II 114th CONGRESS 2d Session S. 2675 IN THE SENATE OF THE UNITED STATES March 14, 2016 Mr. Menendez (for himself, Mr. Schumer , Mr. Brown , Mr. Blumenthal , Ms. Warren , and Mr. Booker ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To provide for the adjustment of the debts of the Commonwealth of Puerto Rico, and for other purposes.

1. Short title This Act may be cited as Puerto Rico Recovery Act of 2016 . 2. Table of contents The table of contents for this Act is as follows: Sec. 1. Short title. Sec. 2. Table of contents. TITLE I—Tax provisions Sec. 101. Puerto Rico residents eligible for earned income tax credit. Sec. 102. Equitable treatment for residents of Puerto Rico with respect to the refundable portion of the child tax credit. TITLE II—Health care parity Subtitle A—Medicaid Sec. 201. Elimination of general Medicaid funding limitations ( cap ) for territories. Sec. 202. Elimination of specific Federal medical assistance percentage (FMAP) limitation for territories. Sec. 203. Application of Medicaid waiver authority to all of the territories. Sec. 204. Application of 100 percent Federal poverty line (FPL) limitation to territories. Sec. 205. Permitting Medicaid DSH allotments for territories. Subtitle B—Medicare Sec. 211. Calculation of Medicare DSH payments for IPPS hospitals in Puerto Rico. Sec. 212. Application of part B deemed enrollment process to residents of Puerto Rico; special enrollment period and limit on late enrollment penalties. Sec. 213. Puerto Rico practice expense GPCI improvement. Sec. 214. Adjustment in benchmark for low base payment counties in Puerto Rico. Sec. 215. Eliminating exclusion of part D eligible individuals residing in territories from eligibility for premium and cost-sharing subsidies. Sec. 216. Report on treatment of territories under Medicare part D. Subtitle C—Miscellaneous Sec. 221. Report on exclusion of territories from Exchanges. I Tax provisions 101. Puerto Rico residents eligible for earned income tax credit (a) In general Section 32 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (n) Residents of Puerto Rico (1) In general In the case of residents of Puerto Rico— (A) the United States shall be treated as including Puerto Rico for purposes of subsections (c)(1)(A)(ii)(I) and (c)(3)(C), (B) subsection (c)(1)(D) shall not apply to nonresident alien individuals who are residents of Puerto Rico, and (C) adjusted gross income and gross income shall be computed without regard to section 933 for purposes of subsections (a)(2)(B) and (c)(2)(A)(i). (2) Limitation The credit allowed under this section by reason of this subsection for any taxable year shall not exceed the amount, determined under regulations or other guidance promulgated by the Secretary, that a similarly situated taxpayer would receive if residing in a State. . (b) Child tax credit not reduced Subclause (II) of section 24(d)(1)(B)(ii) of such Code is amended by inserting before the period (determined without regard to section 32(n) in the case of residents of Puerto Rico) . (c) Effective date The amendment made shall apply to taxable years beginning after December 31, 2015. 102. Equitable treatment for residents of Puerto Rico with respect to the refundable portion of the child tax credit (a) In general Section 24(d)(1) of the Internal Revenue Code of 1986 is amended by inserting or section 933 after section 112 . (b) Effective date The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2015. II Health care parity A Medicaid 201. Elimination of general Medicaid funding limitations ( cap ) for territories (a) In general Section 1108 of the Social Security Act ( 42 U.S.C. 1308 ) is amended— (1) in subsection (f), in the matter before paragraph (1), by striking subsection (g) and inserting subsections (g) and (h) ; (2) in subsection (g)(2), in the matter before subparagraph (A), by inserting and subsection (h) after paragraphs (3) and (5) ; and (3) by adding at the end the following new subsection: (h) Sunset of Medicaid funding limitations for Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa Subsections (f) and (g) shall not apply to Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa beginning with fiscal year 2017. . (b) Conforming amendments (1) Section 1902(j) of the Social Security Act ( 42 U.S.C. 1396a(j) ) is amended by striking , the limitation in section 1108(f), . (2) Section 1903(u) of the Social Security Act ( 42 U.S.C. 1396b(u) ) is amended by striking paragraph (4). (3) Section 1323(c)(1) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18043(c)(1) ) is amended by striking 2019 and inserting 2016 . (c) Effective date The amendments made by this section shall apply beginning with fiscal year 2017. 202. Elimination of specific Federal medical assistance percentage (FMAP) limitation for territories Section 1905 of the Social Security Act ( 42 U.S.C. 1396d ) is amended— (1) in subsection (b)(2), by inserting for fiscal years before fiscal year 2017 after American Samoa ; and (2) in subsection (y)(1), in the matter preceding subparagraph (A)— (A) by inserting , for fiscal years before fiscal year 2017, before is one of the ; and (B) by inserting and, for fiscal year 2017 and subsequent fiscal years, is one of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, or American Samoa, after the District of Columbia . 203. Application of Medicaid waiver authority to all of the territories (a) In general Section 1902(j) of the Social Security Act ( 42 U.S.C. 1396a(j) ) is amended— (1) by striking American Samoa and the Northern Mariana Islands and inserting Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa ; (2) by striking American Samoa or the Northern Mariana Islands and inserting Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, or American Samoa ; (3) by inserting (1) after (j) ; (4) by inserting except as otherwise provided in this subsection, after Notwithstanding any other requirement of this title ; and (5) by adding at the end the following: (2) The Secretary may not waive under this subsection the requirement of subsection (a)(10)(A)(i)(IX) (relating to coverage of adults formerly under foster care) with respect to any territory. . (b) Effective date The amendments made by this section shall apply beginning October 1, 2016. 204. Application of 100 percent Federal poverty line (FPL) limitation to territories (a) In general Section 1902 of the Social Security Act ( 42 U.S.C. 1396a ) is amended— (1) in subsection (a)(10)(A)(i)(VIII), by inserting (or, subject to subsection (j), 100 percent in the case of Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa) after 133 percent ; and (2) in subsection (j), as amended by section 203, by adding at the end the following new paragraph: (3) (A) Subject to subparagraph (B), Federal financial participation shall not be available to Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, or American Samoa for medical assistance for an individual whose family income exceeds 100 percent of the official poverty line for a family of the size involved, except in the case of individuals qualifying for medical assistance under subsection (a)(10)(A)(i)(IX). (B) The Secretary may, under paragraph (1) or section 1115, waive the limitation under subparagraph (A) in the case of a territory other than Puerto Rico. In carrying out this subparagraph, the Secretary shall take into account the eligibility levels established under the State plan of the territory involved before the date of the enactment of this paragraph. . (b) Not applying 5 percent disregard Section 1902(e)(14)(I) of the Social Security Act ( 42 U.S.C. 1396b(e)(14)(I) ) is amended by adding at the end the following: The previous sentence shall only apply to a State that is one of the 50 States or the District of Columbia. . (c) Effective date The amendments made by this section shall apply with respect to eligibility determinations made with respect to items and services furnished on or after October 1, 2016. 205. Permitting Medicaid DSH allotments for territories Section 1923(f) of the Social Security Act ( 42 U.S.C. 1396 ) is amended— (1) in paragraph (6), by adding at the end the following new subparagraph: (C) Territories (i) Fiscal year 2017 For fiscal year 2017, with respect to the territories of Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa, the DSH allotment determined for each such territory shall bear the same ratio to $150,000,000 as the ratio of the number of individuals who are low-income or uninsured and residing in each such respective territory (as estimated from time to time by the Secretary) bears to the sums of the number of such individuals residing in all of the territories. (ii) Subsequent fiscal year For each subsequent fiscal year, the DSH allotment for each such territory is subject to an increase or reduction in accordance with paragraphs (3) and (7). ; (2) in paragraph (7)(A), by striking clause (iv) and redesignating clause (v) as clause (iv); and (3) in paragraph (9), by inserting before the period at the end the following: , and includes, beginning with fiscal year 2017, Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa . B Medicare 211. Calculation of Medicare DSH payments for IPPS hospitals in Puerto Rico Section 1886(d)(9)(D)(iii) of the Social Security Act ( 42 U.S.C. 1395ww(d)(9)(D)(iii) ) is amended to read as follows: (iii) Subparagraph (F) (relating to disproportionate share payments), including application of subsection (r), except that for this purpose— (I) the sum described in clause (ii) of this subparagraph shall be substituted for the sum referred to in paragraph (5)(F)(ii)(I); and (II) for discharges occurring on or after October 1, 2015, subclause (I) of paragraph (5)(F)(vi) shall be applied by substituting for the numerator described in such subclause the number of subsection (d) Puerto Rico hospital’s patient days for the cost reporting period involved which were made up of patients who (for such days) were entitled to benefits under part A of this title and were— (aa) entitled to supplementary security income benefits (excluding any State supplementation) under title XVI of this Act; (bb) eligible for medical assistance under a State plan under title XIX; or (cc) receiving aid or assistance under any plan of the State approved under title I, X, XIV, or XVI. . 212. Application of part B deemed enrollment process to residents of Puerto Rico; special enrollment period and limit on late enrollment penalties (a) Application of part B deemed enrollment process to residents of Puerto Rico Section 1837(f)(3) of the Social Security Act ( 42 U.S.C. 1395p(f)(3) ) is amended by striking , exclusive of Puerto Rico . (b) Effective date The amendment made by subsection (a) shall apply to individuals whose initial enrollment period under section 1837(d) of the Social Security Act begins on or after the first day of the effective month, specified by the Secretary of Health and Human Services under section 1839(j)(1)(C) of such Act, as added by subsection (c)(2). (c) Transition providing special enrollment period and limit on late enrollment penalties for certain Medicare beneficiaries Section 1839 of the Social Security Act ( 42 U.S.C. 1395r ) is amended— (1) in the first sentence of subsection (b), by inserting subject to section 1839(j)(2), after subsection (i)(4) or (l) of section 1837, ; and (2) by adding at the end the following new subsection: (j) Special rules for certain residents of Puerto Rico (1) Special enrollment period, coverage period for residents who are eligible but not enrolled (A) In general In the case of a transition individual (as defined in paragraph (3)) who is not enrolled under this part as of the day before the first day of the effective month (as defined in subparagraph (C)), the Secretary shall provide for a special enrollment period under section 1837 of 7 months beginning with such effective month during which the individual may be enrolled under this part. (B) Coverage period In the case of such an individual who enrolls during such special enrollment period, the coverage period under section 1838 shall begin on the first day of the second month after the month in which the individual enrolls. (C) Effective month defined In this section, the term effective month means a month, not earlier than October 2016 and not later than January 2017, specified by the Secretary. (2) Reduction in late enrollment penalties for current enrollees and individuals enrolling during transition (A) In general In the case of a transition individual who is enrolled under this part as of the day before the first day of the effective month or who enrolls under this part on or after the date of the enactment of this subsection but before the end of the special enrollment period under paragraph (1)(A), the amount of the late enrollment penalty imposed under section 1839(b) shall be recalculated by reducing the penalty to 15 percent of the penalty otherwise established. (B) Application Subparagraph (A) shall be applied in the case of a transition individual who— (i) is enrolled under this part as of the month before the effective month, for premiums for months beginning with such effective month; or (ii) enrolls under this part on or after the date of the enactment of this Act and before the end of the special enrollment period under paragraph (1)(A), for premiums for months during the coverage period under this part which occur during or after the effective month. (C) Loss of reduction if individual terminates enrollment Subparagraph (A) shall not apply to a transition individual if the individual terminates enrollment under this part after the end of the special enrollment period under paragraph (1). (3) Transition individual defined In this section, the term transition individual means an individual who resides in Puerto Rico and who would have been deemed enrolled under this part pursuant to section 1837(f) before the first day of the effective month but for the fact that the individual was a resident of Puerto Rico, regardless of whether the individual is enrolled under this part as of such first day. . 213. Puerto Rico practice expense GPCI improvement Section 1848(e)(1) of the Social Security Act ( 42 U.S.C. 1395w–4(e)(1) ) is amended— (1) in subparagraph (A), by striking and (I) and inserting (I), and (J) ; and (2) by adding at the end the following new subparagraph: (J) Floor for practice expense index for services furnished in Puerto Rico (i) In general For purposes of payment for services furnished in Puerto Rico in a year (beginning with 2016), after calculating the practice expense index in subparagraph (A)(i) for Puerto Rico, if such index is below the reference index (as defined in clause (ii)) for the year, the Secretary shall increase such index for Puerto Rico to equal the value of the reference index for the year. The preceding sentence shall not be applied in a budget neutral manner. (ii) Reference index defined In this subparagraph, the term reference index means, with respect to a year, 0.800 or, if less, the lowest practice expense index value for the year for any area in the 50 States or the District of Columbia. . 214. Adjustment in benchmark for low base payment counties in Puerto Rico Section 1853(n) of the Social Security Act ( 42 U.S.C. 1395w–23(n) ) is amended— (1) in paragraph (1), by striking and (5) and inserting , (5), and (6) ; (2) in paragraph (4), by striking In no case and inserting Subject to paragraph (6), in no case ; and (3) by adding at the end the following new paragraph: (6) Special rules for blended benchmark amount for territories (A) In general Subject to paragraph (2), the blended benchmark amount for an area in a territory for a year (beginning with 2016) shall not be less than 80 percent of the national average of the base payment amounts specified in subparagraph (2)(E) for such year for areas within the 50 States and the District of Columbia. (B) Limitation In no case shall the blended benchmark amount for an area in a territory for a year under subparagraph (A) exceed the lowest blended benchmark amount for any area within the 50 States and the District of Columbia for such year. . 215. Eliminating exclusion of part D eligible individuals residing in territories from eligibility for premium and cost-sharing subsidies (a) In general Section 1860D–14(a)(3) of the Social Security Act ( 42 U.S.C. 1395w–114(a)(3) ) is amended— (1) in subparagraph (A), in the matter preceding clause (i), by striking subject to subparagraph (F), ; (2) in subparagraph (B)(v), in the matter preceding subclause (I), by striking Subject to subparagraph (F), the Secretary and inserting The Secretary ; (3) in subparagraph (C), by adding at the end the following new sentence: In the case of an individual who is not a resident of the 50 States or the District of Columbia, the poverty line (as such term is defined in clause (ii)) that shall apply to such individual shall be the poverty line for the 48 contiguous States and the District of Columbia. ; and (4) by striking subparagraph (F). (b) Application of Medicaid provisions Section 1935 of the Social Security Act ( 42 U.S.C. 1396u–5 ) is amended— (1) in subsection (a), by striking subject to subsection (e) in the matter preceding paragraph (1); and (2) by striking subsection (e). (c) Conforming amendment Section 1108(f) of the Social Security Act ( 42 U.S.C. 1308(f) ) is amended by striking and section 1935(e)(1)(B) in the matter preceding clause (i). (d) Effective date The amendments made by this section shall take effect on January 1, 2017. 216. Report on treatment of territories under Medicare part D Paragraph (4) of section 1935(e) of the Social Security Act ( 42 U.S.C. 1396u–5(e) ) is amended to read as follows: (4) Report on application of subsection (A) In general Not later than May 1, 2018, the Secretary shall submit to Congress a report on the application of this subsection during the period beginning with fiscal year 2006 and ending with December 31, 2017. (B) Information to be included in report Such report shall include— (i) program guidance issued by the Secretary to implement this subsection; (ii) for each of Puerto Rico, the Virgin Islands of the United States, Guam, the Northern Mariana Islands, and American Samoa, information on the increased amount under paragraph (3) and how the territory has applied such amount, including the territory’s program design, expenditures, and number of individuals (and dual-eligible individuals) assisted; and (iii) a description of the differences between how such territories are treated under part D of title XVIII and under this title compared with the treatment of the 50 States and the District of Columbia under such part and this title for different fiscal years within the period covered under the report. (C) Recommendations Such report shall include recommendations for improving prescription drug coverage for low-income individuals in each territory identified in subparagraph (B)(ii), including recommendations regarding each of the following alternative approaches: (i) Adjusting the aggregate amount specified in paragraph (3)(B). (ii) Allowing residents of the territories to be subsidy eligible individuals under section 1860D–14, notwithstanding subsection (a)(3)(F) of such section, or providing substantially equivalent low-income prescription drug subsidies to such residents. . C Miscellaneous 221. Report on exclusion of territories from Exchanges (a) In general Not later than February 1, 2018, the Secretary of Health and Human Services shall submit to Congress a report that details the adverse impacts in each territory from the practical exclusion of the territories from the provisions of part II of subtitle D of title I of the Patient Protection and Affordable Care Act insofar as such provisions provide for the establishment of an American Health Benefit Exchange or the administration of a federally facilitated Exchange in each State and in the District of Columbia for the purpose of making health insurance more affordable and accessible for individuals and small businesses. (b) Information in report The report shall include information on the following: (1) An estimate of the total number of uninsured and underinsured individuals residing in each territory with respect to health insurance coverage. (2) A description of the number of health insurance issuers in each territory and the health insurance plans these issuers offer. (3) An estimate of the number of individuals residing in each territory who are denied premium and cost-sharing assistance that would otherwise be available to them for obtaining health insurance coverage through an Exchange if they resided in one of the 50 States or in the District of Columbia. (4) An estimate of the amount of Federal assistance described in paragraph (3) that is not being made available to residents of each territory. (5) An estimate of the number of small employers in each territory that would be eligible to purchase health insurance coverage through a Small Business Health Options Program (SHOP) Marketplace that would operate as part of an Exchange if the employers were in one of the 50 States or in the District of Columbia.