlier than the date of the 
expiration of the patent that has been infringed 
under paragraph (2)(C), provided the patent is the 
subject of a final court decision, as defined in sec-
tion 351(k)(6) of the Public Health Service Act, in 
an action for infringement of the patent under sec-
tion 351(l)(6) of such Act, and the biological prod-
uct has not yet been approved because of section 
351(k)(7) of such Act.’’; and 
(iv) in the matter following subpara-
graph (D) (as added by clause (iii)), by 
striking ‘‘and (C)’’ and inserting ‘‘(C), and 
(D)’’; and 
(C) by adding at the end the following: 
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•AMDT. NO. 2786 
‘‘(6)(A) Subparagraph (B) applies, in lieu of para-
graph (4), in the case of a patent— 
‘‘(i) that is identified, as applicable, in the list 
of patents described in section 351(l)(4) of the Pub-
lic Health Service Act or the lists of patents de-
scribed in section 351(l)(5)(B) of such Act with re-
spect to a biological product; and 
‘‘(ii) for which an action for infringement of the 
patent with respect to the biological product— 
‘‘(I) was brought after the expiration of 
the 30-day period described in subparagraph 
(A) or (B), as applicable, of section 351(l)(6) of 
such Act; or 
‘‘(II) was brought before the expiration of 
the 30-day period described in subclause (I), 
but which was dismissed without prejudice or 
was not prosecuted to judgment in good faith. 
‘‘(B) In an action for infringement of a patent de-
scribed in subparagraph (A), the sole and exclusive remedy 
that may be granted by a court, upon a finding that the 
making, using, offering to sell, selling, or importation into 
the United States of the biological product that is the sub-
ject of the action infringed the patent, shall be a reason-
able royalty. 
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•AMDT. NO. 2786 
‘‘(C) The owner of a patent that should have been 
included in the list described in section 351(l)(3)(A) of 
the Public Health Service Act, including as provided under 
section 351(l)(7) of such Act for a biological product, but 
was not timely included in such list, may not bring an 
action under this section for infringement of the patent 
with respect to the biological product.’’. 
(2) CONFORMING
AMENDMENT
UNDER
TITLE 
28.—Section 2201(b) of title 28, United States 
Code, is amended by inserting before the period the 
following: ‘‘, or section 351 of the Public Health 
Service Act’’. 
(d) CONFORMING AMENDMENTS UNDER THE FED-
ERAL FOOD, DRUG, AND COSMETIC ACT.— 
(1) CONTENT
AND
REVIEW
OF
APPLICA-
TIONS.—Section 505(b)(5)(B) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355(b)(5)(B)) is 
amended by inserting before the period at the end 
of the first sentence the following: ‘‘or, with respect 
to an applicant for approval of a biological product 
under section 351(k) of the Public Health Service 
Act, any necessary clinical study or studies’’. 
(2) NEW ACTIVE INGREDIENT.—Section 505B 
of the Federal Food, Drug, and Cosmetic Act (21 
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•AMDT. NO. 2786 
spect to such application (within the meaning of 
such section 351) if such application were submitted 
under subsection (k) of such section 351. 
(4) 
DEEMED
APPROVED
UNDER
SECTION 
351.—An approved application for a biological prod-
uct under section 505 of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355) shall be deemed 
to be a license for the biological product under such 
section 351 on the date that is 10 years after the 
date of enactment of this Act. 
(5) DEFINITIONS.—For purposes of this sub-
section, the term ‘‘biological product’’ has the mean-
ing given such term under section 351 of the Public 
Health Service Act (42 U.S.C. 262) (as amended by 
this Act). 
(f) FOLLOW-ON BIOLOGICS USER FEES.— 
(1) DEVELOPMENT OF USER FEES FOR BIO-
SIMILAR BIOLOGICAL PRODUCTS.— 
(A) IN
GENERAL.—Beginning not later 
than October 1, 2010, the Secretary shall de-
velop recommendations to present to Congress 
with respect to the goals, and plans for meeting 
the goals, for the process for the review of bio-
similar biological product applications sub-
mitted under section 351(k) of the Public 
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•AMDT. NO. 2786 
Health Service Act (as added by this Act) for 
the first 5 fiscal years after fiscal year 2012. In 
developing such recommendations, the Sec-
retary shall consult with— 
(i) the Committee on Health, Edu-
cation, Labor, and Pensions of the Senate; 
(ii) the Committee on Energy and 
Commerce of the House of Representa-
tives; 
(iii) scientific and academic experts; 
(iv) health care professionals; 
(v) representatives of patient and con-
sumer advocacy groups; and 
(vi) the regulated industry. 
(B) PUBLIC
REVIEW
OF
RECOMMENDA-
TIONS.—After negotiations with the regulated 
industry, the Secretary shall— 
(i) present the recommendations de-
veloped under subparagraph (A) to the 
Congressional committees specified in such 
subparagraph; 
(ii) publish such recommendations in 
the Federal Register; 
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•AMDT. NO. 2786 
(iii) provide for a period of 30 days 
for the public to provide written comments 
on such recommendations; 
(iv) hold a meeting at which the pub-
lic may present its views on such rec-
ommendations; and 
(v) after consideration of such public 
views and comments, revise such rec-
ommendations as necessary. 
(C) 
TRANSMITTAL
OF
RECOMMENDA-
TIONS.—Not later than January 15, 2012, the 
Secretary shall transmit to Congress the revised 
recommendations under subparagraph (B), a 
summary of the views and comments received 
under such subparagraph, and any changes 
made to the recommendations in response to 
such views and comments. 
(2) ESTABLISHMENT
OF
USER
FEE
PRO-
GRAM.—It is the sense of the Senate that, based on 
the recommendations transmitted to Congress by the 
Secretary pursuant to paragraph (1)(C), Congress 
should authorize a program, effective on October 1, 
2012, for the collection of user fees relating to the 
submission of biosimilar biological product applica-
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•AMDT. NO. 2786 
tions under section 351(k) of the Public Health 
Service Act (as added by this Act). 
(3) TRANSITIONAL PROVISIONS FOR USER FEES 
FOR BIOSIMILAR BIOLOGICAL PRODUCTS.— 
(A) APPLICATION OF THE PRESCRIPTION 
DRUG
USER
FEE
PROVISIONS.—Section 
735(1)(B) of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 379g(1)(B)) is amended 
by striking ‘‘section 351’’ and inserting ‘‘sub-
section (a) or (k) of section 351’’. 
(B) EVALUATION OF COSTS OF REVIEWING 
BIOSIMILAR
BIOLOGICAL
PRODUCT
APPLICA-
TIONS.—During the period beginning on the 
date of enactment of this Act and ending on 
October 1, 2010, the Secretary shall collect and 
evaluate data regarding the costs of reviewing 
applications for biological products submitted 
under section 351(k) of the Public Health Serv-
ice Act (as added by this Act) during such pe-
riod. 
(C) AUDIT.— 
(i) IN GENERAL.—On the date that is 
2 years after first receiving a user fee ap-
plicable to an application for a biological 
product under section 351(k) of the Public 
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•AMDT. NO. 2786 
Health Service Act (as added by this Act), 
and on a biennial basis thereafter until Oc-
tober 1, 2013, the Secretary shall perform 
an audit of the costs of reviewing such ap-
plications under such section 351(k). Such 
an audit shall compare— 
(I) the costs of reviewing such 
applications 
under 
such 
section 
351(k) to the amount of the user fee 
applicable to such applications; and 
(II)(aa) such ratio determined 
under subclause (I); to 
(bb) the ratio of the costs of re-
viewing applications for biological 
products under section 351(a) of such 
Act (as amended by this Act) to the 
amount of the user fee applicable to 
such applications under such section 
351(a). 
(ii) ALTERATION
OF
USER
FEE.—If 
the audit performed under clause (i) indi-
cates that the ratios compared under sub-
clause (II) of such clause differ by more 
than 5 percent, then the Secretary shall 
alter the user fee applicable to applications 
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•AMDT. NO. 2786 
submitted under such section 351(k) to 
more appropriately account for the costs of 
reviewing such applications. 
(iii) ACCOUNTING
STANDARDS.—The 
Secretary shall perform an audit under 
clause (i) in conformance with the account-
ing principles, standards, and requirements 
prescribed by the Comptroller General of 
the United States under section 3511 of 
title 31, United State Code, to ensure the 
validity of any potential variability. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection such sums as may be necessary for 
each of fiscal years 2010 through 2012. 
(g) PEDIATRIC STUDIES
OF BIOLOGICAL PROD-
UCTS.— 
(1) IN GENERAL.—Section 351 of the Public 
Health Service Act (42 U.S.C. 262) is amended by 
adding at the end the following: 
‘‘(m) PEDIATRIC STUDIES.— 
‘‘(1) APPLICATION OF CERTAIN PROVISIONS.— 
The provisions of subsections (a), (d), (e), (f), (i), 
(j), (k), (l), (p), and (q) of section 505A of the Fed-
eral Food, Drug, and Cosmetic Act shall apply with 
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•AMDT. NO. 2786 
respect to the extension of a period under para-
graphs (2) and (3) to the same extent and in the 
same manner as such provisions apply with respect 
to the extension of a period under subsection (b) or 
(c) of section 505A of the Federal Food, Drug, and 
Cosmetic Act. 
‘‘(2) MARKET EXCLUSIVITY FOR NEW BIOLOGI-
CAL PRODUCTS.—If, prior to approval of an applica-
tion that is submitted under subsection (a), the Sec-
retary determines that information relating to the 
use of a new biological product in the pediatric pop-
ulation may produce health benefits in that popu-
lation, the Secretary makes a written request for pe-
diatric studies (which shall include a timeframe for 
completing such studies), the applicant agrees to the 
request, such studies are completed using appro-
priate formulations for each age group for which the 
study is requested within any such timeframe, and 
the reports thereof are submitted and accepted in 
accordance with section 505A(d)(3) of the Federal 
Food, Drug, and Cosmetic Act— 
‘‘(A) the periods for such biological prod-
uct referred to in subsection (k)(7) are deemed 
to be 4 years and 6 months rather than 4 years 
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•AMDT. NO. 2786 
and 12 years and 6 months rather than 12 
years; and 
‘‘(B) if the biological product is designated 
under section 526 for a rare disease or condi-
tion, the period for such biological product re-
ferred to in section 527(a) is deemed to be 7 
years and 6 months rather than 7 years. 
‘‘(3) MARKET EXCLUSIVITY FOR ALREADY-MAR-
KETED
BIOLOGICAL
PRODUCTS.—If the Secretary 
determines that information relating to the use of a 
licensed biological product in the pediatric popu-
lation may produce health benefits in that popu-
lation and makes a written request to the holder of 
an approved application under subsection (a) for pe-
diatric studies (which shall include a timeframe for 
completing such studies), the holder agrees to the 
request, such studies are completed using appro-
priate formulations for each age group for which the 
study is requested within any such timeframe, and 
the reports thereof are submitted and accepted in 
accordance with section 505A(d)(3) of the Federal 
Food, Drug, and Cosmetic Act— 
‘‘(A) the periods for such biological prod-
uct referred to in subsection (k)(7) are deemed 
to be 4 years and 6 months rather than 4 years 
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•AMDT. NO. 2786 
and 12 years and 6 months rather than 12 
years; and 
‘‘(B) if the biological product is designated 
under section 526 for a rare disease or condi-
tion, the period for such biological product re-
ferred to in section 527(a) is deemed to be 7 
years and 6 months rather than 7 years. 
‘‘(4) EXCEPTION.—The Secretary shall not ex-
tend a period referred to in paragraph (2)(A), 
(2)(B), (3)(A), or (3)(B) if the determination under 
section 505A(d)(3) is made later than 9 months 
prior to the expiration of such period.’’. 
(2) 
STUDIES
REGARDING
PEDIATRIC
RE-
SEARCH.— 
(A) PROGRAM FOR PEDIATRIC STUDY OF 
DRUGS.—Subsection (a)(1) of section 409I of 
the Public Health Service Act (42 U.S.C. 
284m) is amended by inserting ‘‘, biological 
products,’’ after ‘‘including drugs’’. 
(B) INSTITUTE
OF
MEDICINE
STUDY.— 
Section 505A(p) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355b(p)) is 
amended by striking paragraphs (4) and (5) 
and inserting the following: 
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•AMDT. NO. 2786 
‘‘(4) review and assess the number and impor-
tance of biological products for children that are 
being tested as a result of the amendments made by 
the Biologics Price Competition and Innovation Act 
of 2009 and the importance for children, health care 
providers, parents, and others of labeling changes 
made as a result of such testing; 
‘‘(5) review and assess the number, importance, 
and prioritization of any biological products that are 
not being tested for pediatric use; and 
‘‘(6) offer recommendations for ensuring pedi-
atric testing of biological products, including consid-
eration of any incentives, such as those provided 
under this section or section 351(m) of the Public 
Health Service Act.’’. 
(h) ORPHAN PRODUCTS.—If a reference product, as 
defined in section 351 of the Public Health Service Act 
(42 U.S.C. 262) (as amended by this Act) has been des-
ignated under section 526 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 360bb) for a rare disease or con-
dition, a biological product seeking approval for such dis-
ease or condition under subsection (k) of such section 351 
as biosimilar to, or interchangeable with, such reference 
product may be licensed by the Secretary only after the 
expiration for such reference product of the later of— 
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•AMDT. NO. 2786 
(1) the 7-year period described in section 
527(a) of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 360cc(a)); and 
(2) the 12-year period described in subsection 
(k)(7) of such section 351. 
SEC. 7003. SAVINGS. 
(a) DETERMINATION.—The Secretary of the Treas-
ury, in consultation with the Secretary of Health and 
Human Services, shall for each fiscal year determine the 
amount of savings to the Federal Government as a result 
of the enactment of this subtitle. 
(b) USE.—Notwithstanding any other provision of 
this subtitle (or an amendment made by this subtitle), the 
savings to the Federal Government generated as a result 
of the enactment of this subtitle shall be used for deficit 
reduction. 
Subtitle B—More Affordable Medi-
cines for Children and Under-
served Communities 
SEC. 7101. EXPANDED PARTICIPATION IN 340B PROGRAM. 
(a) EXPANSION OF COVERED ENTITIES RECEIVING 
DISCOUNTED PRICES.—Section 340B(a)(4) of the Public 
Health Service Act (42 U.S.C. 256b(a)(4)) is amended by 
adding at the end the following: 
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•AMDT. NO. 2786 
‘‘(M) A children’s hospital excluded from 
the Medicare prospective payment system pur-
suant to section 1886(d)(1)(B)(iii) of the Social 
Security Act, or a free-standing cancer hospital 
excluded from the Medicare prospective pay-
ment 
system 
pursuant 
to 
section 
1886(d)(1)(B)(v) of the Social Security Act, 
that would meet the requirements of subpara-
graph (L), including the disproportionate share 
adjustment 
percentage 
requirement 
under 
clause (ii) of such subparagraph, if the hospital 
were a subsection (d) hospital as defined by sec-
tion 1886(d)(1)(B) of the Social Security Act. 
‘‘(N) An entity that is a critical access hos-
pital (as determined under section 1820(c)(2) 
of the Social Security Act), and that meets the 
requirements of subparagraph (L)(i). 
‘‘(O) An entity that is a rural referral cen-
ter, as defined by section 1886(d)(5)(C)(i) of 
the Social Security Act, or a sole community 
hospital, 
as 
defined 
by 
section 
1886(d)(5)(C)(iii) of such Act, and that both 
meets the requirements of subparagraph (L)(i) 
and has a disproportionate share adjustment 
percentage equal to or greater than 8 percent.’’. 
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•AMDT. NO. 2786 
(b) EXTENSION
OF
DISCOUNT
TO
INPATIENT 
DRUGS.—Section 340B of the Public Health Service Act 
(42 U.S.C. 256b) is amended— 
(1) in paragraphs (2), (5), (7), and (9) of sub-
section (a), by striking ‘‘outpatient’’ each place it 
appears; and 
(2) in subsection (b)— 
(A) by striking ‘‘OTHER DEFINITION’’ and 
all that follows through ‘‘In this section’’ and 
inserting 
the 
following: 
‘‘OTHER
DEFINI-
TIONS.— 
‘‘(1) IN GENERAL.—In this section’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) COVERED DRUG.—In this section, the term 
‘covered drug’— 
‘‘(A) means a covered outpatient drug (as 
defined in section 1927(k)(2) of the Social Se-
curity Act); and 
‘‘(B) includes, notwithstanding paragraph 
(3)(A) of section 1927(k) of such Act, a drug 
used in connection with an inpatient or out-
patient service provided by a hospital described 
in subparagraph (L), (M), (N), or (O) of sub-
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•AMDT. NO. 2786 
section (a)(4) that is enrolled to participate in 
the drug discount program under this section.’’. 
(c) PROHIBITION ON GROUP PURCHASING ARRANGE-
MENTS.—Section 340B(a) of the Public Health Service 
Act (42 U.S.C. 256b(a)) is amended— 
(1) in paragraph (4)(L)— 
(A) in clause (i), by adding ‘‘and’’ at the 
end; 
(B) in clause (ii), by striking ‘‘; and’’ and 
inserting a period; and 
(C) by striking clause (iii); and 
(2) in paragraph (5), as amended by subsection 
(b)— 
(A) by redesignating subparagraphs (C) 
and (D) as subparagraphs (D) and (E); respec-
tively; and 
(B) by inserting after subparagraph (B), 
the following: 
‘‘(C) PROHIBITION ON GROUP PURCHASING 
ARRANGEMENTS.— 
‘‘(i) IN
GENERAL.—A hospital de-
scribed in subparagraph (L), (M), (N), or 
(O) of paragraph (4) shall not obtain cov-
ered outpatient drugs through a group 
purchasing organization or other group 
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•AMDT. NO. 2786 
purchasing arrangement, except as per-
mitted or provided for pursuant to clauses 
(ii) or (iii). 
‘‘(ii) INPATIENT
DRUGS.—Clause (i) 
shall not apply to drugs purchased for in-
patient use. 
‘‘(iii) EXCEPTIONS.—The Secretary 
shall establish reasonable exceptions to 
clause (i)— 
‘‘(I) with respect to a covered 
outpatient drug that is unavailable to 
be purchased through the program 
under this section due to a drug 
shortage problem, manufacturer non-
compliance, or any other circumstance 
beyond the hospital’s control; 
‘‘(II) to facilitate generic substi-
tution when a generic covered out-
patient drug is available at a lower 
price; or 
‘‘(III) to reduce in other ways 
the administrative burdens of man-
aging both inventories of drugs sub-
ject to this section and inventories of 
drugs that are not subject to this sec-
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•AMDT. NO. 2786 
tion, so long as the exceptions do not 
create a duplicate discount problem in 
violation of subparagraph (A) or a di-
version problem in violation of sub-
paragraph (B). 
‘‘(iv) PURCHASING
ARRANGEMENTS 
FOR
INPATIENT
DRUGS.—The Secretary 
shall ensure that a hospital described in 
subparagraph (L), (M), (N), or (O) of sub-
section (a)(4) that is enrolled to partici-
pate in the drug discount program under 
this section shall have multiple options for 
purchasing covered drugs for inpatients, 
including by utilizing a group purchasing 
organization or other group purchasing ar-
rangement, establishing and utilizing its 
own group purchasing program, pur-
chasing directly from a manufacturer, and 
any other purchasing arrangements that 
the Secretary determines is appropriate to 
ensure access to drug discount pricing 
under this section for inpatient drugs tak-
ing into account the particular needs of 
small and rural hospitals.’’. 
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•AMDT. NO. 2786 
(d) MEDICAID CREDITS ON INPATIENT DRUGS.— 
Section 340B of the Public Health Service Act (42 U.S.C. 
256b) is amended by striking subsection (c) and inserting 
the following: 
‘‘(c) MEDICAID CREDIT.—Not later than 90 days 
after the date of filing of the hospital’s most recently filed 
Medicare cost report, the hospital shall issue a credit as 
determined by the Secretary to the State Medicaid pro-
gram for inpatient covered drugs provided to Medicaid re-
cipients.’’. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
this section and section 7102 shall take effect on 
January 1, 2010, and shall apply to drugs pur-
chased on or after January 1, 2010. 
(2) EFFECTIVENESS.—The amendments made 
by this section and section 7102 shall be effective 
and shall be taken into account in determining 
whether a manufacturer is deemed to meet the re-
quirements of section 340B(a) of the Public Health 
Service Act (42 U.S.C. 256b(a)), notwithstanding 
any other provision of law. 
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•AMDT. NO. 2786 
SEC. 7102. IMPROVEMENTS TO 340B PROGRAM INTEGRITY. 
(a) INTEGRITY IMPROVEMENTS.—Subsection (d) of 
section 340B of the Public Health Service Act (42 U.S.C. 
256b) is amended to read as follows: 
‘‘(d) IMPROVEMENTS IN PROGRAM INTEGRITY.— 
‘‘(1) MANUFACTURER COMPLIANCE.— 
‘‘(A) IN GENERAL.—From amounts appro-
priated under paragraph (4), the Secretary 
shall provide for improvements in compliance by 
manufacturers with the requirements of this 
section in order to prevent overcharges and 
other violations of the discounted pricing re-
quirements specified in this section. 
‘‘(B) IMPROVEMENTS.—The improvements 
described in subparagraph (A) shall include the 
following: 
‘‘(i) The development of a system to 
enable the Secretary to verify the accuracy 
of ceiling prices calculated by manufactur-
ers under subsection (a)(1) and charged to 
covered entities, which shall include the 
following: 
‘‘(I) Developing and publishing 
through an appropriate policy or regu-
latory 
issuance, 
precisely 
defined 
standards and methodology for the 
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•AMDT. NO. 2786 
calculation of ceiling prices under 
such subsection. 
‘‘(II) Comparing regularly the 
ceiling prices calculated by the Sec-
retary with the quarterly pricing data 
that is reported by manufacturers to 
the Secretary. 
‘‘(III) Performing spot checks of 
sales transactions by covered entities. 
‘‘(IV) Inquiring into the cause of 
any pricing discrepancies that may be 
identified and either taking, or requir-
ing manufacturers to take, such cor-
rective action as is appropriate in re-
sponse to such price discrepancies. 
‘‘(ii) The establishment of procedures 
for manufacturers to issue refunds to cov-
ered entities in the event that there is an 
overcharge by the manufacturers, including 
the following: 
‘‘(I) Providing the Secretary with 
an explanation of why and how the 
overcharge occurred, how the refunds 
will be calculated, and to whom the 
refunds will be issued. 
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•AMDT. NO. 2786 
‘‘(II) Oversight by the Secretary 
to ensure that the refunds are issued 
accurately and within a reasonable pe-
riod of time, both in routine instances 
of retroactive adjustment to relevant 
pricing data and exceptional cir-
cumstances such as erroneous or in-
tentional overcharging for covered 
drugs. 
‘‘(iii) The provision of access through 
the Internet website of the Department of 
Health and Human Services to the applica-
ble ceiling prices for covered drugs as cal-
culated and verified by the Secretary in ac-
cordance with this section, in a manner 
(such as through the use of password pro-
tection) that limits such access to covered 
entities and adequately assures security 
and protection of privileged pricing data 
from unauthorized re-disclosure. 
‘‘(iv) The development of a mecha-
nism by which— 
‘‘(I) rebates and other discounts 
provided by manufacturers to other 
purchasers subsequent to the sale of 
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•AMDT. NO. 2786 
covered drugs to covered entities are 
reported to the Secretary; and 
‘‘(II) appropriate credits and re-
funds are issued to covered entities if 
such discounts or rebates have the ef-
fect of lowering the applicable ceiling 
price for the relevant quarter for the 
drugs involved. 
‘‘(v) Selective auditing of manufactur-
ers and wholesalers to ensure the integrity 
of the drug discount program under this 
section. 
‘‘(vi) The imposition of sanctions in 
the form of civil monetary penalties, 
which— 
‘‘(I) shall be assessed according 
to standards established in regulations 
to be promulgated by the Secretary 
not later than 180 days after the date 
of enactment of the Patient Protec-
tion and Affordable Care Act; 
‘‘(II) shall not exceed $5,000 for 
each instance of overcharging a cov-
ered entity that may have occurred; 
and 
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•AMDT. NO. 2786 
‘‘(III) shall apply to any manu-
facturer with an agreement under this 
section that knowingly and inten-
tionally charges a covered entity a 
price for purchase of a drug that ex-
ceeds the maximum applicable price 
under subsection (a)(1). 
‘‘(2) COVERED ENTITY COMPLIANCE.— 
‘‘(A) IN GENERAL.—From amounts appro-
priated under paragraph (4), the Secretary 
shall provide for improvements in compliance by 
covered entities with the requirements of this 
section in order to prevent diversion and viola-
tions of the duplicate discount provision and 
other requirements specified under subsection 
(a)(5). 
‘‘(B) IMPROVEMENTS.—The improvements 
described in subparagraph (A) shall include the 
following: 
‘‘(i) The development of procedures to 
enable and require covered entities to regu-
larly update (at least annually) the infor-
mation on the Internet website of the De-
partment of Health and Human Services 
relating to this section. 
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•AMDT. NO. 2786 
‘‘(ii) The development of a system for 
the Secretary to verify the accuracy of in-
formation regarding covered entities that is 
listed on the website described in clause 
(i). 
‘‘(iii) The development of more de-
tailed guidance describing methodologies 
and options available to covered entities for 
billing covered drugs to State Medicaid 
agencies in a manner that avoids duplicate 
discounts pursuant to subsection (a)(5)(A). 
‘‘(iv) The establishment of a single, 
universal, and standardized identification 
system by which each covered entity site 
can be identified by manufacturers, dis-
tributors, covered entities, and the Sec-
retary for purposes of facilitating the or-
dering, purchasing, and delivery of covered 
drugs under this section, including the 
processing of chargebacks for such drugs. 
‘‘(v) The imposition of sanctions, in 
appropriate cases as determined by the 
Secretary, additional to those to which cov-
ered entities are subject under subsection 
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•AMDT. NO. 2786 
(a)(5)(E), through one or more of the fol-
lowing actions: 
‘‘(I) Where a covered entity 
knowingly and intentionally violates 
subsection (a)(5)(B), the covered enti-
ty shall be required to pay a monetary 
penalty to a manufacturer or manu-
facturers in the form of interest on 
sums for which the covered entity is 
found 
liable 
under 
subsection 
(a)(5)(E), such interest to be com-
pounded monthly and equal to the 
current short term interest rate as de-
termined by the Federal Reserve for 
the time period for which the covered 
entity is liable. 
‘‘(II) Where the Secretary deter-
mines 
a 
violation 
of 
subsection 
(a)(5)(B) was systematic and egre-
gious as well as knowing and inten-
tional, removing the covered entity 
from the drug discount program 
under this section and disqualifying 
the entity from re-entry into such pro-
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•AMDT. NO. 2786 
gram for a reasonable period of time 
to be determined by the Secretary. 
‘‘(III) Referring matters to ap-
propriate Federal authorities within 
the Food and Drug Administration, 
the Office of Inspector General of De-
partment of Health and Human Serv-
ices, or other Federal agencies for 
consideration of appropriate action 
under other Federal statutes, such as 
the Prescription Drug Marketing Act 
(21 U.S.C. 353). 
‘‘(3) ADMINISTRATIVE
DISPUTE
RESOLUTION 
PROCESS.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of enactment of the Patient 
Protection and Affordable Care Act, the Sec-
retary shall promulgate regulations to establish 
and implement an administrative process for 
the resolution of claims by covered entities that 
they have been overcharged for drugs purchased 
under this section, and claims by manufactur-
ers, after the conduct of audits as authorized by 
subsection (a)(5)(D), of violations of sub-
sections (a)(5)(A) or (a)(5)(B), including ap-
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•AMDT. NO. 2786 
propriate procedures for the provision of rem-
edies and enforcement of determinations made 
pursuant to such process through mechanisms 
and sanctions described in paragraphs (1)(B) 
and (2)(B). 
‘‘(B) DEADLINES
AND
PROCEDURES.— 
Regulations promulgated by the Secretary 
under subparagraph (A) shall— 
‘‘(i) designate or establish a decision- 
making official or decision-making body 
within the Department of Health and 
Human Services to be responsible for re-
viewing and finally resolving claims by cov-
ered entities that they have been charged 
prices for covered drugs in excess of the 
ceiling price described in subsection (a)(1), 
and claims by manufacturers that viola-
tions of subsection (a)(5)(A) or (a)(5)(B) 
have occurred; 
‘‘(ii) establish such deadlines and pro-
cedures as may be necessary to ensure that 
claims shall be resolved fairly, efficiently, 
and expeditiously; 
‘‘(iii) establish procedures by which a 
covered entity may discover and obtain 
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•AMDT. NO. 2786 
such information and documents from 
manufacturers and third parties as may be 
relevant to demonstrate the merits of a 
claim that charges for a manufacturer’s 
product have exceeded the applicable ceil-
ing price under this section, and may sub-
mit such documents and information to the 
administrative official or body responsible 
for adjudicating such claim; 
‘‘(iv) require that a manufacturer con-
duct an audit of a covered entity pursuant 
to subsection (a)(5)(D) as a prerequisite to 
initiating administrative dispute resolution 
proceedings against a covered entity; 
‘‘(v) permit the official or body des-
ignated under clause (i), at the request of 
a manufacturer or manufacturers, to con-
solidate claims brought by more than one 
manufacturer against the same covered en-
tity where, in the judgment of such official 
or body, consolidation is appropriate and 
consistent with the goals of fairness and 
economy of resources; and 
‘‘(vi) include provisions and proce-
dures to permit multiple covered entities to 
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•AMDT. NO. 2786 
jointly assert claims of overcharges by the 
same manufacturer for the same drug or 
drugs in one administrative proceeding, 
and permit such claims to be asserted on 
behalf of covered entities by associations or 
organizations representing the interests of 
such covered entities and of which the cov-
ered entities are members. 
‘‘(C) FINALITY OF ADMINISTRATIVE RESO-
LUTION.—The administrative resolution of a 
claim or claims under the regulations promul-
gated under subparagraph (A) shall be a final 
agency decision and shall be binding upon the 
parties involved, unless invalidated by an order 
of a court of competent jurisdiction. 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to carry out 
this subsection, such sums as may be necessary for 
fiscal year 2010 and each succeeding fiscal year.’’. 
(b) CONFORMING AMENDMENTS.—Section 340B(a) 
of the Public Health Service Act (42 U.S.C. 256b(a)) is 
amended— 
(1) in subsection (a)(1), by adding at the end 
the following: ‘‘Each such agreement shall require 
that the manufacturer furnish the Secretary with re-
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•AMDT. NO. 2786 
ports, on a quarterly basis, of the price for each cov-
ered drug subject to the agreement that, according 
to the manufacturer, represents the maximum price 
that covered entities may permissibly be required to 
pay for the drug (referred to in this section as the 
‘ceiling price’), and shall require that the manufac-
turer offer each covered entity covered drugs for 
purchase at or below the applicable ceiling price if 
such drug is made available to any other purchaser 
at any price.’’; and 
(2) in the first sentence of subsection (a)(5)(E), 
as redesignated by section 7101(c), by inserting 
‘‘after audit as described in subparagraph (D) and’’ 
after ‘‘finds,’’. 
SEC. 7103. GAO STUDY TO MAKE RECOMMENDATIONS ON 
IMPROVING THE 340B PROGRAM. 
(a) REPORT.—Not later than 18 months after the 
date of enactment of this Act, the Comptroller General 
of the United States shall submit to Congress a report 
that examines whether those individuals served by the cov-
ered entities under the program under section 340B of 
the Public Health Service Act (42 U.S.C. 256b) (referred 
to in this section as the ‘‘340B program’’) are receiving 
optimal health care services. 
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•AMDT. NO. 2786 
(b) RECOMMENDATIONS.—The report under sub-
section (a) shall include recommendations on the fol-
lowing: 
(1) Whether the 340B program should be ex-
panded since it is anticipated that the 47,000,000 
individuals who are uninsured as of the date of en-
actment of this Act will have health care coverage 
once this Act is implemented. 
(2) Whether mandatory sales of certain prod-
ucts by the 340B program could hinder patients ac-
cess to those therapies through any provider. 
(3) Whether income from the 340B program is 
being used by the covered entities under the pro-
gram to further the program objectives. 
TITLE VIII—CLASS ACT 
SEC. 8001. SHORT TITLE OF TITLE. 
This title may be cited as the ‘‘Community Living 
Assistance Services and Supports Act’’ or the ‘‘CLASS 
Act’’. 
SEC. 8002. ESTABLISHMENT OF NATIONAL VOLUNTARY IN-
SURANCE PROGRAM FOR PURCHASING COM-
MUNITY LIVING ASSISTANCE SERVICES AND 
SUPPORT. 
(a) ESTABLISHMENT OF CLASS PROGRAM.— 
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•AMDT. NO. 2786 
(1) IN GENERAL.—The Public Health Service 
Act (42 U.S.C. 201 et seq.), as amended by section 
4302(a), is amended by adding at the end the fol-
lowing: 
‘‘TITLE XXXII—COMMUNITY LIV-
ING 
ASSISTANCE 
SERVICES 
AND SUPPORTS 
‘‘SEC. 3201. PURPOSE. 
‘‘The purpose of this title is to establish a national 
voluntary insurance program for purchasing community 
living assistance services and supports in order to— 
‘‘(1) provide individuals with functional limita-
tions with tools that will allow them to maintain 
their personal and financial independence and live in 
the community through a new financing strategy for 
community living assistance services and supports; 
‘‘(2) establish an infrastructure that will help 
address the Nation’s community living assistance 
services and supports needs; 
‘‘(3) alleviate burdens on family caregivers; and 
‘‘(4) address institutional bias by providing a fi-
nancing mechanism that supports personal choice 
and independence to live in the community. 
‘‘SEC. 3202. DEFINITIONS. 
‘‘In this title: 
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•AMDT. NO. 2786 
‘‘(1) ACTIVE ENROLLEE.—The term ‘active en-
rollee’ means an individual who is enrolled in the 
CLASS program in accordance with section 3204 
and who has paid any premiums due to maintain 
such enrollment. 
‘‘(2) ACTIVELY EMPLOYED.—The term ‘actively 
employed’ means an individual who— 
‘‘(A) is reporting for work at the individ-
ual’s usual place of employment or at another 
location to which the individual is required to 
travel because of the individual’s employment 
(or in the case of an individual who is a mem-
ber of the uniformed services, is on active duty 
and is physically able to perform the duties of 
the individual’s position); and 
‘‘(B) is able to perform all the usual and 
customary duties of the individual’s employment 
on the individual’s regular work schedule. 
‘‘(3) ACTIVITIES OF DAILY LIVING.—The term 
‘activities of daily living’ means each of the following 
activities specified in section 7702B(c)(2)(B) of the 
Internal Revenue Code of 1986: 
‘‘(A) Eating. 
‘‘(B) Toileting. 
‘‘(C) Transferring. 
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•AMDT. NO. 2786 
‘‘(D) Bathing. 
‘‘(E) Dressing. 
‘‘(F) Continence. 
‘‘(4) CLASS PROGRAM.—The term ‘CLASS 
program’ means the program established under this 
title. 
‘‘(5) ELIGIBILITY ASSESSMENT SYSTEM.—The 
term ‘Eligibility Assessment System’ means the enti-
ty established by the Secretary under section 
3205(a)(2) to make functional eligibility determina-
tions for the CLASS program. 
‘‘(6) ELIGIBLE BENEFICIARY.— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
beneficiary’ means any individual who is an ac-
tive enrollee in the CLASS program and, as of 
the date described in subparagraph (B)— 
‘‘(i) has paid premiums for enrollment 
in such program for at least 60 months; 
‘‘(ii) has earned, with respect to at 
least 3 calendar years that occur during 
the first 60 months for which the indi-
vidual has paid premiums for enrollment in 
the program, at least an amount equal to 
the amount of wages and self-employment 
income which an individual must have in 
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1929 
•AMDT. NO. 2786 
order to be credited with a quarter of cov-
erage under section 213(d) of the Social 
Security Act for the year; and 
‘‘(iii) has paid premiums for enroll-
ment in such program for at least 24 con-
secutive months, if a lapse in premium 
payments of more than 3 months has oc-
curred during the period that begins on the 
date of the individual’s enrollment and 
ends on the date of such determination. 
‘‘(B) DATE DESCRIBED.—For purposes of 
subparagraph (A), the date described in this 
subparagraph is the date on which the indi-
vidual is determined to have a functional limita-
tion described in section 3203(a)(1)(C) that is 
expected to last for a continuous period of more 
than 90 days. 
‘‘(C) REGULATIONS.—The Secretary shall 
promulgate regulations specifying exceptions to 
the minimum earnings requirements under sub-
paragraph (A)(ii) for purposes of being consid-
ered an eligible beneficiary for certain popu-
lations. 
‘‘(7) HOSPITAL; NURSING
FACILITY; INTER-
MEDIATE CARE FACILITY FOR THE MENTALLY RE-
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1930 
•AMDT. NO. 2786 
TARDED; INSTITUTION
FOR
MENTAL
DISEASES.— 
The terms ‘hospital’, ‘nursing facility’, ‘intermediate 
care facility for the mentally retarded’, and ‘institu-
tion for mental diseases’ have the meanings given 
such terms for purposes of Medicaid. 
‘‘(8) CLASS INDEPENDENCE ADVISORY COUN-
CIL.—The term ‘CLASS Independence Advisory 
Council’ or ‘Council’ means the Advisory Council es-
tablished under section 3207 to advise the Secretary. 
‘‘(9) CLASS INDEPENDENCE BENEFIT PLAN.— 
The term ‘CLASS Independence Benefit Plan’ 
means the benefit plan developed and designated by 
the Secretary in accordance with section 3203. 
‘‘(10) CLASS 
INDEPENDENCE
FUND.—The 
term ‘CLASS Independence Fund’ or ‘Fund’ means 
the fund established under section 3206. 
‘‘(11) MEDICAID.—The term ‘Medicaid’ means 
the program established under title XIX of the So-
cial Security Act (42 U.S.C. 1396 et seq.). 
‘‘(12) POVERTY LINE.—The term ‘poverty line’ 
has the meaning given that term in section 
2110(c)(5) of the Social Security Act (42 U.S.C. 
1397jj(c)(5)). 
‘‘(13) PROTECTION AND ADVOCACY SYSTEM.— 
The term ‘Protection and Advocacy System’ means 
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•AMDT. NO. 2786 
the system for each State established under section 
143 of the Developmental Disabilities Assistance 
and Bill of Rights Act of 2000 (42 U.S.C. 15043). 
‘‘SEC. 3203. CLASS INDEPENDENCE BENEFIT PLAN. 
‘‘(a) PROCESS FOR DEVELOPMENT.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with appropriate actuaries and other experts, 
shall develop at least 3 actuarially sound benefit 
plans as alternatives for consideration for designa-
tion by the Secretary as the CLASS Independence 
Benefit Plan under which eligible beneficiaries shall 
receive benefits under this title. Each of the plan al-
ternatives developed shall be designed to provide eli-
gible beneficiaries with the benefits described in sec-
tion 3205 consistent with the following require-
ments: 
‘‘(A) PREMIUMS.— 
‘‘(i) IN
GENERAL.—Beginning with 
the first year of the CLASS program, and 
for each year thereafter, subject to clauses 
(ii) and (iii), the Secretary shall establish 
all premiums to be paid by enrollees for 
the year based on an actuarial analysis of 
the 75-year costs of the program that en-
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1932 
•AMDT. NO. 2786 
sures solvency throughout such 75-year pe-
riod. 
‘‘(ii) NOMINAL PREMIUM FOR POOR-
EST
INDIVIDUALS
AND
FULL-TIME
STU-
DENTS.— 
‘‘(I) IN GENERAL.—The monthly 
premium 
for 
enrollment 
in 
the 
CLASS program shall not exceed the 
applicable dollar amount per month 
determined under subclause (II) for— 
‘‘(aa) any individual whose 
income does not exceed the pov-
erty line; and 
‘‘(bb) any individual who 
has not attained age 22, and is 
actively employed during any pe-
riod in which the individual is a 
full-time student (as determined 
by the Secretary). 
‘‘(II) 
APPLICABLE
DOLLAR 
AMOUNT.—The 
applicable 
dollar 
amount described in this subclause is 
the amount equal to $5, increased by 
the percentage increase in the con-
sumer price index for all urban con-
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1933 
•AMDT. NO. 2786 
sumers (U.S. city average) for each 
year occurring after 2009 and before 
such year. 
‘‘(iii) CLASS
INDEPENDENCE
FUND 
RESERVES.—At such time as the CLASS 
program has been in operation for 10 
years, the Secretary shall establish all pre-
miums to be paid by enrollees for the year 
based on an actuarial analysis that accu-
mulated reserves in the CLASS Independ-
ence Fund would not decrease in that year. 
At such time as the Secretary determines 
the CLASS program demonstrates a sus-
tained ability to finance expected yearly ex-
penses with expected yearly premiums and 
interest credited to the CLASS Independ-
ence Fund, the Secretary may decrease the 
required amount of CLASS Independence 
Fund reserves. 
‘‘(B) VESTING PERIOD.—A 5-year vesting 
period for eligibility for benefits. 
‘‘(C) BENEFIT TRIGGERS.—A benefit trig-
ger for provision of benefits that requires a de-
termination that an individual has a functional 
limitation, as certified by a licensed health care 
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1934 
•AMDT. NO. 2786 
practitioner, described in any of the following 
clauses that is expected to last for a continuous 
period of more than 90 days: 
‘‘(i) The individual is determined to 
be unable to perform at least the minimum 
number (which may be 2 or 3) of activities 
of daily living as are required under the 
plan for the provision of benefits without 
substantial assistance (as defined by the 
Secretary) from another individual. 
‘‘(ii) The individual requires substan-
tial supervision to protect the individual 
from threats to health and safety due to 
substantial cognitive impairment. 
‘‘(iii) The individual has a level of 
functional limitation similar (as determined 
under regulations prescribed by the Sec-
retary) to the level of functional limitation 
described in clause (i) or (ii). 
‘‘(D) CASH BENEFIT.—Payment of a cash 
benefit that satisfies the following requirements: 
‘‘(i) MINIMUM REQUIRED AMOUNT.— 
The benefit amount provides an eligible 
beneficiary with not less than an average 
of $50 per day (as determined based on 
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1935 
•AMDT. NO. 2786 
the reasonably expected distribution of 
beneficiaries receiving benefits at various 
benefit levels). 
‘‘(ii) AMOUNT
SCALED
TO
FUNC-
TIONAL ABILITY.—The benefit amount is 
varied based on a scale of functional abil-
ity, with not less than 2, and not more 
than 6, benefit level amounts. 
‘‘(iii) DAILY OR WEEKLY.—The ben-
efit is paid on a daily or weekly basis. 
‘‘(iv) NO
LIFETIME
OR
AGGREGATE 
LIMIT.—The benefit is not subject to any 
lifetime or aggregate limit. 
‘‘(E) 
COORDINATION
WITH
SUPPLE-
MENTAL COVERAGE OBTAINED THROUGH THE 
EXCHANGE.—The benefits allow for coordina-
tion with any supplemental coverage purchased 
through an Exchange established under section 
1311 of the Patient Protection and Affordable 
Care Act. 
‘‘(2) REVIEW AND RECOMMENDATION BY THE 
CLASS
INDEPENDENCE
ADVISORY
COUNCIL.—The 
CLASS Independence Advisory Council shall— 
‘‘(A) evaluate the alternative benefit plans 
developed under paragraph (1); and 
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1936 
•AMDT. NO. 2786 
‘‘(B) recommend for designation as the 
CLASS Independence Benefit Plan for offering 
to the public the plan that the Council deter-
mines best balances price and benefits to meet 
enrollees’ needs in an actuarially sound manner, 
while optimizing the probability of the long- 
term sustainability of the CLASS program. 
‘‘(3) DESIGNATION BY THE SECRETARY.—Not 
later than October 1, 2012, the Secretary, taking 
into consideration the recommendation of the 
CLASS Independence Advisory Council under para-
graph (2)(B), shall designate a benefit plan as the 
CLASS Independence Benefit Plan. The Secretary 
shall publish such designation, along with details of 
the plan and the reasons for the selection by the 
Secretary, in a final rule that allows for a period of 
public comment. 
‘‘(b) ADDITIONAL PREMIUM REQUIREMENTS.— 
‘‘(1) ADJUSTMENT OF PREMIUMS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraphs (B), (C), (D), and (E), the 
amount of the monthly premium determined for 
an individual upon such individual’s enrollment 
in the CLASS program shall remain the same 
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1937 
•AMDT. NO. 2786 
for as long as the individual is an active en-
rollee in the program. 
‘‘(B) RECALCULATED
PREMIUM
IF
RE-
QUIRED FOR PROGRAM SOLVENCY.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), if the Secretary determines, based on 
the most recent report of the Board of 
Trustees of the CLASS Independence 
Fund, the advice of the CLASS Independ-
ence Advisory Council, and the annual re-
port of the Inspector General of the De-
partment of Health and Human Services, 
and waste, fraud, and abuse, or such other 
information as the Secretary determines 
appropriate, that the monthly premiums 
and income to the CLASS Independence 
Fund for a year are projected to be insuffi-
cient with respect to the 20-year period 
that begins with that year, the Secretary 
shall adjust the monthly premiums for in-
dividuals enrolled in the CLASS program 
as necessary (but maintaining a nominal 
premium for enrollees whose income is 
below the poverty line or who are full-time 
students actively employed). 
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1938 
•AMDT. NO. 2786 
‘‘(ii) EXEMPTION FROM INCREASE.— 
Any increase in a monthly premium im-
posed as result of a determination de-
scribed in clause (i) shall not apply with 
respect to the monthly premium of any ac-
tive enrollee who— 
‘‘(I) has attained age 65; 
‘‘(II) has paid premiums for en-
rollment in the program for at least 
20 years; and 
‘‘(III) is not actively employed. 
‘‘(C) RECALCULATED
PREMIUM
IF
RE-
ENROLLMENT AFTER MORE THAN A 3-MONTH 
LAPSE.— 
‘‘(i) IN GENERAL.—The reenrollment 
of an individual after a 90-day period dur-
ing which the individual failed to pay the 
monthly premium required to maintain the 
individual’s enrollment in the CLASS pro-
gram shall be treated as an initial enroll-
ment for purposes of age-adjusting the 
premium for enrollment in the program. 
‘‘(ii) CREDIT FOR PRIOR MONTHS IF 
REENROLLED WITHIN 5 YEARS.—An indi-
vidual who reenrolls in the CLASS pro-
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1939 
•AMDT. NO. 2786 
gram after such a 90-day period and be-
fore the end of the 5-year period that be-
gins with the first month for which the in-
dividual failed to pay the monthly premium 
required to maintain the individual’s en-
rollment in the program shall be— 
‘‘(I) credited with any months of 
paid premiums that accrued prior to 
the individual’s lapse in enrollment; 
and 
‘‘(II) notwithstanding the total 
amount of any such credited months, 
required 
to 
satisfy 
section 
3202(6)(A)(ii) before being eligible to 
receive benefits. 
‘‘(D) NO LONGER STATUS AS A FULL-TIME 
STUDENT.—An individual subject to a nominal 
premium on the basis of being described in sub-
section (a)(1)(A)(ii)(I)(bb) who ceases to be de-
scribed in that subsection, beginning with the 
first month following the month in which the 
individual ceases to be so described, shall be 
subject to the same monthly premium as the 
monthly premium that applies to an individual 
of the same age who first enrolls in the pro-
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1940 
•AMDT. NO. 2786 
gram under the most similar circumstances as 
the individual (such as the first year of eligi-
bility for enrollment in the program or in a sub-
sequent year). 
‘‘(E) PENALTY FOR REENOLLMENT AFTER 
5-YEAR LAPSE.—In the case of an individual 
who reenrolls in the CLASS program after the 
end of the 5-year period described in subpara-
graph (C)(ii), the monthly premium required 
for the individual shall be the age-adjusted pre-
mium that would be applicable to an initially 
enrolling individual who is the same age as the 
reenrolling individual, increased by the greater 
of— 
‘‘(i) an amount that the Secretary de-
termines is actuarially sound for each 
month that occurs during the period that 
begins with the first month for which the 
individual failed to pay the monthly pre-
mium required to maintain the individual’s 
enrollment in the CLASS program and 
ends with the month preceding the month 
in which the reenollment is effective; or 
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1941 
•AMDT. NO. 2786 
‘‘(ii) 1 percent of the applicable age- 
adjusted premium for each such month oc-
curring in such period. 
‘‘(2) ADMINISTRATIVE
EXPENSES.—In deter-
mining the monthly premiums for the CLASS pro-
gram the Secretary may factor in costs for admin-
istering the program, not to exceed for any year in 
which the program is in effect under this title, an 
amount equal to 3 percent of all premiums paid dur-
ing the year. 
‘‘(3) NO UNDERWRITING REQUIREMENTS.—No 
underwriting (other than on the basis of age in ac-
cordance with subparagraphs (D) and (E) of para-
graph (1)) shall be used to— 
‘‘(A) determine the monthly premium for 
enrollment in the CLASS program; or 
‘‘(B) prevent an individual from enrolling 
in the program. 
‘‘(c) SELF-ATTESTATION AND VERIFICATION OF IN-
COME.—The Secretary shall establish procedures to— 
‘‘(1) permit an individual who is eligible for the 
nominal 
premium 
required 
under 
subsection 
(a)(1)(A)(ii), as part of their automatic enrollment 
in the CLASS program, to self-attest that their in-
come does not exceed the poverty line or that their 
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1942 
•AMDT. NO. 2786 
status as a full-time student who is actively em-
ployed; 
‘‘(2) verify, using procedures similar to the pro-
cedures used by the Commissioner of Social Security 
under section 1631(e)(1)(B)(ii) of the Social Secu-
rity Act and consistent with the requirements appli-
cable to the conveyance of data and information 
under section 1942 of such Act, the validity of such 
self-attestation; and 
‘‘(3) require an individual to confirm, on at 
least an annual basis, that their income does not ex-
ceed the poverty line or that they continue to main-
tain such status. 
‘‘SEC. 3204. ENROLLMENT AND DISENROLLMENT REQUIRE-
MENTS. 
‘‘(a) AUTOMATIC ENROLLMENT.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary, in coordination with the Secretary of 
the Treasury, shall establish procedures under which 
each individual described in subsection (c) may be 
automatically enrolled in the CLASS program by an 
employer of such individual in the same manner as 
an employer may elect to automatically enroll em-
ployees in a plan under section 401(k), 403(b), or 
457 of the Internal Revenue Code of 1986. 
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1944 
•AMDT. NO. 2786 
‘‘(c) INDIVIDUAL DESCRIBED.—For purposes of en-
rolling in the CLASS program, an individual described in 
this paragraph is an individual— 
‘‘(1) who has attained age 18; 
‘‘(2) who— 
‘‘(A) receives wages on which there is im-
posed a tax under section 3201(a) of the Inter-
nal Revenue Code of 1986; or 
‘‘(B) derives self-employment income on 
which there is imposed a tax under section 
1401(a) of the Internal Revenue Code of 1986; 
‘‘(3) who is actively employed; and 
‘‘(4) who is not— 
‘‘(A) a patient in a hospital or nursing fa-
cility, an intermediate care facility for the men-
tally retarded, or an institution for mental dis-
eases and receiving medical assistance under 
Medicaid; or 
‘‘(B) confined in a jail, prison, other penal 
institution or correctional facility, or by court 
order pursuant to conviction of a criminal of-
fense or in connection with a verdict or finding 
described in section 202(x)(1)(A)(ii) of the So-
cial Security Act (42 U.S.C. 402(x)(1)(A)(ii)). 
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•AMDT. NO. 2786 
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this title 
shall be construed as requiring an active enrollee to con-
tinue to satisfy subparagraph (B) or (C) of subsection 
(c)(1) in order to maintain enrollment in the CLASS pro-
gram. 
‘‘(e) PAYMENT.— 
‘‘(1) PAYROLL DEDUCTION.—An amount equal 
to the monthly premium for the enrollment in the 
CLASS program of an individual shall be deducted 
from the wages or self-employment income of such 
individual in accordance with such procedures as the 
Secretary, in coordination with the Secretary of the 
Treasury, shall establish for employers who elect to 
deduct and withhold such premiums on behalf of en-
rolled employees. 
‘‘(2) ALTERNATIVE
PAYMENT
MECHANISM.— 
The Secretary, in coordination with the Secretary of 
the Treasury, shall establish alternative procedures 
for the payment of monthly premiums by an indi-
vidual enrolled in the CLASS program— 
‘‘(A) who does not have an employer who 
elects to deduct and withhold premiums in ac-
cordance with subparagraph (A); or 
‘‘(B) who does not earn wages or derive 
self-employment income. 
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•AMDT. NO. 2786 
‘‘(f) TRANSFER OF PREMIUMS COLLECTED.— 
‘‘(1) IN GENERAL.—During each calendar year 
the Secretary of the Treasury shall deposit into the 
CLASS Independence Fund a total amount equal, in 
the aggregate, to 100 percent of the premiums col-
lected during that year. 
‘‘(2) TRANSFERS BASED ON ESTIMATES.—The 
amount deposited pursuant to paragraph (1) shall be 
transferred in at least monthly payments to the 
CLASS Independence Fund on the basis of esti-
mates by the Secretary and certified to the Sec-
retary of the Treasury of the amounts collected in 
accordance with subparagraphs (A) and (B) of para-
graph (5). Proper adjustments shall be made in 
amounts subsequently transferred to the Fund to 
the extent prior estimates were in excess of, or were 
less than, actual amounts collected. 
‘‘(g) OTHER ENROLLMENT
AND DISENROLLMENT 
OPPORTUNITIES.—The Secretary, in coordination with 
the Secretary of the Treasury, shall establish procedures 
under which— 
‘‘(1) an individual who, in the year of the indi-
vidual’s initial eligibility to enroll in the CLASS pro-
gram, has elected to waive enrollment in the pro-
gram, is eligible to elect to enroll in the program, in 
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•AMDT. NO. 2786 
such form and manner as the Secretaries shall es-
tablish, only during an open enrollment period estab-
lished by the Secretaries that is specific to the indi-
vidual and that may not occur more frequently than 
biennially after the date on which the individual first 
elected to waive enrollment in the program; and 
‘‘(2) an individual shall only be permitted to 
disenroll from the program (other than for non-
payment 
of 
premiums) 
during 
an 
annual 
disenrollment period established by the Secretaries 
and in such form and manner as the Secretaries 
shall establish. 
‘‘SEC. 3205. BENEFITS. 
‘‘(a) DETERMINATION OF ELIGIBILITY.— 
‘‘(1) APPLICATION
FOR
RECEIPT
OF
BENE-
FITS.—The Secretary shall establish procedures 
under which an active enrollee shall apply for receipt 
of benefits under the CLASS Independence Benefit 
Plan. 
‘‘(2) ELIGIBILITY ASSESSMENTS.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2012, the Secretary shall— 
‘‘(i) establish an Eligibility Assess-
ment System (other than a service with 
which the Commissioner of Social Security 
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•AMDT. NO. 2786 
has entered into an agreement, with re-
spect to any State, to make disability de-
terminations for purposes of title II or 
XVI of the Social Security Act) to provide 
for eligibility assessments of active enroll-
ees who apply for receipt of benefits; 
‘‘(ii) enter into an agreement with the 
Protection and Advocacy System for each 
State to provide advocacy services in ac-
cordance with subsection (d); and 
‘‘(iii) enter into an agreement with 
public and private entities to provide ad-
vice and assistance counseling in accord-
ance with subsection (e). 
‘‘(B) REGULATIONS.—The Secretary shall 
promulgate regulations to develop an expedited 
nationally equitable eligibility determination 
process, as certified by a licensed health care 
practitioner, an appeals process, and a redeter-
mination process, as certified by a licensed 
health care practitioner, including whether an 
active enrollee is eligible for a cash benefit 
under the program and if so, the amount of the 
cash benefit (in accordance the sliding scale es-
tablished under the plan). 
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•AMDT. NO. 2786 
‘‘(C) PRESUMPTIVE ELIGIBILITY FOR CER-
TAIN
INSTITUTIONALIZED
ENROLLEES
PLAN-
NING TO DISCHARGE.—An active enrollee shall 
be deemed presumptively eligible if the en-
rollee— 
‘‘(i) has applied for, and attests is eli-
gible for, the maximum cash benefit avail-
able under the sliding scale established 
under the CLASS Independence Benefit 
Plan; 
‘‘(ii) is a patient in a hospital (but 
only if the hospitalization is for long-term 
care), nursing facility, intermediate care 
facility for the mentally retarded, or an in-
stitution for mental diseases; and 
‘‘(iii) is in the process of, or about to 
begin the process of, planning to discharge 
from the hospital, facility, or institution, or 
within 60 days from the date of discharge 
from the hospital, facility, or institution. 
‘‘(D) APPEALS.—The Secretary shall es-
tablish procedures under which an applicant for 
benefits under the CLASS Independence Ben-
efit Plan shall be guaranteed the right to ap-
peal an adverse determination. 
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•AMDT. NO. 2786 
‘‘(b) BENEFITS.—An eligible beneficiary shall receive 
the following benefits under the CLASS Independence 
Benefit Plan: 
‘‘(1) CASH
BENEFIT.—A cash benefit estab-
lished by the Secretary in accordance with the re-
quirements of section 3203(a)(1)(D) that— 
‘‘(A) the first year in which beneficiaries 
receive the benefits under the plan, is not less 
than the average dollar amount specified in 
clause (i) of such section; and 
‘‘(B) for any subsequent year, is not less 
than the average per day dollar limit applicable 
under this subparagraph for the preceding year, 
increased by the percentage increase in the con-
sumer price index for all urban consumers 
(U.S. city average) over the previous year. 
‘‘(2) ADVOCACY SERVICES.—Advocacy services 
in accordance with subsection (d). 
‘‘(3) ADVICE AND ASSISTANCE COUNSELING.— 
Advice and assistance counseling in accordance with 
subsection (e). 
‘‘(4) ADMINISTRATIVE
EXPENSES.—Advocacy 
services and advise and assistance counseling serv-
ices under paragraphs (2) and (3) of this subsection 
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1951 
•AMDT. NO. 2786 
shall be included as administrative expenses under 
section 3203(b)(3). 
‘‘(c) PAYMENT OF BENEFITS.— 
‘‘(1) LIFE INDEPENDENCE ACCOUNT.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish procedures for administering the pro-
vision of benefits to eligible beneficiaries under 
the CLASS Independence Benefit Plan, includ-
ing the payment of the cash benefit for the ben-
eficiary into a Life Independence Account es-
tablished by the Secretary on behalf of each eli-
gible beneficiary. 
‘‘(B) USE OF CASH BENEFITS.—Cash ben-
efits paid into a Life Independence Account of 
an eligible beneficiary shall be used to purchase 
nonmedical services and supports that the bene-
ficiary needs to maintain his or her independ-
ence at home or in another residential setting 
of their choice in the community, including (but 
not limited to) home modifications, assistive 
technology, accessible transportation, home-
maker services, respite care, personal assistance 
services, home care aides, and nursing support. 
Nothing in the preceding sentence shall prevent 
an eligible beneficiary from using cash benefits 
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1952 
•AMDT. NO. 2786 
paid into a Life Independence Account for ob-
taining assistance with decision making con-
cerning medical care, including the right to ac-
cept or refuse medical or surgical treatment 
and the right to formulate advance directives or 
other written instructions recognized under 
State law, such as a living will or durable power 
of attorney for health care, in the case that an 
injury or illness causes the individual to be un-
able to make health care decisions. 
‘‘(C) 
ELECTRONIC
MANAGEMENT
OF 
FUNDS.—The Secretary shall establish proce-
dures for— 
‘‘(i) crediting an account established 
on behalf of a beneficiary with the bene-
ficiary’s cash daily benefit; 
‘‘(ii) allowing the beneficiary to access 
such account through debit cards; and 
‘‘(iii) accounting for withdrawals by 
the beneficiary from such account. 
‘‘(D) PRIMARY PAYOR RULES FOR BENE-
FICIARIES WHO ARE ENROLLED IN MEDICAID.— 
In the case of an eligible beneficiary who is en-
rolled in Medicaid, the following payment rules 
shall apply: 
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•AMDT. NO. 2786 
‘‘(i) 
INSTITUTIONALIZED
BENE-
FICIARY.—If the beneficiary is a patient in 
a hospital, nursing facility, intermediate 
care facility for the mentally retarded, or 
an institution for mental diseases, the ben-
eficiary shall retain an amount equal to 5 
percent of the beneficiary’s daily or weekly 
cash benefit (as applicable) (which shall be 
in addition to the amount of the bene-
ficiary’s personal needs allowance provided 
under Medicaid), and the remainder of 
such benefit shall be applied toward the fa-
cility’s cost of providing the beneficiary’s 
care, and Medicaid shall provide secondary 
coverage for such care. 
‘‘(ii) 
BENEFICIARIES
RECEIVING 
HOME
AND
COMMUNITY-BASED
SERV-
ICES.— 
‘‘(I) 50 PERCENT
OF
BENEFIT 
RETAINED BY BENEFICIARY.—Subject 
to subclause (II), if a beneficiary is 
receiving medical assistance under 
Medicaid for home and community 
based services, the beneficiary shall 
retain an amount equal to 50 percent 
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1954 
•AMDT. NO. 2786 
of the beneficiary’s daily or weekly 
cash benefit (as applicable), and the 
remainder of the daily or weekly cash 
benefit shall be applied toward the 
cost to the State of providing such as-
sistance (and shall not be used to 
claim Federal matching funds under 
Medicaid), and Medicaid shall provide 
secondary coverage for the remainder 
of any costs incurred in providing 
such assistance. 
‘‘(II) REQUIREMENT FOR STATE 
OFFSET.—A State shall be paid the 
remainder of a beneficiary’s daily or 
weekly cash benefit under subclause 
(I) only if the State home and com-
munity-based waiver under section 
1115 of the Social Security Act (42 
U.S.C. 1315) or subsection (c) or (d) 
of section 1915 of such Act (42 
U.S.C. 1396n), or the State plan 
amendment under subsection (i) of 
such section does not include a waiver 
of 
the 
requirements 
of 
section 
1902(a)(1) of the Social Security Act 
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1955 
•AMDT. NO. 2786 
(relating to statewideness) or of sec-
tion 1902(a)(10)(B) of such Act (re-
lating to comparability) and the State 
offers at a minimum case manage-
ment services, personal care services, 
habilitation services, and respite care 
under such a waiver or State plan 
amendment. 
‘‘(III) DEFINITION OF HOME AND 
COMMUNITY-BASED
SERVICES.—In 
this clause, the term ‘home and com-
munity-based services’ means any 
services which may be offered under a 
home and community-based waiver 
authorized for a State under section 
1115 of the Social Security Act (42 
U.S.C. 1315) or subsection (c) or (d) 
of section 1915 of such Act (42 
U.S.C. 1396n) or under a State plan 
amendment under subsection (i) of 
such section. 
‘‘(iii) BENEFICIARIES
ENROLLED
IN 
PROGRAMS OF ALL-INCLUSIVE CARE FOR 
THE ELDERLY (PACE).— 
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1956 
•AMDT. NO. 2786 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), if a beneficiary is re-
ceiving medical assistance under Med-
icaid for PACE program services 
under section 1934 of the Social Secu-
rity Act (42 U.S.C. 1396u–4), the 
beneficiary shall retain an amount 
equal to 50 percent of the bene-
ficiary’s daily or weekly cash benefit 
(as applicable), and the remainder of 
the daily or weekly cash benefit shall 
be applied toward the cost to the 
State of providing such assistance 
(and shall not be used to claim Fed-
eral matching funds under Medicaid), 
and Medicaid shall provide secondary 
coverage for the remainder of any 
costs incurred in providing such as-
sistance. 
‘‘(II) 
INSTITUTIONALIZED
RE-
CIPIENTS
OF
PACE
PROGRAM
SERV-
ICES.—If a beneficiary receiving as-
sistance under Medicaid for PACE 
program services is a patient in a hos-
pital, nursing facility, intermediate 
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1957 
•AMDT. NO. 2786 
care facility for the mentally retarded, 
or an institution for mental diseases, 
the beneficiary shall be treated as in 
institutionalized 
beneficiary 
under 
clause (i). 
‘‘(2) AUTHORIZED REPRESENTATIVES.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish procedures to allow access to a bene-
ficiary’s cash benefits by an authorized rep-
resentative of the eligible beneficiary on whose 
behalf such benefits are paid. 
‘‘(B) QUALITY ASSURANCE AND PROTEC-
TION AGAINST FRAUD AND ABUSE.—The proce-
dures established under subparagraph (A) shall 
ensure that authorized representatives of eligi-
ble beneficiaries comply with standards of con-
duct established by the Secretary, including 
standards requiring that such representatives 
provide quality services on behalf of such bene-
ficiaries, do not have conflicts of interest, and 
do not misuse benefits paid on behalf of such 
beneficiaries or otherwise engage in fraud or 
abuse. 
‘‘(3) COMMENCEMENT OF BENEFITS.—Benefits 
shall be paid to, or on behalf of, an eligible bene-
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1958 
•AMDT. NO. 2786 
ficiary beginning with the first month in which an 
application for such benefits is approved. 
‘‘(4) ROLLOVER OPTION FOR LUMP-SUM PAY-
MENT.—An eligible beneficiary may elect to— 
‘‘(A) defer payment of their daily or weekly 
benefit and to rollover any such deferred bene-
fits from month-to-month, but not from year-to- 
year; and 
‘‘(B) receive a lump-sum payment of such 
deferred benefits in an amount that may not 
exceed the lesser of— 
‘‘(i) the total amount of the accrued 
deferred benefits; or 
‘‘(ii) the applicable annual benefit. 
‘‘(5) PERIOD FOR DETERMINATION OF ANNUAL 
BENEFITS.— 
‘‘(A) IN GENERAL.—The applicable period 
for determining with respect to an eligible bene-
ficiary the applicable annual benefit and the 
amount of any accrued deferred benefits is the 
12-month period that commences with the first 
month in which the beneficiary began to receive 
such benefits, and each 12-month period there-
after. 
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•AMDT. NO. 2786 
‘‘(B) INCLUSION
OF
INCREASED
BENE-
FITS.—The Secretary shall establish procedures 
under which cash benefits paid to an eligible 
beneficiary that increase or decrease as a result 
of a change in the functional status of the bene-
ficiary before the end of a 12-month benefit pe-
riod shall be included in the determination of 
the applicable annual benefit paid to the eligible 
beneficiary. 
‘‘(C) RECOUPMENT OF UNPAID, ACCRUED 
BENEFITS.— 
‘‘(i) IN GENERAL.—The Secretary, in 
coordination with the Secretary of the 
Treasury, shall recoup any accrued bene-
fits in the event of— 
‘‘(I) the death of a beneficiary; or 
‘‘(II) the failure of a beneficiary 
to elect under paragraph (4)(B) to re-
ceive such benefits as a lump-sum 
payment before the end of the 12- 
month period in which such benefits 
accrued. 
‘‘(ii) PAYMENT
INTO
CLASS
INDE-
PENDENCE FUND.—Any benefits recouped 
in accordance with clause (i) shall be paid 
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1960 
•AMDT. NO. 2786 
into the CLASS Independence Fund and 
used in accordance with section 3206. 
‘‘(6) REQUIREMENT TO RECERTIFY ELIGIBILITY 
FOR RECEIPT OF BENEFITS.—An eligible beneficiary 
shall periodically, as determined by the Secretary— 
‘‘(A) recertify by submission of medical 
evidence the beneficiary’s continued eligibility 
for receipt of benefits; and 
‘‘(B) submit records of expenditures attrib-
utable to the aggregate cash benefit received by 
the beneficiary during the preceding year. 
‘‘(7) SUPPLEMENT, 
NOT
SUPPLANT
OTHER 
HEALTH CARE BENEFITS.—Subject to the Medicaid 
payment rules under paragraph (1)(D), benefits re-
ceived by an eligible beneficiary shall supplement, 
but not supplant, other health care benefits for 
which the beneficiary is eligible under Medicaid or 
any other Federally funded program that provides 
health care benefits or assistance. 
‘‘(d) ADVOCACY SERVICES.—An agreement entered 
into under subsection (a)(2)(A)(ii) shall require the Pro-
tection and Advocacy System for the State to— 
‘‘(1) assign, as needed, an advocacy counselor 
to each eligible beneficiary that is covered by such 
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1961 
•AMDT. NO. 2786 
agreement and who shall provide an eligible bene-
ficiary with— 
‘‘(A) information regarding how to access 
the appeals process established for the program; 
‘‘(B) assistance with respect to the annual 
recertification and notification required under 
subsection (c)(6); and 
‘‘(C) such other assistance with obtaining 
services as the Secretary, by regulation, shall 
require; and 
‘‘(2) ensure that the System and such coun-
selors comply with the requirements of subsection 
(h). 
‘‘(e) ADVICE
AND ASSISTANCE COUNSELING.—An 
agreement entered into under subsection (a)(2)(A)(iii) 
shall require the entity to assign, as requested by an eligi-
ble beneficiary that is covered by such agreement, an ad-
vice and assistance counselor who shall provide an eligible 
beneficiary with information regarding— 
‘‘(1) accessing and coordinating long-term serv-
ices and supports in the most integrated setting; 
‘‘(2) possible eligibility for other benefits and 
services; 
‘‘(3) development of a service and support plan; 
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•AMDT. NO. 2786 
‘‘(4) information about programs established 
under the Assistive Technology Act of 1998 and the 
services offered under such programs; 
‘‘(5) available assistance with decision making 
concerning medical care, including the right to ac-
cept or refuse medical or surgical treatment and the 
right to formulate advance directives or other writ-
ten instructions recognized under State law, such as 
a living will or durable power of attorney for health 
care, in the case that an injury or illness causes the 
individual to be unable to make health care deci-
sions; and 
‘‘(6) such other services as the Secretary, by 
regulation, may require. 
‘‘(f) NO EFFECT ON ELIGIBILITY FOR OTHER BENE-
FITS.—Benefits paid to an eligible beneficiary under the 
CLASS program shall be disregarded for purposes of de-
termining or continuing the beneficiary’s eligibility for re-
ceipt of benefits under any other Federal, State, or locally 
funded assistance program, including benefits paid under 
titles II, XVI, XVIII, XIX, or XXI of the Social Security 
Act (42 U.S.C. 401 et seq., 1381 et seq., 1395 et seq., 
1396 et seq., 1397aa et seq.), under the laws administered 
by the Secretary of Veterans Affairs, under low-income 
housing assistance programs, or under the supplemental 
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•AMDT. NO. 2786 
nutrition assistance program established under the Food 
and Nutrition Act of 2008 (7 U.S.C. 2011 et seq.). 
‘‘(g) RULE OF CONSTRUCTION.—Nothing in this title 
shall be construed as prohibiting benefits paid under the 
CLASS Independence Benefit Plan from being used to 
compensate a family caregiver for providing community 
living assistance services and supports to an eligible bene-
ficiary. 
‘‘(h) PROTECTION AGAINST CONFLICT OF INTER-
ESTS.—The Secretary shall establish procedures to ensure 
that the Eligibility Assessment System, the Protection and 
Advocacy System for a State, advocacy counselors for eli-
gible beneficiaries, and any other entities that provide 
services to active enrollees and eligible beneficiaries under 
the CLASS program comply with the following: 
‘‘(1) If the entity provides counseling or plan-
ning services, such services are provided in a manner 
that fosters the best interests of the active enrollee 
or beneficiary. 
‘‘(2) The entity has established operating proce-
dures that are designed to avoid or minimize con-
flicts of interest between the entity and an active en-
rollee or beneficiary. 
‘‘(3) The entity provides information about all 
services and options available to the active enrollee 
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•AMDT. NO. 2786 
or beneficiary, to the best of its knowledge, including 
services available through other entities or providers. 
‘‘(4) The entity assists the active enrollee or 
beneficiary to access desired services, regardless of 
the provider. 
‘‘(5) The entity reports the number of active 
enrollees and beneficiaries provided with assistance 
by age, disability, and whether such enrollees and 
beneficiaries received services from the entity or an-
other entity. 
‘‘(6) If the entity provides counseling or plan-
ning services, the entity ensures that an active en-
rollee or beneficiary is informed of any financial in-
terest that the entity has in a service provider. 
‘‘(7) The entity provides an active enrollee or 
beneficiary with a list of available service providers 
that can meet the needs of the active enrollee or 
beneficiary. 
‘‘SEC. 3206. CLASS INDEPENDENCE FUND. 
‘‘(a) ESTABLISHMENT OF CLASS INDEPENDENCE 
FUND.—There is established in the Treasury of the 
United States a trust fund to be known as the ‘CLASS 
Independence Fund’. The Secretary of the Treasury shall 
serve as Managing Trustee of such Fund. The Fund shall 
consist of all amounts derived from payments into the 
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•AMDT. NO. 2786 
Fund under sections 3204(f) and 3205(c)(5)(C)(ii), and 
remaining after investment of such amounts under sub-
section (b), including additional amounts derived as in-
come from such investments. The amounts held in the 
Fund are appropriated and shall remain available without 
fiscal year limitation— 
‘‘(1) to be held for investment on behalf of indi-
viduals enrolled in the CLASS program; 
‘‘(2) to pay the administrative expenses related 
to the Fund and to investment under subsection (b); 
and 
‘‘(3) to pay cash benefits to eligible bene-
ficiaries under the CLASS Independence Benefit 
Plan. 
‘‘(b) INVESTMENT OF FUND BALANCE.—The Sec-
retary of the Treasury shall invest and manage the 
CLASS Independence Fund in the same manner, and to 
the same extent, as the Federal Supplementary Medical 
Insurance Trust Fund may be invested and managed 
under subsections (c), (d), and (e) of section 1841(d) of 
the Social Security Act (42 U.S.C. 1395t). 
‘‘(c) BOARD OF TRUSTEES.— 
‘‘(1) IN GENERAL.—With respect to the CLASS 
Independence Fund, there is hereby created a body 
to be known as the Board of Trustees of the CLASS 
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1966 
•AMDT. NO. 2786 
Independence Fund (hereinafter in this section re-
ferred to as the ‘Board of Trustees’) composed of 
the Secretary of the Treasury, the Secretary of 
Labor, and the Secretary of Health and Human 
Services, all ex officio, and of two members of the 
public (both of whom may not be from the same po-
litical party), who shall be nominated by the Presi-
dent for a term of 4 years and subject to confirma-
tion by the Senate. A member of the Board of 
Trustees serving as a member of the public and 
nominated and confirmed to fill a vacancy occurring 
during a term shall be nominated and confirmed 
only for the remainder of such term. An individual 
nominated and confirmed as a member of the public 
may serve in such position after the expiration of 
such member’s term until the earlier of the time at 
which the member’s successor takes office or the 
time at which a report of the Board is first issued 
under paragraph (2) after the expiration of the 
member’s term. The Secretary of the Treasury shall 
be the Managing Trustee of the Board of Trustees. 
The Board of Trustees shall meet not less frequently 
than once each calendar year. A person serving on 
the Board of Trustees shall not be considered to be 
a fiduciary and shall not be personally liable for ac-
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1967 
•AMDT. NO. 2786 
tions taken in such capacity with respect to the 
Trust Fund. 
‘‘(2) DUTIES.— 
‘‘(A) IN GENERAL.—It shall be the duty of 
the Board of Trustees to do the following: 
‘‘(i) Hold the CLASS Independence 
Fund. 
‘‘(ii) Report to the Congress not later 
than the first day of April of each year on 
the operation and status of the CLASS 
Independence Fund during the preceding 
fiscal year and on its expected operation 
and status during the current fiscal year 
and the next 2 fiscal years. 
‘‘(iii) Report immediately to the Con-
gress whenever the Board is of the opinion 
that the amount of the CLASS Independ-
ence Fund is not actuarially sound in re-
gards to the projection under section 
3203(b)(1)(B)(i). 
‘‘(iv) Review the general policies fol-
lowed in managing the CLASS Independ-
ence Fund, and recommend changes in 
such policies, including necessary changes 
in the provisions of law which govern the 
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•AMDT. NO. 2786 
way in which the CLASS Independence 
Fund is to be managed. 
‘‘(B) REPORT.—The report provided for in 
subparagraph (A)(ii) shall— 
‘‘(i) include— 
‘‘(I) a statement of the assets of, 
and the disbursements made from, the 
CLASS Independence Fund during 
the preceding fiscal year; 
‘‘(II) an estimate of the expected 
income to, and disbursements to be 
made from, the CLASS Independence 
Fund during the current fiscal year 
and each of the next 2 fiscal years; 
‘‘(III) a statement of the actu-
arial status of the CLASS Independ-
ence Fund for the current fiscal year, 
each of the next 2 fiscal years, and as 
projected over the 75-year period be-
ginning with the current fiscal year; 
and 
‘‘(IV) an actuarial opinion by the 
Chief Actuary of the Centers for 
Medicare & Medicaid Services certi-
fying that the techniques and meth-
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•AMDT. NO. 2786 
odologies used are generally accepted 
within the actuarial profession and 
that the assumptions and cost esti-
mates used are reasonable; and 
‘‘(ii) be printed as a House document 
of the session of the Congress to which the 
report is made. 
‘‘(C) RECOMMENDATIONS.—If the Board 
of Trustees determines that enrollment trends 
and expected future benefit claims on the 
CLASS Independence Fund are not actuarially 
sound in regards to the projection under section 
3203(b)(1)(B)(i) and are unlikely to be resolved 
with reasonable premium increases or through 
other means, the Board of Trustees shall in-
clude in the report provided for in subpara-
graph (A)(ii) recommendations for such legisla-
tive action as the Board of Trustees determine 
to be appropriate, including whether to adjust 
monthly premiums or impose a temporary mor-
atorium on new enrollments. 
‘‘SEC. 3207. CLASS INDEPENDENCE ADVISORY COUNCIL. 
‘‘(a) ESTABLISHMENT.—There is hereby created an 
Advisory Committee to be known as the ‘CLASS Inde-
pendence Advisory Council’. 
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•AMDT. NO. 2786 
‘‘(b) MEMBERSHIP.— 
‘‘(1) IN GENERAL.—The CLASS Independence 
Advisory Council shall be composed of not more 
than 15 individuals, not otherwise in the employ of 
the United States— 
‘‘(A) who shall be appointed by the Presi-
dent without regard to the civil service laws and 
regulations; and 
‘‘(B) a majority of whom shall be rep-
resentatives of individuals who participate or 
are likely to participate in the CLASS program, 
and shall include representatives of older and 
younger workers, individuals with disabilities, 
family caregivers of individuals who require 
services and supports to maintain their inde-
pendence at home or in another residential set-
ting of their choice in the community, individ-
uals with expertise in long-term care or dis-
ability insurance, actuarial science, economics, 
and other relevant disciplines, as determined by 
the Secretary. 
‘‘(2) TERMS.— 
‘‘(A) IN GENERAL.—The members of the 
CLASS Independence Advisory Council shall 
serve overlapping terms of 3 years (unless ap-
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•AMDT. NO. 2786 
pointed to fill a vacancy occurring prior to the 
expiration of a term, in which case the indi-
vidual shall serve for the remainder of the 
term). 
‘‘(B) LIMITATION.—A member shall not be 
eligible to serve for more than 2 consecutive 
terms. 
‘‘(3) CHAIR.—The President shall, from time to 
time, appoint one of the members of the CLASS 
Independence Advisory Council to serve as the 
Chair. 
‘‘(c) DUTIES.—The CLASS Independence Advisory 
Council shall advise the Secretary on matters of general 
policy in the administration of the CLASS program estab-
lished under this title and in the formulation of regula-
tions under this title including with respect to— 
‘‘(1) the development of the CLASS Independ-
ence Benefit Plan under section 3203; 
‘‘(2) the determination of monthly premiums 
under such plan; and 
‘‘(3) the financial solvency of the program. 
‘‘(d) APPLICATION OF FACA.—The Federal Advisory 
Committee Act (5 U.S.C. App.), other than section 14 of 
that Act, shall apply to the CLASS Independence Advisory 
Council. 
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•AMDT. NO. 2786 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.— 
‘‘(1) IN GENERAL.—There are authorized to be 
appropriated to the CLASS Independence Advisory 
Council to carry out its duties under this section, 
such sums as may be necessary for fiscal year 2011 
and for each fiscal year thereafter. 
‘‘(2) AVAILABILITY.—Any sums appropriated 
under the authorization contained in this section 
shall remain available, without fiscal year limitation, 
until expended. 
‘‘SEC. 3208. SOLVENCY AND FISCAL INDEPENDENCE; REGU-
LATIONS; ANNUAL REPORT. 
‘‘(a) SOLVENCY.—The Secretary shall regularly con-
sult with the Board of Trustees of the CLASS Independ-
ence Fund and the CLASS Independence Advisory Coun-
cil, for purposes of ensuring that enrollees premiums are 
adequate to ensure the financial solvency of the CLASS 
program, both with respect to fiscal years occurring in the 
near-term and fiscal years occurring over 20- and 75- year 
periods, taking into account the projections required for 
such 
periods 
under 
subsections 
(a)(1)(A)(i) 
and 
(b)(1)(B)(i) of section 3202. 
‘‘(b) NO TAXPAYER FUNDS USED TO PAY BENE-
FITS.—No taxpayer funds shall be used for payment of 
benefits under a CLASS Independent Benefit Plan. For 
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•AMDT. NO. 2786 
purposes of this subsection, the term ‘taxpayer funds’ 
means any Federal funds from a source other than pre-
miums deposited by CLASS program participants in the 
CLASS Independence Fund and any associated interest 
earnings. 
‘‘(c) REGULATIONS.—The Secretary shall promulgate 
such regulations as are necessary to carry out the CLASS 
program in accordance with this title. Such regulations 
shall include provisions to prevent fraud and abuse under 
the program. 
‘‘(d) ANNUAL REPORT.—Beginning January 1, 2014, 
the Secretary shall submit an annual report to Congress 
on the CLASS program. Each report shall include the fol-
lowing: 
‘‘(1) The total number of enrollees in the pro-
gram. 
‘‘(2) The total number of eligible beneficiaries 
during the fiscal year. 
‘‘(3) The total amount of cash benefits provided 
during the fiscal year. 
‘‘(4) A description of instances of fraud or 
abuse identified during the fiscal year. 
‘‘(5) Recommendations for such administrative 
or legislative action as the Secretary determines is 
necessary to improve the program, ensure the sol-
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•AMDT. NO. 2786 
vency of the program, or to prevent the occurrence 
of fraud or abuse. 
‘‘SEC. 3209. INSPECTOR GENERAL’S REPORT. 
‘‘The Inspector General of the Department of Health 
and Human Services shall submit an annual report to the 
Secretary and Congress relating to the overall progress of 
the CLASS program and of the existence of waste, fraud, 
and abuse in the CLASS program. Each such report shall 
include findings in the following areas: 
‘‘(1) The eligibility determination process. 
‘‘(2) The provision of cash benefits. 
‘‘(3) Quality assurance and protection against 
waste, fraud, and abuse. 
‘‘(4) Recouping of unpaid and accrued benefits. 
‘‘SEC. 3210. TAX TREATMENT OF PROGRAM. 
‘‘The CLASS program shall be treated for purposes 
of the Internal Revenue Code of 1986 in the same manner 
as a qualified long-term care insurance contract for quali-
fied long-term care services.’’. 
(2) CONFORMING
AMENDMENTS
TO
MED-
ICAID.—Section 1902(a) of the Social Security Act 
(42 U.S.C. 1396a(a)), as amended by section 6505, 
is amended by inserting after paragraph (80) the 
following: 
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•AMDT. NO. 2786 
‘‘(81) provide that the State will comply with 
such regulations regarding the application of pri-
mary and secondary payor rules with respect to indi-
viduals who are eligible for medical assistance under 
this title and are eligible beneficiaries under the 
CLASS program established under title XXXII of 
the Public Health Service Act as the Secretary shall 
establish; and’’. 
(b) ASSURANCE
OF ADEQUATE INFRASTRUCTURE 
FOR THE PROVISION OF PERSONAL CARE ATTENDANT 
WORKERS.—Section 1902(a) of the Social Security Act 
(42 U.S.C. 1396a(a)), as amended by subsection (a)(2), 
is amended by inserting after paragraph (81) the fol-
lowing: 
‘‘(82) provide that, not later than 2 years after 
the date of enactment of the Community Living As-
sistance Services and Supports Act, each State 
shall— 
‘‘(A) assess the extent to which entities 
such as providers of home care, home health 
services, home and community service providers, 
public authorities created to provide personal 
care services to individuals eligible for medical 
assistance under the State plan, and nonprofit 
organizations, are serving or have the capacity 
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•AMDT. NO. 2786 
to serve as fiscal agents for, employers of, and 
providers of employment-related benefits for, 
personal care attendant workers who provide 
personal care services to individuals receiving 
benefits under the CLASS program established 
under title XXXII of the Public Health Service 
Act, including in rural and underserved areas; 
‘‘(B) designate or create such entities to 
serve as fiscal agents for, employers of, and 
providers of employment-related benefits for, 
such workers to ensure an adequate supply of 
the workers for individuals receiving benefits 
under the CLASS program, including in rural 
and underserved areas; and 
‘‘(C) ensure that the designation or cre-
ation of such entities will not negatively alter or 
impede existing programs, models, methods, or 
administration of service delivery that provide 
for consumer controlled or self-directed home 
and community services and further ensure that 
such entities will not impede the ability of indi-
viduals to direct and control their home and 
community services, including the ability to se-
lect, manage, dismiss, co-employ, or employ 
such workers or inhibit such individuals from 
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•AMDT. NO. 2786 
relying on family members for the provision of 
personal care services.’’. 
(c) PERSONAL CARE ATTENDANTS WORKFORCE AD-
VISORY PANEL.— 
(1) ESTABLISHMENT.—Not later than 90 days 
after the date of enactment of this Act, the Sec-
retary of Health and Human Services shall establish 
a Personal Care Attendants Workforce Advisory 
Panel for the purpose of examining and advising the 
Secretary and Congress on workforce issues related 
to personal care attendant workers, including with 
respect to the adequacy of the number of such work-
ers, the salaries, wages, and benefits of such work-
ers, and access to the services provided by such 
workers. 
(2) MEMBERSHIP.—In appointing members to 
the Personal Care Attendants Workforce Advisory 
Panel, the Secretary shall ensure that such members 
include the following: 
(A) Individuals with disabilities of all ages. 
(B) Senior individuals. 
(C) Representatives of individuals with dis-
abilities. 
(D) Representatives of senior individuals. 
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•AMDT. NO. 2786 
(E) Representatives of workforce and labor 
organizations. 
(F) Representatives of home and commu-
nity-based service providers. 
(G) Representatives of assisted living pro-
viders. 
(d) INCLUSION OF INFORMATION ON SUPPLEMENTAL 
COVERAGE
IN
THE NATIONAL CLEARINGHOUSE
FOR 
LONG-TERM CARE INFORMATION; EXTENSION OF FUND-
ING.—Section 6021(d) of the Deficit Reduction Act of 
2005 (42 U.S.C. 1396p note) is amended— 
(1) in paragraph (2)(A)— 
(A) in clause (ii), by striking ‘‘and’’ at the 
end; 
(B) in clause (iii), by striking the period at 
the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(iv) include information regarding 
the CLASS program established under 
title XXXII of the Public Health Service 
Act and coverage available for purchase 
through a Exchange established under sec-
tion 1311 of the Patient Protection and 
Affordable Care Act that is supplemental 
coverage to the benefits provided under a 
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•AMDT. NO. 2786 
CLASS Independence Benefit Plan under 
that program, and information regarding 
how benefits provided under a CLASS 
Independence Benefit Plan differ from dis-
ability insurance benefits.’’; and 
(2) in paragraph (3), by striking ‘‘2010’’ and 
inserting ‘‘2015’’. 
(e) EFFECTIVE DATE.—The amendments made by 
subsections (a), (b), and (d) take effect on January 1, 
2011. 
(f) RULE OF CONSTRUCTION.—Nothing in this title 
or the amendments made by this title are intended to re-
place or displace public or private disability insurance ben-
efits, including such benefits that are for income replace-
ment. 
TITLE IX—REVENUE 
PROVISIONS 
Subtitle A—Revenue Offset 
Provisions 
SEC. 9001. EXCISE TAX ON HIGH COST EMPLOYER-SPON-
SORED HEALTH COVERAGE. 
(a) IN GENERAL.—Chapter 43 of the Internal Rev-
enue Code of 1986, as amended by section 1513, is 
amended by adding at the end the following: 
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•AMDT. NO. 2786 
‘‘SEC. 4980I. EXCISE TAX ON HIGH COST EMPLOYER-SPON-
SORED HEALTH COVERAGE. 
‘‘(a) IMPOSITION OF TAX.—If— 
‘‘(1) an employee is covered under any applica-
ble employer-sponsored coverage of an employer at 
any time during a taxable period, and 
‘‘(2) there is any excess benefit with respect to 
the coverage, 
there is hereby imposed a tax equal to 40 percent of the 
excess benefit. 
‘‘(b) EXCESS BENEFIT.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘excess benefit’ 
means, with respect to any applicable employer-spon-
sored coverage made available by an employer to an 
employee during any taxable period, the sum of the 
excess amounts determined under paragraph (2) for 
months during the taxable period. 
‘‘(2) MONTHLY EXCESS AMOUNT.—The excess 
amount determined under this paragraph for any 
month is the excess (if any) of— 
‘‘(A) the aggregate cost of the applicable 
employer-sponsored coverage of the employee 
for the month, over 
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•AMDT. NO. 2786 
‘‘(B) an amount equal to 1⁄12 of the annual 
limitation under paragraph (3) for the calendar 
year in which the month occurs. 
‘‘(3) ANNUAL
LIMITATION.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—The annual limitation 
under this paragraph for any calendar year is 
the dollar limit determined under subparagraph 
(C) for the calendar year. 
‘‘(B) APPLICABLE ANNUAL LIMITATION.— 
The annual limitation which applies for any 
month shall be determined on the basis of the 
type of coverage (as determined under sub-
section (f)(1)) provided to the employee by the 
employer as of the beginning of the month. 
‘‘(C) APPLICABLE DOLLAR LIMIT.—Except 
as provided in subparagraph (D)— 
‘‘(i) 2013.—In the case of 2013, the 
dollar limit under this subparagraph is— 
‘‘(I) in the case of an employee 
with self-only coverage, $8,500, and 
‘‘(II) in the case of an employee 
with coverage other than self-only cov-
erage, $23,000. 
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•AMDT. NO. 2786 
‘‘(ii) EXCEPTION FOR CERTAIN INDI-
VIDUALS.—In the case of an individual 
who is a qualified retiree or who partici-
pates in a plan sponsored by an employer 
the majority of whose employees are en-
gaged in a high-risk profession or em-
ployed to repair or install electrical or tele-
communications lines— 
‘‘(I) the dollar amount in clause 
(i)(I) (determined after the applica-
tion of subparagraph (D)) shall be in-
creased by $1,350, and 
‘‘(II) the dollar amount in clause 
(i)(II) (determined after the applica-
tion of subparagraph (D)) shall be in-
creased by $3,000. 
‘‘(iii) SUBSEQUENT
YEARS.—In the 
case of any calendar year after 2013, each 
of the dollar amounts under clauses (i) and 
(ii) shall be increased to the amount equal 
to such amount as in effect for the cal-
endar year preceding such year, increased 
by an amount equal to the product of— 
‘‘(I) such amount as so in effect, 
multiplied by 
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•AMDT. NO. 2786 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for such year (determined by sub-
stituting the calendar year that is 2 
years before such year for ‘1992’ in 
subparagraph (B) thereof), increased 
by 1 percentage point. 
If any amount determined under this 
clause is not a multiple of $50, such 
amount shall be rounded to the nearest 
multiple of $50. 
‘‘(D) TRANSITION RULE FOR STATES WITH 
HIGHEST COVERAGE COSTS.— 
‘‘(i) IN GENERAL.—If an employee is 
a resident of a high cost State on the first 
day of any month beginning in 2013, 
2014, or 2015, the annual limitation under 
this paragraph for such month with re-
spect to such employee shall be an amount 
equal to the applicable percentage of the 
annual limitation (determined without re-
gard to this subparagraph or subparagraph 
(C)(ii)). 
‘‘(ii) APPLICABLE PERCENTAGE.—The 
applicable percentage is 120 percent for 
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•AMDT. NO. 2786 
2013, 110 percent for 2014, and 105 per-
cent for 2015. 
‘‘(iii) HIGH COST STATE.—The term 
‘high cost State’ means each of the 17 
States which the Secretary of Health and 
Human Services, in consultation with the 
Secretary, estimates had the highest aver-
age cost during 2012 for employer-spon-
sored coverage under health plans. The 
Secretary’s estimate shall be made on the 
basis of aggregate premiums paid in the 
State for such health plans, determined 
using the most recent data available as of 
August 31, 2012. 
‘‘(c) LIABILITY TO PAY TAX.— 
‘‘(1) IN
GENERAL.—Each coverage provider 
shall pay the tax imposed by subsection (a) on its 
applicable share of the excess benefit with respect to 
an employee for any taxable period. 
‘‘(2) COVERAGE PROVIDER.—For purposes of 
this subsection, the term ‘coverage provider’ means 
each of the following: 
‘‘(A) HEALTH INSURANCE COVERAGE.—If 
the applicable employer-sponsored coverage con-
sists of coverage under a group health plan 
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•AMDT. NO. 2786 
which provides health insurance coverage, the 
health insurance issuer. 
‘‘(B) HSA AND MSA CONTRIBUTIONS.—If 
the applicable employer-sponsored coverage con-
sists of coverage under an arrangement under 
which the employer makes contributions de-
scribed in subsection (b) or (d) of section 106, 
the employer. 
‘‘(C) OTHER COVERAGE.—In the case of 
any other applicable employer-sponsored cov-
erage, the person that administers the plan ben-
efits. 
‘‘(3) APPLICABLE
SHARE.—For purposes of 
this subsection, a coverage provider’s applicable 
share of an excess benefit for any taxable period is 
the amount which bears the same ratio to the 
amount of such excess benefit as— 
‘‘(A) the cost of the applicable employer- 
sponsored coverage provided by the provider to 
the employee during such period, bears to 
‘‘(B) the aggregate cost of all applicable 
employer-sponsored coverage provided to the 
employee by all coverage providers during such 
period. 
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•AMDT. NO. 2786 
‘‘(4) RESPONSIBILITY TO CALCULATE TAX AND 
APPLICABLE SHARES.— 
‘‘(A) IN GENERAL.—Each employer shall— 
‘‘(i) calculate for each taxable period 
the amount of the excess benefit subject to 
the tax imposed by subsection (a) and the 
applicable share of such excess benefit for 
each coverage provider, and 
‘‘(ii) notify, at such time and in such 
manner as the Secretary may prescribe, 
the Secretary and each coverage provider 
of the amount so determined for the pro-
vider. 
‘‘(B) SPECIAL RULE FOR MULTIEMPLOYER 
PLANS.—In the case of applicable employer- 
sponsored coverage made available to employees 
through a multiemployer plan (as defined in 
section 414(f)), the plan sponsor shall make the 
calculations, and provide the notice, required 
under subparagraph (A). 
‘‘(d) APPLICABLE
EMPLOYER-SPONSORED
COV-
ERAGE; COST.—For purposes of this section— 
‘‘(1) APPLICABLE EMPLOYER-SPONSORED COV-
ERAGE.— 
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•AMDT. NO. 2786 
‘‘(A) IN GENERAL.—The term ‘applicable 
employer-sponsored coverage’ means, with re-
spect to any employee, coverage under any 
group health plan made available to the em-
ployee by an employer which is excludable from 
the employee’s gross income under section 106, 
or would be so excludable if it were employer- 
provided coverage (within the meaning of such 
section 106). 
‘‘(B) EXCEPTIONS.—The term ‘applicable 
employer-sponsored coverage’ shall not in-
clude— 
‘‘(i) any coverage (whether through 
insurance or otherwise) described in sec-
tion 9832(c)(1)(A) or for long-term care, 
or 
‘‘(ii) any coverage described in section 
9832(c)(3) the payment for which is not 
excludable from gross income and for 
which a deduction under section 162(l) is 
not allowable. 
‘‘(C) COVERAGE
INCLUDES
EMPLOYEE 
PAID PORTION.—Coverage shall be treated as 
applicable employer-sponsored coverage without 
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•AMDT. NO. 2786 
regard to whether the employer or employee 
pays for the coverage. 
‘‘(D) SELF-EMPLOYED
INDIVIDUAL.—In 
the case of an individual who is an employee 
within the meaning of section 401(c)(1), cov-
erage under any group health plan providing 
health insurance coverage shall be treated as 
applicable employer-sponsored coverage if a de-
duction is allowable under section 162(l) with 
respect to all or any portion of the cost of the 
coverage. 
‘‘(E) GOVERNMENTAL PLANS INCLUDED.— 
Applicable employer-sponsored coverage shall 
include coverage under any group health plan 
established and maintained primarily for its ci-
vilian employees by the Government of the 
United States, by the government of any State 
or political subdivision thereof, or by any agen-
cy or instrumentality of any such government. 
‘‘(2) DETERMINATION OF COST.— 
‘‘(A) IN GENERAL.—The cost of applicable 
employer-sponsored coverage shall be deter-
mined under rules similar to the rules of section 
4980B(f)(4), except that in determining such 
cost, any portion of the cost of such coverage 
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•AMDT. NO. 2786 
which is attributable to the tax imposed under 
this section shall not be taken into account and 
the amount of such cost shall be calculated sep-
arately for self-only coverage and other cov-
erage. In the case of applicable employer-spon-
sored coverage which provides coverage to re-
tired employees, the plan may elect to treat a 
retired employee who has not attained the age 
of 65 and a retired employee who has attained 
the age of 65 as similarly situated beneficiaries. 
‘‘(B) HEALTH FSAS.—In the case of appli-
cable employer-sponsored coverage consisting of 
coverage under a flexible spending arrangement 
(as defined in section 106(c)(2)), the cost of the 
coverage shall be equal to the sum of— 
‘‘(i) the amount of employer contribu-
tions under any salary reduction election 
under the arrangement, plus 
‘‘(ii) the amount determined under 
subparagraph (A) with respect to any re-
imbursement under the arrangement in ex-
cess of the contributions described in 
clause (i). 
‘‘(C) ARCHER
MSAS
AND
HSAS.—In the 
case of applicable employer-sponsored coverage 
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•AMDT. NO. 2786 
consisting of coverage under an arrangement 
under which the employer makes contributions 
described in subsection (b) or (d) of section 
106, the cost of the coverage shall be equal to 
the amount of employer contributions under the 
arrangement. 
‘‘(D) 
ALLOCATION
ON
A
MONTHLY 
BASIS.—If cost is determined on other than a 
monthly basis, the cost shall be allocated to 
months in a taxable period on such basis as the 
Secretary may prescribe. 
‘‘(e) PENALTY FOR FAILURE TO PROPERLY CAL-
CULATE EXCESS BENEFIT.— 
‘‘(1) IN GENERAL.—If, for any taxable period, 
the tax imposed by subsection (a) exceeds the tax 
determined under such subsection with respect to 
the total excess benefit calculated by the employer or 
plan sponsor under subsection (c)(4)— 
‘‘(A) each coverage provider shall pay the 
tax on its applicable share (determined in the 
same manner as under subsection (c)(4)) of the 
excess, but no penalty shall be imposed on the 
provider with respect to such amount, and 
‘‘(B) the employer or plan sponsor shall, in 
addition to any tax imposed by subsection (a), 
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•AMDT. NO. 2786 
pay a penalty in an amount equal to such ex-
cess, plus interest at the underpayment rate de-
termined under section 6621 for the period be-
ginning on the due date for the payment of tax 
imposed by subsection (a) to which the excess 
relates and ending on the date of payment of 
the penalty. 
‘‘(2) LIMITATIONS ON PENALTY.— 
‘‘(A) PENALTY
NOT
TO
APPLY
WHERE 
FAILURE
NOT
DISCOVERED
EXERCISING
REA-
SONABLE DILIGENCE.—No penalty shall be im-
posed by paragraph (1)(B) on any failure to 
properly calculate the excess benefit during any 
period for which it is established to the satisfac-
tion of the Secretary that the employer or plan 
sponsor neither knew, nor exercising reasonable 
diligence would have known, that such failure 
existed. 
‘‘(B) PENALTY NOT TO APPLY TO FAIL-
URES CORRECTED WITHIN 30 DAYS.—No pen-
alty shall be imposed by paragraph (1)(B) on 
any such failure if— 
‘‘(i) such failure was due to reason-
able cause and not to willful neglect, and 
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•AMDT. NO. 2786 
or drug is a prescribed drug (determined without regard 
to whether such drug is available without a prescription) 
or is insulin.’’. 
(d) EFFECTIVE DATES.— 
(1) 
DISTRIBUTIONS
FROM
SAVINGS
AC-
COUNTS.—The amendments made by subsections (a) 
and (b) shall apply to amounts paid with respect to 
taxable years beginning after December 31, 2010. 
(2) REIMBURSEMENTS.—The amendment made 
by subsection (c) shall apply to expenses incurred 
with respect to taxable years beginning after Decem-
ber 31, 2010. 
SEC. 9004. INCREASE IN ADDITIONAL TAX ON DISTRIBU-
TIONS FROM HSAS AND ARCHER MSAS NOT 
USED FOR QUALIFIED MEDICAL EXPENSES. 
(a) HSAS.—Section 223(f)(4)(A) of the Internal 
Revenue Code of 1986 is amended by striking ‘‘10 per-
cent’’ and inserting ‘‘20 percent’’. 
(b) ARCHER MSAS.—Section 220(f)(4)(A) of the In-
ternal Revenue Code of 1986 is amended by striking ‘‘15 
percent’’ and inserting ‘‘20 percent’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions made after Decem-
ber 31, 2010. 
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•AMDT. NO. 2786 
care for emergency medical conditions (within 
the meaning of section 1867 of the Social Secu-
rity Act (42 U.S.C. 1395dd)) to individuals re-
gardless of their eligibility under the financial 
assistance policy described in subparagraph (A). 
‘‘(5) LIMITATION ON CHARGES.—An organiza-
tion meets the requirements of this paragraph if the 
organization— 
‘‘(A) limits amounts charged for emer-
gency or other medically necessary care pro-
vided to individuals eligible for assistance under 
the financial assistance policy described in para-
graph (4)(A) to not more than the lowest 
amounts charged to individuals who have insur-
ance covering such care, and 
‘‘(B) prohibits the use of gross charges. 
‘‘(6) BILLING
AND
COLLECTION
REQUIRE-
MENTS.—An organization meets the requirement of 
this paragraph only if the organization does not en-
gage in extraordinary collection actions before the 
organization has made reasonable efforts to deter-
mine whether the individual is eligible for assistance 
under the financial assistance policy described in 
paragraph (4)(A). 
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•AMDT. NO. 2786 
(B) by striking ‘‘the following percentages 
of the’’ and inserting ‘‘1.45 percent of the’’, 
(C) by striking ‘‘(as defined in section 
3121(b))—’’ and all that follows and inserting 
‘‘(as defined in section 3121(b)).’’, and 
(D) by adding at the end the following new 
paragraph: 
‘‘(2) ADDITIONAL TAX.—In addition to the tax 
imposed by paragraph (1) and the preceding sub-
section, there is hereby imposed on every taxpayer 
(other than a corporation, estate, or trust) a tax 
equal to 0.5 percent of wages which are received 
with respect to employment (as defined in section 
3121(b)) during any taxable year beginning after 
December 31, 2012, and which are in excess of— 
‘‘(A) in the case of a joint return, 
$250,000, and 
‘‘(B) in any other case, $200,000.’’. 
(2) COLLECTION OF TAX.—Section 3102 of the 
Internal Revenue Code of 1986 is amended by add-
ing at the end the following new subsection: 
‘‘(f) SPECIAL RULES FOR ADDITIONAL TAX.— 
‘‘(1) IN GENERAL.—In the case of any tax im-
posed by section 3101(b)(2), subsection (a) shall 
only apply to the extent to which the taxpayer re-
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