I 
110TH CONGRESS 
2D SESSION 
H. R. 5480 
To respond to a Medicare funding warning. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 25, 2008 
Mr. HOYER (for himself and Mr. BOEHNER) (both by request) introduced the 
following bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committees on the Judiciary and Ways and 
Means, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To respond to a Medicare funding warning. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare Funding Warning Response Act of 2008’’. 
(b) REFERENCES.—In this Act: 
(1) Except where otherwise specifically pro-
vided, references in this Act shall be considered to 
be made to the Social Security Act, or to a section 
or other provision thereof. 
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(2) The term ‘‘Secretary’’ shall be deemed a 
reference to the Secretary of Health and Human 
Services. 
(3) The terms ‘‘Medicare’’ and ‘‘Medicare pro-
gram’’ mean the program under title XVIII of the 
Social Security Act (42 U.S.C. 1395 et seq.). 
(4) The Medicare Prescription Drug, Improve-
ment, and Modernization Act of 2003 (Public Law 
108–173) shall be referred to as the ‘‘MMA’’. 
(5) The term ‘‘excess general revenue medicare 
funding’’ has the meaning given such term by sec-
tion 801(c) of the MMA. 
(6) The term ‘‘Trustees Report’’ means the an-
nual report submitted under subsection (b)(2) of 
sections 1817 and 1841 of the Social Security Act 
(42 U.S.C. 1395i(b)(2) and 1395t(b)(2), respec-
tively). 
(c) PURPOSE.—It is the purpose of this Act to re-
spond to the medicare funding warning currently in effect 
under section 801(a)(2) of the MMA. 
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TITLE 
I—INTRODUCING 
PRIN-
CIPLES 
OF 
VALUE-BASED 
HEALTH 
CARE 
INTO 
THE 
MEDICARE PROGRAM 
SEC. 101. INTRODUCING PRINCIPLES OF VALUE-BASED 
HEALTH CARE INTO THE MEDICARE PRO-
GRAM. 
(a) ELECTRONIC HEALTH RECORDS.—The Secretary 
shall develop and implement a system for encouraging na-
tionwide adoption and use of interoperable electronic 
health records and to make available personal health 
records for Medicare beneficiaries. 
(b) PRICING TRANSPARENCY.—The Secretary shall 
make publicly available information on prices and pay-
ments under the Medicare program for treatments (includ-
ing episodes of care), items, and services to assist Medi-
care beneficiaries in making choices among providers, 
plans, and treatment options. 
(c) QUALITY TRANSPARENCY.—The Secretary shall 
make publicly available information on the quality of care 
provided to Medicare beneficiaries to assist them in mak-
ing choices among providers, plans, and treatments. To 
ensure the continued development and evolution of quality 
measures, the Secretary shall develop and implement a 
plan for ensuring that, by the year 2013, quality measures 
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are available and reported with respect to at least 50 per-
cent of the care provided under the Medicare program (de-
termined according to the amount of payment made under 
such program for items and services with respect to which 
such measures are available). The Secretary shall report 
to the Committees on Ways and Means and Energy and 
Commerce in the House of Representatives and the Com-
mittee on Finance in the Senate annually on the progress 
of the goal specified in the preceding sentence. 
(d) INCENTIVES FOR VALUE.— 
(1) INCENTIVES
FOR
PROVIDERS
AND
SUP-
PLIERS.— 
(A) IN GENERAL.—The Secretary shall de-
sign and implement a system for use in the 
Medicare program under which a portion of the 
payments that would otherwise be made under 
such program to some or all classes of individ-
uals and entities furnishing items or services to 
beneficiaries of such program would be based 
on the quality and efficiency of their perform-
ance. 
(B) 
IMPLEMENTATION.—The 
Secretary 
shall first implement such system in settings 
where measures are well-accepted and already 
collected, including hospitals, physicians’ of-
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fices, home health agencies, skilled nursing fa-
cilities, and renal dialysis facilities. The initial 
focus of such efforts shall be on quality, but the 
Secretary shall add measures of efficiency as 
they are identified. The system shall also in-
clude incentives for reducing unwarranted geo-
graphic variations in quality and efficiency. 
(C) SECRETARY’S AUTHORITY.—The Sec-
retary may implement the system described in 
this paragraph without regard to any provision 
of title XVIII of the Social Security Act that 
would, in the absence of subparagraphs (A) and 
(B), apply with respect to payment to an indi-
vidual or entity furnishing items or services for 
which payment may be made under the Medi-
care program. 
(2) BENEFICIARY INCENTIVES.— 
(A) IN GENERAL.—The Secretary shall im-
plement incentives for Medicare beneficiaries to 
use more efficient providers and preventive 
services known to reduce costs. 
(B) ACCESS
TO
HEALTH
SAVINGS
AC-
COUNTS.—The Secretary shall assure a transi-
tion into the Medicare program for individuals 
who are not yet enrolled in such program who 
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own health savings accounts, and shall provide 
for the availability of high deductible health 
plan options in the Medicare program. 
(e) BROADLY TRANSFORMING THE PRIVATE HEALTH 
CARE MARKETPLACE.—The Secretary shall use and re-
lease Medicare data for quality improvement, performance 
measurement, public reporting, and treatment-related pur-
poses. In implementing the preceding sentence, the Sec-
retary shall apply risk adjustment techniques where ap-
propriate and shall determine the circumstances under 
which it is appropriate to release such data. 
(f) 
PROTECTING
INDIVIDUALLY
IDENTIFIABLE 
HEALTH INFORMATION.—In implementing this title, the 
Secretary shall ensure that individually identifiable bene-
ficiary health information is protected (in accordance with 
the regulations adopted under section 264(c) of the Health 
Insurance Portability and Accountability Act of 1996 and 
such other laws and regulations as may apply). 
(g) REGULATIONS.—The Secretary may implement a 
system described in this section by regulation, but only 
if such regulation is issued after public notice and an op-
portunity for public comment. 
(h) DEFINITIONS.—As used in this section: 
(1) The term ‘‘efficiency’’ means the delivery of 
health care in a manner that reduces the costs of 
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providing care for Medicare beneficiaries while main-
taining or improving the quality of such care. 
(2) The term ‘‘information on quality of care’’ 
means such measures of— 
(A) the use of clinical processes and struc-
tures known to improve care; 
(B) health outcomes; and 
(C) patient perceptions of their care, as 
the Secretary may select with preference given 
to those measures that have been recognized 
through a consensus-based process. 
(i) SAVINGS REQUIREMENT.— 
(1) IN GENERAL.—The Secretary may imple-
ment the provisions of subsections (a) through (e) of 
section 101 and section 102 for a year only to the 
extent that the Secretary determines (and the Chief 
Actuary of the Centers for Medicare & Medicaid 
Services certifies) that— 
(A) the total amount of payment made 
under title XVIII of the Social Security Act 
over the five and ten year periods that begin 
with January 1 of such year as a result of the 
implementation of such subsections (a) through 
(e) and section 102 is less than the amount 
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that would have been made over such periods if 
such implementation had not occurred; and 
(B) the total amount of payment made 
under each of titles XIX and XXI of such Act 
over such periods as a result of such implemen-
tation is no greater than the amount that would 
have been made under each such title over such 
periods if such implementation had not oc-
curred. 
(2) AVAILABILITY
OF
APPROPRIATIONS.—The 
Secretary shall carry out the provisions of this sec-
tion subject to the availability of appropriations and 
to the extent permitted consistent with paragraph 
(1). 
SEC. 102. RELEASE OF PHYSICIAN PERFORMANCE MEAS-
UREMENTS. 
Section 1848(k) (42 U.S.C. 1395w–4(k)) is amended 
by adding at the end the following new paragraph: 
‘‘(9) RELEASE OF QUALITY MEASUREMENTS.— 
‘‘(A) IN GENERAL.—Notwithstanding sec-
tion 552a of title 5, United States Code, the 
Secretary may— 
‘‘(i) release to the public physician- 
specific measurements of the quality or ef-
ficiency of physician performance against a 
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standard (reflecting measurements that 
have been recognized through a consensus- 
based process) that has been endorsed by 
the Secretary; and 
‘‘(ii) release, to an entity that will 
generate or calculate such measurements, 
data that the entity may use to perform 
such task. 
‘‘(B) ENDORSEMENT
OF
STANDARDS.— 
The Secretary may make an endorsement under 
subparagraph (A) by publication of a notice in 
the Federal Register.’’. 
TITLE II—REDUCING THE EX-
CESSIVE 
BURDEN 
THE 
LI-
ABILITY SYSTEM PLACES ON 
THE HEALTH CARE DELIVERY 
SYSTEM 
SEC. 201. SHORT TITLE. 
This title may be cited as the ‘‘Help Efficient, Acces-
sible, Low-cost, Timely Healthcare (HEALTH) Act of 
2008’’. 
SEC. 202. FINDINGS AND PURPOSE. 
(a) FINDINGS.— 
(1) EFFECT
ON
HEALTH
CARE
ACCESS
AND 
COSTS.—Congress finds that our current civil justice 
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system is adversely affecting patient access to health 
care services, better patient care, and cost-efficient 
health care, in that the health care liability system 
is a costly and ineffective mechanism for resolving 
claims of health care liability and compensating in-
jured patients, and is a deterrent to the sharing of 
information among health care professionals which 
impedes efforts to improve patient safety and quality 
of care. 
(2) EFFECT
ON
INTERSTATE
COMMERCE.— 
Congress finds that the health care and insurance 
industries are industries affecting interstate com-
merce and the health care liability litigation systems 
existing throughout the United States are activities 
that affect interstate commerce by contributing to 
the high costs of health care and premiums for 
health care liability insurance purchased by health 
care system providers. 
(3) EFFECT
ON
FEDERAL
SPENDING.—Con-
gress finds that the health care liability litigation 
systems existing throughout the United States have 
a significant effect on the amount, distribution, and 
use of Federal funds because of— 
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(A) the large number of individuals who 
receive health care benefits under programs op-
erated or financed by the Federal Government; 
(B) the large number of individuals who 
benefit because of the exclusion from Federal 
taxes of the amounts spent to provide them 
with health insurance benefits; and 
(C) the large number of health care pro-
viders who provide items or services for which 
the Federal Government makes payments. 
(b) PURPOSE.—It is the purpose of this title to imple-
ment reasonable, comprehensive, and effective health care 
liability reforms designed to— 
(1) improve the availability of health care serv-
ices in cases in which health care liability actions 
have been shown to be a factor in the decreased 
availability of services; 
(2) reduce the incidence of ‘‘defensive medi-
cine’’ and lower the cost of health care liability in-
surance, all of which contribute to the escalation of 
health care costs; 
(3) ensure that persons with meritorious health 
care injury claims receive fair and adequate com-
pensation, including reasonable noneconomic dam-
ages; 
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(4) improve the fairness and cost-effectiveness 
of our current health care liability system to resolve 
disputes over, and provide compensation for, health 
care liability by reducing uncertainty in the amount 
of compensation provided to injured individuals; and 
(5) provide an increased sharing of information 
in the health care system which will reduce unin-
tended injury and improve patient care. 
SEC. 203. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 
The time for the commencement of a health care law-
suit shall be 3 years after the date of manifestation of 
injury or 1 year after the claimant discovers, or through 
the use of reasonable diligence should have discovered, the 
injury, whichever occurs first. In no event shall the time 
for commencement of a health care lawsuit exceed 3 years 
after the date of manifestation of injury unless tolled for 
any of the following— 
(1) upon proof of fraud; 
(2) intentional concealment; or 
(3) the presence of a foreign body, which has no 
therapeutic or diagnostic purpose or effect, in the 
person of the injured person. 
Actions by a minor shall be commenced within 3 years 
from the date of the alleged manifestation of injury except 
that actions by a minor under the full age of 6 years shall 
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be commenced within 3 years of manifestation of injury 
or prior to the minor’s 8th birthday, whichever provides 
a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian 
and a health care provider or health care organization 
have committed fraud or collusion in the failure to bring 
an action on behalf of the injured minor. 
SEC. 204. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this title shall limit a claim-
ant’s recovery of the full amount of the available economic 
damages, notwithstanding the limitation in subsection (b). 
(b) ADDITIONAL NONECONOMIC DAMAGES.—In any 
health care lawsuit, the amount of noneconomic damages, 
if available, may be as much as $250,000, regardless of 
the number of parties against whom the action is brought 
or the number of separate claims or actions brought with 
respect to the same injury. 
(c) NO DISCOUNT OF AWARD FOR NONECONOMIC 
DAMAGES.—For purposes of applying the limitation in 
subsection (b), future noneconomic damages shall not be 
discounted to present value. The jury shall not be in-
formed about the maximum award for noneconomic dam-
ages. An award for noneconomic damages in excess of 
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$250,000 shall be reduced either before the entry of judg-
ment, or by amendment of the judgment after entry of 
judgment, and such reduction shall be made before ac-
counting for any other reduction in damages required by 
law. If separate awards are rendered for past and future 
noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be re-
duced first. 
(d) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a sepa-
rate judgment shall be rendered against each such party 
for the amount allocated to such party. For purposes of 
this section, the trier of fact shall determine the propor-
tion of responsibility of each party for the claimant’s 
harm. 
SEC. 205. MAXIMIZING PATIENT RECOVERY. 
(a) COURT SUPERVISION OF SHARE OF DAMAGES 
ACTUALLY PAID TO CLAIMANTS.—In any health care law-
suit, the court shall supervise the arrangements for pay-
ment of damages to protect against conflicts of interest 
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that may have the effect of reducing the amount of dam-
ages awarded that are actually paid to claimants. In par-
ticular, in any health care lawsuit in which the attorney 
for a party claims a financial stake in the outcome by vir-
tue of a contingent fee, the court shall have the power 
to restrict the payment of a claimant’s damage recovery 
to such attorney, and to redirect such damages to the 
claimant based upon the interests of justice and principles 
of equity. In no event shall the total of all contingent fees 
for representing all claimants in a health care lawsuit ex-
ceed the following limits: 
(1) 40 percent of the first $50,000 recovered by 
the claimant(s). 
(2) 331⁄3 percent of the next $50,000 recovered 
by the claimant(s). 
(3) 25 percent of the next $500,000 recovered 
by the claimant(s). 
(4) 15 percent of any amount by which the re-
covery by the claimant(s) is in excess of $600,000. 
(b) APPLICABILITY.—The limitations in this section 
shall apply whether the recovery is by judgment, settle-
ment, mediation, arbitration, or any other form of alter-
native dispute resolution. In a health care lawsuit involv-
ing a minor or incompetent person, a court retains the 
authority to authorize or approve a fee that is less than 
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the maximum permitted under this section. The require-
ment for court supervision in the first two sentences of 
subsection (a) applies only in civil actions. 
SEC. 206. ADDITIONAL HEALTH BENEFITS. 
In any health care lawsuit involving injury or wrong-
ful death, any party may introduce evidence of collateral 
source benefits. If a party elects to introduce such evi-
dence, any opposing party may introduce evidence of any 
amount paid or contributed or reasonably likely to be paid 
or contributed in the future by or on behalf of the oppos-
ing party to secure the right to such collateral source bene-
fits. No provider of collateral source benefits shall recover 
any amount against the claimant or receive any lien or 
credit against the claimant’s recovery or be equitably or 
legally subrogated to the right of the claimant in a health 
care lawsuit involving injury or wrongful death. This sec-
tion shall apply to any health care lawsuit that is settled 
as well as a health care lawsuit that is resolved by a fact 
finder. This section shall not apply to section 1862(b) (42 
U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) of the Social Security Act, or to section 
8131 or section 8132 of title 5, United States Code. This 
section shall not apply to section 1862(b) (42 U.S.C. 
1395y(b)) 
or 
section 
1902(a)(25) 
(42 
U.S.C. 
1396a(a)(25)) of the Social Security Act, or to section 
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8131 or section 8132 of title 5, United States Code, or 
to a collateral source provider that is an employee benefit 
plan under section 3(3) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1002(3)). 
SEC. 207. PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may, if other-
wise permitted by applicable State or Federal law, be 
awarded against any person in a health care lawsuit only 
if it is proven by clear and convincing evidence that such 
person acted with malicious intent to injure the claimant, 
or that such person deliberately failed to avoid unneces-
sary injury that such person knew the claimant was sub-
stantially certain to suffer. In any health care lawsuit 
where no judgment for compensatory damages is rendered 
against such person, no punitive damages may be awarded 
with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a mo-
tion by the claimant and after a finding by the court, upon 
review of supporting and opposing affidavits or after a 
hearing, after weighing the evidence, that the claimant has 
established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the re-
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quest of any party in a health care lawsuit, the trier of 
fact shall consider in a separate proceeding— 
(1) whether punitive damages are to be award-
ed and the amount of such award; and 
(2) the amount of punitive damages following a 
determination of punitive liability. 
If a separate proceeding is requested, evidence relevant 
only to the claim for punitive damages, as determined by 
applicable State law, shall be inadmissible in any pro-
ceeding to determine whether compensatory damages are 
to be awarded. 
(b) DETERMINING AMOUNT
OF PUNITIVE DAM-
AGES.— 
(1) FACTORS
CONSIDERED.—In determining 
the amount of punitive damages, if awarded, in a 
health care lawsuit, the trier of fact shall consider 
only the following— 
(A) the severity of the harm caused by the 
conduct of such party; 
(B) the duration of the conduct or any 
concealment of it by such party; 
(C) the profitability of the conduct to such 
party; 
(D) the number of products sold or med-
ical procedures rendered for compensation, as 
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the case may be, by such party, of the kind 
causing the harm complained of by the claim-
ant; 
(E) any criminal penalties imposed on such 
party, as a result of the conduct complained of 
by the claimant; and 
(F) the amount of any civil fines assessed 
against such party as a result of the conduct 
complained of by the claimant. 
(2) MAXIMUM AWARD.—The amount of punitive 
damages, if awarded, in a health care lawsuit may 
be as much as $250,000 or as much as two times 
the amount of economic damages awarded, which-
ever is greater. The jury shall not be informed of 
this limitation. 
(c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT 
COMPLY WITH FDA STANDARDS.— 
(1) IN GENERAL.— 
(A) No punitive damages may be awarded 
against the manufacturer or distributor of a 
medical product, or a supplier of any compo-
nent or raw material of such medical product, 
based on a claim that such product caused the 
claimant’s harm where— 
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(i)(I) such medical product was sub-
ject to premarket approval, clearance, or li-
censure by the Food and Drug Administra-
tion with respect to the safety of the for-
mulation or performance of the aspect of 
such medical product which caused the 
claimant’s harm or the adequacy of the 
packaging or labeling of such medical 
product; and 
(II) such medical product was so ap-
proved, cleared, or licensed; or 
(ii) such medical product is generally 
recognized among qualified experts as safe 
and effective pursuant to conditions estab-
lished by the Food and Drug Administra-
tion and applicable Food and Drug Admin-
istration regulations, including without 
limitation those related to packaging and 
labeling, unless the Food and Drug Admin-
istration has determined that such medical 
product was not manufactured or distrib-
uted in substantial compliance with appli-
cable Food and Drug Administration stat-
utes and regulations. 
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(B) RULE OF CONSTRUCTION.—Subpara-
graph (A) may not be construed as establishing 
the obligation of the Food and Drug Adminis-
tration to demonstrate affirmatively that a 
manufacturer, distributor, or supplier referred 
to in such subparagraph meets any of the con-
ditions described in such subparagraph. 
(2) LIABILITY OF HEALTH CARE PROVIDERS.— 
A health care provider who prescribes, or who dis-
penses pursuant to a prescription, a medical product 
approved, licensed, or cleared by the Food and Drug 
Administration shall not be named as a party to a 
product liability lawsuit involving such product and 
shall not be liable to a claimant in a class action 
lawsuit against the manufacturer, distributor, or 
seller of such product. Nothing in this paragraph 
prevents a court from consolidating cases involving 
health care providers and cases involving products li-
ability claims against the manufacturer, distributor, 
or product seller of such medical product. 
(3) PACKAGING.—In a health care lawsuit for 
harm which is alleged to relate to the adequacy of 
the packaging or labeling of a drug which is required 
to have tamper-resistant packaging under regula-
tions of the Secretary of Health and Human Serv-
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ices (including labeling regulations related to such 
packaging), the manufacturer or product seller of 
the drug shall not be held liable for punitive dam-
ages unless such packaging or labeling is found by 
the trier of fact by clear and convincing evidence to 
be substantially out of compliance with such regula-
tions. 
(4) EXCEPTION.—Paragraph (1) shall not 
apply in any health care lawsuit in which— 
(A) a person, before or after premarket ap-
proval, clearance, or licensure of such medical 
product, knowingly misrepresented to or with-
held from the Food and Drug Administration 
information that is required to be submitted 
under the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 301 et seq.) or section 351 of 
the Public Health Service Act (42 U.S.C. 262) 
that is material and is causally related to the 
harm which the claimant allegedly suffered; or 
(B) a person made an illegal payment to 
an official of the Food and Drug Administra-
tion for the purpose of either securing or main-
taining approval, clearance, or licensure of such 
medical product. 
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SEC. 208. AUTHORIZATION OF PAYMENT OF FUTURE DAM-
AGES TO CLAIMANTS IN HEALTH CARE LAW-
SUITS. 
(a) IN GENERAL.—In any health care lawsuit, if an 
award of future damages, without reduction to present 
value, equaling or exceeding $50,000 is made against a 
party with sufficient insurance or other assets to fund a 
periodic payment of such a judgment, the court shall, at 
the request of any party, enter a judgment ordering that 
the future damages be paid by periodic payments. In any 
health care lawsuit, the court may be guided by the Uni-
form Periodic Payment of Judgments Act promulgated by 
the National Conference of Commissioners on Uniform 
State Laws. 
(b) APPLICABILITY.—This section applies to all ac-
tions which have not been first set for trial or retrial be-
fore the effective date of this Act. 
SEC. 209. DEFINITIONS. 
In this title: 
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution 
system’’ or ‘‘ADR’’ means a system that provides 
for the resolution of health care lawsuits in a man-
ner other than through a civil action brought in a 
State or Federal court. 
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(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
ing a person who asserts or claims a right to legal 
or equitable contribution, indemnity or subrogation, 
arising out of a health care liability claim or action, 
and any person on whose behalf such a claim is as-
serted or such an action is brought, whether de-
ceased, incompetent, or a minor. 
(3) COLLATERAL
SOURCE
BENEFITS.—The 
term ‘‘collateral source benefits’’ means any amount 
paid or reasonably likely to be paid in the future to 
or on behalf of the claimant, or any service, product 
or other benefit provided or reasonably likely to be 
provided in the future to or on behalf of the claim-
ant, as a result of the injury or wrongful death, pur-
suant to— 
(A) any State or Federal health, sickness, 
income-disability, accident, or workers’ com-
pensation law (except the Federal Employees’ 
Compensation Act (5 U.S.C. 8101 et seq.)); 
(B) any health, sickness, income-disability, 
or accident insurance that provides health bene-
fits or income-disability coverage; 
(C) any contract or agreement of any 
group, organization, partnership, or corporation 
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to provide, pay for, or reimburse the cost of 
medical, hospital, dental, or income disability 
benefits; and 
(D) any other publicly or privately funded 
program. 
(4) 
COMPENSATORY
DAMAGES.—The 
term 
‘‘compensatory 
damages’’ 
means 
objectively 
verifiable monetary losses incurred as a result of the 
provision of, use of, or payment for (or failure to 
provide, use, or pay for) health care services or med-
ical products, such as past and future medical ex-
penses, loss of past and future earnings, cost of ob-
taining domestic services, loss of employment, and 
loss of business or employment opportunities, dam-
ages for physical and emotional pain, suffering, in-
convenience, physical impairment, mental anguish, 
disfigurement, loss of enjoyment of life, loss of soci-
ety and companionship, loss of consortium (other 
than loss of domestic service), hedonic damages, in-
jury to reputation, and all other nonpecuniary losses 
of any kind or nature. The term ‘‘compensatory 
damages’’ includes economic damages and non-
economic damages, as such terms are defined in this 
section. 
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(5) CONTINGENT FEE.—The term ‘‘contingent 
fee’’ includes all compensation to any person or per-
sons which is payable only if a recovery is effected 
on behalf of one or more claimants. 
(6) ECONOMIC DAMAGES.—The term ‘‘economic 
damages’’ means objectively verifiable monetary 
losses incurred as a result of the provision of, use 
of, or payment for (or failure to provide, use, or pay 
for) health care services or medical products, such as 
past and future medical expenses, loss of past and 
future earnings, cost of obtaining domestic services, 
loss of employment, and loss of business or employ-
ment opportunities. 
(7) 
HEALTH
CARE
LAWSUIT.—The 
term 
‘‘health care lawsuit’’ means any health care liability 
claim concerning the provision of health care goods 
or services or any medical product affecting inter-
state commerce, or any health care liability action 
concerning the provision of health care goods or 
services or any medical product affecting interstate 
commerce, brought in a State or Federal court or 
pursuant to an alternative dispute resolution system, 
against a health care provider, a health care organi-
zation, or the manufacturer, distributor, supplier, 
marketer, promoter, or seller of a medical product, 
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regardless of the theory of liability on which the 
claim is based, or the number of claimants, plain-
tiffs, defendants, or other parties, or the number of 
claims or causes of action, in which the claimant al-
leges a health care liability claim. Such term does 
not include a claim brought by the United States 
Government or a relator under the False Claims Act 
(31 U.S.C. 3729 et seq.) or a claim or action which 
is based on criminal liability; which seeks civil fines 
or penalties paid to Federal, State, or local govern-
ment; or which is grounded in antitrust. 
(8) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal Court or pursu-
ant to an alternative dispute resolution system, 
against a health care provider, a health care organi-
zation, or the manufacturer, distributor, supplier, 
marketer, promoter, or seller of a medical product, 
regardless of the theory of liability on which the 
claim is based, or the number of plaintiffs, defend-
ants, or other parties, or the number of causes of ac-
tion, in which the claimant alleges a health care li-
ability claim. 
(9) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
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by any person, whether or not pursuant to ADR, 
against a health care provider, health care organiza-
tion, or the manufacturer, distributor, supplier, mar-
keter, promoter, or seller of a medical product, in-
cluding, but not limited to, third-party claims, cross- 
claims, counter-claims, or contribution claims, which 
are based upon the provision of, use of, or payment 
for (or the failure to provide, use, or pay for) health 
care services or medical products, regardless of the 
theory of liability on which the claim is based, or the 
number of plaintiffs, defendants, or other parties, or 
the number of causes of action. 
(10) HEALTH CARE ORGANIZATION.—The term 
‘‘health care organization’’ means any person or en-
tity which is obligated to provide or pay for health 
benefits under any health plan, including any person 
or entity acting under a contract or arrangement 
with a health care organization to provide or admin-
ister any health benefit. 
(11) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any person or entity 
required by State or Federal laws or regulations to 
be licensed, registered, or certified to provide health 
care services, and being either so licensed, reg-
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istered, or certified, or exempted from such require-
ment by other statute or regulation. 
(12) HEALTH CARE GOODS OR SERVICES.—The 
term ‘‘health care goods or services’’ means any 
goods or services provided by a health care organiza-
tion, provider, or by any individual working under 
the supervision of a health care provider, that relates 
to the diagnosis, prevention, or treatment of any 
human disease or impairment, or the assessment or 
care of the health of human beings. 
(13) MALICIOUS
INTENT
TO
INJURE.—The 
term ‘‘malicious intent to injure’’ means inten-
tionally causing or attempting to cause physical in-
jury other than providing health care goods or serv-
ices. 
(14) MEDICAL PRODUCT.—The term ‘‘medical 
product’’ means a drug, device, or biological product 
intended for humans, and the terms ‘‘drug’’, ‘‘de-
vice’’, and ‘‘biological product’’ have the meanings 
given such terms in sections 201(g)(1) and 201(h) 
of the Federal Food, Drug and Cosmetic Act (21 
U.S.C. 321) and section 351(a) of the Public Health 
Service Act (42 U.S.C. 262(a)), respectively, includ-
ing any component or raw material used therein, but 
excluding health care services. 
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(15) 
NONECONOMIC
DAMAGES.—The 
term 
‘‘noneconomic damages’’ means damages for phys-
ical and emotional pain, suffering, inconvenience, 
physical impairment, mental anguish, disfigurement, 
loss of enjoyment of life, loss of society and compan-
ionship, loss of consortium (other than loss of do-
mestic service), hedonic damages, injury to reputa-
tion, and all other nonpecuniary losses of any kind 
or nature. 
(16) PUNITIVE DAMAGES.—The term ‘‘punitive 
damages’’ means damages awarded, for the purpose 
of punishment or deterrence, and not solely for com-
pensatory purposes, against a health care provider, 
health care organization, or a manufacturer, dis-
tributor, or supplier of a medical product. Punitive 
damages are neither economic nor noneconomic 
damages. 
(17) RECOVERY.—The term ‘‘recovery’’ means 
the net sum recovered after deducting any disburse-
ments or costs incurred in connection with prosecu-
tion or settlement of the claim, including all costs 
paid or advanced by any person. Costs of health care 
incurred by the plaintiff and the attorneys’ office 
overhead costs or charges for legal services are not 
deductible disbursements or costs for such purpose. 
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(18) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana Is-
lands, the Trust Territory of the Pacific Islands, and 
any other territory or possession of the United 
States, or any political subdivision thereof. 
SEC. 210. EFFECT ON OTHER LAWS. 
(a) VACCINE INJURY.— 
(1) To the extent that title XXI of the Public 
Health Service Act establishes a Federal rule of law 
applicable to a civil action brought for a vaccine-re-
lated injury or death— 
(A) this title does not affect the application 
of the rule of law to such an action; and 
(B) any rule of law prescribed by this title 
in conflict with a rule of law of such title XXI 
shall not apply to such action. 
(2) If there is an aspect of a civil action 
brought for a vaccine-related injury or death to 
which a Federal rule of law under title XXI of the 
Public Health Service Act does not apply, then this 
title or otherwise applicable law (as determined 
under this title) will apply to such aspect of such ac-
tion. 
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(b) OTHER FEDERAL LAW.—Except as provided in 
this section, nothing in this title shall be deemed to affect 
any defense available to a defendant in a health care law-
suit or action under any other provision of Federal law. 
SEC. 
211. 
STATE 
FLEXIBILITY 
AND 
PROTECTION 
OF 
STATES’ RIGHTS. 
(a) HEALTH CARE LAWSUITS.—The provisions gov-
erning health care lawsuits set forth in this title preempt, 
subject to subsections (b) and (c), State law to the extent 
that State law prevents the application of any provisions 
of law established by or under this title. The provisions 
governing health care lawsuits set forth in this title super-
sede chapter 171 of title 28, United States Code, to the 
extent that such chapter— 
(1) provides or allows for a greater amount of 
damages or contingent fees, or a longer period in 
which a health care lawsuit may be commenced, 
than provided in this title; 
(2) precludes or reduces the applicability or 
scope of periodic payment of future damages as pro-
vided in this title; or 
(3) through application of State law, conflicts 
with provisions of this title concerning joint liability, 
collateral source benefits, subrogation, or liens. 
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(b) PROTECTION OF STATES’ RIGHTS AND OTHER 
LAWS.— 
(1) Any issue that is not governed by any provi-
sion of law established by or under this title (includ-
ing State standards of negligence) shall be governed 
by otherwise applicable State or Federal law. 
(2) This title shall not preempt or supersede 
any State or Federal law that imposes greater proce-
dural or substantive protections for health care pro-
viders and health care organizations from liability, 
loss, or damages than those provided by this title or 
create a cause of action. 
(c) STATE FLEXIBILITY.—No provision of this title 
shall be construed to preempt— 
(1) any State law (whether effective before, on, 
or after the date of the enactment of this title) that 
specifies a particular monetary amount of compen-
satory or punitive damages (or the total amount of 
damages) that may be awarded in a health care law-
suit, regardless of whether such monetary amount is 
greater or lesser than is provided for under this title, 
notwithstanding section 204(a); or 
(2) any defense available to a party in a health 
care lawsuit under any other provision of State or 
Federal law. 
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SEC. 212. APPLICABILITY; EFFECTIVE DATE. 
This title shall apply to any health care lawsuit 
brought in a Federal or State court, or subject to an alter-
native dispute resolution system, that is initiated on or 
after the date of the enactment of this title, except that 
any health care lawsuit arising from an injury occurring 
prior to the date of the enactment of this title shall be 
governed by the applicable statute of limitations provisions 
in effect at the time the injury occurred. 
TITLE III—INCREASING HIGH-IN-
COME BENEFICIARY AWARE-
NESS AND RESPONSIBILITY 
FOR HEALTH CARE COSTS 
SEC. 301. INCOME-RELATED REDUCTION IN PART D PRE-
MIUM SUBSIDY. 
(a) INCOME-RELATED REDUCTION IN PART D PRE-
MIUM SUBSIDY.— 
(1) IN
GENERAL.—Section 1860D–13(a) (42 
U.S.C. 1395w–113(a)) is amended by adding at the 
end the following new paragraph: 
‘‘(7) REDUCTION IN PREMIUM SUBSIDY BASED 
ON INCOME.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual whose modified adjusted gross income 
exceeds the threshold amount applicable under 
subparagraph (B) for the calendar year, the 
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monthly amount of the premium subsidy appli-
cable to the premium under this section for a 
month after December 2008 shall be reduced 
(and the monthly beneficiary premium shall be 
increased) by the monthly adjustment amount 
specified in subparagraph (C). 
‘‘(B) THRESHOLD AMOUNT.—For purposes 
of this paragraph, the threshold amount is— 
‘‘(i) except as provided in clause (ii), 
$82,000; and 
‘‘(ii) in the case of a joint return, 
twice the amount applicable under clause 
(i) for the calendar year. 
‘‘(C) MONTHLY ADJUSTMENT AMOUNT.— 
‘‘(i) IN GENERAL.—The monthly ad-
justment amount specified in this subpara-
graph for an individual for a month in a 
year is equal to the product of— 
‘‘(I) the quotient obtained by di-
viding— 
‘‘(aa) the applicable percent-
age specified in the table in 
clause (ii) for the individual for 
the calendar year reduced by 
25.5 percent; by 
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‘‘(bb) does not live apart 
from such individual’s spouse at 
all times during the taxable year, 
subclause (I) shall be applied by 
reducing 
each 
of 
the 
dollar 
amounts 
otherwise 
applicable 
under such subclause for the cal-
endar year by the threshold 
amount for such year applicable 
to an unmarried individual. 
‘‘(D) DETERMINATION BY COMMISSIONER 
OF
SOCIAL
SECURITY.—The Commissioner of 
Social Security shall have the authority to make 
initial and reconsideration determinations nec-
essary to carry out the income-related reduction 
in premium subsidy under this paragraph. 
‘‘(E) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the 
term ’modified adjusted gross income’ has the 
meaning given such term in subparagraph (A) 
of section 1839(i)(4), determined for the tax-
able year applicable under subparagraphs (B) 
and (C) of such section. 
‘‘(F) JOINT RETURN DEFINED.—For pur-
poses of this paragraph, the term ’joint return’ 
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has the meaning given to such term by section 
7701(a)(38) of the Internal Revenue Code of 
1986. 
‘‘(G) PROCEDURES TO ASSURE CORRECT 
INCOME-RELATED
REDUCTION
IN
PREMIUM 
SUBSIDY.— 
‘‘(i) DISCLOSURE
OF
BASE
BENE-
FICIARY
PREMIUM.—Not later than Sep-
tember 15 of each year beginning with 
2008, the Secretary shall disclose to the 
Commissioner 
of 
Social 
Security 
the 
amount of the base beneficiary premium 
(as computed under paragraph (2)) for the 
purpose of carrying out the income-related 
reduction in premium subsidy under this 
paragraph with respect to the following 
year. 
‘‘(ii) ADDITIONAL DISCLOSURE.—Not 
later than October 15 of each year begin-
ning with 2008, the Secretary shall dis-
close to the Commissioner of Social Secu-
rity the following information for the pur-
pose of carrying out the income-related re-
duction in premium subsidy under this 
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paragraph with respect to the following 
year: 
‘‘(I) The monthly adjustment 
amount specified in subparagraph (C). 
‘‘(II) Any other information the 
Commissioner of Social Security de-
termines necessary to carry out the 
income-related reduction in premium 
subsidy under this paragraph. 
‘‘(H) RULE OF CONSTRUCTION.—The for-
mula used to determine the monthly adjustment 
amount specified under subparagraph (C) shall 
only be used for the purpose of determining 
such monthly adjustment amount under such 
subparagraph.’’. 
(2) COLLECTION
OF
MONTHLY
ADJUSTMENT 
AMOUNT.—Section 1860D–13(c) (42 U.S.C. 1395w– 
113(c)) is amended— 
(A) in paragraph (1), by striking ‘‘(2) and 
(3)’’ and inserting ‘‘(2), (3), and (4)’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) COLLECTION OF MONTHLY ADJUSTMENT 
AMOUNT.— 
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‘‘(A) IN GENERAL.—Notwithstanding any 
provision 
of 
this 
subsection 
or 
section 
1854(d)(2), subject to subparagraph (B), the 
amount of the income-related reduction in pre-
mium subsidy for an individual for a month (as 
determined under subsection (a)(7)) shall be 
paid through withholding from benefit pay-
ments in the manner provided under section 
1840. 
‘‘(B) AGREEMENTS.—In the case where 
the monthly benefit payments of an individual 
that are withheld under subparagraph (A) are 
insufficient to pay the amount described in such 
subparagraph, the Commissioner of Social Se-
curity shall enter into agreements with the Sec-
retary, the Director of the Office of Personnel 
Management, and the Railroad Retirement 
Board as necessary in order to allow other 
agencies to collect the amount described in sub-
paragraph (A) that was not withheld under 
such subparagraph.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) MEDICARE.—Part D of title XVIII (42 
U.S.C. 1395w–101 et seq.) is amended— 
(A) in section 1860D–13(a)(1)— 
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(i) by redesignating subparagraph (F) 
as subparagraph (G); 
(ii) in subparagraph (G), as redesig-
nated by subparagraph (A), by striking 
‘‘(D) and (E)’’ and inserting ‘‘(D), (E), 
and (F)’’; and 
(iii) by inserting after subparagraph 
(E) the following new subparagraph: 
‘‘(F) INCREASE
BASED
ON
INCOME.—The 
monthly beneficiary premium shall be increased pur-
suant to paragraph (7).’’; and 
(B) in section 1860D–15(a)(1)(B), by 
striking 
‘‘paragraph 
(1)(B)’’ 
and 
inserting‘‘paragraphs (1)(B) and (1)(F)’’. 
(2) 
INTERNAL
REVENUE
CODE.—Section 
6103(l)(20) of the Internal Revenue Code of 1986 
(relating to disclosure of return information to carry 
out Medicare part B premium subsidy adjustment) 
is amended— 
(A) in the heading, by striking ‘‘PART B 
PREMIUM SUBSIDY ADJUSTMENT’’ and 
inserting ‘‘PARTS B AND D PREMIUM 
SUBSIDY ADJUSTMENTS’’; 
(B) in subparagraph (A)— 
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(i) in the matter preceding clause (i), 
by inserting ‘‘or 1860D–13(a)(7)’’ after 
‘‘1839(i)’’; and 
(ii) in clause (vii), by inserting 
after‘‘subsection (i) of such section’’ the 
following: ‘‘or under section 1860D– 
13(a)(7) of such Act’’; and 
(C) in subparagraph (B)— 
(i) by inserting ‘‘or such section 
1860D–13(a)(7)’’ before the period at the 
end; 
(ii) as amended by clause (i), by add-
ing at the end the following new sentence: 
‘‘Such return information may be disclosed 
to officers and employees of the Depart-
ments of Health and Human Services and 
Justice, to the extent necessary, and solely 
for their use, in any administrative or judi-
cial proceeding ensuing from an adjust-
ment to any such premium.’’; and 
(D) by adding at the end the following new 
subparagraph: 
‘‘(C) TIMING OF DISCLOSURE.—Return in-
formation shall be disclosed to officers, employ-
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ees, and contractors of the Social Security Ad-
ministration under subparagraph (A): 
‘‘(i) for taxpayers currently entitled to 
benefits under title II of the Social Secu-
rity Act, or as qualified railroad retirement 
beneficiaries within the meaning of section 
7(d) of the Railroad Retirement Act of 
1974, within 4 months preceding the 
month in which the taxpayer first becomes 
entitled to benefits under part A or is eligi-
ble to enroll in part B or part D of title 
XVIII of the Social Security Act; and 
‘‘(ii) for taxpayers not currently re-
ceiving benefits under title II of the Social 
Security Act, or as qualified railroad re-
tirement beneficiaries within the meaning 
of section 7(d) of the Railroad Retirement 
Act of 1974, or who have participated in 
Medicare qualified government employment 
as defined in section 210(p) of the Social 
Security Act, after the taxpayer applies for 
a benefit under part A or part B and is eli-
gible to enroll in part D of title XVIII of 
the Social Security Act.’’. 
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(c) IMPLEMENTATION.—Notwithstanding any other 
provision of law, the Secretary, in consultation with the 
Commissioner of Social Security may implement this sec-
tion, and the amendments made by this section, by pro-
gram instruction or otherwise. 
Æ 
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