America First Act

Bill: 114-hr-3777
Sponsor: full_name: Rep. Rigell, E. Scott [R-VA-2]
Introduced: 2015-10-21
Policy area: Economics and Public Finance
Subjects: Agricultural insurance

Agricultural prices, subsidies, credit

Budget deficits and national debt

Budget process

Civil actions and liability

Customs enforcement

Education programs funding

Evidence and witnesses

Executive agency funding and structure

Federal Reserve System

Federal preemption

Government employee pay, benefits, personnel management

Government lending and loan guarantees

Health care costs and insurance

Health care quality

Health facilities and institutions

Health personnel

Health programs administration and funding

Health technology, devices, supplies

Higher education

Hospital care

Income tax credits

Income tax deductions

Income tax rates

Inflation and prices

Interest, dividends, interest rates

Medicaid

Medical education

Medicare

Poverty and welfare assistance

Sales and excise taxes

Social security and elderly assistance

Student aid and college costs

Transportation safety and security

User charges and fees

Wages and earnings
Latest action: action_date: 2016-03-23
text: Referred to the Subcommittee on Health, Employment, Labor, and Pensions.

Summaries:
action_date: 2015-10-21
action_desc: Introduced in House
text: <p><b>America First Act </b></p> <p>This bill increases discretionary spending limits, repeals sequestration for direct spending, and includes offsets that change direct spending programs and tax provisions. </p> <p>The bill amends the Balanced Budget and Emergency Deficit Control Act of 1985 to increase the discretionary spending limits for FY2016-FY2025 and to eliminate the sequestration for direct spending that is required under current law. </p> <p>The bill permanently extends two expansions of the Earned Income Tax Credit, limits tax deductions for high-income individuals, and repeals the medical device tax included in the Patient Protection and Affordable Care Act. </p> <p>In the health care area, the bill expands means-testing for Medicare, changes certain Medicare cost-sharing requirements and benefits, reduces the Medicaid provider tax threshold, and changes procedures for medical malpractice cases. </p> <p>The bill changes the measure of inflation that is used for tax provisions and benefits under spending programs such as Social Security to the Chained Consumer Price Index. It also indexes several user fees for inflation, including customs user fees and Transportation Security Administration fees.</p> <p>The bill decreases the dividend payment that the Federal Reserve pays on stocks held by member banks to participate in the Federal Reserve System. </p> <p>Federal Employees Retirement System contributions are increased for some current federal employees. </p> <p>The Higher Education Act of 1965 is amended to consolidate and make several changes to income-based student loan repayment programs. </p> <p>The Federal Crop Insurance Act is amended to reduce federal payments for crop insurance premium subsidies. </p>

tv_txt: I 114th CONGRESS 1st Session H. R. 3777 IN THE HOUSE OF REPRESENTATIVES October 21, 2015 Mr. Rigell introduced the following bill; which was referred to the Committee on Ways and Means , and in addition to the Committees on the Budget , Energy and Commerce , the Judiciary , Education and the Workforce , Oversight and Government Reform , Homeland Security , Financial Services , and Agriculture , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To provide for relief from sequester under the Balanced Budget and Emergency Deficit Control Act of 1985 and offsets to such relief through reforms in certain revenue and direct spending programs, and for other purposes.

1. Short title This Act may be cited as the America First Act . 2. Table of contents The table of contents of this Act is as follows: Sec. 1. Short title. Sec. 2. Table of contents. Title I—Sequester Relief Sec. 101. Amendments to the Balanced Budget and Emergency Deficit Control Act of 1985. Title II—Revenue Sec. 201. Permanent extension of modifications to earned income tax credit. Sec. 202. 35-percent limitation on certain deductions and exclusions. Sec. 203. Repeal of medical device tax. Title III—Healthcare Savings Subtitle A—Medicare and Medicaid provisions Sec. 301. Freeze income-related thresholds in calculation of Medicare part B and part D premiums. Sec. 302. Adjustment to applicable percentage increase for Medicare part B and D premiums for high-income beneficiaries. Sec. 303. Improved benefit structure. Sec. 304. Prohibition on first-dollar coverage under medigap policies and development of new standards for medigap policies. Sec. 305. Adjust Post-Acute Payment Updates. Sec. 306. Payment bundling for post-acute care (PAC) under Medicare. Sec. 307. Reduction of bad debt treated as an allowable cost. Sec. 308. Reduce Excess Subsidies to Teaching Hospitals. Sec. 309. Equalizing payment for certain covered OPD services and physicians’ services. Sec. 310. Medicare Advantage coding intensity adjustment. Sec. 311. Modifications to cost-sharing reductions under Medicare part D for low-income individuals. Sec. 312. Rebase Medicare payments at post-sequester levels. Sec. 313. Phased-in reduction of allowable provider taxes under Medicaid. Subtitle B—Medical Malpractice Reform Sec. 321. Definitions. Sec. 322. Encouraging speedy resolution of claims. Sec. 323. Compensating patient injury. Sec. 324. Maximizing patient recovery. Sec. 325. Additional HEALTH benefits. Sec. 326. Effect on other laws. Sec. 327. State flexibility and protection of States’ rights. Sec. 328. State demonstration programs to evaluate alternatives to current medical tort litigation. Sec. 329. Affirmative defense based on compliance with best practice guidelines. Sec. 330. Medical malpractice reform State incentive fund. Sec. 331. Sense of Congress concerning additional reforms. Sec. 332. Applicability; effective date. Title IV—Social Security Savings Sec. 401. Adjustments in supplemental security income benefits for certain long-time beneficiaries. Title V—Other Mandatory Savings and Receipts Sec. 501. Conversion to chained CPI. Sec. 502. Adjustment for inflation of fees for certain customs services. Sec. 503. Adjustment for inflation of TSA service security fees and fee levels. Sec. 504. Dividends and surplus funds of reserve banks. Sec. 505. Cost-saving reforms for Federal Crop Insurance Program. Sec. 506. Federal employee annuities. Sec. 507. Repayment plans. Sec. 508. REPAYE. Sec. 509. Public service loan forgiveness. I Sequester Relief 101. Amendments to the Balanced Budget and Emergency Deficit Control Act of 1985 (a) Discretionary spending limits Section 251(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 ( 2 U.S.C. 901(c) ) is amended by striking paragraphs (3) through (8) and inserting the following: (3) for fiscal year 2016— (A) for the revised security category, $564,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $521,000,000,000 in new budget authority; (4) for fiscal year 2017— (A) for the revised security category, $577,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $532,000,000,000 in new budget authority; (5) for fiscal year 2018— (A) for the revised security category, $590,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $544,000,000,000 in new budget authority; (6) for fiscal year 2019— (A) for the revised security category, $603,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $557,000,000,000 in new budget authority; (7) for fiscal year 2020— (A) for the revised security category, $617,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $569,000,000,000 in new budget authority; (8) for fiscal year 2021— (A) for the revised security category, $631,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $581,000,000,000 in new budget authority; (9) for fiscal year 2022— (A) for the revised security category, $646,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $596,000,000,000 in new budget authority; (10) for fiscal year 2023— (A) for the revised security category, $662,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $610,000,000,000 in new budget authority; (11) for fiscal year 2024— (A) for the revised security category, $679,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $626,000,000,000 in new budget authority; and (12) for fiscal year 2025— (A) for the revised security category, $695,000,000,000 in new budget authority; and (B) for the revised nonsecurity category, $641,000,000,000 in new budget authority; . (b) Elimination of direct spending sequester and other adjustments (1) In general Section 251A of the Balanced Budget and Emergency Deficit Control Act of 1985 ( 2 U.S.C. 901a ) is repealed. (2) Clarification Any order issued by the Director of the Office of Management and Budget to reduce the discretionary spending limit for fiscal year 2016 under such section (as in effect on the date before the date of enactment of this Act) shall have no force or effect. (c) Adjustments to discretionary spending limits Section 251(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 ( 2 U.S.C. 901(b)(2) ) is amended as follows: (1) In subparagraph (B)— (A) in subclause (IX), by striking and at the end; (B) in subclause (X), by striking the period at the end and inserting ; and ; and (C) by adding at the end the following: (XI) for fiscal year 2022, $1,309,000,000 in additional new budget authority; (XII) for fiscal year 2023, $1,309,000,000 in additional new budget authority; (XIII) for fiscal year 2024, $1,309,000,000 in additional new budget authority; and (XIV) for fiscal year 2025, $1,309,000,000 in additional new budget authority. . (2) In subparagraph (C)— (A) in subclause (IX), by striking and at the end; (B) in subclause (X), by striking the period at the end and inserting ; and ; and (C) by adding at the end the following: (XI) for fiscal year 2022, $496,000,000 in additional new budget authority; (XII) for fiscal year 2023, $496,000,000in additional new budget authority; (XIII) for fiscal year 2024, $496,000,000 in additional new budget authority; and (XIV) for fiscal year 2025, $496,000,000 in additional new budget authority. . (3) In subparagraph (D), by striking fiscal years 2012 through 2021 and inserting fiscal years 2012 through 2025 . (d) Clerical amendment Section 250(a) of the Balanced Budget and Emergency Deficit Control Act of 1985 ( 2 U.S.C. 900(a) ) is amended by striking the item relating to section 251A. II Revenue 201. Permanent extension of modifications to earned income tax credit (a) Increase in credit percentage for families 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: Percentages .— (A) In general The credit percentage and ; and (2) by adding at the end the following new subparagraph: (B) Increased credit percentage for families with 3 or more qualifying children In the case of an eligible individual 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 striking increased by and all that follows and inserting increased by $5,000. . (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. 202. 35-percent limitation on certain deductions 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: 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— (1) the tax which would be imposed under such section if taxable income were determined without 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 taxpayer’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. 203. Repeal of medical device tax (a) In general Chapter 32 of the Internal Revenue 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 enactment of this Act. III Healthcare Savings A Medicare and Medicaid provisions 301. Freeze income-related thresholds in calculation 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 beginning with the target year, August of the calendar year that is two years before the target year ; and (2) by adding at the end the following new subparagraph: (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 this subsection to the monthly amount of the premium subsidy applicable to the premium under this section. . 302. Adjustment to applicable percentage increase for Medicare part B and D premiums for high-income beneficiaries (a) In general Section 1839(i) of the Social Security Act ( 42 U.S.C. 1395r(i) ) is amended— (1) in paragraph (3)(A)(i), by striking paragraph (6) and inserting paragraphs (6) and (7) ; (2) by redesignating paragraph (7) as paragraph (8); and (3) by inserting after paragraph (6) the following new paragraph: (7) Adjustment to applicable percentage increase beginning in 2016 Notwithstanding 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 37.625 percent , 53.75 percent , 69.875 percent , 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 subparagraph (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) . 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: 1899B. Unified part A and B deductible (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 section) constitute incurred expenses for which benefits payable under section 1833(a) are determinable, shall be reduced by the amount of the unified deductible under subsection (b); and (2) the individual shall be responsible for payment 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 average) 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: (1) With respect to items and services covered under part A, such unified deductible shall be applied on the basis of the amount that is payable for such items and services without regard to any copayments 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 applied on the basis of the total amount of the expenses 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 coinsurance. (3) (A) Except as provided in subparagraph (B), such unified deductible shall be applied with respect 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 applied to preventive services and additional preventive services (as those terms are defined in section 1861(ddd)). (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 deductible under this section and the annual out-of-pocket limit under section 1899D that will be applicable for the succeeding year. 1899C. Uniform part A and B coinsurance rate (a) In general Notwithstanding any other provision of this title, in the case of an individual 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 coinsurance 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 applied 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 applied on the basis of the total amount of the expenses 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 coinsurance under such parts. (B) Such uniform coinsurance shall not be applied to preventive services and additional preventive services (as those terms are defined in section 1861(ddd)). 1899D. Protection against high out-of-pocket expenditures for fee-for-service benefits (a) In general Notwithstanding any other provision of this title, in the case of an individual 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 exceeds the annual out-of-pocket limit under subsection (b) 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 limits (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 average) 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 attributable to deductibles, coinsurance, and copayments 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-related basis shall not be considered incurred expenses for purposes of determining out-of-pocket cost-sharing 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 subsequent 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— (A) in subsection (a), by inserting Subject to sections 1899B, 1899C, and 1899D: before paragraph (1); and (B) in subsection (b), by inserting Subject 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 preceding paragraph (1), by inserting and sections 1899B, 1899C, and 1899D after succeeding 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 preceding subparagraph (A), by inserting subject to sections 1899B, 1899C, and 1899D, after this part, ; (D) in subsection (f), by striking In establishing and inserting Subject to sections 1899B, 1899C, and 1899D, in establishing ; and (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 . 304. Prohibition on first-dollar coverage under medigap policies and development 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 request the National Association of Insurance Commissioners to review and revise the standards for benefit packages under subsection (p)(1), taking into 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 revisions shall be made consistent with the rules applicable under subsection (p)(1)(E) with the reference to the 1991 NAIC Model Regulation deemed a reference 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 enactment 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 (B) more than 50 percent of the cost-sharing (excluding premiums) otherwise applicable 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 requirement under subsection (q)(1) shall be satisfied with the renewal of the revised package under paragraph (1) that most closely matches the policy in which the individual was enrolled prior to such revision. . 305. Adjust Post-Acute Payment Updates (a) Revision of inpatient rehabilitation facility 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 such increase factor is greater than 0.0 percent the Secretary shall reduce the increase factor by an additional amount described 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 subparagraph (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 described in subparagraph (C)(iii) for such year is 0.0 percentage point. ; and (2) in paragraph (7)(A)(i), by striking and (D) and inserting , (D), and (E) . (b) Revision of long-Term care hospital market basket updates for 2016 through 2025 Section 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 period at the end and inserting ; and ; and (iii) by adding at the end the following new clause: (iii) for each of rate years 2016 through 2025, by the additional adjustment described in subparagraph (C). ; and (B) by striking subparagraph (C) and inserting 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 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 adjustment shall be reduced such that the annual update after its application is 0.0. If, in any of the fiscal years 2016 through 2025, the annual update, 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 percentage 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 market basket updates for 2016 through 2025 Section 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 following new clause: (ii) Productivity and other adjustment 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 adjustment described in clause (iii). Such percentage shall be reduced first by the productivity adjustment in subclause (I). The application of the productivity adjustment 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 subclause (II) shall not apply. ; and (2) by striking clause (iii) and inserting the following: (iii) Calculating other adjustment 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 adjustment shall be applied to the percentage under clause (i) as reduced by the productivity 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 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 following new clause: (vi) Adjustments After determining the home health market basket percentage increase under clause (iii), and after application of clause (v), the Secretary shall reduce such percentage— (I) for 2015 and each subsequent year, by the productivity adjustment 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 described in subparagraph (vii). The application of subclauses (I) and (II) may result in the home health market basket percentage increase under clause (iii) being less than 0.0 for a year, and may result in payment rates under the system under this subsection for a year being less 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 adjustment described in this clause is 1.1 percentage point for each of 2016 through 2025. If the application of the other adjustment 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 increase after its application of the other adjustment 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. . 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: 1899C. Post-acute care (PAC) payment bundling system (a) Establishment of system (1) In general The Secretary shall establish a retrospective bundled payment arrangement (in this section referred to as the PAC bundled payment system ) under which, in accordance with the provisions of this section, actual payments made under this title to post-acute care providers with respect to post-acute care services furnished to targeted beneficiaries during a bundle period are adjusted (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 fiscal 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. (2) Post-acute care services The term post-acute care services means post-acute care, including home health services, skilled nursing services, 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 following: (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 period means, with respect to a bundle of post-acute care services for a targeted beneficiary who was discharged from an inpatient hospital stay, a period beginning 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. (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 periodically update such bundles, based on the most recent available 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 establish a payment benchmark for each bundle of post-acute care services specified under subsection (c) for such year. The Secretary shall, through annual reconciliation, adjust the payments made to a post-acute care provider with respect to post-acute care services included within a bundle so specified furnished to a targeted beneficiary during a bundle period during the year so that total payments for such provider with respect to such services within such bundle furnished to such beneficiary during such period equals such benchmark for such bundle. (2) Considerations In establishing the payment amount for a bundle of post-acute care services, the Secretary may consider patient characteristics 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 aggregate, a reduction in the spending otherwise made under parts A and B for post-acute care services included 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 updated each fiscal year based on a market basket of the services included within such bundles. (5) Coverage of 50 percent of total payments The bundles under this section, collectively, 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 payment system. . 307. Reduction of bad debt treated as an allowable 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 during fiscal year 2016, by 50 percent of such amount otherwise allowable, (vii) for cost reporting periods beginning during fiscal year 2017, by 60 percent of such amount otherwise allowable, and (viii) for cost reporting periods beginning during 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; (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 (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 during fiscal year 2016, by 50 percent of such amount otherwise allowable; (V) for cost reporting periods beginning during fiscal year 2017, by 60 percent of such amount otherwise allowable; and (VI) for cost reporting periods beginning during fiscal year 2018 or a subsequent fiscal year, by 75 percent of such amount otherwise allowable . 308. Reduce Excess Subsidies to Teaching Hospitals 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 subclause: (XIII) on or after October 1, 2016, c is equal to 1.22. . 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— (1) in subparagraph (D), by striking The Secretary and inserting Subject to subparagraph (H), the Secretary ; and (2) by adding at the end the following new subparagraph: (H) Payment for certain covered OPD services (i) In general In the case of applicable covered OPD services furnished on or after January 1, 2017, there shall be substituted for the medicare OPD fee schedule amount established under subparagraph (D) for such service and year, determined prior to application of any geographic 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 adjustments under such section. (ii) Applicable covered OPD services defined In this subparagraph, the term applicable covered OPD services covered OPD services that are evaluation and management services (as specified by the Secretary). (iii) Not budget neutral implementation In making any budget neutrality adjustments under this subsection for 2017 or a subsequent year, the Secretary shall not take into account the reduced expenditures that result from the application of this subparagraph. . 310. Medicare Advantage coding intensity adjustment 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 . 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 (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 dollar 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 dollar amounts specified in such paragraph when clause (i) first applied. ; and (2) by adding at the end the following new subparagraph: (C) Copayment for other individuals 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 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 beginning on or after January 1, 2017. 312. Rebase Medicare payments at post-sequester levels In determining payment rates under title XVIII of the Social Security Act for years and fiscal years beginning on or after October 1, 2015, the percentage reductions 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). 313. Phased-in reduction of allowable provider 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: (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. B Medical Malpractice Reform 321. Definitions In this subtitle: (1) Alternative dispute resolution system; ADR The term alternative dispute resolution system or ADR means a system that provides for the resolution of health care lawsuits in a manner 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, including 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 asserted or such an action is brought, whether deceased, 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 claimant, as a result of the injury or wrongful death, pursuant to— (A) any State or Federal health, sickness, income-disability, accident, or workers’ compensation law; (B) any health, sickness, income-disability, or accident insurance that provides health benefits 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 (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 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 employment opportunities, damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature. The term compensatory damages includes economic damages and noneconomic damages, as such terms are defined in this section. (5) Contingent fee The term contingent fee includes all compensation to any person or persons 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 employment 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 interstate 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 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 claimants, plaintiffs, defendants, or other parties, or the number of claims or causes of action, in which the claimant alleges 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 action 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 parties, 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 organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, including, 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 entity 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 administer 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, registered, or certified, or exempted from such requirement 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 organization, 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) Medical product The term medical product means a drug, device, or biological product intended for humans, and the terms drug , device , 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) ), respectively, including any component or raw material used therein, but excluding health care services. (14) Noneconomic damages The term noneconomic damages means damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, 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 compensatory purposes, against a health care provider, health care organization, or a manufacturer, distributor, 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 disbursements or costs incurred in connection with prosecution 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 Islands, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States, or any political subdivision thereof. 322. Encouraging speedy resolution of claims The time for the commencement of a health care lawsuit 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 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. 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 economic damages. (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 separate 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 proportion of responsibility of each party for the claimant’s harm. 324. Maximizing patient recovery (a) Court Supervision of Share of Damages Actually Paid to Claimants In any health care lawsuit, the court shall supervise the arrangements for payment of damages to protect against conflicts of interest that may have the effect of reducing the amount of damages awarded that are actually paid to claimants. In particular, in any health care lawsuit in which the attorney for a party claims a financial stake in the outcome by virtue 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 exceed 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, settlement, mediation, arbitration, or any other form of alternative dispute resolution. In a health care lawsuit involving 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 requirement for court supervision in the first two sentences of subsection (a) applies only in civil actions. 325. Additional HEALTH benefits In any health care lawsuit involving injury or wrongful death, any party may introduce evidence of collateral source benefits. If a party elects to introduce such evidence, 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 opposing party to secure the right to such collateral source benefits. 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 section 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 . 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-related injury or death— (A) this subtitle does not affect the application of the rule of law to such an action; and (B) any rule of law prescribed by this subtitle 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 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. 327. State flexibility and protection of States’ rights (a) Health Care Lawsuits The provisions governing health care lawsuits set forth in this subtitle 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 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 applicability or scope of periodic payment of future damages, than provided in this subtitle; or (2) prohibits the introduction of evidence regarding 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 provision of law established by or under this subtitle (including State standards of negligence) shall be governed by otherwise 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 subtitle 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 compensatory or punitive damages (or the total amount of damages) that may be awarded in a health care lawsuit, regardless of whether such monetary amount is greater or lesser than is provided for under this subtitle, 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. 328. State demonstration programs to evaluate 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: 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 development, 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 (1) Requirements Each State desiring a grant under subsection (a) shall— (A) develop an alternative to current tort litigation for resolving disputes over injuries allegedly 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 related to disputes resolved under subparagraph (A) to be collected and analyzed by organizations that engage in voluntary efforts to improve patient safety and the quality of health care delivery. (2) Alternative to current tort litigation Each State desiring a grant under subsection (a) shall demonstrate how the proposed alternative described in paragraph (1)(A)— (A) makes the medical liability system more reliable through prompt and fair resolution of disputes; (B) encourages the early disclosure of health care errors; (C) enhances patient safety; and (D) maintains access to liability insurance. (3) Sources of compensation Each State desiring a grant under subsection (a) shall identify the sources from and methods by which compensation would be paid for claims resolved under the proposed 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 geographic 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 patients would be notified that they are receiving health care services that fall within such scope. (5) Preference in awarding demonstration grants In awarding grants under subsection (a), the Secretary shall give preference to States— (A) that have developed the proposed alternative through substantive consultation with relevant stakeholders; and (B) in which State law at the time of the application would not prohibit the adoption of an alternative to current tort litigation. (d) Models (1) In general Any State desiring a grant under subsection (a) that proposes an alternative described in paragraph (2), (3), or (4) shall be deemed to meet the criteria under subsection (c)(2). (2) Early disclosure and compensation model In the early disclosure and compensation model, the State shall— (A) require that health care providers or health care organizations notify a patient (or an immediate family member or designee of the patient) of an adverse event that results in serious injury to the patient, and that such notification shall not constitute an acknowledgment or an admission of liability; (B) provide immunity from tort liability to any health care provider or health care organization that offers in good faith to pay compensation in accordance with this section to a patient for an injury incurred in the provision of health care services (limited to claims arising out of the same nucleus of operative facts as the injury, and except in cases of fraud related to the provision of health care services, or in cases of criminal or intentional harm); (C) set a limited time period during which a health care provider or health care organization may make an offer of compensation benefits under subparagraph (B), with consideration for instances where prompt recognition of an injury is unlikely or impossible; (D) require that the compensation provided under subparagraph (B) include— (i) payment for the net economic loss of the patient, on a periodic basis, reduced by any payments received by the patient under— (I) any health or accident insurance; (II) any wage or salary continuation plan; or (III) any disability income insurance; (ii) payment for the non-economic damages of the patient, if appropriate for the injury, based on a defined payment schedule developed by the State in consultation with relevant experts and with the Secretary in accordance with subsection (g); and (iii) reasonable attorney’s fees; (E) not abridge the right of an injured patient to seek redress through the State tort system if a health care provider does not enter into a compensation agreement with the patient in accordance with subparagraph (B) or if the compensation offered does not meet the requirements of subparagraph (D) or is not offered in good faith; (F) permit a health care provider or health care organization that offers in good faith to pay compensation benefits to an individual under subparagraph (B) to join in the payment of the compensation benefits any health care provider or health care organization that is potentially liable, in whole or in part, for the injury; and (G) permit any health care provider or health care organization to contribute voluntarily in the payment of compensation benefits to an individual under subparagraph (B). (3) Administrative determination of compensation model (A) In general In the administrative determination of compensation model— (i) the State shall— (I) designate an administrative entity (in this paragraph referred to as the Board ) that shall include representatives of— (aa) relevant State licensing boards; (bb) patient advocacy groups; (cc) health care providers and health care organizations; and (dd) attorneys in relevant practice areas; (II) set up classes of avoidable injuries, in consultation with relevant experts and with the Secretary in accordance with subsection (g), that will be used by the Board to determine compensation under clause (ii)(II); (III) modify tort liability, through statute or contract, to bar negligence claims in court against health care providers and health care organizations for the classes of injuries established under subclause (II), except in cases of fraud related to an injury, or in cases of criminal or intentional harm; (IV) outline a procedure for informing patients about the modified liability system described in this paragraph and, in systems where participation by the health care provider, health care organization, or patient is voluntary, allow for the decision by the provider, organization, or patient of whether to participate to be made prior to the provision of, use of, or payment for the health care service; (V) provide for an appeals process to allow for review of decisions; and (VI) establish procedures to coordinate settlement payments with other sources of payment; (ii) the Board shall— (I) resolve health care liability claims for certain classes of avoidable injuries as determined by the State and determine compensation for such claims; (II) develop a schedule of compensation to be used in making such determinations that includes— (aa) payment for the net economic loss of the patient, on a periodic basis, reduced by any payments received by the patient under any health or accident insurance, any wage or salary continuation plan, or any disability income insurance; (bb) payment for the non-economic damages of the patient, if appropriate for the injury, based on a defined payment schedule developed by the State in consultation with relevant experts and with the Secretary in accordance with subsection (g); and (cc) reasonable attorney’s fees; and (III) update the schedule under subclause (II) on a regular basis. (B) Appeals The State, in establishing the appeals process described in subparagraph (A)(i)(V), may choose whether to allow for de novo review, review with deference, or some opportunity for parties to reject determinations by the Board and elect to file a civil action after such rejection. Any State desiring to adopt the model described in this paragraph shall indicate how such review method meets the criteria under subsection (c)(2). (C) Timeliness The State shall establish timeframes to ensure that claims handled under the system described in this paragraph provide for adjudication that is more timely and expedited than adjudication in a traditional tort system. (4) Special health care court model In the special health care court model, the State shall— (A) establish a special court for the timely adjudication of disputes over injuries allegedly caused by health care providers or health care organizations in the provision of health care services; (B) ensure that such court is presided over by judges with health care expertise who meet applicable State standards for judges and who agree to preside over such court voluntarily; (C) provide authority to such judges to make binding rulings on causation, compensation, standards of care, and related issues with reliance on independent expert witnesses commissioned by the court; (D) provide for an appeals process to allow for review of decisions; and (E) at its option, establish an administrative entity similar to the entity described in paragraph (3)(A)(i)(I) to provide advice and guidance to the special court. (e) Application (1) In general Each State desiring a grant under subsection (a) shall submit to the Secretary an application, at such time, in such manner, and containing such information as the Secretary may require. (2) Review panel (A) In general In reviewing applications under paragraph (1), the Secretary shall consult with a review panel composed of relevant experts appointed by the Comptroller General. (B) Composition (i) Nominations The Comptroller General shall solicit nominations from the public for individuals to serve on the review panel. (ii) Appointment The Comptroller General shall appoint, at least 11 but not more than 15, highly qualified and knowledgeable individuals to serve on the review panel and shall ensure that the following entities receive fair representation on such panel: (I) Patient advocates. (II) Health care providers and health care organizations. (III) Attorneys with expertise in representing patients and health care providers. (IV) Insurers. (V) State officials. (C) Chairperson The Comptroller General, or an individual within the Government Accountability Office designated by the Comptroller General, shall be the chairperson of the review panel. (D) Availability of information The Comptroller General shall make available to the review panel such information, personnel, and administrative services and assistance as the review panel may reasonably require to carry out its duties. (E) Information from agencies The review panel may request directly from any department or agency of the United States any information that such panel considers necessary to carry out its duties. To the extent consistent with applicable laws and regulations, the head of such department or agency shall furnish the requested information to the review panel. (f) Report Each State receiving a grant under subsection (a) shall submit to the Secretary a report evaluating the effectiveness of activities funded with grants awarded under such subsection at such time and in such manner as the Secretary may require. (g) Technical assistance (1) In general The Secretary shall provide technical assistance to the States awarded grants under subsection (a). (2) Requirements Technical assistance under paragraph (1) shall include— (A) the development of a defined payment schedule for non-economic damages (including guidance on the consideration of individual facts and circumstances in determining appropriate payment), the development of classes of avoidable injuries, and guidance on early disclosure to patients of adverse events; and (B) the development, in consultation with States, of common definitions, formats, and data collection infrastructure for States receiving grants under this section to use in reporting to facilitate aggregation and analysis of data both within and between States. (3) Use of common definitions, formats, and data collection infrastructure States not receiving grants under this section may also use the common definitions, formats, and data collection infrastructure developed under paragraph (2)(B). (h) Evaluation (1) In general The Secretary, in consultation with the review panel established under subsection (e)(2), shall enter into a contract with an appropriate research organization to conduct an overall evaluation of the effectiveness of grants awarded under subsection (a) and to annually prepare and submit a report to the appropriate committees of Congress. Such an evaluation shall begin not later than 18 months following the date of implementation of the first program funded by a grant under subsection (a). (2) Contents The evaluation under paragraph (1) shall include— (A) an analysis of the effect of the grants awarded under subsection (a) on the number, nature, and costs of health care liability claims; (B) a comparison of the claim and cost information of each State receiving a grant under subsection (a); and (C) a comparison between States receiving a grant under this section and States that did not receive such a grant, matched to ensure similar legal and health care environments, and to determine the effects of the grants and subsequent reforms on— (i) the liability environment; (ii) health care quality; (iii) patient safety; and (iv) patient and health care provider and organization satisfaction with the reforms. (i) Option To provide for initial planning grants Of the funds appropriated pursuant to subsection (k), the Secretary may use a portion not to exceed $500,000 per State to provide planning grants to such States for the development of demonstration project applications meeting the criteria described in subsection (c). In selecting States to receive such planning grants, the Secretary shall give preference to those States in which State law at the time of the application would not prohibit the adoption of an alternative to current tort litigation. (j) Definitions In this section: (1) Health care services The term health care services means any services provided by a health care provider, or by any individual working under the supervision of a health care provider, that relate to— (A) the diagnosis, prevention, or treatment of any human disease or impairment; or (B) the assessment of the health of human beings. (2) Health care organization The term health care organization means any individual or entity which is obligated to provide, pay for, or administer health benefits under any health plan. (3) Health care provider The term health care provider means any individual or entity— (A) licensed, registered, or certified under Federal or State laws or regulations to provide health care services; or (B) required to be so licensed, registered, or certified but that is exempted by other statute or regulation. (4) Net economic loss The term net economic loss means— (A) reasonable expenses incurred for products, services, and accommodations needed for health care, training, and other remedial treatment and care of an injured individual; (B) reasonable and appropriate expenses for rehabilitation treatment and occupational training; (C) 100 percent of the loss of income from work that an injured individual would have performed if not injured, reduced by any income from substitute work actually performed; and (D) reasonable expenses incurred in obtaining ordinary and necessary services to replace services an injured individual would have performed for the benefit of the individual or the family of such individual if the individual had not been injured. (5) Non-economic damages The term non-economic damages means losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), injury to reputation, and all other non-pecuniary losses of any kind or nature, to the extent permitted under State law. (k) Authorization of appropriations There are authorized to be appropriated to carry out this section such sums as may be necessary. Amounts appropriated pursuant to this subsection shall remain available until expended. . 329. Affirmative defense based on compliance with best practice guidelines (a) Selection and Issuance of Best Practices Guidelines (1) In general The Secretary of Health and Human Services (in this section referred to as the Secretary ) shall provide for the selection and issuance of best practice guidelines (each in this subsection referred to as a guideline ) in accordance with paragraphs (2) and (3). (2) Development process Not later than 90 days after the date of the enactment of this Act, the Secretary shall enter into a contract with a qualified physician consensus-building organization (such as the Physician Consortium for Performance Improvement), in concert and agreement with physician specialty organizations, to develop guidelines for treatment of medical conditions for application under subsection (b). Under the contract, the organization shall take into consideration any endorsed performance-based quality measures utilized under title XVIII of the Social Security Act ( 42 U.S.C. 1395 et seq. ). Under the contract and not later than 18 months after the date of the enactment of this Act, the organization shall submit best practice guidelines for issuance as guidelines under paragraph (3). (3) Issuance (A) In general Not later than 2 years after the date of the enactment of this Act, the Secretary shall issue, by regulation, after notice and opportunity for public comment, guidelines that have been recommended under paragraph (2) for application under subsection (b). (B) Limitation The Secretary may not issue guidelines unless they have been approved or endorsed by qualified physician consensus-building organization involved and physician specialty organizations. (C) Dissemination The Secretary shall broadly disseminate the guidelines so issued. (b) Limitation on damages (1) Limitation on noneconomic damages In any health care lawsuit, no noneconomic damages may awarded with respect to treatment that is within a guideline issued under subsection (a). (2) Limitation on punitive damages In any health care lawsuit, no punitive damages may be awarded against a health care practitioner based on a claim that such treatment caused the claimant harm if— (A) such treatment was subject to the quality review by a qualified physician consensus-building organization; (B) such treatment was approved in a guideline that underwent full review by such organization, public comment, approval by the Secretary, and dissemination as described in subparagraph (a); and (C) such medical treatment is generally recognized among qualified experts (including medical providers and relevant physician specialty organizations) as safe, effective, and appropriate. (c) Use (1) Introduction as evidence Guidelines under subsection (a) may not be introduced as evidence of negligence or deviation in the standard of care in any civil action unless they have previously been introduced by the defendant. (2) No presumption of negligence There would be no presumption of negligence if a participating physician does not adhere to such guidelines. (d) Construction Nothing in this section shall be construed as preventing a State from— (1) replacing their current medical malpractice rules with rules that rely, as a defense, upon a health care provider's compliance with a guideline issued under subsection (a); or (2) applying additional guidelines or safe-harbors that are in addition to, but not in lieu of, the guidelines issued under subsection (a). 330. Medical malpractice reform State incentive fund (a) Grants The Secretary of Health and Human Services (referred to in this section as the Secretary ) shall award grants to eligible States to assist such States in implementing State-based medical malpractice reforms. (b) Eligibility (1) In general To be eligible to receive a grant under subsection (a), a State shall— (A) submit to the Secretary an application, at such time, in such manner, and containing such information as the Secretary may require; and (B) shall certify, as part of the application under subparagraph (A), that the State has carried out activities, including enacting State laws, that have been demonstrated to lower medical malpractice claim or premiums costs for physicians or to lower health care costs for patients. (2) Study As part of a certification provided under paragraph (1)(B), the State shall include the results of at least one longitudinal, empirically based study or data based on an actuarial analysis that demonstrates cost reductions of the type described in such paragraph. Such results shall be provided in a manner that enables the Comptroller General of the United States to make a determination as to whether such results are the reasonable and demonstrable conclusion of the State activities involved. (3) Types of laws Laws described in paragraph (1)(B) may include caps on non-economic damages, the establishment of health courts, the establishment of a comprehensive patient compensation program, providing for administrative determinations of compensation, providing for early offers, establishing safe harbors for the practice of evidence-based medicine, or other demonstrated methods to reduce costs. (c) Authorization of appropriations There is authorized to be appropriated to carry out this section— (1) $500,000,000 for the period of fiscal years 2016 through 2020; and (2) $500,000,000 for the period of fiscal years 2021 through 2025. (d) Sunset The authority established under this section shall not apply after September 30, 2026. 331. Sense of Congress concerning additional reforms It is the sense of Congress that Congress should explore other options for health care-related tort reform, including statutory caps on punitive and non-economic damages and measures to ensure savings resulting from tort reforms go to reducing health care costs, as well as measures to encourage the reduction of medical errors. 332. Applicability; effective date This subtitle shall apply to any health care lawsuit brought in a Federal or State court, or subject to an alternative dispute resolution system, that is initiated on or after the date of the enactment of this Act, except that any health care lawsuit arising from an injury occurring prior to the date of the enactment of this Act shall be governed by the applicable statute of limitations provisions in effect at the time the injury occurred. IV Social Security Savings 401. Adjustments in supplemental security income benefits for certain long-time beneficiaries (a) In general Title XVI of the Social Security Act ( 42 U.S.C. 1381 et seq. ) is amended by inserting after section 1617 the following: 1617A. Adjustments in benefits for certain long-time beneficiaries (a) In the case of an eligible individual to whom benefits under this title (or under section 211 of Public Law 93–66 ) have been payable for at least 240 months (whether or not consecutive) and whose benefits under this title (or under such section 211) have been increased under this section fewer than 5 times, whenever benefit amounts under title II are increased by any percentage effective with any month as a result of a determination made under section 215(i) of this Act— (1) each of the dollar amounts in effect for the month with respect to the eligible individual under subsections (a)(1)(A), (a)(2)(A), (b)(1), and (b)(2) of section 1611 of this title, and subsection (a)(1)(A) of section 211 of Public Law 93–66 , as specified in such subsections or as previously increased under section 1617 of this title or this section, shall be increased by the amount (if any) by which— (A) the amount which would have been in effect under such subsections for the month with respect to the individual but for the rounding of the amount pursuant to section 1617(a)(2) of this title or paragraph (2) of this subsection, exceeds (B) the amount in effect for the month under such subsections with respect to the individual; and (2) the amount obtained under paragraph (1) with respect to each subsection with respect to the individual shall be further increased by 1 percent of the amount so obtained with respect to the individual the 1st time this section is applied with respect to the individual, (and rounded, when not a multiple of $12, to the next lower multiple of $12), effective with respect to benefits for months after the month. (b) The new dollar amounts to be in effect under section 1611 of this title and under section 211 of Public Law 93–66 by reason of the application of subsection (a) of this section with respect to eligible individuals shall be published in the Federal Register together with, and at the same time as, the material required by section 215(i)(2)(D) of this Act to be published therein by reason of the determination involved. . (b) Conforming amendments (1) Subsections (a)(1)(A), (a)(2)(A), (b)(1), (b)(2), and (b)(6) of section 1611 of such Act ( 42 U.S.C. 1382 ) are each amended by inserting or 1617A after 1617 . (2) Section 1617(a)(1) of such Act ( 42 U.S.C. 1382f(a)(1) ) is amended— (A) in the matter preceding subparagraph (A), by inserting or section 1617A after this section ; and (B) in subparagraph (A), by inserting or section 1617A(a)(2)) after paragraph (2) . (c) Effective date The amendments made by this section shall apply with respect to benefits payable for months beginning after calendar year in which this Act is enacted. V Other Mandatory Savings and Receipts 501. Conversion to chained CPI (a) Consumer price index adjustments applicable to the Internal Revenue Code provisions (1) In general Paragraph (3) of section 1(f) of the Internal Revenue Code of 1986 is amended to read as follows: (3) Cost-of-living adjustment (A) In general For purposes of paragraph (2), the cost-of-living adjustment for any calendar year is— (i) for adjustments first beginning before 2017, the product of— (I) the CPI fraction for calendar years before 2017, multiplied by (II) the Chained CPI fraction for calendar years after 2016, reduced by 1, and (ii) for adjustments first beginning after 2016, the Chained CPI fraction for years after 2016. (B) CPI fraction for calendar years before 2017 The CPI fraction for calendar years before 2017 is the fraction— (i) the numerator of which is the CPI for the calendar year 2015; and (ii) the denominator of which is the CPI for the calendar year 1992. (C) Chained cpi fraction for calendar years after 2016 The Chained CPI fraction for calendar years after 2016 is the fraction— (i) the numerator of which is the Chained CPI for the preceding calendar year, and (ii) the denominator of which is the Chained CPI for the calendar year 2015. . (2) Conforming amendments (A) Paragraph (4) of section 1(f) of such Code is amended to read as follows: (4) CPI and chained cpi for any calendar year For purposes of paragraph (3)— (A) CPI The CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year. (B) Chained CPI The Chained CPI for any calendar year is the average of the Chained Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year. . (B) Paragraph (5) of section 1(f) of such Code is amended to read as follows: (5) Consumer price index and chained consumer price index For purposes of paragraph (4)— (A) Consumer price index The term Consumer Price Index means the last Consumer Price Index for all urban consumers published by the Department of Labor. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used. (B) Chained consumer price index The term Chained Consumer Price Index means the most recent estimate of the Chained Consumer Price Index for all urban consumers published by the Department of Labor. . (C) Subclause (II) of section 36B(b)(3)(A)(ii) of such Code is amended by striking consumer price index and inserting Chained Consumer Price Index (as defined in section 1(f)(5)(B)) . (D) Subclause (II) of section 36B(f)(2)(B)(ii) of such Code is amended by striking by substituting calendar year 2017 for calendar year 1992 in subparagraph (B) thereof and inserting by substituting calendar year 2017 for calendar year 2015 in subparagraph (C) thereof . (E) Clause (ii) of section 45R(d)(3)(B) of such Code is amended by striking by substituting calendar year 2016 for calendar year 1992 in subparagraph (B) thereof and inserting by substituting calendar year 2016 for calendar year 2015 in subparagraph (C) thereof . (F) Subparagraph (B) of section 125(i)(2) of such Code is amended by striking by substituting calendar year 2016 for calendar year 1992 in subparagraph (B) thereof and inserting by substituting calendar year 2016 for calendar year 2015 in subparagraph (C) thereof . (G) Subclause (II) of section 4980I(b)(3)(C)(v) of such Code is amended by striking for 1992 in subparagraph (B) thereof and inserting for 2015 in subparagraph (C) thereof . (H) Clause (ii) of section 5000A(c)(3)(D) of such Code is amended by striking by substituting calendar year 2015 for calendar year 1992 in subparagraph (B) thereof and inserting by substituting calendar year 2015 for calendar year 2015 in subparagraph (C) thereof . (I) Paragraph (1) of section 6721(f) of such Code is amended by striking determined by substituting calendar year 2015 for calendar year 1992 in subparagraph (B) thereof . (J) Paragraph (1) of section 6722(f) of such Code is amended by striking determined by substituting calendar year 2015 for calendar year 1992 in subparagraph (B) thereof . (3) Effective date The amendments made by this subsection shall apply to taxable years beginning after December 31, 2016. (b) Modifications to cost-of-Living indexation of Social Security benefits (1) In general Section 215(i)(1)(D) of the Social Security Act ( 42 U.S.C. 415(i)(1)(D) ) is amended to read as follows: (D) the term CPI increase percentage , with respect to a base quarter or cost-of-living computation quarter in any calendar year, means the percentage (rounded to the nearest one-tenth of 1 percent) by which the Chained Consumer Price Index for All Urban Consumers (as published in its initial form by the Bureau of Labor Statistics of the Department of Labor) for such base quarter or cost-of-living computation quarter exceeds such index for the later of— (i) the most recent calendar quarter (prior to such base quarter or cost-of-living computation quarter) which was a base quarter under subparagraph (A)(ii); or (ii) the most recent cost-of-living computation quarter under subparagraph (B); . (2) Definitions Section 215(i)(1)(G) of such Act ( 42 U.S.C. 415(i)(1)(G) ) is amended to read as follows: (G) the Chained Consumer Price Index for All Urban Consumers for a base quarter, a cost-of-living computation quarter, or any other calendar quarter shall be the arithmetical mean of such index (as published in its initial form by the Bureau of Labor Statistics of the Department of Labor as of the end of such quarter) for the 12-month period ending with such quarter. . (3) Conforming changes for pre-1977 law (A) Section 215(i)(1) of such Act, as in effect in December 1978, and as applied in certain cases under the provisions of such Act as in effect after December 1978, is amended— (i) in subparagraph (B), by striking and after the semicolon; (ii) in subparagraph (C), by striking for the 3 months in such quarter. and inserting for the 12 months in the 12-month period ending with such quarter; and ; and (iii) by adding at the end the following new subparagraph: (D) the term Consumer Price Index means the Chained Consumer Price Index for All Urban Consumers (C–CPI–U), as published in its initial form by the Bureau of Labor Statistics of the Department of Labor. . (B) Section 215(i)(4) of the Social Security Act ( 42 U.S.C. 415(i)(4) ) is amended by inserting and by section 501(b) of the America First Act after 1986, . (4) Effective date The amendments made by this subsection shall apply with respect to increases described in section 215(i) of the Social Security Act, and to increases under programs dependent on Social Security cost-of-living adjustments, effective with the month of December for years after 2015. (c) Adjustments of provisions utilizing the consumer price index (1) In general Notwithstanding any other provision of law, and except as provided in this section, for purposes of determining the amount of any cost-of-living increase or similar adjustment under a Federal program or law effective in the month of December 2016 and thereafter, any such increase for the period for which the percentage change is determined shall be deemed to be, in lieu of the increase otherwise determined under applicable law, the increase determined under such applicable law by substituting the Chained CPI for the CPI. (2) Increases determined from a constant base year (A) In general In any case in which the amount of a cost-of-living increase effective in the month of December 2015 and thereafter is determined under applicable law by reference to a change in the CPI over a period which is determined by reference to a base period which remains constant from year to year, any such increase for any period shall be deemed to be, in lieu of the increase otherwise determined under applicable law, the increase, expressed as a percentage increase, equal to the product of— (i) the CPI fraction prior to 2017; multiplied by (ii) the Chained CPI fraction after 2016, reduced by 1. (B) CPI fraction prior to 2017 The CPI fraction prior to 2017 is the fraction— (i) the numerator of which is the CPI for the period, ending with or during 2015, which corresponds to the base period; and (ii) the denominator of which is the CPI for the base period. (C) Chained CPI fraction after 2016 The Chained CPI fraction after 2016 is the fraction— (i) the numerator of which is the Chained CPI for the period, ending with or during the year preceding the year in which the determination takes effect, which corresponds to the base period; and (ii) the denominator of which is the most recently published estimate of the Chained CPI for the period, ending with or during 2015, which corresponds to the base period. (3) Special provisions and exceptions (A) Programs tied to Social Security Subject to subparagraph (B) and the effective date under subsection (b)(4), this section and the amendments made by this section shall apply to any cost-of-living increase or other adjustment which is determined by reference to an adjustment made under section 215(i) of the Social Security Act ( 42 U.S.C. 415(i) ). (B) Nonapplication to cost-of-living indexation of SSI benefits (i) In general Section 1617 of the Social Security Act ( 42 U.S.C. 1382f ) is amended— (I) in subsection (a), in the matter preceding paragraph (1), by striking Whenever and inserting Subject to subsection (d), whenever ; and (II) by adding at the end the following: (d) (1) Notwithstanding subsection (a), with respect to benefits payable under this title for December 2016 and months thereafter, whenever benefit amounts under title II are increased by any percentage effective with any month as a result of a determination made under section 215(i), each of the dollar amounts in effect for such month under subsections (a)(1)(A), (a)(2)(A), (b)(1), and (b)(2) of section 1611, and subsection (a)(1)(A) of section 211 of Public Law 93–66 , as specified in such subsections or as previously increased under this section, shall be increased by 1/12 of the cost-of-living adjustment determined under paragraph (2) for the most recent prior calendar year (and rounded, when not a multiple of $12, to the next lower multiple of $12). (2) The cost-of-living adjustment determined under this paragraph is, with respect to a calendar year, the percentage equal to the sum of— (A) the Chained CPI increase percentage determined under paragraph (3) for the year; and (B) the difference of— (i) the product of the CPI increase percentage determined under paragraph (4) for the year and the applicable transition factor under paragraph (5); and (ii) the product of the Chained CPI increase percentage determined under paragraph (3) for the year and the applicable transition factor under paragraph (5). (3) The Chained CPI increase percentage determined under this paragraph for a calendar year is the fraction (expressed as a percentage)— (A) the numerator of which is the Chained Consumer Price Index for All Urban Consumers for the preceding calendar year (as published by the Bureau of Labor Statistics of the Department of Labor); and (B) the denominator of which is the Chained Consumer Price Index for All Urban Consumers for calendar year 2015 (as so published). (4) The CPI increase percentage determined under this paragraph for a calendar year is the fraction (expressed as a percentage)— (A) the numerator of which is the Consumer Price Index for all urban consumers for the preceding calendar year (as published by the Bureau of Labor Statistics of the Department of Labor); and (B) the denominator of which is the Consumer Price Index for all urban consumers for calendar year 2015 (as so published). (5) The applicable transition factor under this paragraph is— (A) for benefits effective for months beginning after November 30, 2016, and before December 1, 2017, 0.8; (B) for benefits effective for months beginning after November 30, 2017, and before December 1, 2018, 0.6; (C) for benefits effective for months beginning after November 30, 2018, and before December 1, 2019, 0.4; (D) for benefits effective for months beginning after November 30, 2019, and before December 1, 2020, 0.2; and (E) for benefits effective for months beginning after November 30, 2020, 0.0. . (ii) Conforming amendment Section 1617(b) of such Act ( 42 U.S.C. 1382f(b) ) is amended by inserting or (d) after subsection (a) . (C) Poverty line This subsection shall apply to revisions to the poverty line made pursuant to 42 U.S.C. 9902(2) , and any programs for which adjustments or eligibility thresholds are based upon the poverty line as defined in that section. (4) CPI and chained cpi For purposes of this subsection— (A) the CPI for any period means the average monthly Consumer Price Index for such period, or a component thereof, as determined under the applicable law in connection with any cost-of-living increase or similar adjustment required for such period (without regard to this subsection); and (B) the Chained CPI for any period means, except as provided in paragraph (2)(C)(ii), the Chained Consumer Price Index for all urban consumers (as published in its initial form by the Bureau of Labor Statistics of the Department of Labor) for such period, or a component thereof, determined under applicable law in the same manner as the CPI for such period would be determined. (d) Change to 12-Month period for cost-of-Living indexation for Federal civil service and military retirement programs (1) In general (A) Federal civil service Sections 8340(a)(2) and 8462(a)(2) of title 5, United States Code, are each amended by striking 3 months comprising such quarter and inserting 12-month period ending with such quarter . (B) Military Section 1401a(h) of title 10, United States Code, is amended by striking three months comprising that quarter and inserting 12-month period ending with such quarter . (2) Effective date The amendments made by this subsection shall apply with respect to cost-of-living increases effective with the month of December of years after 2015. 502. Adjustment for inflation of fees for certain customs services (a) In general Section 13031 of the Consolidated Omnibus Budget Reconciliation Act of 1985 ( 19 U.S.C. 58c ) is amended by adding at the end the following: (l) Adjustment of fees for inflation (1) In general The Secretary of the Treasury shall adjust the fees established under subsection (a), and the limitations on such fees under paragraphs (2), (3), (5), (6), (8), and (9) of subsection (b), on October 1, 2015, and annually thereafter, to reflect the percentage (if any) of the increase in the average of the chained Consumer Price Index for the preceding 12-month period compared to the chained Consumer Price Index for fiscal year 2014. (2) Special rules for calculation of adjustment In adjusting under paragraph (1) the amount of the fees established under subsection (a), and the limitations on such fees under paragraphs (2), (3), (5), (6), (8), and (9) of subsection (b), the Secretary— (A) shall round the amount of any increase in the Consumer Price Index to the nearest dollar; and (B) may ignore any such increase of less than 1 percent. (3) Chained Consumer Price Index defined For purposes of this subsection, the term chained Consumer Price Index means the Chained Consumer Price Index for All Urban Consumers (C–CPI–U), as published in its initial form by the Bureau of Labor Statistics of the Department of Labor. . (b) Deposits into Customs User Fee Account Section 13031(f) of the Consolidated Omnibus Budget Reconciliation Act of 1985 ( 19 U.S.C. 58c(f) ) is amended— (1) in paragraph (1), in the matter preceding subparagraph (A), by striking all fees collected under subsection (a) and inserting the amount of fees collected under subsection (a) (determined without regard to any adjustment made under subsection (l)) ; and (2) in paragraph (3)(A), in the matter preceding clause (i)— (A) by striking fees collected and inserting amount of fees collected ; and (B) by striking ), each appropriation and inserting , and determined without regard to any adjustment made under subsection (l)), each appropriation . (c) Conforming amendments Section 13031 of the Consolidated Omnibus Budget Reconciliation Act of 1985 ( 19 U.S.C. 58c ), as amended by subsections (a) and (b), is further amended— (1) in subsection (a), in the matter preceding paragraph (1), by inserting (subject to adjustment under subsection (l)) after following fees ; and (2) in subsection (b)— (A) in paragraph (2), by inserting (subject to adjustment under subsection (l)) after in fees ; (B) in paragraph (3), by inserting (subject to adjustment under subsection (l)) after in fees ; (C) in paragraph (5)(A), by inserting (subject to adjustment under subsection (l)) after in fees ; (D) in paragraph (6), by inserting (subject to adjustment under subsection (l)) after in fees ; (E) in paragraph (8)(A)— (i) in clause (i), by inserting or (l) after subsection (a)(9)(B) ; and (ii) in clause (ii), by inserting (subject to adjustment under subsection (l)) after $3 ; and (F) in paragraph (9)— (i) in subparagraph (A)— (I) in the matter preceding clause (i), by inserting and subject to adjustment under subsection (l) after Tariff Act of 1930 ; and (II) in clause (ii)(I), by inserting (subject to adjustment under subsection (l)) after bill of lading ; and (ii) in subparagraph (B)(i), by inserting (subject to adjustment under subsection (l)) after bill of lading . 503. Adjustment for inflation of TSA service security fees and fee levels (a) Limitation on fees Subsection (c) of section 44940 of title 49, United States Code, is amended by adding at the end the following new paragraph: (3) Adjustment of fee amount For fiscal year 2016 and each subsequent fiscal year, the amount of a fee under this subsection shall be adjusted to reflect the percentage (if any) of the average of the chained Consumer Price Index for the preceding 12-month period compared to the chained Consumer Price Index for the preceding fiscal year. . (b) Fee levels Subsection (i)(4) of such section is amended by adding at the end the following new subparagraph: (M) For fiscal year 2026, and each subsequent fiscal year, the amount in effect for the preceding fiscal year, as adjusted to reflect the percentage (if any) in the average of the chained Consumer Price Index for the preceding 12-month period compared to the chained Consumer Price Index for preceding fiscal year. . (c) Chained consumer price index Such section is further amended by adding at the end the following new subsection: (j) Calculation of chained consumer price index (1) Special rules for calculation of adjustment In calculating the amount of the fee under subsection (c) and the fiscal year amounts under subsection (i)(4)(K), the Under Secretary— (A) shall round the amount of any increase in the Consumer Price Index to the nearest dollar; and (B) may ignore any such increase of less than 1 percent. (2) Chained Consumer Price Index defined For purposes of this section, the term chained Consumer Price Index means the Chained Consumer Price Index for All Urban Consumers (C–CPI–U), as published in its initial form by the Bureau of Labor Statistics of the Department of Labor. . 504. Dividends and surplus funds of reserve banks Section 7(a)(1)(A) of the Federal Reserve Act ( 12 U.S.C. 289(a)(1)(A) ) is amended by striking 6 percent and inserting 6 percent (1.5 percent in the case of a stockholder having total consolidated assets of more than $1,000,000,000 (determined as of September 30 of the preceding fiscal year)) . 505. Cost-saving reforms for Federal Crop Insurance Program (a) Reduction in premium subsidy for harvest price policies Section 508(e) of the Federal Crop Insurance Act ( 7 U.S.C. 1508(e) ) is amended by adding at the end the following new paragraph: (9) Reduced premium subsidy for harvest price policies Notwithstanding any other provision of this subsection regarding payment of a portion of premiums, effective beginning with the 2016 reinsurance year, the level of premium subsidy for revenue-based plans of insurance that provide protection for upward price movements at harvest time shall be at least 10 percentage points less than the premium subsidy available for the same coverage for the 2015 reinsurance year. . (b) Adjustment in prevented planting payment coverage levels Section 508(i) of the Federal Crop Insurance Act ( 7 U.S.C. 1508(i) ) is amended by adding at the end the following new paragraph: (5) Adjustment in prevented planting payment coverage levels The Corporation shall adjust, as soon as practicable, prevented planting coverage levels on a crop-by-crop basis to improve the actuarial soundness of the insurance operations of the Corporation. . (c) Elimination of optional additional prevented planting coverage Section 508(l) of the Federal Crop Insurance Act ( 7 U.S.C. 1508(l) ) is amended— (1) by striking The Corporation and inserting the following: (1) In general The Corporation ; and (2) by adding at the end the following new paragraph: (2) Limitation on optional additional prevented planting coverage The Corporation may not provide an option for producers to purchase additional prevented planting coverage levels in excess of the base coverage provided in the policy. . (d) Consistent calculation of Actual Production History for producers that receive a preventing planting payment Section 508A(c)(3) of the Federal Crop Insurance Act ( 7 U.S.C. 1508a(c)(3) ) is amended by striking make an election under paragraph (1)(B) for a crop year, and inserting collects an indemnity under prevented planting coverage for a first crop for a crop year, whether or not the producer elects to plant a second crop, (e) Application of amendments The amendments made by this section shall apply beginning with the 2016 reinsurance year. 506. Federal employee annuities (a) Civil Service Retirement System Section 8334(c) of title 5, United States Code, is amended to read as follows: (c) Each employee or Member credited with civilian service after July 31, 1920, for which retirement deductions or deposits have not been made, may deposit with interest an amount equal to the following percentages of his basic pay received for that service: Employee 7 January 1, 2001 to December 31, 2016. 7.5 January 1, 2017 to December 31, 2017. 7.9 January 1, 2018 to December 31, 2018. 8.3 After December 31, 2018. Member or employee for congressional service 7.5 January 1, 2001 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. Member for Member service 8 January 1, 2001 to December 31, 2016. 8.5 January 1, 2017 to December 31, 2017. 8.9 January 1, 2018 to December 31, 2018. 9.3 After December 31, 2018. Law enforcement officer for law enforcement service, member of the Supreme Court Police for Supreme Court Police service, and firefighter for firefighter service 7.5 January 1, 2001 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. Bankruptcy judge 8 January 1, 2001 to December 31, 2016. 8.5 January 1, 2017 to December 31, 2017. 8.9 January 1, 2018 to December 31, 2018. 9.3 After December 31, 2018. Judge of the United States Court of Appeals for the Armed Forces for service as a judge of that court 8 January 1, 2001 to December 31, 2016. 8.5 January 1, 2017 to December 31, 2017. 8.9 January 1, 2018 to December 31, 2018. 9.3 After December 31, 2018. United States Magistrate judge 8 January 1, 2001 to December 31, 2016. 8.5 January 1, 2017 to December 31, 2017. 8.9 January 1, 2018 to December 31, 2018. 9.3 After December 31, 2018. Court of Federal Claims Judge 8 January 1, 2001 to December 31, 2016. 8.5 January 1, 2017 to December 31, 2017. 8.9 January 1, 2018 to December 31, 2018. 9.3 After December 31, 2018. Member of the Capitol Police 7.5 January 1, 2001 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. Nuclear materials courier 7.5 January 1, 2001 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. Customs and border protection officer 7.5 June 30, 2008 to December 30, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. . (b) Federal Employees’ Retirement System (1) Individual contributions Section 8422(a)(3)(A) of title 5, United States Code, is amended to read as follows: (3) (A) The applicable percentage under this paragraph for civilian service by employees or Members other than revised annuity employees or further revised annuity employees shall be as follows: Employee 7 January 1, 2001 to December 31, 2016. 7.5 January 1, 2017 to December 31, 2017. 7.9 January 1, 2018 to December 31, 2018. 8.3 After December 31, 2018. Congressional employee 7.5 January 1, 2001 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. Member 7.5 January 31, 2000 to December 31, 2016. 8 January 1, 2016 to December 31, 2017. 8.4 January 1, 2017 to December 31, 2018. 8.8 After December 31, 2018. Law enforcement officer, firefighter, member of the Capitol Police, member of the Supreme Court Police, or air traffic controller 7.5 December 31, 2000 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. Nuclear materials courier 7.5 December 31, 2000 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2019. Customs and border protection officer 7.5 June 30, 2008 to December 31, 2016. 8 January 1, 2017 to December 31, 2017. 8.4 January 1, 2018 to December 31, 2018. 8.8 After December 31, 2018. . (2) Government contributions Section 8423(a)(2)(B)(i) of title 5, United States Code, is amended by inserting after 2013 the following: and section 506 of the America First Act . (c) Foreign Service Pension System (1) Employee contributions Section 856(a)(2)(A) of the Foreign Service Act of 1980 ( 22 U.S.C. 4071e(a)(2)(A) ) is amended to read as follows: (2) (A) The applicable percentage for a participant other than a revised annuity participant or a further revised annuity participant shall be as follows:   7.55 January 12, 2003 to December 31, 2016. 8.05 January 1, 2017 to December 31, 2017. 8.45 January 1, 2018 to December 31, 2018. 8.85 After December 31, 2018. . (2) Government contributions Section 857 of the Foreign Service Act of 1980 ( 22 U.S.C. 4071f ) is amended by inserting after 2013 the following: and section 506 of the America First Act . 507. Repayment plans Section 455(d)(1) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d)(1) ) is amended— (1) in subparagraph (D)— (A) by inserting before the semicolon at the end the following: , and with respect to loans made on or after July 1, 2016, the revised pay as you earn repayment plan under section 493E shall be the only income contingent repayment plan ; and (B) by striking and at the end; and (2) in subparagraph (E), by inserting and only for loans made before July 1, 2016, after 2009, . 508. REPAYE Part G of title IV of the Higher Education Act of 1965 is amended by adding at the end the following: 493E. Revised Pay As You Earn Repayment Plan (a) Definitions (1) Eligible loan The term eligible loan means any outstanding loan made under part D or part B, except for a defaulted loan, an excepted PLUS loan, or an excepted consolidation loan. (2) Excepted plus loan; excepted consolidation loan The terms excepted plus loan and excepted consolidation loan have the meanings given such terms in section 493C. (3) Partial financial hardship The term partial financial hardship — (A) when used with respect to an unmarried borrower— (i) means that for such borrower the annual amount due on the total amount of eligible loans, as calculated under the standard repayment plan under section 455(d)(1)(A), based on a 10-year repayment period, and using the greater of— (I) the amount due on such loans at the time the borrower entered repayment for such loans; or (II) the amount due on such loans at the time the borrower elected the plan under this section; exceeds (ii) 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which— (I) the borrower’s adjusted gross income; exceeds (II) 150 percent of the poverty line applicable to the borrower's family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ); and (B) when used with respect to a married borrower— (i) means that for such borrower the annual amount due on the total amount of the borrower’s eligible loans, and, if applicable, the borrower’s spouse’s eligible loans, as calculated under the standard repayment plan under section 455(d)(1)(A), based on a 10-year repayment period, and using the greater of— (I) the amount due on such loans at the time the borrower or borrower’s spouse entered repayment on such loans; or (II) the amount due on such loans at the time the borrower or the borrower’s spouse elected the plan under this section; exceeds (ii) 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which— (I) the difference between the borrower’s and borrower’s spouse’s adjusted gross income; exceeds (II) 150 percent of the poverty line applicable to the borrower’s family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ). (4) Pay As You Earn repayment plan The term Pay As You Earn repayment plan means the Pay As You Earn repayment plan described in section 685.209 of title 34, Code of Federal Regulations (as in effect on the date of enactment of America First Act). (b) Revised Pay As You Earn Repayment Plan Authorized Notwithstanding any other provision of this Act, the Secretary shall carry out a program that meets the following requirements: (1) Monthly payment amount Except as otherwise provided in this subsection, a borrower of any eligible loan may elect to have the borrower’s aggregate monthly payment for all such loans not to exceed the result described in subsection (a)(3) divided by 12. (2) Adjusted monthly payment amount The Secretary adjusts the aggregate monthly payment under paragraph (1), if— (A) the borrower's eligible loans are not solely loans made under part D, in which case the Secretary determines the borrower’s adjusted monthly payment by multiplying the aggregate monthly payment by the percentage of the total outstanding principal amount of the borrower’s eligible loans that are loans made under part D; (B) the borrower and borrower’s spouse have eligible loans, in which case the Secretary determines— (i) each borrower’s percentage of the couple’s total eligible loan debt; (ii) the adjusted monthly payment for each borrower by multiplying the calculated payment by the percentage determined under clause (i) applicable to the borrower; and (iii) if the borrower’s loans are held by multiple holders, the borrower’s adjusted monthly payment for part D loans by multiplying the adjusted monthly payment determined under clause (ii) by the percentage of the total outstanding principal amount of the borrower's eligible loans that are made under part D; (C) the calculated monthly payment amount under paragraph (1) or this paragraph is less than $5.00, in which case the borrower’s monthly payment is $0.00; or (D) the calculated monthly payment amount under paragraph (1) or this paragraph or is equal to or greater than $5.00 but less than $10.00, in which case the borrower’s monthly payment is $10.00. (3) Accrued interest (A) In general If the borrower's monthly payment amount under paragraph (1) or (2) is not sufficient to pay the accrued interest on the borrower’s loan— (i) for a subsidized loan made under part D or the subsidized portion of a Federal Direct Consolidation Loan— (I) the Secretary does not charge the borrower the remaining accrued interest for a period not to exceed three consecutive years from the established repayment period start date on that loan; and (II) after the three-year period, the Secretary charges the borrower 50 percent of the remaining accrued interest on such subsidized loan or portion of a Federal Direct Consolidation Loan; and (ii) for an unsubsidized loan made under part D, a Federal Direct PLUS Loan made to a graduate or professional student, or the unsubsidized portion of a Federal Direct Consolidation Loan, or for a subsidized loan made under part D or the subsidized portion of a Federal Direct Consolidation Loan for which the borrower has become responsible for accruing interest in accordance with section 455(q)(2), the Secretary charges the borrower 50 percent of the remaining accrued interest. (B) Three-year period defined The three-year period described in subparagraph (A)(i)— (i) does not include any period during which the borrower receives an economic hardship deferment; (ii) includes any prior period of repayment under an income-based repayment plan under section 493C or the Pay-As-You-Earn repayment plan; and (iii) for a Federal Direct Consolidation Loan, includes any period in which the underlying loans were repaid under a plan described in clause (ii) of this subparagraph. (C) Capitalization of accrued interest (i) Timing Accrued interest is capitalized— (I) when the Secretary determines that a borrower does not have a partial financial hardship; or (II) at the time a borrower leaves the program under this section. (ii) Capitalization (I) Limitation The amount of accrued interest capitalized under clause (i)(I) is limited to 10 percent of the original principal balance at the time the borrower entered repayment under the program under this section. (II) Participation After the amount of accrued interest reaches the limit described in subclause (I), interest continues to accrue, but is not capitalized while the borrower participates in the program under this section. (4) Postponement of principal payment If the borrower's monthly payment amount is not sufficient to pay any of the principal due, the payment of that principal is postponed until the borrower leaves the program under this section or the Secretary determines the borrower does not have a partial financial hardship. (5) Selection of different repayment plan A borrower who no longer wishes to repay under the program under this section may change to a different repayment plan in accordance with section 455(d)(3). (6) Payment application and prepayment (A) In general The Secretary applies any payment made under the program under this section in the following order: (i) Accrued interest. (ii) Collection costs. (iii) Late charges. (iv) Loan principal. (B) Prepayment authorized The borrower may prepay all or part of a loan at any time without penalty, as authorized under section 455(d)(1). (C) Application of prepayment If the prepayment amount equals or exceeds— (i) a monthly payment amount of $10.00 or more under the repayment schedule established for the loan, the Secretary applies the prepayment consistent with the requirements of section 455(d)(1); or (ii) a monthly payment amount of $0.00 under the repayment schedule established for the loan, the Secretary applies the prepayment consistent with the requirements of subparagraph (A). (7) Eligibility documentation, verification, and notifications (A) Documentation (i) AGI The Secretary requires the borrower to provide documentation, acceptable to the Secretary, of the borrower's adjusted gross income. (ii) Other documentation If the borrower's adjusted gross income is not available, or if the Secretary believes that the borrower's reported adjusted gross income does not reasonably reflect the borrower's current income, the borrower must provide other documentation to verify income. (iii) Family size Unless otherwise directed by the Secretary, the borrower must annually certify the borrower's family size. If the borrower fails to certify family size, the Secretary assumes a family size of one for the applicable year. (B) Notifications (i) In general Each year that the borrower participates in the program under this section, the Secretary sends the borrower a written notification that provides the borrower with— (I) the borrower’s monthly payment amount, as calculated under paragraph (1) or (2), and the time period during which such monthly payment amount will apply (annual payment period); (II) information about the requirement for the borrower to annually provide the information described in subparagraph (A), and an explanation that the borrower will be notified in advance of the date by which the Secretary must receive this information; (III) an explanation of the consequences, as described under subparagraph (F), if the borrower does not provide the required information; and (IV) information about the borrower's option to request, at any time during the borrower's annual payment period, that the Secretary recalculate the borrower's monthly payment amount if the borrower's financial circumstances have changed and the income amount that was used to calculate the borrower's current monthly payment no longer reflects the borrower's current income. (ii) Recalculation If the Secretary recalculates the borrower's monthly payment amount based on the borrower's request, the Secretary sends the borrower a written notification that includes the information described in this subparagraph. (C) Subsequent years (i) In general For each year following the first year in which a borrower participating in the plan under this section, the Secretary notifies the borrower in writing of the requirements of subparagraph (A) not later than 60 days and not earlier than 90 days prior to the date specified in clause (ii)(I). (ii) Contents The notification under clause (i) shall provide the borrower with— (I) the date, no earlier than 35 days before the end of the borrower's annual payment period, by which the Secretary must receive all of the documentation described in subparagraph (A) (annual deadline); and (II) the consequences if the Secretary does not receive the information within 10 days following the annual deadline specified in the notice, as described under subparagraph (F). (D) No partial financial hardship Each time the Secretary makes a determination that a borrower does not have a partial financial hardship for each year following the first year for which borrower wishes to participate in the program under this section, the Secretary sends the borrower a written notification that unpaid interest will be capitalized in accordance with paragraph (3)(C). (E) No documentation provided If a borrower who is currently repaying under another repayment plan elects the program under this section but does not provide the documentation described in subparagraph (A), the borrower remains on his or her current repayment plan. (F) Alternate repayment plan (i) In general If a borrower who is currently repaying under the program under this section elects to participate in such program for a subsequent year but the Secretary does not receive the documentation described in subparagraph (A) not later than 10 days after the specified annual deadline, the Secretary removes the borrower from the program under this section and places the borrower on an alternative repayment plan under which the borrower’s required monthly payment is the amount necessary to repay the borrower’s eligible loans in full within the earlier of— (I) 10 years from the date the borrower begins repayment under the alternative repayment plan; or (II) the ending date of the 20-year period as described in paragraph (8)(A)(i)(II). (ii) Notification If the Secretary places the borrower on an alternative repayment plan in accordance with clause (i), the Secretary sends the borrower a written notification informing the borrower that— (I) the borrower has been placed on an alternative repayment plan; (II) the borrower’s monthly payment amount has been recalculated under clause (i); or (III) the borrower may change to another repayment plan in accordance with section 455(d)(3). (iii) Return to program A borrower who has been removed from the program under this section or changes to another repayment plan may return to the program under this section if the borrower provides the documentation under subparagraph (A), necessary for the Secretary to calculate the borrower’s current monthly payment amount and the monthly amount the borrower would have been required to pay under the program during the period when the borrower was on the alternative repayment plan or any other repayment plan. (iv) Adjustment of monthly payment amount If the Secretary determines that the total amount of the payments the borrower was required to make while on the alternative repayment plan or any other repayment plan are less than the total amount the borrower would have been required to make under the program during that period, the Secretary will adjust the borrower’s monthly payment amount to ensure that the difference between the two amounts is paid in full by the end of the 20-year period described in paragraph (8)(A)(i)(II). (v) Application of loan forgiveness If the borrower returns to the program under this section or changes to the Pay As You Earn Repayment plan, the income-contingent repayment plan; or the income-based repayment plan, any payments that the borrower made under the alternative repayment plan after the borrower was removed from the program under this section will count towards forgiveness under such program or such other repayment plans. (vi) PSLF Payments made under the alternative repayment plan described in clause (i) will not count towards public service loan forgiveness under section 455(m). (vii) Exception The Secretary does not take the action described in clause (i) if the Secretary receives the documentation described in subparagraph (A) more than 10 days after the specified annual deadline, but is able to determine the borrower’s new monthly payment amount before the end of the borrower’s current annual payment period. (viii) Monthly payment amount If the Secretary receives the documentation described in subparagraph (A) within 10 days of the specified annual deadline— (I) the Secretary promptly determines the borrower’s new scheduled monthly payment amount and maintains the borrower’s current scheduled monthly payment amount until the new scheduled monthly payment amount is determined; (II) if the new monthly payment amount is less than the borrower’s previously calculated plan monthly payment amount, and the borrower made payments at the previously calculated amount after the end of the most recent annual payment period— (aa) the Secretary makes the appropriate adjustment to the borrower’s account; and (bb) unless the borrower requests otherwise, the Secretary applies the excess payment amounts made after the end of the most recent annual payment period in accordance with the requirements of paragraph (6)(A); (III) if the new monthly payment amount is equal to or greater than the borrower's previously calculated monthly payment amount, and the borrower made payments at the previously calculated payment amount after the end of the most recent annual payment period, the Secretary does not make any adjustment to the borrower's account; (IV) any payments that the borrower continued to make at the previously calculated payment amount after the end of the prior annual payment period and before the new monthly payment amount is calculated are considered to be qualifying payments for purposes of public service loan forgiveness under section 455(m), provided that the payments otherwise meet the requirements described in such section 455(m); and (V) the new annual payment period begins on the day after the end of the most recent annual payment period. (8) Loan forgiveness (A) In general (i) Cancellation The Secretary cancels any remaining outstanding balance of principal and accrued interest on a borrower’s loans made under part D that are being repaid under the program under this section after— (I) the borrower has made the equivalent of 240 qualifying monthly payments as defined in subparagraph (B); and (II) 20 years have elapsed, beginning on the date determined in accordance with subparagraph (C). (ii) Determination The Secretary determines when a borrower has met the loan forgiveness requirements under clause (i) and does not require the borrower to submit a request for loan forgiveness. (B) Qualifying monthly payment defined (i) In general For purposes of this paragraph, a qualifying monthly payment is— (I) a monthly payment under the program under this section, including a monthly payment amount of $0.00, as provided under paragraph (2)(C); or (II) a month during which the borrower was not required to make a payment due to receiving an economic hardship deferment on his or her eligible loans that are made under part D. (ii) Defaulted loans excluded Any payments made on a defaulted loan are not qualifying monthly payments and are not counted toward the 20-year forgiveness period. (C) Determination of beginning date For a borrower who qualifies for the program under this section, the beginning date for the 20-year repayment period is— (i) for a borrower who has an eligible Federal Direct Consolidation Loan, the date the borrower made a qualifying monthly payment on the consolidation loan, before the date the borrower qualified for the program under this section; (ii) for a borrower who has one or more other eligible Direct Loans, the date the borrower made a qualifying monthly payment on that loan, before the date the borrower qualified for the program under this section; (iii) for a borrower who did not make a qualifying monthly payment under clause (i) or (ii), the date the borrower made a payment on the loan under the program under this section; or (iv) if the borrower consolidates his or her eligible loans, the date the borrower made a qualifying monthly payment on the Federal Direct Consolidation Loan. (D) Notification (i) Prior to loan cancellation Not later than 6 months prior to the anticipated date that the borrower will meet the forgiveness requirements, the Secretary sends the borrower a written notice that includes— (I) an explanation that the borrower is approaching the date that the borrower is expected to meet the requirements to receive loan forgiveness; (II) a reminder that the borrower must continue to make the borrower’s scheduled monthly payments; and (III) general information on the current treatment of the forgiveness amount for tax purposes, and instructions for the borrower to contact the Internal Revenue Service for more information. (ii) After loan cancellation After determining that a borrower has satisfied the loan forgiveness requirements, the Secretary— (I) notifies the borrower that the borrower's obligation on the loans is satisfied; (II) provides the borrower with the information described in clause (i)(III); and (III) returns to the sender any payment received on a loan after loan forgiveness has been granted. . 509. Public service loan forgiveness Section 455(m)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(m)(2) ) is amended— (1) by striking After and inserting the following: (A) In general Except as provided under subparagraph (B), after ; and (2) by adding at the end the following: (B) Undergraduate cap The Secretary shall not cancel under this paragraph an amount greater than $57,500 of principal and interest due on an eligible Federal Direct Loan made to a borrower for a program of undergraduate education .