TITLE II—REVENUE 
SEC. 201. PERMANENT EXTENSION OF MODIFICATIONS TO 
EARNED INCOME TAX CREDIT. 
(a) INCREASE IN CREDIT PERCENTAGE FOR FAMI-
LIES WITH 3 OR MORE CHILDREN.—Section 32(b)(1) of 
the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘PERCENTAGES.—The credit 
percentage and’’ and inserting the following: ‘‘PER-
CENTAGES.— 
‘‘(A) IN GENERAL.—The credit percentage 
and’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) INCREASED
CREDIT
PERCENTAGE 
FOR FAMILIES WITH 3 OR MORE QUALIFYING 
CHILDREN.—In the case of an eligible indi-
vidual with 3 or more qualifying children, the 
table in subparagraph (A) shall be applied by 
substituting ‘45’ for ‘40’ in the second column 
thereof.’’. 
(b) JOINT RETURNS.— 
(1) IN GENERAL.—Section 32(b)(2)(B) of the 
Internal Revenue Code of 1986 is amended by strik-
ing ‘‘increased by’’ and all that follows and inserting 
‘‘increased by $5,000.’’. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(2) 
INFLATION
ADJUSTMENTS.—Section 
32(j)(1)(B)(ii) of such Code is amended— 
(A) by striking ‘‘$3,000’’ and inserting 
‘‘$5,000’’; 
(B) by striking ‘‘subsection (b)(2)(B)(iii)’’ 
and inserting ‘‘subsection (b)(2)(B)’’; and 
(C) by striking ‘‘calendar year 2007’’ and 
inserting ‘‘calendar year 2008’’. 
(c) CONFORMING AMENDMENT.—Section 32(b) of 
such Code is amended by striking paragraph (3). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2015. 
SEC. 202. 35-PERCENT LIMITATION ON CERTAIN DEDUC-
TIONS AND EXCLUSIONS. 
(a) IN GENERAL.—Part I of subchapter B of chapter 
1 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 69. LIMITATION ON ITEMIZED DEDUCTIONS. 
‘‘In the case of an individual, for any taxable year 
with respect to which the highest rate of tax imposed 
under section 1 exceeds 35 percent, the tax imposed by 
such section shall be increased by the excess (if any) of— 
VerDate Sep 11 2014 
07:19 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(1) the tax which would be imposed under 
such section if taxable income were determined with-
out regard to itemized deductions, over 
‘‘(2) the tax which would be determined under 
paragraph (1) if the highest rate of tax imposed 
under such section on amounts in excess of the tax-
payer’s taxable income (determined without regard 
to this section) was 35 percent.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part I of subchapter B of chapter 1 of such Code is 
amended by adding at the end the following new item: 
‘‘Sec. 69. Limitation on itemized deductions.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2015. 
SEC. 203. REPEAL OF MEDICAL DEVICE TAX. 
(a) IN GENERAL.—Chapter 32 of the Internal Rev-
enue Code of 1986 is amended by striking subchapter E. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to sales after the date of the enact-
ment of this Act. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
TITLE III—HEALTHCARE 
SAVINGS 
Subtitle A—Medicare and Medicaid 
Provisions 
SEC. 301. FREEZE INCOME-RELATED THRESHOLDS IN CAL-
CULATION OF MEDICARE PART B AND PART 
D PREMIUMS. 
Section 1839(i)(5) of the Social Security Act (42 
U.S.C. 1395r(i)(5)) is amended— 
(1) in subparagraph (A)— 
(A) in the matter preceding clause (i), by 
striking ‘‘and 2019’’ and inserting ‘‘and each 
subsequent year before the target year’’; and 
(B) in clause (ii), by striking ‘‘beginning 
with 2020, August 2018’’ and inserting ‘‘begin-
ning with the target year, August of the cal-
endar year that is two years before the target 
year’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(C) TARGET YEAR.—For purposes of this 
paragraph, the term ‘target year’ means the 
first calendar year after the calendar year in 
which at least 25 percent of individuals enrolled 
under this part are subject to a reduction under 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
this subsection to the monthly amount of the 
premium subsidy applicable to the premium 
under this section.’’. 
SEC. 302. ADJUSTMENT TO APPLICABLE PERCENTAGE IN-
CREASE FOR MEDICARE PART B AND D PRE-
MIUMS FOR HIGH-INCOME BENEFICIARIES. 
(a) IN GENERAL.—Section 1839(i) of the Social Se-
curity Act (42 U.S.C. 1395r(i)) is amended— 
(1) in paragraph (3)(A)(i), by striking ‘‘para-
graph (6)’’ and inserting ‘‘paragraphs (6) and (7)’’; 
(2) by redesignating paragraph (7) as para-
graph (8); and 
(3) by inserting after paragraph (6) the fol-
lowing new paragraph: 
‘‘(7) ADJUSTMENT TO APPLICABLE PERCENT-
AGE
INCREASE
BEGINNING
IN
2016.—Notwith-
standing any other provision of this subsection, for 
months beginning with January 2016, in applying 
the applicable percentages specified in the applicable 
table in paragraph (3)(C)(i)— 
‘‘(A) during 2016, the references in the 
table in subparagraph (I) of such paragraph to 
‘35 percent’, ‘50 percent’, ‘65 percent’, and ‘80 
percent’ shall be deemed to be references to 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘37.625 percent’, ‘53.75 percent’, ‘69.875 per-
cent’, and ‘85 percent’, respectively; and 
‘‘(B) during 2017 or a subsequent year, 
the references in the table in subparagraph (I) 
of such paragraph and the table in subpara-
graph (II) of such paragraph, as applicable, to 
‘35 percent’, ‘50 percent’, ‘65 percent’, and ‘80 
percent’ shall be deemed to be references to 
‘40.25 percent’, ‘57.5 percent’, ‘74.75 percent’, 
and ‘90 percent’, respectively.’’. 
(b) PART D CONFORMING AMENDMENTS.—Section 
1860D–13(a)(7)(B)(i)(I) of such Act (42 U.S.C. 1395w– 
113(a)(7)(B)(i)(I)) is amended by striking ‘‘paragraph 
(5)’’ and inserting ‘‘paragraphs (5) and (7)’’. 
SEC. 303. IMPROVED BENEFIT STRUCTURE. 
(a) IN GENERAL.—Title XVIII of the Social Security 
Act (42 U.S.C. 1395 et seq.) is amended by adding at 
the end the following new sections: 
‘‘UNIFIED PART A AND B DEDUCTIBLE 
‘‘SEC. 1899B. (a) IN GENERAL.—Notwithstanding 
any other provision of this title, for a year (beginning with 
2018), in the case of an individual entitled to, or enrolled 
for, benefits under part A or enrolled in part B— 
‘‘(1) the amount otherwise payable under part 
A and the total amount of expenses incurred by the 
individual during a year which would (except for this 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
section) constitute incurred expenses for which bene-
fits payable under section 1833(a) are determinable, 
shall be reduced by the amount of the unified de-
ductible under subsection (b); and 
‘‘(2) the individual shall be responsible for pay-
ment of such amount. 
‘‘(b) AMOUNT OF UNIFIED DEDUCTIBLE.— 
‘‘(1) IN GENERAL.—The amount of the unified 
deductible under this section shall be— 
‘‘(A) for 2018, $650; or 
‘‘(B) for a subsequent year, the amount 
specified in this subsection for the preceding 
year increased by the percentage increase in the 
medical care component of the consumer price 
index for all urban consumers (U.S. city aver-
age) as estimated by the Secretary for the 12- 
month period ending with the midpoint of the 
year involved. 
‘‘(2) ROUNDING.—If any amount determined 
under paragraph (1) is not a multiple of $1, such 
amount shall be rounded to the nearest multiple of 
$1. 
‘‘(c) APPLICATION TO ALL ITEMS AND SERVICES.— 
The unified deductible under this section for a year shall 
be applied as follows: 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(1) With respect to items and services covered 
under part A, such unified deductible shall be ap-
plied on the basis of the amount that is payable for 
such items and services without regard to any copay-
ments or coinsurance and before the application of 
any such copayments or coinsurance. 
‘‘(2) With respect to items and services covered 
under part B, such unified deductible shall be ap-
plied on the basis of the total amount of the ex-
penses incurred by the individual during a year 
which would, except for the application of the unified 
deductible, constitute incurred expenses for which 
items and services are payable under part B, without 
regard to any copayments or coinsurance and before 
the application of any such copayments or coinsur-
ance. 
‘‘(3)(A) Except as provided in subparagraph 
(B), such unified deductible shall be applied with re-
spect to all items and services covered under parts 
A and B and in lieu of the deductibles described in 
sections 1813(b) and 1833(b) or otherwise. 
‘‘(B) Such unified deductible shall not be ap-
plied to preventive services and additional preventive 
services (as those terms are defined in section 
1861(ddd)). 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(d) ANNOUNCEMENT
OF UNIFIED DEDUCTIBLE 
AND ANNUAL OUT-OF-POCKET LIMIT.—The Secretary 
shall (beginning in 2017) announce (in a manner intended 
to provide notice to all interested parties) the unified de-
ductible under this section and the annual out-of-pocket 
limit under section 1899D that will be applicable for the 
succeeding year. 
‘‘UNIFORM PART A AND B COINSURANCE RATE 
‘‘SEC. 1899C. (a) IN GENERAL.—Notwithstanding 
any other provision of this title, in the case of an indi-
vidual entitled to, or enrolled for, benefits under part A 
or enrolled in part B, after the application of the unified 
deductible under section 1899B and subject to the limit 
on annual out-of-pocket expenses under section 1899D, 
the amount otherwise payable under part A and the total 
amount of expenses incurred by the individual during a 
year (beginning with 2018) which would (except for this 
section) constitute incurred expenses for which benefits 
are payable under part B, shall be reduced by a coinsur-
ance of 20 percent of such amount. 
‘‘(b) APPLICATION TO ALL ITEMS AND SERVICES.— 
The uniform coinsurance under this section for a year 
shall be applied as follows: 
‘‘(1) With respect to items and services covered 
under part A, such uniform coinsurance shall be ap-
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
plied on the basis of the amount that is payable for 
such items and services. 
‘‘(2) With respect to items and services covered 
under part B, such uniform coinsurance shall be ap-
plied on the basis of the total amount of the ex-
penses incurred by the individual during a year 
which would, except for the application of the unified 
deductible, constitute incurred expenses from which 
items and services are payable under part B. 
‘‘(3)(A) Except as provided in subparagraph 
(B), such uniform coinsurance shall be applied with 
respect to all items and services covered under parts 
A and B and in lieu of any other copayments or co-
insurance under such parts. 
‘‘(B) Such uniform coinsurance shall not be ap-
plied to preventive services and additional preventive 
services (as those terms are defined in section 
1861(ddd)). 
‘‘PROTECTION AGAINST HIGH OUT-OF-POCKET 
EXPENDITURES FOR FEE-FOR-SERVICE BENEFITS 
‘‘SEC. 1899D. (a) IN GENERAL.—Notwithstanding 
any other provision of this title, in the case of an indi-
vidual entitled to benefits under part A or enrolled in part 
B, if the amount of the out-of-pocket cost-sharing of such 
individual for a year (beginning with 2018) equals or ex-
ceeds the annual out-of-pocket limit under subsection (b) 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
for such year, there shall not be any additional reduction 
under section 1899C for the remainder of the year. 
‘‘(b) AMOUNT
OF ANNUAL OUT-OF-POCKET LIM-
ITS.— 
‘‘(1) IN GENERAL.—The amount of the annual 
out-of-pocket limit under this subsection shall be— 
‘‘(A) for 2018, $6,500; or 
‘‘(B) for a subsequent year, the amount 
specified in this subsection for the preceding 
year increased by the percentage increase in the 
medical care component of the consumer price 
index for all urban consumers (U.S. city aver-
age) as estimated by the Secretary for the 12- 
month period ending with the midpoint of the 
year involved. 
‘‘(2) ROUNDING.—If any amount determined 
under paragraph (1) is not a multiple of $50, such 
amount shall be rounded to the nearest multiple of 
$50. 
‘‘(c) OUT-OF-POCKET COST-SHARING DEFINED.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
in this section, the term ‘out-of-pocket cost-sharing’ 
means, with respect to an individual, the amount of 
expenses incurred by the individual that are attrib-
utable to deductibles, coinsurance, and copayments 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
applicable under part A or B, without regard to 
whether the individual or another person, including 
a State program or other third-party coverage, has 
paid for such expenses. 
‘‘(2) ITEMS AND SERVICES NOT FURNISHED ON 
AN
ASSIGNMENT-RELATED
BASIS.—If an item or 
service is furnished to an individual under this title 
and is not furnished on an assignment-related basis, 
any additional expenses the individual incurs above 
the amount the individual would have incurred if the 
item or service was furnished on an assignment-re-
lated basis shall not be considered incurred expenses 
for purposes of determining out-of-pocket cost-shar-
ing under paragraph (1).’’. 
(b) 
CLARIFICATION
REGARDING
APPLICATION 
UNDER
MEDICARE
ADVANTAGE.—Section 
1852(a)(1)(B)(iii) of the Social Security Act (42 U.S.C. 
1395w–22(a)(1)(B)(iii)) is amended by adding at the end 
the following new sentence: ‘‘For plan year 2018 and sub-
sequent plan years, the preceding sentence shall be applied 
to take into account the application of sections 1899B, 
1899C, and 1899D.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 1813 of the Social Security Act (42 
U.S.C. 1395e) is amended— 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(A) in subsection (a), by inserting ‘‘Subject 
to sections 1899B, 1899C, and 1899D:’’ before 
paragraph (1); and 
(B) in subsection (b), by inserting ‘‘Sub-
ject to sections 1899B, 1899C, and 1899D:’’ 
before paragraph (1). 
(2) Section 1833 of the Social Security Act (42 
U.S.C. 1395l) is amended— 
(A) in subsection (a), in the matter pre-
ceding paragraph (1), by inserting ‘‘and sec-
tions 1899B, 1899C, and 1899D’’ after ‘‘suc-
ceeding provisions of this section’’; 
(B) in subsection (b), in the first sentence, 
by striking ‘‘Before applying’’ and inserting 
‘‘Subject to sections 1899B, 1899C, and 
1899D, before applying’’; 
(C) in subsection (c)(1), in the matter pre-
ceding subparagraph (A), by inserting ‘‘subject 
to sections 1899B, 1899C, and 1899D,’’ after 
‘‘this part,’’; 
(D) in subsection (f), by striking ‘‘In es-
tablishing’’ and inserting ‘‘Subject to sections 
1899B, 1899C, and 1899D, in establishing’’; 
and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(E) in subsection (g)(1), by inserting ‘‘and 
sections 1899B, 1899C, and 1899D’’ and 
‘‘paragraphs (4) and (5)’’. 
(3) Section 1905(p)(3) of the Social Security 
Act (42 U.S.C. 1396d(p)(3)) is amended— 
(A) in subparagraph (B), striking ‘‘section 
1813’’ and inserting ‘‘sections 1813 and 
1899C’’; and 
(B) in subparagraph (C), by striking ‘‘and 
section 1833(b)’’ and inserting ‘‘, 1833(b), and 
1899C’’. 
SEC. 304. PROHIBITION ON FIRST-DOLLAR COVERAGE 
UNDER MEDIGAP POLICIES AND DEVELOP-
MENT OF NEW STANDARDS FOR MEDIGAP 
POLICIES. 
Section 1882 of the Social Security Act (42 U.S.C. 
1395ss) is amended by adding at the end the following 
new subsection: 
‘‘(z) PROHIBITION
ON FIRST-DOLLAR COVERAGE 
AND DEVELOPMENT OF NEW STANDARDS FOR MEDICARE 
SUPPLEMENTAL POLICIES.— 
‘‘(1) DEVELOPMENT.—The Secretary shall re-
quest the National Association of Insurance Com-
missioners to review and revise the standards for 
benefit packages under subsection (p)(1), taking into 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
account the changes in benefits resulting from the 
enactment of the America First Act and to otherwise 
update standards to include the requirements for 
cost sharing described in paragraph (2). Such revi-
sions shall be made consistent with the rules applica-
ble under subsection (p)(1)(E) with the reference to 
the ‘1991 NAIC Model Regulation’ deemed a ref-
erence to the NAIC Model Regulation as published 
in the Federal Register on December 4, 1998, and 
as subsequently updated by the National Association 
of Insurance Commissioners to reflect previous 
changes in law and the reference to ‘date of enact-
ment of this subsection’ deemed a reference to the 
date of enactment of the America First Act. To the 
extent practicable, such revision shall provide for the 
implementation of revised standards for benefit 
packages as of January 1, 2018. 
‘‘(2) COST SHARING REQUIREMENTS.—The cost 
sharing requirements described in this paragraph 
are that, notwithstanding any other provision of law, 
no medicare supplemental policy may provide for 
coverage of— 
‘‘(A) any portion of the unified deductible 
under section 1899B(b) for the year; and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(B) more than 50 percent of the cost- 
sharing (excluding premiums) otherwise appli-
cable under parts A and B after the individual 
has met the unified deductible under section 
1899B(b) for the year and before the individual 
has reached the annual out-of-pocket limit 
under section 1899D(b) for the year. 
‘‘(3) RENEWABILITY.—The renewability re-
quirement under subsection (q)(1) shall be satisfied 
with the renewal of the revised package under para-
graph (1) that most closely matches the policy in 
which the individual was enrolled prior to such revi-
sion.’’. 
SEC. 305. ADJUST POST-ACUTE PAYMENT UPDATES. 
(a) REVISION OF INPATIENT REHABILITATION FA-
CILITY PERCENTAGE INCREASE
FOR 2016 THROUGH 
2025.—Section 1886(j) of the Social Security Act (42 
U.S.C. 1395ww(j)) is amended— 
(1) in paragraph (3)— 
(A) in subparagraph (C), by striking 
clause (iii) and inserting the following: 
‘‘(iii) ADDITIONAL
ADJUSTMENT.— 
For fiscal years 2016 through 2025, after 
establishing the increase factor for a fiscal 
year pursuant to clauses (i) and (ii), if 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
such increase factor is greater than 0.0 
percent the Secretary shall reduce the in-
crease factor by an additional amount de-
scribed in subparagraph (E).’’; and 
(B) by inserting at the end the following 
new subparagraph: 
‘‘(E) ADDITIONAL
ADJUSTMENT.—If the 
increase factor, as established pursuant to 
clauses (i) and (ii) of subparagraph (C), is 
greater than zero, for purposes of subparagraph 
(C)(iii), the additional adjustment described in 
this subparagraph is 1.1 percentage point for 
each of fiscal years 2016 through 2025. If the 
application of the additional adjustment in sub-
paragraph (C)(iii) would result in an increase 
factor that is less than 0.0 for a fiscal year, the 
additional adjustment shall be reduced such 
that the increase factor after its application is 
0.0. If, in any of fiscal years 2016 through 
2025, the increase factor as adjusted by clauses 
(i) and (ii) of subparagraph (C) is less than or 
equal to zero, the additional adjustment de-
scribed in subparagraph (C)(iii) for such year is 
0.0 percentage point.’’; and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(2) in paragraph (7)(A)(i), by striking ‘‘and 
(D)’’ and inserting ‘‘, (D), and (E)’’. 
(b) REVISION OF LONG-TERM CARE HOSPITAL MAR-
KET BASKET UPDATES FOR 2016 THROUGH 2025.—Sec-
tion 1886(m) of the Social Security Act (42 U.S.C. 
1395ww(m)) is amended— 
(1) in paragraph (3)— 
(A) in subparagraph (A)— 
(i) in clause (i), by striking ‘‘and’’ at 
the end; 
(ii) in clause (ii), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(iii) by adding at the end the fol-
lowing new clause: 
‘‘(iii) for each of rate years 2016 
through 2025, by the additional adjust-
ment described in subparagraph (C).’’; and 
(B) by striking subparagraph (C) and in-
serting the following: 
‘‘(C) ADDITIONAL
ADJUSTMENT.—If the 
annual update, as established pursuant to 
clauses (i) and (ii) of paragraph (3)(A), is 
greater than zero, for purposes of clause (iii) of 
such paragraph, the additional adjustment is 
1.1 percentage point for each of fiscal years 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
2016 through 2025. If the application of the 
additional adjustment in paragraph (3)(A)(iii) 
would result in an annual update that is less 
than 0.0 for a fiscal year, the additional adjust-
ment shall be reduced such that the annual up-
date after its application is 0.0. If, in any of the 
fiscal years 2016 through 2025, the annual up-
date, as established pursuant to clauses (i) and 
(ii) of paragraph (3)(A), is less than or equal 
to zero, the additional adjustment described in 
paragraph (3)(A)(iii) for such year is 0.0 per-
centage point.’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(7) USE OF TERMINOLOGY.—With respect to 
discharges occurring on or after October 1, 2010, 
the term ‘rate year’ under this subsection shall mean 
‘fiscal year’.’’. 
(c) REVISION OF SKILLED NURSING FACILITY MAR-
KET BASKET UPDATES FOR 2016 THROUGH 2025.—Sec-
tion 1888(e)(5)(B) of the Social Security Act (42 U.S.C. 
1395yy(e)(5)(B)) is amended— 
(1) by striking clause (ii) and inserting the fol-
lowing new clause: 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(ii) PRODUCTIVITY AND OTHER AD-
JUSTMENT.—The Secretary shall reduce 
the percentage determined in clause (i) by 
the following amounts: 
‘‘(I) For fiscal year 2012 and 
each subsequent fiscal year, by the 
productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II). 
‘‘(II) For each of fiscal years 
2016 through 2025, by the other ad-
justment described in clause (iii). 
Such percentage shall be reduced first by 
the productivity adjustment in subclause 
(I). The application of the productivity ad-
justment described in subclause (I) may 
result in such percentage being less than 
0.0 for a fiscal year, and may result in 
payment rates under this subsection for a 
fiscal year being less than such payment 
rates for the preceding fiscal year. If the 
application of the productivity adjustment 
in subclause (I) results in such percentage 
being 0.0 or less than 0.0 for a fiscal year, 
the other adjustment described in sub-
clause (II) shall not apply.’’; and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(2) by striking clause (iii) and inserting the fol-
lowing: 
‘‘(iii) CALCULATING OTHER ADJUST-
MENT.—For purposes of clause (ii)(II), the 
other adjustment described in this clause is 
¥2.5 percentage points in each of fiscal 
years 2016 and 2017, ¥2.0 percentage 
points in each of fiscal years 2018 and 
2019, ¥1.5 percentage points in each of 
fiscal years 2020 through 2022, and 
¥0.97 percentage point in each of fiscal 
years 2023 through 2025. The other ad-
justment shall be applied to the percentage 
under clause (i) as reduced by the produc-
tivity adjustment in clause (ii)(I). If the 
application of the adjustment in clause 
(ii)(II) would result in the percentage 
under clause (i) being less than 0.0 for a 
fiscal year, the other adjustment shall be 
reduced such that the final percentage 
after its application is 0.0 percentage 
point.’’. 
(d) REVISION OF HOME HEALTH MARKET BASKET 
UPDATES
FOR
2016 
THROUGH
2025.—Section 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
1895(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395fff(b)(3)(B)) is amended— 
(1) in clause (iii), by striking the last sentence; 
(2) by striking clause (vi) and inserting the fol-
lowing new clause: 
‘‘(vi) 
ADJUSTMENTS.—After 
deter-
mining the home health market basket per-
centage increase under clause (iii), and 
after application of clause (v), the Sec-
retary shall reduce such percentage— 
‘‘(I) for 2015 and each subse-
quent year, by the productivity adjust-
ment 
described 
in 
section 
1886(b)(3)(B)(xi)(II); 
‘‘(II) for each of 2011 and 2012, 
by 1 percentage point; and 
‘‘(III) for each of 2016 through 
2025, by the other adjustment de-
scribed in subparagraph (vii). 
The application of subclauses (I) and (II) 
may result in the home health market bas-
ket percentage increase under clause (iii) 
being less than 0.0 for a year, and may re-
sult in payment rates under the system 
under this subsection for a year being less 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
than such payment rates for the preceding 
year. In such case, the other adjustment in 
subclause (III) shall not apply.’’; and 
(3) by adding at the end the following new 
clause: 
‘‘(vii) OTHER
ADJUSTMENTS.—For 
purposes of clause (vi)(III), the other ad-
justment described in this clause is 1.1 
percentage point for each of 2016 through 
2025. If the application of the other ad-
justment in clause (vi)(III) would result in 
the home health market basket percentage 
increase being less than 0.0 for a year, the 
other adjustment shall be reduced such 
that the final market basket percentage in-
crease after its application of the other ad-
justment is 0.0. If, in any of years 2016 
through 2025, the home health market 
basket as adjusted by subclauses (I) and 
(II) is less than or equal to zero, the other 
adjustment for such year is 0.0 percentage 
point.’’. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
SEC. 306. PAYMENT BUNDLING FOR POST-ACUTE CARE 
(PAC) UNDER MEDICARE. 
Title XVIII of the Social Security Act is amended by 
adding at the end the following new section: 
‘‘POST-ACUTE CARE (PAC) PAYMENT BUNDLING SYSTEM 
‘‘SEC. 1899C. (a) ESTABLISHMENT OF SYSTEM.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a retrospective bundled payment arrangement 
(in this section referred to as the ‘PAC bundled pay-
ment system’) under which, in accordance with the 
provisions of this section, actual payments made 
under this title to post-acute care providers with re-
spect to post-acute care services furnished to tar-
geted beneficiaries during a bundle period are ad-
justed (through additional payment or recoupment, 
as applicable), based on a benchmark established by 
the Secretary for such bundle. 
‘‘(2) IMPLEMENTATION.—The PAC bundled 
payment system shall be established to be applied to 
services furnished in fiscal years beginning with fis-
cal year 2020. 
‘‘(b) DEFINITIONS.—In this section: 
‘‘(1) PAC BENEFICIARY.—The term ‘targeted 
beneficiary’ means an individual who is entitled to 
benefits under part A and enrolled under part B and 
not enrolled under part C. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(2) POST-ACUTE CARE SERVICES.—The term 
‘post-acute care services’ means post-acute care, in-
cluding home health services, skilled nursing serv-
ices, inpatient rehabilitation services, and inpatient 
hospital services, for which payment may otherwise 
be made under this title and which are furnished 
during a bundle period to a targeted beneficiary. 
‘‘(3) POST-ACUTE CARE PROVIDER.—The terms 
‘post-acute care provider’ means each of the fol-
lowing: 
‘‘(A) A home health agency. 
‘‘(B) A skilled nursing facility. 
‘‘(C) A rehabilitation facility. 
‘‘(D) A long-term care hospital. 
‘‘(4) BUNDLE PERIOD.—The term ‘bundle pe-
riod’ means, with respect to a bundle of post-acute 
care services for a targeted beneficiary who was dis-
charged from an inpatient hospital stay, a period be-
ginning on the first date on which post-acute care 
services within a bundle specified under subsection 
(c) is furnished to an individual not later than 30 
days after such discharge and ending 30, 60, or 90 
days, as specified by the Secretary for such bundle, 
after such first date. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(c) BUNDLES.—The Secretary shall establish under 
the PAC bundled payment system bundles of post-acute 
care services consisting of MS–DRGs, other than such 
MS–DRGs included under the Comprehensive Care for 
Joint Replacement Model carried out by the Centers for 
Medicare & Medicaid Services under section 1115A, that 
represent the highest 50 percent of expenditures under 
this title attributable to post acute care, and shall periodi-
cally update such bundles, based on the most recent avail-
able data. 
‘‘(d) PAYMENT METHODOLOGY.—The PAC payment 
system shall be designed consistent with the following: 
‘‘(1) PAYMENT OR RECOUPMENT BASED OFF OF 
BENCHMARK.—The Secretary shall annually estab-
lish a payment benchmark for each bundle of post- 
acute care services specified under subsection (c) for 
such year. The Secretary shall, through annual rec-
onciliation, adjust the payments made to a post- 
acute care provider with respect to post-acute care 
services included within a bundle so specified fur-
nished to a targeted beneficiary during a bundle pe-
riod during the year so that total payments for such 
provider with respect to such services within such 
bundle furnished to such beneficiary during such pe-
riod equals such benchmark for such bundle. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(2) CONSIDERATIONS.—In establishing the 
payment amount for a bundle of post-acute care 
services, the Secretary may consider patient charac-
teristics and other factors that are designed to take 
into account variations in treatment costs within the 
bundle. 
‘‘(3) SAVINGS.—The payment rates established 
for such bundles shall be set to result in, in the ag-
gregate, a reduction in the spending otherwise made 
under parts A and B for post-acute care services in-
cluded in such bundles of 2.85 percent by not later 
than fiscal year 2025. 
‘‘(4) ANNUAL
UPDATES.—The payment rates 
for bundles of post-acute care services shall be up-
dated each fiscal year based on a market basket of 
the services included within such bundles. 
‘‘(5) COVERAGE OF 50 PERCENT OF TOTAL PAY-
MENTS.—The bundles under this section, collec-
tively, shall be established by the Secretary so as to 
provide for payment for at least 50 percent of all 
post-acute care services provided under this title 
during each fiscal year under the PAC bundled pay-
ment system.’’. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
SEC. 307. REDUCTION OF BAD DEBT TREATED AS AN AL-
LOWABLE COST. 
(a) HOSPITALS.—Section 1861(v)(1)(T) of the Social 
Security Act (42 U.S.C. 1395x(v)(1)(T)) is amended— 
(1) in clause (iv), by striking ‘‘and’’ at the end; 
(2) in clause (v)— 
(A) by striking ‘‘or a subsequent fiscal 
year’’ and inserting ‘‘, 2014, or 2015’’; and 
(B) by striking the period at the end and 
inserting a comma; and 
(3) by adding at the end the following: 
‘‘(vi) for cost reporting periods beginning dur-
ing fiscal year 2016, by 50 percent of such amount 
otherwise allowable, 
‘‘(vii) for cost reporting periods beginning dur-
ing fiscal year 2017, by 60 percent of such amount 
otherwise allowable, and 
‘‘(viii) for cost reporting periods beginning dur-
ing fiscal year 2018 or a subsequent fiscal year, by 
75 percent of such amount otherwise allowable.’’. 
(b) 
SKILLED
NURSING
FACILITIES.—Section 
1861(v)(1)(V) of the Social Security Act (42 U.S.C. 
1395x(v)(1)(V)) is amended— 
(1) by moving subclauses (I) and (II) of clause 
(i) and subclauses (I) through (IV) of clause (ii) two 
ems to the right; 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(2) in clause (i)— 
(A) in subclause (I), by striking ‘‘and’’ at 
the end; 
(B) in subclause (II)— 
(i) by striking ‘‘or a subsequent fiscal 
year’’ and inserting ‘‘, 2014, or 2015’’ ; 
and 
(ii) by striking the period at the end 
and inserting a semicolon; and 
(C) by adding at the end the following: 
‘‘(III) for cost reporting periods beginning 
during fiscal year 2016, by 50 percent of such 
amount otherwise allowable; 
‘‘(IV) for cost reporting periods beginning 
during fiscal year 2017, by 60 percent of such 
amount otherwise allowable; and 
‘‘(V) for cost reporting periods beginning 
during fiscal year 2018 or a subsequent fiscal 
year, by 75 percent of such amount otherwise 
allowable.’’; and 
(3) in clause (ii)— 
(A) in subclause (IV)— 
(i) by striking ‘‘a subsequent fiscal 
year’’ and inserting ‘‘fiscal year 2015’’; 
and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(ii) by striking the period at the end 
and inserting a semicolon; and 
(B) by adding at the end the following: 
‘‘(V) for cost reporting periods beginning 
during fiscal year 2016, by 50 percent of such 
amount otherwise allowable; 
‘‘(VI) for cost reporting periods beginning 
during fiscal year 2017, by 60 percent of such 
amount otherwise allowable; and 
‘‘(VII) for cost reporting periods beginning 
during fiscal year 2018 or a subsequent fiscal 
year, by 75 percent of such amount otherwise 
allowable.’’. 
(c) 
CERTAIN
OTHER
PROVIDERS.—Section 
1861(v)(1)(W)(i) of the Social Security Act (42 U.S.C. 
1395x(v)(1)(W)(i)) is amended— 
(1) in subclause (III)— 
(A) by striking ‘‘a subsequent fiscal year’’ 
and inserting ‘‘fiscal year 2015’’; and 
(B) by striking the period at the end and 
inserting a semicolon; and 
(2) by adding at the end the following: 
‘‘(IV) for cost reporting periods beginning dur-
ing fiscal year 2016, by 50 percent of such amount 
otherwise allowable; 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(V) for cost reporting periods beginning dur-
ing fiscal year 2017, by 60 percent of such amount 
otherwise allowable; and 
‘‘(VI) for cost reporting periods beginning dur-
ing fiscal year 2018 or a subsequent fiscal year, by 
75 percent of such amount otherwise allowable’’. 
SEC. 308. REDUCE EXCESS SUBSIDIES TO TEACHING HOS-
PITALS. 
Section 1886(d)(5)(B)(ii) of the Social Security Act 
(42 U.S.C. 1395ww) is amended— 
(1) in subclause (XI), by striking at the end 
‘‘and’’; 
(2) in subclause (XII)— 
(A) by inserting ‘‘and before October 1, 
2016’’ after ‘‘October 1, 2007,’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
clause: 
‘‘(XIII) on or after October 1, 
2016, ‘c’ is equal to 1.22.’’. 
SEC. 309. EQUALIZING PAYMENT FOR CERTAIN COVERED 
OPD SERVICES AND PHYSICIANS’ SERVICES. 
Section 1833(t)(3) of the Social Security Act (42 
U.S.C. 1395l(t)(3)) is amended— 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(1) in subparagraph (D), by striking ‘‘The Sec-
retary’’ and inserting ‘‘Subject to subparagraph (H), 
the Secretary’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(H) PAYMENT
FOR
CERTAIN
COVERED 
OPD SERVICES.— 
‘‘(i) IN GENERAL.—In the case of ap-
plicable covered OPD services furnished on 
or after January 1, 2017, there shall be 
substituted for the medicare OPD fee 
schedule amount established under sub-
paragraph (D) for such service and year, 
determined prior to application of any geo-
graphic or other adjustments under this 
subsection (including adjustments under 
paragraph (17)), an amount equal to the 
payment amount under section 1848 for 
such service and year, determined prior to 
application of any geographic or other ad-
justments under such section. 
‘‘(ii) 
APPLICABLE
COVERED
OPD 
SERVICES
DEFINED.—In this subpara-
graph, the term ‘applicable covered OPD 
services’ covered OPD services that are 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
evaluation and management services (as 
specified by the Secretary). 
‘‘(iii) NOT BUDGET NEUTRAL IMPLE-
MENTATION.—In making any budget neu-
trality adjustments under this subsection 
for 2017 or a subsequent year, the Sec-
retary shall not take into account the re-
duced expenditures that result from the 
application of this subparagraph.’’. 
SEC. 310. MEDICARE ADVANTAGE CODING INTENSITY AD-
JUSTMENT. 
Section 1853(a)(1)(C)(ii)(III) of the Social Security 
Act (42 U.S.C. 1395w–23(a)(1)(C)(ii)(III)) is amended by 
striking ‘‘and for 2019 and each subsequent year, not less 
than 5.9 percent’’ and inserting ‘‘, for 2019 and 2020, 
not less than 5.9 percent, and for 2021 and subsequent 
years, not less than 8.76 percent’’. 
SEC. 311. MODIFICATIONS TO COST-SHARING REDUCTIONS 
UNDER MEDICARE PART D FOR LOW-INCOME 
INDIVIDUALS. 
(a) IN GENERAL.—Section 1860D–14(a)(1)(D) of 
the Social Security Act (42 U.S.C. 1395w–114(a)(1)(D)) 
is amended— 
(1) in clause (ii), by striking ‘‘$3’’ and inserting 
‘‘$6’’; and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(2) in clause (iii), by inserting before the period 
at the end the following: ‘‘(or, in the case of a drug 
that is not a generic or a preferred drug that is a 
multiple source drug, twice the copayment amount 
specified under section 1860D–2(b)(4)(A)(i)(I) for 
the drug and year involved)’’. 
(b) APPLICATION OF CURRENT INDEXING TO DOL-
LAR AMOUNTS SPECIFIED.—Section 1860D–14(a)(4) of 
the Social Security Act (42 U.S.C. 1395w–114(a)(4)) is 
amended— 
(1) in subparagraph (A), by adding at the end 
the following new sentence: ‘‘This subparagraph 
shall be applied (for 2017 and subsequent years) as 
if the dollar amounts specified under paragraph 
(1)(D)(ii), pursuant to the amendments made by 
section 311 of the America First Act, were the dol-
lar amounts specified in such paragraph when clause 
(i) first applied.’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(C) COPAYMENT
FOR
OTHER
INDIVID-
UALS.—The provisions of clause (ii) of section 
1860D–2(b)(4)(A) shall apply with respect to 
the dollar amounts specified in paragraph 
(1)(D)(iii) for 2017 and subsequent years in 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00041
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
the same manner as such provisions apply to 
the dollar amounts specified in clause (i)(I) of 
such section and the dollar amounts specified in 
paragraph (1)(D)(iii) shall be treated, for such 
purpose, as if they were the dollar amounts 
specified in such section for 2006.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning on or after January 1, 2017. 
SEC. 312. REBASE MEDICARE PAYMENTS AT POST-SEQUES-
TER LEVELS. 
In determining payment rates under title XVIII of 
the Social Security Act for years and fiscal years begin-
ning on or after October 1, 2015, the percentage reduc-
tions in payment rates effected for 2015 (and for fiscal 
year 2015) under the Balanced Budget and Emergency 
Deficit Control Act of 1985 shall be incorporated into and 
treated as part of the permanent payment rates for that 
year (or fiscal year) in determining the payment rates for 
subsequent years (and fiscal years). 
SEC. 313. PHASED-IN REDUCTION OF ALLOWABLE PRO-
VIDER TAXES UNDER MEDICAID. 
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
1903(w)(4)(C) of the Social Security Act (42 U.S.C. 
1396b(w)(4)(C)) is amended to read as follows: 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(ii) For purposes of clause (i), a determination 
of the existence of an indirect guarantee shall be 
made under paragraph (3)(i) of section 433.68(f) of 
title 42, Code of Federal Regulations, as in effect on 
November 1, 2006, except that— 
‘‘(I) for fiscal year 2017, ‘5.5 percent’ 
shall be substituted for ‘6 percent’ each place it 
appears; and 
‘‘(II) for fiscal year 2018 and each fiscal 
year thereafter, ‘5 percent’ shall be substituted 
for ‘6 percent’ each place it appears.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on October 1, 2016. 
Subtitle B—Medical Malpractice 
Reform 
SEC. 321. DEFINITIONS. 
In this subtitle: 
(1) ALTERNATIVE DISPUTE RESOLUTION 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. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
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; 
(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 
to provide, pay for, or reimburse the cost of 
medical, hospital, dental, or income-disability 
benefits; and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(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. 
(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. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(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, 
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-
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
leges a health care liability claim. Such term does 
not include a claim or action which is based on 
criminal liability; which seeks civil fines or penalties 
paid to Federal, State, or local government; or which 
is grounded in antitrust. 
(8) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court or pursuant 
to an alternative dispute resolution system, against 
a health care provider, a health care organization, or 
the manufacturer, distributor, supplier, marketer, 
promoter, or seller of a medical product, regardless 
of the theory of liability on which the claim is based, 
or the number of plaintiffs, defendants, or other par-
ties, or the number of causes of action, in which the 
claimant alleges a health care liability claim. 
(9) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
by any person, whether or not pursuant to ADR, 
against a health care provider, health care 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 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
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-
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 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00048
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
human disease or impairment, or the assessment or 
care of the health of human beings. 
(13) MEDICAL PRODUCT.—The term ‘‘medical 
product’’ means a drug, device, or biological product 
intended for humans, and the terms ‘‘drug’’, ‘‘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(g)(1) and (h)) and section 351(a) of the 
Public Health Service Act (42 U.S.C. 262(a)), re-
spectively, including any component or raw material 
used therein, but excluding health care services. 
(14) 
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. 
(15) 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, 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00049
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
health care organization, or a manufacturer, dis-
tributor, or supplier of a medical product. Punitive 
damages are neither economic nor noneconomic 
damages. 
(16) RECOVERY.—The term ‘‘recovery’’ means 
the net sum recovered after deducting any 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. 
(17) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana 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. 322. 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 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00050
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
for commencement of a health care lawsuit exceed 3 years 
after the date of manifestation of injury unless tolled for 
any of the following— 
(1) upon proof of fraud; 
(2) intentional concealment; or 
(3) the presence of a foreign body, which has no 
therapeutic or diagnostic purpose or effect, in the 
person of the injured person. 
Actions by a minor shall be commenced within 3 years 
from the date of the alleged manifestation of injury except 
that actions by a minor under the full age of 6 years shall 
be commenced within 3 years of manifestation of injury 
or prior to the minor’s 8th birthday, whichever provides 
a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian 
and a health care provider or health care organization 
have committed fraud or collusion in the failure to bring 
an action on behalf of the injured minor. 
SEC. 323. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this subtitle shall limit a 
claimant’s recovery of the full amount of the available eco-
nomic damages. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00051
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(b) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a 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. 324. 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 
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 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00052
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
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) Forty percent of the first $50,000 recovered 
by the claimant(s). 
(2) Thirty-three and one-third percent of the 
next $50,000 recovered by the claimant(s). 
(3) Twenty-five percent of the next $500,000 
recovered by the claimant(s). 
(4) Fifteen percent of any amount by which the 
recovery by the claimant(s) is in excess of $600,000. 
(b) APPLICABILITY.—The limitations in this section 
shall apply whether the recovery is by judgment, 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 
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. 325. 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 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00053
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
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. 
SEC. 326. EFFECT ON OTHER LAWS. 
(a) VACCINE INJURY.— 
(1) To the extent that title XXI of the Public 
Health Service Act establishes a Federal rule of law 
applicable to a civil action brought for a vaccine-re-
lated injury or death— 
(A) this subtitle does not affect the appli-
cation of the rule of law to such an action; and 
(B) any rule of law prescribed by this sub-
title in conflict with a rule of law of such title 
XXI shall not apply to such action. 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00054
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
(2) If there is an aspect of a civil action 
brought for a vaccine-related injury or death to 
which a Federal rule of law under title XXI of the 
Public Health Service Act does not apply, then this 
subtitle or otherwise applicable law (as determined 
under this subtitle) will apply to such aspect of such 
action. 
(b) OTHER FEDERAL LAW.—Except as provided in 
this section, nothing in this subtitle shall be deemed to 
affect any defense available to a defendant in a health care 
lawsuit or action under any other provision of Federal law. 
SEC. 
327. 
STATE 
FLEXIBILITY 
AND 
PROTECTION 
OF 
STATES’ RIGHTS. 
(a) HEALTH CARE LAWSUITS.—The provisions gov-
erning health care lawsuits set forth in this subtitle pre-
empt, subject to subsections (b) and (c), State law to the 
extent that State law prevents the application of any pro-
visions of law established by or under this subtitle. The 
provisions governing health care lawsuits set forth in this 
subtitle supersede chapter 171 of title 28, United States 
Code, to the extent that such chapter— 
(1) provides for a greater amount of damages 
or contingent fees, a longer period in which a health 
care lawsuit may be commenced, or a reduced appli-
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00055
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
cability or scope of periodic payment of future dam-
ages, than provided in this subtitle; or 
(2) prohibits the introduction of evidence re-
garding collateral source benefits, or mandates or 
permits subrogation or a lien on collateral source 
benefits. 
(b) PROTECTION OF STATES’ RIGHTS AND OTHER 
LAWS.—(1) Any issue that is not governed by any provi-
sion of law established by or under this subtitle (including 
State standards of negligence) shall be governed by other-
wise applicable State or Federal law. 
(2) This subtitle shall not preempt or supersede any 
State or Federal law that imposes greater procedural or 
substantive protections for health care providers and 
health care organizations from liability, loss, or damages 
than those provided by this subtitle or create a cause of 
action. 
(c) STATE FLEXIBILITY.—No provision of this sub-
title shall be construed to preempt— 
(1) any State law (whether effective before, on, 
or after the date of the enactment of this Act) that 
specifies a particular monetary amount of 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 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00056
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
greater or lesser than is provided for under this sub-
title, notwithstanding section 4(a); or 
(2) any defense available to a party in a health 
care lawsuit under any other provision of State or 
Federal law. 
SEC. 328. STATE DEMONSTRATION PROGRAMS TO EVALU-
ATE ALTERNATIVES TO CURRENT MEDICAL 
TORT LITIGATION. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 399V–6. STATE DEMONSTRATION PROGRAMS TO 
EVALUATE 
ALTERNATIVES 
TO 
CURRENT 
MEDICAL TORT LITIGATION. 
‘‘(a) IN GENERAL.—The Secretary is authorized to 
award demonstration grants to States for the develop-
ment, implementation, and evaluation of alternatives to 
current tort litigation for resolving disputes over injuries 
allegedly caused by health care providers or health care 
organizations. 
‘‘(b) DURATION.—The Secretary may award up to 10 
grants under subsection (a) and each grant awarded under 
such subsection may not exceed a period of 5 years. 
‘‘(c) CONDITIONS FOR DEMONSTRATION GRANTS.— 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00057
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(1) REQUIREMENTS.—Each State desiring a 
grant under subsection (a) shall— 
‘‘(A) develop an alternative to current tort 
litigation for resolving disputes over injuries al-
legedly caused by health care providers or 
health care organizations that may be 1 of the 
models described in subsection (d); and 
‘‘(B) promote a reduction of health care 
errors by allowing for patient safety data re-
lated to disputes resolved under subparagraph 
(A) to be collected and analyzed by organiza-
tions that engage in voluntary efforts to im-
prove patient safety and the quality of health 
care delivery. 
‘‘(2) ALTERNATIVE TO CURRENT TORT LITIGA-
TION.—Each State desiring a grant under sub-
section (a) shall demonstrate how the proposed al-
ternative described in paragraph (1)(A)— 
‘‘(A) makes the medical liability system 
more reliable through prompt and fair resolu-
tion of disputes; 
‘‘(B) encourages the early disclosure of 
health care errors; 
‘‘(C) enhances patient safety; and 
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00058
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(D) maintains access to liability insur-
ance. 
‘‘(3) SOURCES OF COMPENSATION.—Each State 
desiring a grant under subsection (a) shall identify 
the sources from and methods by which compensa-
tion would be paid for claims resolved under the pro-
posed alternative to current tort litigation, which 
may include public or private funding sources, or a 
combination of such sources. Funding methods shall 
to the extent practicable provide financial incentives 
for activities that improve patient safety. 
‘‘(4) SCOPE.— 
‘‘(A) IN GENERAL.—Each State desiring a 
grant under subsection (a) may establish a 
scope of jurisdiction (such as a designated geo-
graphic region, a designated area of health care 
practice, or a designated group of health care 
providers or health care organizations) for the 
proposed alternative to current tort litigation 
that is sufficient to evaluate the effects of the 
alternative. 
‘‘(B) NOTIFICATION
OF
PATIENTS.—A 
State proposing a scope of jurisdiction under 
subparagraph (A) shall demonstrate how pa-
VerDate Sep 11 2014 
04:01 Oct 22, 2015
Jkt 059200
PO 00000
Frm 00059
Fmt 6652
Sfmt 6201
E:\BILLS\H3777.IH
H3777
SSpencer on DSK4SPTVN1PROD with BILLS