Topic: Macroeconomics — Tax Code
Subject: Health
Date: 2010-03-17 00:00:00

(This measure has not been amended since it was passed by the Senate on March 25, 2010. The summary of that version is repeated here.) Health Care and Education Reconciliation Act of 2010 - Title I: Coverage, Medicare, Medicaid, and Revenues - Subtitle A: Coverage - (Sec. 1001) Amends Internal Revenue Code provisions added by the Patient Protection and Affordable Care Act (PPACA) to revise the formula for calculating the refundable tax credit for premium assistance for coverage under a qualified health plan by establishing a sliding scale from the initial to the final premium percentage for individuals and families with household incomes up to 400% of the federal poverty line. Requires adjustments, after 2014 and after 2018, of the initial and final premium percentages to reflect the excess (if any) of the rate of premium growth over the rate of growth of income and the consumer price index. Reduces from 9.8% to 9.5% of a taxpayer's household income the maximum amount an employee's required contribution to an employer-sponsored plan may be for such employee to be treated as eligible for employer-sponsored minimum essential coverage. Increases the percentage of employer cost sharing for the out-of-pocket expenses of individuals with household incomes between 100% and 400% of the federal poverty line. (Sec. 1002) Revises the provisions setting forth penalties to be imposed on individuals who decline to purchase health care coverage by: (1) lowering the maximum penalty amount from $495 to $325 in 2015 and from $750 to $695 in 2016; and (2) increasing the penalty rates based on taxpayer household income for taxable years beginning in 2014 and 2015 and for taxable years beginning after 2015. (Sec. 1003) Revises the provisions setting forth penalties to be imposed on employers with 50 or more employees who decline to offer employees health care coverage to allow an exemption for the first 30 employees (including part-time employees) when calculating the penalty. Increases the applicable penalty amount per employee to $2,000. Eliminates the assessment on large employers with extended waiting periods for enrollment in employer-sponsored plans. (Sec. 1004) Modifies the definition of "modified adjusted gross income" for purposes of the tax credit for premium assistance and the individual responsibility requirement for purchasing health care coverage. Extends the exclusion from gross income for employer-provided health care coverage to adult children up to age 26. Requires Exchanges that offer health care plans to provide the Secretary of the Treasury and taxpayers with specified information, including information about the level of coverage, the total premium for coverage, and the aggregate amount of any advance payment of the premium assistance tax credit. Amends title XIX (Medicaid) of the Social Security Act to allow a disregard of 5% of modified adjusted gross income for purposes of determining eligibility for medical assistance. (Sec. 1005) Establishes a Health Insurance Reform Implementation Fund within the Department of Health and Human Services (HHS) and makes appropriations to the Fund for the administrative costs of carrying out PPACA and this Act. Subtitle B: Medicare - (Sec. 1101) Amends part D (Voluntary Prescription Drug Benefit Program) of title XVIII (Medicare) of the Social Security Act (SSA) to direct the Secretary of HHS to provide a one-time $250 rebate in 2010 to all Medicare part D enrollees who enter the Medicare part D coverage gap (also known as the Medicare donut hole, the difference between the standard initial coverage limit and the catastrophic or out-of-pocket coverage threshold for which the Medicare beneficiary is financially responsible). Amends PPACA to: (1) delay until January 1, 2011, the deadline for establishment of a Medicare coverage gap discount program, as well as the effective date of the requirement that a part D drug manufacturer participate in it; and (2) repeal the increase by $500 in the 2010 standard initial coverage limit (thus restoring the provisions in effect before enactment of PPACA). Amends SSA title XVIII, as amended by PPACA, to reduce the coinsurance percentage for covered brand-name and generic drugs to 25% by 2020 (thus closing the donut hole with 75% discounts). Revises the growth rate of the out-of-pocket cost threshold. (Sec. 1102) Amends PPACA to repeal: (1) certain provisions concerning Medicare Advantage (MA) payments, benchmarks, and capitation rates; and (2) a requirement that the Secretary analyze the differences in coding patterns between MA and the original Medicare fee-for-service programs, and incorporate the results into risk scores for 2014 and subsequent years. Amends SSA title XVIII to freeze MA payments in 2011. Reduces MA benchmarks relative to current levels, varying them from 95% of Medicare spending in high-cost areas to 115% of Medicare spending in low-cost areas. Creates an incentive system to increase payments to high-quality plans by at least 5%. Extends the authority of the Centers for Medicare & Medicaid Service to adjust MA risk scores for observed differences in coding patterns relative to fee-for-service. Repeals the Comparative Cost Adjustment Program under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. (Sec. 1103) Requires MA plans whose medical loss ratios are not at least .85 to remit to the Secretary an amount equal to a specified percentage of plan revenue. Requires the Secretary to: (1) prohibit enrollment in such a plan of new enrollees for three consecutive contract years; and (2) terminate the Medicare+Choice contract if the plan fails to have a .85 medical loss ratio for five consecutive contract years. (Sec. 1104) Amends SSA title XVIII (Medicare), as amended by PPACA, with respect to specified reductions to Medicare disproportionate share hospital (DSH) payments for FY2015 and ensuing fiscal years, especially to subsection (d) hospitals, to reflect lower uncompensated care costs relative to increases in the number of insured. (Generally, a subsection [d] hospital is an acute care hospital, particularly one that receives payments under Medicare's inpatient prospective payment system [IPPS] when providing covered inpatient services to eligible beneficiaries.) Advances the beginning of such reductions from FY2015 to FY2014. Revises the reduction formula to lower the reduction scheduled to occur over ten years. (Sec. 1105) Revises the hospital market basket reduction applicable to payments to inpatient hospitals, long-term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals, and outpatient hospitals. (Sec. 1106) Postpones from August 1, 2010, to December 31, 2010, the date by which physician-owned hospitals must have a provider agreement in order to participate in Medicare under a rural provider and hospital exception to the physician-ownership or -investment prohibition if they also meet certain requirements addressing conflicts of interest, bona fide investments, patient safety issues, and expansion limitations. Modifies the expansion limitation imposed on such a rural hospital under which the number of operating rooms, procedure rooms, and beds for which the hospital is licensed at any time on or after the enactment of PPACA is no greater than the number of such rooms and beds for which the hospital is licensed as of such date. Allows an exception to the expansion limitation for a high Medicaid hospital that treats the highest percentage of Medicaid patients in their county (and is not the sole hospital in the county). (Sec. 1107) Revises the special rule in the physician fee schedule for imaging services, in particular the PPACA adjustment in the practice expense relative value units with respect to advanced diagnostic imaging services to reflect a higher presumed utilization rate. Replaces the multiyear phase-in of the assumed utilization rate from 50% to 75% with a flat 75% rate for 2011 and subsequent years. (Sec. 1108) Modifies the employee wage and rent portions of the practice expense geographic index adjustment for 2010 and subsequent years. Requires such portions to reflect 1/2 (instead of 3/4) of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national average of such employee wages and rents. (Sec. 1109) Directs the Secretary to provide for a specified payment for FY2011 and FY2012 to qualifying subsection (d) hospitals located in a county that ranks, based upon age, sex, and race adjusted spending per enrollee for Medicare parts A and B benefits, within the lowest quartile of such counties in the United States. Subtitle C: Medicaid - (Sec. 1201) Amends SSA title XIX (Medicaid), as amended by PPACA, to repeal the permanent 100% federal matching rate (federal medical assistance percentage [FMAP]) for Nebraska for the Medicaid costs of newly eligible mandatory individuals (expansion populations). Provides federal Medicaid matching payments for the costs of services to expansion populations at the following rates in all states: (1) 100% in 2014, 2015, and 2016; (2) 95% in 2017; (3) 94% in 2018; (4) 93% in 2019; and (5) 90% thereafter. Reduces, in the case of expansion states, the state share of the costs of covering nonpregnant childless adults by 50% in 2014, 60% in 2015, 70% in 2016, 80% in 2017, 90% in 2018. (Sec. 1202) Requires that Medicaid payment rates to primary care physicians (family medicine, general internal medicine, or pediatric medicine) for furnishing primary care services in 2013 and 2014 be at least 100% of Medicare payment rates under both fee-for-service plans and managed-care plans. Requires a 100% FMAP for the costs to states of meeting this requirement. (Sec. 1203) Lowers the reduction in federal Medicaid DSH payments and advances the reductions to begin in FY2014. Directs the Secretary to develop a methodology for reducing federal DSH allotments to all states in order to achieve the mandated reductions. Extends through FY2013 the federal DSH allotment for a state that has a $0 allotment after FY2011. (Sec. 1204) Authorizes Puerto Rico, Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands to elect to operate a Health Benefits Exchange. Increases federal Medicaid payments to such territories. Raises the caps on federal Medicaid funding for each of the territories. (Sec. 1205) Postpones from October 1, 2010, until October 1, 2011, the effective date of the Community First Choice option established for state Medicaid programs to offer home and community-based attendant services and supports to Medicaid beneficiaries with disabilities who would otherwise require care in a hospital, nursing facility, intermediate care facility for the mentally retarded, or an institution for mental diseases. (Sec. 1206) Revises the definition of a new formulation of an existing drug, for purposes of applying the additional rebate, to specify a line extension of a single source drug or an innovator multiple source drug that is an oral solid dosage form of the drug. Subtitle D: Reducing Fraud, Waste, and Abuse - (Sec. 1301) Revises the meaning of a community mental health center that provides Medicare partial hospitalization services as a distinct and organized intensive ambulatory treatment service offering less than 24-hour-daily care. Establishes new requirements for such community mental health centers. Requires such a center to provide: (1) daily care other than in an individual's home or in an inpatient or residential setting; and (2) at least 40% of its services to individuals who are not eligible for Medicare benefits. (Sec. 1302) Repeals Medicare prepayment medical review limitations to facilitate additional reviews designed to reduce fraud and abuse. (Sec. 1303) Makes additional appropriations to the Health Care Fraud and Abuse Control Account of the Federal Hospital Insurance Trust Fund for FY2011-FY2016. Makes additional appropriations to the Medicare Integrity Program for FY2010 and each subsequent year, indexed for inflation. (Sec. 1305) Revises requirements for the enrollment process for Medicare service providers and suppliers. Requires the Secretary to: (1) withhold payment for a 90-day period after submission of a claim; and (2) conduct enhanced oversight in cases where the Secretary identifies a significant risk of fraud among newly enrolling durable medical equipment (DME) suppliers in a particular category or geographical area. Subtitle E: Provisions Relating to Revenue - (Sec. 1401) Amends the Internal Revenue Code to delay until 2018 the excise tax on high cost employer-sponsored health coverage plans. Increases the dollar thresholds for such tax to $10,200 for self-only coverage and $27,500 for other than self-only coverage (family plans). Increases such threshold amounts for retirees and employees in high risk professions. Excludes separate dental and vision plans from such tax. Allows employers to reduce the cost of plan coverage when applying such tax based upon the age and gender characteristics of all plan employees. (Sec. 1402) Includes net investment income in the Medicare taxable base and imposes a 3.8% tax on such income, beginning in 2013. Excludes from such tax the net investment income of taxpayers with adjusted gross incomes of less than $200,000 ($250,000 for joint returns). Defines "net investment income" to include interest, dividends, annuities, royalties, rents, passive income, and net gain from the disposition of nonbusiness property. (Sec. 1403) Amends PPACA to delay until 2013 the $2,500 limitation on annual salary reduction contributions by an employee to a health flexible spending arrangement under a cafeteria plan. Delays until 2014 the annual inflation adjustment to such limitation amount. (Sec. 1404) Delays until 2011 the fee on sales of branded prescription drugs. Sets forth a schedule of applicable amounts for 2011 through 2018 upon which such fee is based. (Sec. 1405) Imposes a tax on sales after 2012 of any taxable medical device by the manufacturer, producer, or importer equal to 2.3% of the price for which such device is sold. Defines "taxable medical device" as any device intended for humans, except eyeglasses, contact lenses, hearing aids, and any other medical device generally purchased by the general public at retail. Repeals the excise tax on medical devices enacted by PPACA. (Sec. 1406) Delays until 2014 the annual fee on the net premium income of health insurance providers. Allows a reduced fee for tax-exempt insurance providers. Sets forth a schedule of applicable amounts upon which such fee is based for calendar years between 2014 and 2018. Imposes a penalty on health insurance providers who understate net premium income subject to such tax. (Sec. 1407) Delays until 2013 the elimination of the tax deduction for expenses allocable to the Medicare Part D subsidy. (Sec. 1408) Revises the definition of "cellulosic biofuel" for purposes of the cellulosic biofuel producer tax credit to exclude any fuel if more than 4% of such fuel is any combination of water and sediment or the ash content of such fuel is more than 1% (determined by weight). (Sec. 1409) Sets forth rules for the application of the economic substance doctrine to transactions affecting taxpayer liability. Treats a transaction as having economic substance if: (1) the transaction changes in a meaningful way the taxpayer's economic position; and (2) the taxpayer has a substantial purpose, other than tax avoidance, for entering into a transaction. Imposes penalties for underpayments attributable to transactions lacking economic substance. (Sec. 1410) Increases by 15.75% in the third quarter of 2014, the estimated tax payment of corporations with assets of $1 billion or more. Subtitle F: Other Provisions - (Sec. 1501) Amends the Trade Act of 1974 to make appropriations for the community college and career training grant program for FY2011-FY2014. Requires that states receive not less than .5% of amounts appropriated in each fiscal year. Title II: Education and Health - Subtitle A: Education - SAFRA Act - Part I: Investing in Students and Families - (Sec. 2101) Amends the Higher Education Act of 1965 to authorize and appropriate such sums as may be necessary to fully fund maximum Pell Grant amounts, beginning in FY2010. Authorizes and appropriates an additional amount for FY2011. Establishes a new formula for determining increases in the maximum Pell Grant award beginning with the 2013-2014 school year. Ties increases in the maximum Pell Grant amount, from the 2013-2014 school year through the 2017-2018 school year, to increases in the Consumer Price Index. (Sec. 2102) Authorizes and appropriates funds for the College Access Challenge Grant program for FY2010-FY2014. Terminates the authority of the Secretary of Education (Secretary, for purposes of this subtitle) to award grants under such program after FY2014. Increases the minimum state allotment under such program from 0.5% to 1% of the total amount appropriated for such program in a fiscal year. (Sec. 2103) Extends funding for grants to historically Black colleges and universities and other minority-serving institutions through FY2019. Terminates the Secretary's authority to award such grants after FY2019. Part II: Student Loan Reform - (Sec. 2201) Prohibits any new loans from being made or insured under the Federal Family Education Loan (FFEL) program after June 2010, including payments to reduce student costs and FFEL Plus Loans. (Sec. 2206) Allows borrowers who have loans under both the Direct Loan (DL) and FFEL programs, or who have a loan under either program as well as an FFEL that has been sold to the Secretary, to consolidate such loans under the DL program from July 2010 through June 2011, if the borrower has not begun repaying such loans. (Sec. 2207) Terminates after June 2010 unsubsidized Stafford Loans for middle-income borrowers and special allowances. (Sec. 2209) Requires DLs for students and the parents of students attending institutions of higher education (IHEs) outside of the United States to be disbursed through a financial institution located or operating in the United States which is designated by the Secretary to receive DL funds and transfer them to such schools. (Sec. 2212) Directs the Secretary to: (1) award DL servicing contracts to nonprofit servicers that meet certain federal standards and have the capacity to service their loan account allocation; (2) allocate the loan accounts of 100,000 borrowers to each of the nonprofit servicers; and (3) establish a separate pricing tier for each of the first 100,000 borrower loan accounts at a competitive market rate. Permits the Secretary to reallocate, increase, reduce, or terminate a nonprofit servicers allocation based on the performance of such servicer. Makes nonprofit servicers ineligible for such contracts if they have not been awarded such a contract before July 1, 2014, or have had their contract terminated and not been awarded a new contract before such date. Provides funding to the Secretary, from FY2010-2019, for the administrative costs of servicing such contracts. Directs the Secretary to provide IHEs with technical assistance in establishing and administering DL programs. Authorizes and appropriates FY2010 funding for the provision of such assistance. Requires the Secretary to provide payments to loan servicers for retaining jobs at locations in the United States where such servicers were operating under the FFEL program on January 1, 2010. Authorizes and appropriates FY2010-FY2011 funding for the provision of such payments. (Sec. 2213) Lowers the cap on annual, income-based student loan repayments for new borrowers after July 1, 2014 from 15% to 10% of the amount by which a borrower's and the borrower's spouse's adjusted gross income exceeds 150% of the poverty line. Requires the Secretary to forgive the remaining balance of such loans after 20 (currently, 25) years of repayment. Subtitle B: Health - (Sec. 2301) Amends the Patient Protection and Affordable Care Act (PPACA) to apply to grandfathered health plans for plan years beginning on or after January 1, 2014, provisions that prohibit a health plan from applying any waiting period for coverage that exceeds 90 days. (A grandfathered health plan is a group health plan or health insurance coverage in which an individual was enrolled on the date of enactment of PPACA.) Applies to grandfathered health plans for plan years beginning on or after six months after enactment of PPACA provisions that: (1) prohibit a health plan from establishing lifetime limits on the dollar value of benefits for any participant or beneficiary; (2) prohibit a health plan from rescinding coverage of an enrollee except in the case of fraud or intentional misrepresentation of material fact; and (3) require a health plan that provides dependent coverage of children to make such coverage available for an adult child under 26 years of age. Applies to grandfathered group health plans for plan years beginning on or after January 1, 2014, provisions that: (1) prohibit a health plan from establishing annual limits on the dollar value of benefits for any participant or beneficiary, except that restrictions on annual limits apply for plan years beginning on or after six months after enactment of PPACA; and (2) prohibit a health plan from imposing any preexisting condition exclusions, except that such requirements apply for plan years beginning on or after six months after enactment of PPACA for enrollees under 19 years of age. Requires grandfathered group health plans for plan years beginning before January 1, 2014, to provide dependent coverage to an adult child until age 26 only if such child is not eligible to enroll in an employer-sponsored health plan other than such grandfathered health plan. Repeals the requirement that an adult child be unmarried in order to qualify for dependent coverage until age 26. (Sec. 2302) Limits the 340B drug discount program to outpatients drugs and removes exceptions to the prohibition on enrolled hospitals obtaining covered outpatient drugs through a group purchasing organization or a group purchasing arrangement (thus restoring the provisions in effect before enactment of PPACA). Excludes certain drugs designated for a rare disease or condition as covered outpatient drugs for covered entities added to the program under PPACA. (Sec. 2303) Increases the authorization of appropriations for FY2011-FY2015 to the Community Health Center Fund to provide enhanced funding for the community health center program.