Health Care and Education Reconciliation Act of 2010
PL 111-152 (H.R.4872), enacted 03/30/2010

124 STAT. 1029 
PUBLIC LAW 111–152—MAR. 30, 2010 
Public Law 111–152 
111th Congress 
An Act 
To provide for reconciliation pursuant to Title II of the concurrent resolution on 
the budget for fiscal year 2010 (S. Con. Res. 13). 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the ‘‘Health Care 
and Education Reconciliation Act of 2010’’. 
(b) TABLE OF CONTENTS.—The table of contents of this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—COVERAGE, MEDICARE, MEDICAID, AND REVENUES 
Subtitle A—Coverage 
Sec. 1001. Tax credits. 
Sec. 1002. Individual responsibility. 
Sec. 1003. Employer responsibility. 
Sec. 1004. Income definitions. 
Sec. 1005. Implementation funding. 
Subtitle B—Medicare 
Sec. 1101. Closing the medicare prescription drug ‘‘donut hole’’. 
Sec. 1102. Medicare Advantage payments. 
Sec. 1103. Savings from limits on MA plan administrative costs. 
Sec. 1104. Disproportionate share hospital (DSH) payments. 
Sec. 1105. Market basket updates. 
Sec. 1106. Physician ownership-referral. 
Sec. 1107. Payment for imaging services. 
Sec. 1108. PE GPCI adjustment for 2010. 
Sec. 1109. Payment for qualifying hospitals. 
Subtitle C—Medicaid 
Sec. 1201. Federal funding for States. 
Sec. 1202. Payments to primary care physicians. 
Sec. 1203. Disproportionate share hospital payments. 
Sec. 1204. Funding for the territories. 
Sec. 1205. Delay in Community First Choice option. 
Sec. 1206. Drug rebates for new formulations of existing drugs. 
Subtitle D—Reducing Fraud, Waste, and Abuse 
Sec. 1301. Community mental health centers. 
Sec. 1302. Medicare prepayment medical review limitations. 
Sec. 1303. Funding to fight fraud, waste, and abuse. 
Sec. 1304. 90-day period of enhanced oversight for initial claims of DME suppliers. 
Subtitle E—Provisions Relating to Revenue 
Sec. 1401. High-cost plan excise tax. 
Sec. 1402. Unearned income Medicare contribution. 
Sec. 1403. Delay of limitation on health flexible spending arrangements under cafe-
teria plans. 
42 USC 1305 
note. 
Health Care and 
Education 
Reconciliation 
Act of 2010. 
Mar. 30, 2010 
[H.R. 4872] 
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124 STAT. 1030 
PUBLIC LAW 111–152—MAR. 30, 2010 
Sec. 1404. Brand name pharmaceuticals. 
Sec. 1405. Excise tax on medical device manufacturers. 
Sec. 1406. Health insurance providers. 
Sec. 1407. Delay of elimination of deduction for expenses allocable to medicare part 
D subsidy. 
Sec. 1408. Elimination of unintended application of cellulosic biofuel producer cred-
it. 
Sec. 1409. Codification of economic substance doctrine and penalties. 
Sec. 1410. Time for payment of corporate estimated taxes. 
Subtitle F—Other Provisions 
Sec. 1501. Community college and career training grant program. 
TITLE II—EDUCATION AND HEALTH 
Subtitle A—Education 
Sec. 2001. Short title; references. 
PART I—INVESTING IN STUDENTS AND FAMILIES 
Sec. 2101. Federal Pell Grants. 
Sec. 2102. College access challenge grant program. 
Sec. 2103. Investment in historically black colleges and universities and minority- 
serving institutions. 
PART II—STUDENT LOAN REFORM 
Sec. 2201. Termination of Federal Family Education Loan appropriations. 
Sec. 2202. Termination of Federal loan insurance program. 
Sec. 2203. Termination of applicable interest rates. 
Sec. 2204. Termination of Federal payments to reduce student interest costs. 
Sec. 2205. Termination of FFEL PLUS Loans. 
Sec. 2206. Federal Consolidation Loans. 
Sec. 2207. Termination of Unsubsidized Stafford Loans for middle-income bor-
rowers. 
Sec. 2208. Termination of special allowances. 
Sec. 2209. Origination of Direct Loans at institutions outside the United States. 
Sec. 2210. Conforming amendments. 
Sec. 2211. Terms and conditions of loans. 
Sec. 2212. Contracts; mandatory funds. 
Sec. 2213. Income-based repayment. 
Subtitle B—Health 
Sec. 2301. Insurance reforms. 
Sec. 2302. Drugs purchased by covered entities. 
Sec. 2303. Community health centers. 
TITLE I—COVERAGE, MEDICARE, 
MEDICAID, AND REVENUES 
Subtitle A—Coverage 
SEC. 1001. TAX CREDITS. 
(a) PREMIUM TAX CREDITS.—Section 36B of the Internal Rev-
enue Code of 1986, as added by section 1401 of the Patient Protec-
tion and Affordable Care Act and amended by section 10105 of 
such Act, is amended— 
(1) in subsection (b)(3)(A)— 
(A) in clause (i), by striking ‘‘with respect to any tax-
payer’’ and all that follows up to the end period and 
inserting: ‘‘for any taxable year shall be the percentage 
such that the applicable percentage for any taxpayer whose 
household income is within an income tier specified in 
the following table shall increase, on a sliding scale in 
a linear manner, from the initial premium percentage to 
Ante, p. 213, 906. 
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124 STAT. 1031 
PUBLIC LAW 111–152—MAR. 30, 2010 
the final premium percentage specified in such table for 
such income tier: 
‘‘In the case of household in-
come (expressed as a percent 
of poverty line) within the fol-
lowing income tier: 
The initial premium 
percentage is— 
The final premium 
percentage is— 
Up to 133% 
2.0% 
2.0% 
133% up to 150% 
3.0% 
4.0% 
150% up to 200% 
4.0% 
6.3% 
200% up to 250% 
6.3% 
8.05% 
250% up to 300% 
8.05% 
9.5% 
300% up to 400% 
9.5% 
9.5%’’; and 
(B) by striking clauses (ii) and (iii), and inserting the 
following: 
‘‘(ii) INDEXING.— 
‘‘(I) IN
GENERAL.—Subject to subclause (II), 
in the case of taxable years beginning in any cal-
endar year after 2014, the initial and final 
applicable percentages under clause (i) (as in effect 
for the preceding calendar year after application 
of this clause) shall be adjusted to reflect the excess 
of the rate of premium growth for the preceding 
calendar year over the rate of income growth for 
the preceding calendar year. 
‘‘(II) ADDITIONAL ADJUSTMENT.—Except as pro-
vided in subclause (III), in the case of any calendar 
year after 2018, the percentages described in sub-
clause (I) shall, in addition to the adjustment 
under subclause (I), be adjusted to reflect the 
excess (if any) of the rate of premium growth esti-
mated under subclause (I) for the preceding cal-
endar year over the rate of growth in the consumer 
price index for the preceding calendar year. 
‘‘(III) FAILSAFE.—Subclause (II) shall apply for 
any calendar year only if the aggregate amount 
of premium tax credits under this section and cost- 
sharing reductions under section 1402 of the 
Patient Protection and Affordable Care Act for the 
preceding calendar year exceeds an amount equal 
to 0.504 percent of the gross domestic product 
for the preceding calendar year.’’; and 
(2) in subsection (c)(2)(C)— 
(A) by striking ‘‘9.8 percent’’ in clauses (i)(II) and (iv) 
and inserting ‘‘9.5 percent’’; and 
(B) by striking ‘‘(b)(3)(A)(iii)’’ in clause (iv) and 
inserting ‘‘(b)(3)(A)(ii)’’. 
(b) COST SHARING.—Section 1402(c) of the Patient Protection 
and Affordable Care Act is amended— 
(1) in paragraph (1)(B)(i)— 
(A) in subclause (I), by striking ‘‘90’’ and inserting 
‘‘94’’; 
(B) in subclause (II)— 
(i) by striking ‘‘80’’ and inserting ‘‘87’’; and 
(ii) by striking ‘‘and’’; and 
Ante, p. 221. 
Applicability. 
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124 STAT. 1032 
PUBLIC LAW 111–152—MAR. 30, 2010 
(C) by striking subclause (III) and inserting the fol-
lowing: 
‘‘(III) 73 percent in the case of an eligible 
insured whose household income is more than 200 
percent but not more than 250 percent of the pov-
erty line for a family of the size involved; and 
‘‘(IV) 70 percent in the case of an eligible 
insured whose household income is more than 250 
percent but not more than 400 percent of the pov-
erty line for a family of the size involved.’’; and 
(2) in paragraph (2)— 
(A) in subparagraph (A)— 
(i) by striking ‘‘90’’ and inserting ‘‘94’’; and 
(ii) by striking ‘‘and’’; 
(B) in subparagraph (B)— 
(i) by striking ‘‘80’’ and inserting ‘‘87’’; and 
(ii) by striking the period and inserting ‘‘; and’’; 
and 
(C) by inserting after subparagraph (B) the following 
new subparagraph: 
‘‘(C) in the case of an eligible insured whose household 
income is more than 200 percent but not more than 250 
percent of the poverty line for a family of the size involved, 
increase the plan’s share of the total allowed costs of bene-
fits provided under the plan to 73 percent of such costs.’’. 
SEC. 1002. INDIVIDUAL RESPONSIBILITY. 
(a) AMOUNTS.—Section 5000A(c) of the Internal Revenue Code 
of 1986, as added by section 1501(b) of the Patient Protection 
and Affordable Care Act and amended by section 10106 of such 
Act, is amended— 
(1) in paragraph (2)(B)— 
(A) in the matter preceding clause (i), by— 
(i) inserting ‘‘the excess of’’ before ‘‘the taxpayer’s 
household income’’; and 
(ii) inserting ‘‘for the taxable year over the amount 
of gross income specified in section 6012(a)(1) with 
respect to the taxpayer’’ before ‘‘for the taxable year’’; 
(B) in clause (i), by striking ‘‘0.5’’ and inserting ‘‘1.0’’; 
(C) in clause (ii), by striking ‘‘1.0’’ and inserting ‘‘2.0’’; 
and 
(D) in clause (iii), by striking ‘‘2.0’’ and inserting ‘‘2.5’’; 
and 
(2) in paragraph (3)— 
(A) in subparagraph (A), by striking ‘‘$750’’ and 
inserting ‘‘$695’’; 
(B) in subparagraph (B), by striking ‘‘$495’’ and 
inserting ‘‘$325’’; and 
(C) in subparagraph (D)— 
(i) in the matter preceding clause (i), by striking 
‘‘$750’’ and inserting ‘‘$695’’; and 
(ii) in clause (i), by striking ‘‘$750’’ and inserting 
‘‘$695’’. 
(b) THRESHOLD.—Section 5000A of such Code, as so added 
and amended, is amended— 
(1) by striking subsection (c)(4)(D); and 
(2) in subsection (e)(2)— 
Ante, p. 244, 907. 
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124 STAT. 1033 
PUBLIC LAW 111–152—MAR. 30, 2010 
(A) by striking ‘‘UNDER 100 PERCENT OF POVERTY LINE’’ 
and inserting ‘‘BELOW FILING THRESHOLD’’; and 
(B) by striking all that follows ‘‘less than’’ and inserting 
‘‘the amount of gross income specified in section 6012(a)(1) 
with respect to the taxpayer.’’. 
SEC. 1003. EMPLOYER RESPONSIBILITY. 
(a) PAYMENT CALCULATION.—Subparagraph (D) of subsection 
(d)(2) of section 4980H of the Internal Revenue Code of 1986, 
as added by section 1513 of the Patient Protection and Affordable 
Care Act and amended by section 10106 of such Act, is amended 
to read as follows: 
‘‘(D) APPLICATION OF EMPLOYER SIZE TO ASSESSABLE 
PENALTIES.— 
‘‘(i) IN
GENERAL.—The number of individuals 
employed by an applicable large employer as full-time 
employees during any month shall be reduced by 30 
solely for purposes of calculating— 
‘‘(I) the assessable payment under subsection 
(a), or 
‘‘(II) the overall limitation under subsection 
(b)(2). 
‘‘(ii) AGGREGATION.—In the case of persons treated 
as 1 employer under subparagraph (C)(i), only 1 reduc-
tion under subclause (I) or (II) shall be allowed with 
respect to such persons and such reduction shall be 
allocated among such persons ratably on the basis 
of the number of full-time employees employed by each 
such person.’’. 
(b) APPLICABLE PAYMENT AMOUNT.—Section 4980H of such 
Code, as so added and amended, is amended— 
(1) in the flush text following subsection (c)(1)(B), by 
striking ‘‘400 percent of the applicable payment amount’’ and 
inserting ‘‘an amount equal to 1⁄12 of $3,000’’; 
(2) in subsection (d)(1), by striking ‘‘$750’’ and inserting 
‘‘$2,000’’; and 
(3) in subsection (d)(5)(A), in the matter preceding clause 
(i), by striking ‘‘subsection (b)(2) and (d)(1)’’ and inserting ‘‘sub-
section (b) and paragraph (1)’’. 
(c) COUNTING PART-TIME WORKERS IN SETTING THE THRESHOLD 
FOR EMPLOYER RESPONSIBILITY.—Section 4980H(d)(2) of such Code, 
as so added and amended and as amended by subsection (a), is 
amended by adding at the end the following new subparagraph: 
‘‘(E) FULL-TIME EQUIVALENTS TREATED AS FULL-TIME 
EMPLOYEES.—Solely for purposes of determining whether 
an employer is an applicable large employer under this 
paragraph, an employer shall, in addition to the number 
of full-time employees for any month otherwise determined, 
include for such month a number of full-time employees 
determined by dividing the aggregate number of hours 
of service of employees who are not full-time employees 
for the month by 120.’’. 
(d) ELIMINATING WAITING PERIOD ASSESSMENT.—Section 4980H 
of such Code, as so added and amended and as amended by the 
preceding subsections, is amended by striking subsection (b) and 
redesignating subsections (c), (d), and (e) as subsections (b), (c), 
and (d), respectively. 
Ante, p. 253, 907. 
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124 STAT. 1034 
PUBLIC LAW 111–152—MAR. 30, 2010 
SEC. 1004. INCOME DEFINITIONS. 
(a) MODIFIED ADJUSTED GROSS INCOME.— 
(1) IN GENERAL.—The following provisions of the Internal 
Revenue Code of 1986 are each amended by striking ‘‘modified 
gross’’ each place it appears and inserting ‘‘modified adjusted 
gross’’: 
(A) Clauses (i) and (ii) of section 36B(d)(2)(A), as added 
by section 1401 of the Patient Protection and Affordable 
Care Act. 
(B) Section 6103(l)(21)(A)(iv), as added by section 1414 
of such Act. 
(C) Clauses (i) and (ii) of section 5000A(c)(4), as added 
by section 1501(b) of such Act. 
(2) DEFINITION.— 
(A) Section 36B(d)(2)(B) of such Code, as so added, 
is amended to read as follows: 
‘‘(B) MODIFIED
ADJUSTED
GROSS
INCOME.—The term 
‘modified adjusted gross income’ means adjusted gross 
income increased by— 
‘‘(i) any amount excluded from gross income under 
section 911, and 
‘‘(ii) any amount of interest received or accrued 
by the taxpayer during the taxable year which is 
exempt from tax.’’. 
(B) Section 5000A(c)(4)(C) of such Code, as so added, 
is amended to read as follows: 
‘‘(C) MODIFIED
ADJUSTED
GROSS
INCOME.—The term 
‘modified adjusted gross income’ means adjusted gross 
income increased by— 
‘‘(i) any amount excluded from gross income under 
section 911, and 
‘‘(ii) any amount of interest received or accrued 
by the taxpayer during the taxable year which is 
exempt from tax.’’. 
(b) MODIFIED ADJUSTED GROSS INCOME DEFINITION.— 
(1) MEDICAID.—Section 1902 of the Social Security Act 
(42 U.S.C. 1396a) is amended by striking ‘‘modified gross 
income’’ each place it appears in the text and headings of 
the following provisions and inserting ‘‘modified adjusted gross 
income’’: 
(A) Paragraph (14) of subsection (e), as added by sec-
tion 2002(a) of the Patient Protection and Affordable Care 
Act. 
(B) Subsection (gg)(4)(A), as added by section 2001(b) 
of such Act. 
(2) CHIP.— 
(A) 
STATE
PLAN
REQUIREMENTS.—Section 
2102(b)(1)(B)(v) of the Social Security Act (42 U.S.C. 
1397bb(b)(1)(B)(v)), as added by section 2101(d)(1) of the 
Patient Protection and Affordable Care Act, is amended 
by striking ‘‘modified gross income’’ and inserting ‘‘modified 
adjusted gross income’’. 
(B) PLAN ADMINISTRATION.—Section 2107(e)(1)(E) of the 
Social Security Act (42 U.S.C. 1397gg(e)(1)(E)), as added 
by section 2101(d)(2) of the Patient Protection and Afford-
able Care Act, is amended by striking ‘‘modified gross 
income’’ and inserting ‘‘modified adjusted gross income’’. 
Ante, p. 244. 
Ante, p. 236. 
Ante, p. 213. 
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124 STAT. 1035 
PUBLIC LAW 111–152—MAR. 30, 2010 
(c) NO EXCESS PAYMENTS.—Section 36B(f) of the Internal Rev-
enue Code of 1986, as added by section 1401(a) of the Patient 
Protection and Affordable Care Act, is amended by adding at the 
end the following new paragraph: 
‘‘(3) INFORMATION REQUIREMENT.—Each Exchange (or any 
person carrying out 1 or more responsibilities of an Exchange 
under section 1311(f)(3) or 1321(c) of the Patient Protection 
and Affordable Care Act) shall provide the following information 
to the Secretary and to the taxpayer with respect to any health 
plan provided through the Exchange: 
‘‘(A) The level of coverage described in section 1302(d) 
of the Patient Protection and Affordable Care Act and 
the period such coverage was in effect. 
‘‘(B) The total premium for the coverage without regard 
to the credit under this section or cost-sharing reductions 
under section 1402 of such Act. 
‘‘(C) The aggregate amount of any advance payment 
of such credit or reductions under section 1412 of such 
Act. 
‘‘(D) The name, address, and TIN of the primary 
insured and the name and TIN of each other individual 
obtaining coverage under the policy. 
‘‘(E) Any information provided to the Exchange, 
including any change of circumstances, necessary to deter-
mine eligibility for, and the amount of, such credit. 
‘‘(F) Information necessary to determine whether a tax-
payer has received excess advance payments.’’. 
(d) ADULT DEPENDENTS.— 
(1) EXCLUSION OF AMOUNTS EXPENDED FOR MEDICAL CARE.— 
The first sentence of section 105(b) of the Internal Revenue 
Code of 1986 (relating to amounts expended for medical care) 
is amended— 
(A) by striking ‘‘and his dependents’’ and inserting 
‘‘his dependents’’; and 
(B) by inserting before the period the following: ‘‘, 
and any child (as defined in section 152(f)(1)) of the tax-
payer who as of the end of the taxable year has not attained 
age 27’’. 
(2) SELF-EMPLOYED HEALTH INSURANCE DEDUCTION.—Sec-
tion 162(l)(1) of such Code is amended to read as follows: 
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case of a taxpayer 
who is an employee within the meaning of section 401(c)(1), 
there shall be allowed as a deduction under this section an 
amount equal to the amount paid during the taxable year 
for insurance which constitutes medical care for— 
‘‘(A) the taxpayer, 
‘‘(B) the taxpayer’s spouse, 
‘‘(C) the taxpayer’s dependents, and 
‘‘(D) any child (as defined in section 152(f)(1)) of the 
taxpayer who as of the end of the taxable year has not 
attained age 27.’’. 
(3) COVERAGE UNDER SELF-EMPLOYED DEDUCTION.—Section 
162(l)(2)(B) of such Code is amended by inserting ‘‘, or any 
dependent, or individual described in subparagraph (D) of para-
graph (1) with respect to,’’ after ‘‘spouse of’’. 
(4) SICK AND ACCIDENT BENEFITS PROVIDED TO MEMBERS 
OF
A
VOLUNTARY
EMPLOYEES’ BENEFICIARY
ASSOCIATION
AND 
26 USC 162. 
26 USC 105. 
Ante, p. 213. 
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124 STAT. 1036 
PUBLIC LAW 111–152—MAR. 30, 2010 
THEIR DEPENDENTS.—Section 501(c)(9) of such Code is amended 
by adding at the end the following new sentence: ‘‘For purposes 
of providing for the payment of sick and accident benefits 
to members of such an association and their dependents, the 
term ‘dependent’ shall include any individual who is a child 
(as defined in section 152(f)(1)) of a member who as of the 
end of the calendar year has not attained age 27.’’. 
(5) 
MEDICAL
AND
OTHER
BENEFITS
FOR
RETIRED 
EMPLOYEES.—Section 401(h) of such Code is amended by adding 
at the end the following: ‘‘For purposes of this subsection, 
the term ‘dependent’ shall include any individual who is a 
child (as defined in section 152(f)(1)) of a retired employee 
who as of the end of the calendar year has not attained age 
27.’’. 
(e) FIVE PERCENT INCOME DISREGARD FOR CERTAIN INDIVID-
UALS.—Section 1902(e)(14) of the Social Security Act (42 U.S.C. 
1396a(e)(14)), as amended by subsection (b)(1), is further amended— 
(1) in subparagraph (B), by striking ‘‘No type’’ and inserting 
‘‘Subject to subparagraph (I), no type’’; and 
(2) by adding at the end the following new subparagraph: 
‘‘(I) TREATMENT
OF
PORTION
OF
MODIFIED
ADJUSTED 
GROSS INCOME.—For purposes of determining the income 
eligibility of an individual for medical assistance whose 
eligibility is determined based on the application of modi-
fied adjusted gross income under subparagraph (A), the 
State shall— 
‘‘(i) determine the dollar equivalent of the dif-
ference between the upper income limit on eligibility 
for such an individual (expressed as a percentage of 
the poverty line) and such upper income limit increased 
by 5 percentage points; and 
‘‘(ii) notwithstanding the requirement in subpara-
graph (A) with respect to use of modified adjusted 
gross income, utilize as the applicable income of such 
individual, in determining such income eligibility, an 
amount equal to the modified adjusted gross income 
applicable to such individual reduced by such dollar 
equivalent amount.’’. 
SEC. 1005. IMPLEMENTATION FUNDING. 
(a) IN GENERAL.—There is hereby established a Health Insur-
ance Reform Implementation Fund (referred to in this section as 
the ‘‘Fund’’) within the Department of Health and Human Services 
to carry out the Patient Protection and Affordable Care Act and 
this Act (and the amendments made by such Acts). 
(b) FUNDING.—There is appropriated to the Fund, out of any 
funds in the Treasury not otherwise appropriated, $1,000,000,000 
for Federal administrative expenses to carry out such Act (and 
the amendments made by such Acts). 
Subtitle B—Medicare 
SEC. 1101. CLOSING THE MEDICARE PRESCRIPTION DRUG ‘‘DONUT 
HOLE’’. 
(a) COVERAGE GAP REBATE FOR 2010.— 
42 USC 18121. 
Determination. 
26 USC 401. 
26 USC 501. 
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124 STAT. 1037 
PUBLIC LAW 111–152—MAR. 30, 2010 
(1) IN GENERAL.—Section 1860D–42 of the Social Security 
Act (42 U.S.C. 1395w–152) is amended by adding at the end 
the following new subsection: 
‘‘(c) COVERAGE GAP REBATE FOR 2010.— 
‘‘(1) IN GENERAL.—In the case of an individual described 
in subparagraphs (A) through (D) of section 1860D–14A(g)(1) 
who as of the last day of a calendar quarter in 2010 has 
incurred costs for covered part D drugs so that the individual 
has exceeded the initial coverage limit under section 1860D– 
2(b)(3) for 2010, the Secretary shall provide for payment from 
the Medicare Prescription Drug Account of $250 to the indi-
vidual by not later than the 15th day of the third month 
following the end of such quarter. 
‘‘(2) LIMITATION.—The Secretary shall provide only 1 pay-
ment under this subsection with respect to any individual.’’. 
(2) REPEAL
OF
PROVISION.—Section 3315 of the Patient 
Protection and Affordable Care Act (including the amendments 
made by such section) is repealed, and any provision of law 
amended or repealed by such sections is hereby restored or 
revived as if such section had not been enacted into law. 
(b) CLOSING THE DONUT HOLE.—Part D of title XVIII of the 
Social Security Act (42 U.S.C. 1395w–101 et seq.), as amended 
by section 3301 of the Patient Protection and Affordable Care Act, 
is further amended— 
(1) in section 1860D–43— 
(A) in subsection (b), by striking ‘‘July 1, 2010’’ and 
inserting ‘‘January 1, 2011’’; and 
(B) in subsection (c)(2), by striking ‘‘July 1, 2010, and 
ending on December 31, 2010,’’ and inserting ‘‘January 
1, 2011, and December 31, 2011,’’; 
(2) in section 1860D–14A— 
(A) in subsection (a)— 
(i) by striking ‘‘July 1, 2010’’ and inserting 
‘‘January 1, 2011’’; and 
(ii) by striking ‘‘April 1, 2010’’ and inserting ‘‘180 
days after the date of the enactment of this section’’; 
(B) in subsection (b)(1)(C)— 
(i) in the heading, by striking ‘‘2010 AND’’; 
(ii) by striking ‘‘July 1, 2010’’ and inserting 
‘‘January 1, 2011’’; and 
(iii) by striking ‘‘May 1, 2010’’ and inserting ‘‘not 
later than 30 days after the date of the establishment 
of a model agreement under subsection (a)’’; 
(C) in subsection (c)— 
(i) in paragraph (1)(A)(iii), by striking ‘‘July 1, 
2010, and ending on December 31, 2011’’ and inserting 
‘‘January 1, 2011, and ending on December 31, 2011’’; 
and 
(ii) in paragraph (2), by striking ‘‘2010’’ and 
inserting ‘‘2011’’; 
(D) in subsection (d)(2)(B), by striking ‘‘July 1, 2010, 
and ending on December 31, 2010’’ and inserting ‘‘January 
1, 2011, and ending on December 31, 2011’’; and 
(E) in subsection (g)(1)— 
(i) in the matter before subparagraph (A), by 
striking ‘‘an applicable drug’’ and inserting ‘‘a covered 
part D drug’’; 
Ante, p. 462. 
Ante, p. 461. 
Ante, p. 479. 
Deadline. 
Payments. 
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124 STAT. 1038 
PUBLIC LAW 111–152—MAR. 30, 2010 
(ii) by adding ‘‘and’’ at the end of subparagraph 
(C); 
(iii) by striking subparagraph (D); and 
(iv) by redesignating subparagraph (E) as subpara-
graph (D); and 
(3) in section 1860D–2(b)— 
(A) in paragraph (2)(A), by striking ‘‘The coverage’’ 
and inserting ‘‘Subject to subparagraphs (C) and (D), the 
coverage’’; 
(B) in paragraph (2)(B), by striking ‘‘subparagraph 
(A)(ii)’’ and inserting ‘‘subparagraphs (A)(ii), (C), and (D)’’; 
(C) by adding at the end of paragraph (2) the following 
new subparagraphs: 
‘‘(C) COVERAGE
FOR
GENERIC
DRUGS
IN
COVERAGE 
GAP.— 
‘‘(i) IN GENERAL.—Except as provided in paragraph 
(4), the coverage for an applicable beneficiary (as 
defined in section 1860D–14A(g)(1)) has coinsurance 
(for costs above the initial coverage limit under para-
graph (3) and below the out-of-pocket threshold) for 
covered part D drugs that are not applicable drugs 
under section 1860D–14A(g)(2) that is— 
‘‘(I) equal to the generic-gap coinsurance 
percentage (specified in clause (ii)) for the year; 
or 
‘‘(II) actuarially equivalent (using processes 
and methods established under section 1860D– 
11(c)) to an average expected payment of such 
percentage of such costs for covered part D drugs 
that are not applicable drugs under section 1860D– 
14A(g)(2). 
‘‘(ii) GENERIC-GAP
COINSURANCE
PERCENTAGE.— 
The generic-gap coinsurance percentage specified in 
this clause for— 
‘‘(I) 2011 is 93 percent; 
‘‘(II) 2012 and each succeeding year before 
2020 is the generic-gap coinsurance percentage 
under this clause for the previous year decreased 
by 7 percentage points; and 
‘‘(III) 2020 and each subsequent year is 25 
percent. 
‘‘(D) COVERAGE FOR APPLICABLE DRUGS IN COVERAGE 
GAP.— 
‘‘(i) IN GENERAL.—Except as provided in paragraph 
(4), the coverage for an applicable beneficiary (as 
defined in section 1860D–14A(g)(1)) has coinsurance 
(for costs above the initial coverage limit under para-
graph (3) and below the out-of-pocket threshold) for 
the negotiated price (as defined in section 1860D– 
14A(g)(6)) of covered part D drugs that are applicable 
drugs under section 1860D–14A(g)(2) that is— 
‘‘(I) equal to the difference between the 
applicable gap percentage (specified in clause (ii) 
for the year) and the discount percentage specified 
in section 1860D–14A(g)(4)(A) for such applicable 
drugs; or 
42 USC 
1395w–102. 
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124 STAT. 1039 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(II) actuarially equivalent (using processes 
and methods established under section 1860D– 
11(c)) to an average expected payment of such 
percentage of such costs, for covered part D drugs 
that are applicable drugs under section 1860D– 
14A(g)(2). 
‘‘(ii) APPLICABLE GAP PERCENTAGE.—The applicable 
gap percentage specified in this clause for— 
‘‘(I) 2013 and 2014 is 97.5 percent; 
‘‘(II) 2015 and 2016 is 95 percent; 
‘‘(III) 2017 is 90 percent; 
‘‘(IV) 2018 is 85 percent; 
‘‘(V) 2019 is 80 percent; and 
‘‘(VI) 2020 and each subsequent year is 75 
percent.’’; 
(D) in paragraph (3)(A), as restored under subsection 
(a)(2), by striking ‘‘paragraph (4)’’ and inserting ‘‘para-
graphs (2)(C), (2)(D), and (4)’’; and 
(E) in paragraph (4)(E), by inserting before the period 
at the end the following: ‘‘, except that incurred costs 
shall not include the portion of the negotiated price that 
represents the reduction in coinsurance resulting from the 
application of paragraph (2)(D)’’; and 
(4) in section 1860D–22(a)(2)(A), by inserting before the 
period at the end the following: ‘‘, not taking into account 
the value of any discount or coverage provided during the 
gap in prescription drug coverage that occurs between the 
initial coverage limit under section 1860D–2(b)(3) during the 
year and the out-of-pocket threshold specified in section 1860D– 
2(b)(4)(B)’’. 
(c) CONFORMING AMENDMENT TO AMP UNDER MEDICAID.—Sec-
tion 1927(k)(1)(B)(i) of the Social Security Act (42 U.S.C. 1396r– 
8(k)(1)(B)(i)), as amended by section 2503(a)(2)(B) of the Patient 
Protection and Affordable Care Act, is amended— 
(1) by striking ‘‘and’’ at the end of subclause (III); 
(2) by striking the period at the end of subclause (IV); 
and 
(3) by adding at the end the following new subclause: 
‘‘(V) discounts provided by manufacturers 
under section 1860D–14A.’’. 
(d) 
REDUCING
GROWTH
RATE
OF
OUT-OF-POCKET
COST 
THRESHOLD.—Section 1860D–2(b) of the Social Security Act (42 
U.S.C. 1395w–102(b)) is amended— 
(1) in paragraph (4)(B)(i)— 
(A) in subclause (I), by striking ‘‘or’’ at the end; 
(B) by redesignating subclause (II) as subclause (VI); 
and 
(C) by inserting after subclause (I) the following new 
subclauses: 
‘‘(II) for each of years 2007 through 2013, is 
equal to the amount specified in this subparagraph 
for the previous year, increased by the annual 
percentage increase described in paragraph (6) for 
the year involved; 
‘‘(III) for 2014 and 2015, is equal to the amount 
specified in this subparagraph for the previous 
year, increased by the annual percentage increase 
42 USC 
1395w–132. 
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124 STAT. 1040 
PUBLIC LAW 111–152—MAR. 30, 2010 
described in paragraph (6) for the year involved, 
minus 0.25 percentage point; 
‘‘(IV) for each of years 2016 through 2019, 
is equal to the amount specified in this subpara-
graph for the previous year, increased by the lesser 
of— 
‘‘(aa) the annual percentage increase 
described in paragraph (7) for the year 
involved, plus 2 percentage points; or 
‘‘(bb) the annual percentage increase 
described in paragraph (6) for the year; 
‘‘(V) for 2020, is equal to the amount that 
would have been applied under this subparagraph 
for 2020 if the amendments made by section 
1101(d)(1) of the Health Care and Education Rec-
onciliation Act of 2010 had not been enacted; or’’; 
and 
(2) by adding at the end the following new paragraph: 
‘‘(7) ADDITIONAL
ANNUAL
PERCENTAGE
INCREASE.—The 
annual percentage increase specified in this paragraph for a 
year is equal to the annual percentage increase in the consumer 
price index for all urban consumers (United States city average) 
for the 12-month period ending in July of the previous year.’’. 
SEC. 1102. MEDICARE ADVANTAGE PAYMENTS. 
(a) REPEAL.—Effective as if included in the enactment of the 
Patient Protection and Affordable Care Act, sections 3201 and 3203 
of such Act (and the amendments made by such sections) are 
repealed. 
(b) PHASE-IN OF MODIFIED BENCHMARKS.—Section 1853 of the 
Social Security Act (42 U.S.C. 1395w–23) is amended— 
(1) in subsection (j)(1)(A), by striking ‘‘(or, beginning with 
2007, 1⁄12 of the applicable amount determined under subsection 
(k)(1)) for the area for the year’’ and inserting ‘‘for the area 
for the year (or, for 2007, 2008, 2009, and 2010, 1⁄12 of the 
applicable amount determined under subsection (k)(1) for the 
area for the year; for 2011, 1⁄12 of the applicable amount deter-
mined under subsection (k)(1) for the area for 2010; and, begin-
ning with 2012, 1⁄12 of the blended benchmark amount deter-
mined under subsection (n)(1) for the area for the year)’’; and 
(2) by adding at the end the following new subsection: 
‘‘(n) DETERMINATION OF BLENDED BENCHMARK AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of subsection (j), subject 
to paragraphs (3), (4), and (5), the term ‘blended benchmark 
amount’ means for an area— 
‘‘(A) for 2012 the sum of— 
‘‘(i) 1⁄2 of the applicable amount for the area and 
year; and 
‘‘(ii) 1⁄2 of the amount specified in paragraph (2)(A) 
for the area and year; and 
‘‘(B) for a subsequent year the amount specified in 
paragraph (2)(A) for the area and year. 
‘‘(2) SPECIFIED AMOUNT.— 
‘‘(A) IN
GENERAL.—The amount specified in this 
subparagraph for an area and year is the product of— 
‘‘(i) the base payment amount specified in subpara-
graph (E) for the area and year adjusted to take into 
Definition. 
Effective date. 
42 USC 
1395w–21 et seq. 
and note. 
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124 STAT. 1041 
PUBLIC LAW 111–152—MAR. 30, 2010 
account the phase-out in the indirect costs of medical 
education from capitation rates described in subsection 
(k)(4); and 
‘‘(ii) the applicable percentage for the area for the 
year specified under subparagraph (B). 
‘‘(B) APPLICABLE
PERCENTAGE.—Subject to subpara-
graph (D), the applicable percentage specified in this 
subparagraph for an area for a year in the case of an 
area that is ranked— 
‘‘(i) in the highest quartile under subparagraph 
(C) for the previous year is 95 percent; 
‘‘(ii) in the second highest quartile under such 
subparagraph for the previous year is 100 percent; 
‘‘(iii) in the third highest quartile under such 
subparagraph for the previous year is 107.5 percent; 
or 
‘‘(iv) in the lowest quartile under such subpara-
graph for the previous year is 115 percent. 
‘‘(C) PERIODIC RANKING.—For purposes of this para-
graph in the case of an area located— 
‘‘(i) in 1 of the 50 States or the District of 
Columbia, the Secretary shall rank such area in each 
year specified under subsection (c)(1)(D)(ii) based upon 
the level of the amount specified in subparagraph (A)(i) 
for such areas; or 
‘‘(ii) in a territory, the Secretary shall rank such 
areas in each such year based upon the level of the 
amount specified in subparagraph (A)(i) for such area 
relative to quartile rankings computed under clause 
(i). 
‘‘(D) 1-YEAR TRANSITION FOR CHANGES IN APPLICABLE 
PERCENTAGE.—If, for a year after 2012, there is a change 
in the quartile in which an area is ranked compared to 
the previous year, the applicable percentage for the area 
in the year shall be the average of— 
‘‘(i) the applicable percentage for the area for the 
previous year; and 
‘‘(ii) the applicable percentage that would other-
wise apply for the area for the year. 
‘‘(E) BASE PAYMENT AMOUNT.—Subject to subparagraph 
(F), the base payment amount specified in this subpara-
graph— 
‘‘(i) for 2012 is the amount specified in subsection 
(c)(1)(D) for the area for the year; or 
‘‘(ii) for a subsequent year that— 
‘‘(I) 
is 
not 
specified 
under 
subsection 
(c)(1)(D)(ii), is the base amount specified in this 
subparagraph for the area for the previous year, 
increased by the national per capita MA growth 
percentage, described in subsection (c)(6) for that 
succeeding year, but not taking into account any 
adjustment under subparagraph (C) of such sub-
section for a year before 2004; and 
‘‘(II) is specified under subsection (c)(1)(D)(ii), 
is the amount specified in subsection (c)(1)(D) for 
the area for the year. 
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124 STAT. 1042 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(F) APPLICATION
OF
INDIRECT
MEDICAL
EDUCATION 
PHASE-OUT.—The base payment amount specified in 
subparagraph (E) for a year shall be adjusted in the same 
manner under paragraph (4) of subsection (k) as the 
applicable amount is adjusted under such subsection. 
‘‘(3) ALTERNATIVE PHASE-INS.— 
‘‘(A) 4-YEAR PHASE-IN FOR CERTAIN AREAS.—If the dif-
ference between the applicable amount (as defined in sub-
section (k)) for an area for 2010 and the projected 2010 
benchmark amount (as defined in subparagraph (C)) for 
the area is at least $30 but less than $50, the blended 
benchmark amount for the area is— 
‘‘(i) for 2012 the sum of— 
‘‘(I) 3⁄4 of the applicable amount for the area 
and year; and 
‘‘(II) 1⁄4 of the amount specified in paragraph 
(2)(A) for the area and year; 
‘‘(ii) for 2013 the sum of— 
‘‘(I) 1⁄2 of the applicable amount for the area 
and year; and 
‘‘(II) 1⁄2 of the amount specified in paragraph 
(2)(A) for the area and year; 
‘‘(iii) for 2014 the sum of— 
‘‘(I) 1⁄4 of the applicable amount for the area 
and year; and 
‘‘(II) 3⁄4 of the amount specified in paragraph 
(2)(A) for the area and year; and 
‘‘(iv) for a subsequent year the amount specified 
in paragraph (2)(A) for the area and year. 
‘‘(B) 6-YEAR PHASE-IN FOR CERTAIN AREAS.—If the dif-
ference between the applicable amount (as defined in sub-
section (k)) for an area for 2010 and the projected 2010 
benchmark amount (as defined in subparagraph (C)) for 
the area is at least $50, the blended benchmark amount 
for the area is— 
‘‘(i) for 2012 the sum of— 
‘‘(I) 5⁄6 of the applicable amount for the area 
and year; and 
‘‘(II) 1⁄6 of the amount specified in paragraph 
(2)(A) for the area and year; 
‘‘(ii) for 2013 the sum of— 
‘‘(I) 2⁄3 of the applicable amount for the area 
and year; and 
‘‘(II) 1⁄3 of the amount specified in paragraph 
(2)(A) for the area and year; 
‘‘(iii) for 2014 the sum of— 
‘‘(I) 1⁄2 of the applicable amount for the area 
and year; and 
‘‘(II) 1⁄2 of the amount specified in paragraph 
(2)(A) for the area and year; 
‘‘(iv) for 2015 the sum of— 
‘‘(I) 1⁄3 of the applicable amount for the area 
and year; and 
‘‘(II) 2⁄3 of the amount specified in paragraph 
(2)(A) for the area and year; and 
‘‘(v) for 2016 the sum of— 
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124 STAT. 1043 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(I) 1⁄6 of the applicable amount for the area 
and year; and 
‘‘(II) 5⁄6 of the amount specified in paragraph 
(2)(A) for the area and year; and 
‘‘(vi) for a subsequent year the amount specified 
in paragraph (2)(A) for the area and year. 
‘‘(C) PROJECTED 2010 BENCHMARK AMOUNT.—The pro-
jected 2010 benchmark amount described in this subpara-
graph for an area is equal to the sum of— 
‘‘(i) 1⁄2 of the applicable amount (as defined in 
subsection (k)) for the area for 2010; and 
‘‘(ii) 1⁄2 of the amount specified in paragraph (2)(A) 
for the area for 2010 but determined as if there were 
substituted for the applicable percentage specified in 
clause (ii) of such paragraph the sum of— 
‘‘(I) the applicable percent that would be speci-
fied under subparagraph (B) of paragraph (2) 
(determined without regard to subparagraph (D) 
of such paragraph) for the area for 2010 if any 
reference in such paragraph to ‘the previous year’ 
were deemed a reference to 2010; and 
‘‘(II) the applicable percentage increase that 
would apply to a qualifying plan in the area under 
subsection (o) as if any reference in such subsection 
to 2012 were deemed a reference to 2010 and 
as if the determination of a qualifying county 
under paragraph (3)(B) of such subsection were 
made for 2010. 
‘‘(4) CAP ON BENCHMARK AMOUNT.—In no case shall the 
blended benchmark amount for an area for a year (determined 
taking into account subsection (o)) be greater than the 
applicable amount that would (but for the application of this 
subsection) be determined under subsection (k)(1) for the area 
for the year. 
‘‘(5) NON-APPLICATION
TO
PACE
PLANS.—This subsection 
shall not apply to payments to a PACE program under section 
1894.’’. 
(c) APPLICABLE PERCENTAGE QUALITY INCREASES.—Section 1853 
of such Act (42 U.S.C. 1395w–23), as amended by subsection (b), 
is amended— 
(1) in subsection (j), by inserting ‘‘subject to subsection 
(o),’’ after ‘‘For purposes of this part,’’; 
(2) in subsection (n)(2)(B), as added by subsection (b), by 
inserting ‘‘, subject to subsection (o)’’ after ‘‘as follows’’; and 
(3) by adding at the end the following new subsection: 
‘‘(o) APPLICABLE PERCENTAGE QUALITY INCREASES.— 
‘‘(1) IN GENERAL.—Subject to the succeeding paragraphs, 
in the case of a qualifying plan with respect to a year beginning 
with 2012, the applicable percentage under subsection (n)(2)(B) 
shall be increased on a plan or contract level, as determined 
by the Secretary— 
‘‘(A) for 2012, by 1.5 percentage points; 
‘‘(B) for 2013, by 3.0 percentage points; and 
‘‘(C) for 2014 or a subsequent year, by 5.0 percentage 
points. 
Determination. 
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124 STAT. 1044 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(2) INCREASE FOR QUALIFYING PLANS IN QUALIFYING COUN-
TIES.—The increase applied under paragraph (1) for a qualifying 
plan located in a qualifying county for a year shall be doubled. 
‘‘(3) QUALIFYING PLANS AND QUALIFYING COUNTY DEFINED; 
APPLICATION
OF
INCREASES
TO
LOW
ENROLLMENT
AND
NEW 
PLANS.—For purposes of this subsection: 
‘‘(A) QUALIFYING PLAN.— 
‘‘(i) IN
GENERAL.—The term ‘qualifying plan’ 
means, for a year and subject to paragraph (4), a 
plan that had a quality rating under paragraph (4) 
of 4 stars or higher based on the most recent data 
available for such year. 
‘‘(ii) APPLICATION OF INCREASES TO LOW ENROLL-
MENT PLANS.— 
‘‘(I) 2012.—For 2012, the term ‘qualifying plan’ 
includes an MA plan that the Secretary determines 
is not able to have a quality rating under para-
graph (4) because of low enrollment. 
‘‘(II) 2013 AND SUBSEQUENT YEARS.—For 2013 
and subsequent years, for purposes of determining 
whether an MA plan with low enrollment (as 
defined by the Secretary) is included as a quali-
fying plan, the Secretary shall establish a method 
to apply to MA plans with low enrollment (as 
defined by the Secretary) the computation of 
quality rating and the rating system under para-
graph (4). 
‘‘(iii) APPLICATION OF INCREASES TO NEW PLANS.— 
‘‘(I) IN GENERAL.—A new MA plan that meets 
criteria specified by the Secretary shall be treated 
as a qualifying plan, except that in applying para-
graph (1), the applicable percentage under sub-
section (n)(2)(B) shall be increased— 
‘‘(aa) for 2012, by 1.5 percentage points; 
‘‘(bb) for 2013, by 2.5 percentage points; 
and 
‘‘(cc) for 2014 or a subsequent year, by 
3.5 percentage points. 
‘‘(II) NEW MA PLAN DEFINED.—The term ‘new 
MA plan’ means, with respect to a year, a plan 
offered by an organization or sponsor that has 
not had a contract as a Medicare Advantage 
organization in the preceding 3-year period. 
‘‘(B) QUALIFYING COUNTY.—The term ‘qualifying county’ 
means, for a year, a county— 
‘‘(i) that has an MA capitation rate that, in 2004, 
was based on the amount specified in subsection 
(c)(1)(B) for a Metropolitan Statistical Area with a 
population of more than 250,000; 
‘‘(ii) for which, as of December 2009, of the Medi-
care Advantage eligible individuals residing in the 
county at least 25 percent of such individuals were 
enrolled in Medicare Advantage plans; and 
‘‘(iii) that has per capita fee-for-service spending 
that is lower than the national monthly per capita 
cost for expenditures for individuals enrolled under 
Determination. 
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124 STAT. 1045 
PUBLIC LAW 111–152—MAR. 30, 2010 
the original medicare fee-for-service program for the 
year. 
‘‘(4) 
QUALITY
DETERMINATIONS
FOR
APPLICATION
OF 
INCREASE.— 
‘‘(A) QUALITY DETERMINATION.—The quality rating for 
a plan shall be determined according to a 5-star rating 
system (based on the data collected under section 1852(e)). 
‘‘(B) PLANS
THAT
FAILED
TO
REPORT.—An MA plan 
which does not report data that enables the Secretary 
to rate the plan for purposes of this paragraph shall be 
counted as having a rating of fewer than 3.5 stars. 
‘‘(5) EXCEPTION
FOR
PACE
PLANS.—This subsection shall 
not apply to payments to a PACE program under section 1894.’’. 
(4) DETERMINATION
OF
MEDICARE
PART
D
LOW-INCOME 
BENCHMARK
PREMIUM.—Section 1860D–14(b)(2)(B)(iii) of the 
Social Security Act (42 U.S.C. 1395w–114(b)(2)(B)(iii)) as 
amended by section 3302 of the Patient Protection and Afford-
able Care Act, is amended by striking ‘‘, determined without 
regard to any reduction in such premium as a result of any 
beneficiary rebate under section 1854(b)(1)(C) or bonus payment 
under section 1853(n)’’ and inserting the following: ‘‘and deter-
mined before the application of the monthly rebate computed 
under section 1854(b)(1)(C)(i) for that plan and year involved 
and, in the case of a qualifying plan, before the application 
of the increase under section 1853(o) for that plan and year 
involved’’. 
(d) BENEFICIARY REBATES.—Section 1854(b)(1)(C) of such Act 
(42 U.S.C. 1395w–24(b)(1)(C)), as amended by section 3202(b) of 
the Patient Protection and Affordable Care Act, is further 
amended— 
(1) in clause (i), by inserting ‘‘(or the applicable rebate 
percentage specified in clause (iii) in the case of plan years 
beginning on or after January 1, 2012)’’ after ‘‘75 percent’’; 
and 
(2) by striking clause (iii), by redesignating clauses (iv) 
and (v) as clauses (vii) and (viii), respectively, and by inserting 
after clause (ii) the following new clauses: 
‘‘(iii) 
APPLICABLE
REBATE
PERCENTAGE.—The 
applicable rebate percentage specified in this clause 
for a plan for a year, based on the system under 
section 1853(o)(4)(A), is the sum of— 
‘‘(I) the product of the old phase-in proportion 
for the year under clause (iv) and 75 percent; 
and 
‘‘(II) the product of the new phase-in propor-
tion for the year under clause (iv) and the final 
applicable rebate percentage under clause (v). 
‘‘(iv) OLD AND NEW PHASE-IN PROPORTIONS.—For 
purposes of clause (iv)— 
‘‘(I) for 2012, the old phase-in proportion is 
2⁄3 and the new phase-in proportion is 1⁄3; 
‘‘(II) for 2013, the old phase-in proportion is 
1⁄3 and the new phase-in proportion is 2⁄3; and 
‘‘(III) for 2014 and any subsequent year, the 
old phase-in proportion is 0 and the new phase- 
in proportion is 1. 
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124 STAT. 1046 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(v) FINAL APPLICABLE REBATE PERCENTAGE.—Sub-
ject to clause (vi), the final applicable rebate percentage 
under this clause is— 
‘‘(I) in the case of a plan with a quality rating 
under such system of at least 4.5 stars, 70 percent; 
‘‘(II) in the case of a plan with a quality rating 
under such system of at least 3.5 stars and less 
than 4.5 stars, 65 percent; and 
‘‘(III) in the case of a plan with a quality 
rating under such system of less than 3.5 stars, 
50 percent. 
‘‘(vi) TREATMENT OF LOW ENROLLMENT AND NEW 
PLANS.—For purposes of clause (v)— 
‘‘(I) for 2012, in the case of a plan described 
in subclause (I) of subsection (o)(3)(A)(ii), the plan 
shall be treated as having a rating of 4.5 stars; 
and 
‘‘(II) for 2012 or a subsequent year, in the 
case of a new MA plan (as defined under subclause 
(III) of subsection (o)(3)(A)(iii)) that is treated as 
a qualifying plan pursuant to subclause (I) of such 
subsection, the plan shall be treated as having 
a rating of 3.5 stars.’’. 
(e) CODING INTENSITY ADJUSTMENT.—Section 1853(a)(1)(C)(ii) 
of such Act (42 U.S.C. 1395w–23(a)(1)(C)(ii)) is amended— 
(1) in the heading, by striking ‘‘DURING
PHASEOUT
OF 
BUDGET NEUTRALITY FACTOR’’ and inserting ‘‘OF CODING ADJUST-
MENT’’; 
(2) in the matter before subclause (I), by striking ‘‘through 
2010’’ and inserting ‘‘and each subsequent year’’; and 
(3) in subclause (II)— 
(A) in the first sentence, by inserting ‘‘annually’’ before 
‘‘conduct an analysis’’; 
(B) in the second sentence— 
(i) by inserting ‘‘on a timely basis’’ after ‘‘are incor-
porated’’; and 
(ii) by striking ‘‘only for 2008, 2009, and 2010’’ 
and inserting ‘‘for 2008 and subsequent years’’; 
(C) in the third sentence, by inserting ‘‘and updated 
as appropriate’’ before the period at the end; and 
(D) by adding at the end the following new subclauses: 
‘‘(III) In calculating each year’s adjustment, 
the adjustment factor shall be for 2014, not less 
than the adjustment factor applied for 2010, plus 
1.3 percentage points; for each of years 2015 
through 2018, not less than the adjustment factor 
applied for the previous year, plus 0.25 percentage 
point; and for 2019 and each subsequent year, 
not less than 5.7 percent. 
‘‘(IV) Such adjustment shall be applied to risk 
scores until the Secretary implements risk adjust-
ment using Medicare Advantage diagnostic, cost, 
and use data.’’. 
(f) REPEAL OF COMPARATIVE COST ADJUSTMENT PROGRAM.— 
Section 1860C–1 of the Social Security Act (42 U.S.C. 1395w– 
29), as added by section 241(a) of the Medicare Prescription Drug, 
Applicability. 
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124 STAT. 1047 
PUBLIC LAW 111–152—MAR. 30, 2010 
Improvement, and Modernization Act of 2003 (Public Law 108– 
173), is repealed. 
SEC. 1103. SAVINGS FROM LIMITS ON MA PLAN ADMINISTRATIVE 
COSTS. 
Section 1857(e) of the Social Security Act (42 U.S.C. 1395w– 
27(e)) is amended by adding at the end the following new paragraph: 
‘‘(4) REQUIREMENT FOR MINIMUM MEDICAL LOSS RATIO.— 
If the Secretary determines for a contract year (beginning with 
2014) that an MA plan has failed to have a medical loss 
ratio of at least .85— 
‘‘(A) the MA plan shall remit to the Secretary an 
amount equal to the product of— 
‘‘(i) the total revenue of the MA plan under this 
part for the contract year; and 
‘‘(ii) the difference between .85 and the medical 
loss ratio; 
‘‘(B) for 3 consecutive contract years, the Secretary 
shall not permit the enrollment of new enrollees under 
the plan for coverage during the second succeeding contract 
year; and 
‘‘(C) the Secretary shall terminate the plan contract 
if the plan fails to have such a medical loss ratio for 
5 consecutive contract years.’’. 
SEC. 1104. DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS. 
Section 1886(r) of the Social Security Act (42 U.S.C. 1395ww(r)), 
as added by section 3133 of the Patient Protection and Affordable 
Care Act and as amended by section 10316 of such Act, is 
amended— 
(1) in paragraph (1), by striking ‘‘2015’’ and inserting 
‘‘2014’’; and 
(2) in paragraph (2)— 
(A) in the matter preceding subparagraph (A), by 
striking ‘‘2015’’ and inserting ‘‘2014’’; 
(B) in subparagraph (B)(i)— 
(i) in the heading, by inserting ‘‘2014,’’ after 
‘‘YEARS’’; 
(ii) in the matter preceding subclause (I), by 
inserting ‘‘2014,’’ after ‘‘each of fiscal years’’; 
(iii) in subclause (I), by striking ‘‘on such Act’’ 
and inserting ‘‘on the Health Care and Education Rec-
onciliation Act of 2010’’; and 
(iv) in the matter following subclause (II), by 
striking ‘‘minus 1.5 percentage points’’ and inserting 
‘‘minus 0.1 percentage points for fiscal year 2014 and 
minus 0.2 percentage points for each of fiscal years 
2015, 2016, and 2017’’; and 
(C) in subparagraph (B)(ii), in the matter following 
subclause (II), by striking ‘‘and, for each of 2018 and 2019, 
minus 1.5 percentage points’’ and inserting ‘‘minus 0.2 
percentage points for each of fiscal years 2018 and 2019’’. 
SEC. 1105. MARKET BASKET UPDATES. 
(a) IPPS.—Section 1886(b)(3)(B) of the Social Security Act (42 
U.S.C. 1395ww(b)(3)(B)), as amended by sections 3401(a)(4) and 
10319(a) of the Patient Protection and Affordable Care Act, is 
amended— 
Payments. 
Determination. 
Time periods. 
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124 STAT. 1048 
PUBLIC LAW 111–152—MAR. 30, 2010 
(1) in clause (xii)— 
(A) by placing the subclause (II) (inserted by section 
10319(a)(3) of the Patient Protection and Affordable Care 
Act) immediately after subclause (I) and, in such subclause 
(II), by striking ‘‘and’’ at the end; and 
(B) by striking subclause (III) and inserting the fol-
lowing: 
‘‘(III) for fiscal year 2014, by 0.3 percentage point; 
‘‘(IV) for each of fiscal years 2015 and 2016, by 0.2 percent-
age point; and 
‘‘(V) for each of fiscal years 2017, 2018, and 2019, by 
0.75 percentage point.’’; and 
(2) by striking clause (xiii). 
(b) LONG-TERM CARE HOSPITALS.—Section 1886(m)(4) of the 
Social Security Act (42 U.S.C. 1395ww(m)(4)), as added by section 
3401(c) of the Patient Protection and Affordable Care Act and 
amended by section 10319(b) of such Act, is amended— 
(1) in subparagraph (A)— 
(A) in clause (iii), by striking ‘‘and’’ at the end; and 
(B) by striking clause (iv) and inserting the following: 
‘‘(iv) for rate year 2014, 0.3 percentage point; 
‘‘(v) for each of rate years 2015 and 2016, 0.2 
percentage point; and 
‘‘(vi) for each of rate years 2017, 2018, and 2019, 
0.75 percentage point.’’; 
(2) by striking subparagraph (B); and 
(3) by striking ‘‘(4) OTHER ADJUSTMENT.—’’ and all that 
follows through ‘‘For purposes’’ and inserting ‘‘(4) OTHER 
ADJUSTMENT.—For purposes’’ (and redesignating clauses (i) 
through (vi) as subparagraphs (A) through (F), respectively, 
with appropriate indentation). 
(c) 
INPATIENT
REHABILITATION
FACILITIES.—Section 
1886(j)(3)(D) of the Social Security Act (42 U.S.C. 1395ww(j)(3)(D)), 
as added by section 3401(d)(2) of the Patient Protection and Afford-
able Care Act and amended by section 10319(c) of such Act, is 
amended— 
(1) in clause (i)— 
(A) by placing the subclause (II) (inserted by section 
10319(c)(3) of the Patient Protection and Affordable Care 
Act) immediately after subclause (I) and, in such subclause 
(II), by striking ‘‘and’’ at the end; and 
(B) by striking subclause (III) and inserting the fol-
lowing: 
‘‘(III) for fiscal year 2014, 0.3 percentage point; 
‘‘(IV) for each of fiscal years 2015 and 2016, 
0.2 percentage point; and 
‘‘(V) for each of fiscal years 2017, 2018, and 
2019, 0.75 percentage point.’’; 
(2) by striking clause (ii); and 
(3) by striking ‘‘(D) OTHER ADJUSTMENT.—’’ and all that 
follows through ‘‘For purposes’’ and inserting ‘‘(D) OTHER 
ADJUSTMENT.—For purposes’’ (and redesignating subclauses (I) 
through (V) as clauses (i) through (v), respectively, with appro-
priate indentation). 
(d) PSYCHIATRIC HOSPITALS.—Section 1886(s)(3) of the Social 
Security Act, as added by section 3401(f) of the Patient Protection 
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124 STAT. 1049 
PUBLIC LAW 111–152—MAR. 30, 2010 
and Affordable Care Act and amended by section 10319(e) of such 
Act, is amended— 
(1) in subparagraph (A)— 
(A) by placing the clause (ii) (inserted by section 
10319(e)(3) of the Patient Protection and Affordable Care 
Act) immediately after clause (i) and, in such clause (ii), 
by striking ‘‘and’’ at the end; and 
(B) by striking clause (iii) and inserting the following: 
‘‘(iii) for the rate year beginning in 2014, 0.3 
percentage point; 
‘‘(iv) for each of the rate years beginning in 2015 
and 2016, 0.2 percentage point; and 
‘‘(v) for each of the rate years beginning in 2017, 
2018, and 2019, 0.75 percentage point.’’; 
(2) by striking subparagraph (B); and 
(3) by striking ‘‘(3) OTHER ADJUSTMENT.—’’ and all that 
follows through ‘‘For purposes’’ and inserting ‘‘(3) OTHER 
ADJUSTMENT.—For purposes’’ (and redesignating clauses (i) 
through (v) as subparagraphs (A) through (E), respectively, 
with appropriate indentation). 
(e) OUTPATIENT HOSPITALS.—Section 1833(t)(3)(G) of the Social 
Security Act (42 U.S.C. 1395l(t)(3)(G)), as added by section 3401(i)(2) 
of the Patient Protection and Affordable Care Act and amended 
by section 10319(g) of such Act, is amended— 
(1) in clause (i)— 
(A) by placing the subclause (II) (inserted by section 
10319(g)(3) of the Patient Protection and Affordable Care 
Act) immediately after subclause (I) and, in such subclause 
(II), by striking ‘‘and’’ at the end; and 
(B) by striking subclause (III) and inserting the fol-
lowing: 
‘‘(III) for 2014, 0.3 percentage point; 
‘‘(IV) for each of 2015 and 2016, 0.2 percentage 
point; and 
‘‘(V) for each of 2017, 2018, and 2019, 0.75 
percentage point.’’; 
(2) by striking clause (ii); and 
(3) by striking ‘‘(G) OTHER ADJUSTMENT.—’’ and all that 
follows through ‘‘For purposes’’ and inserting ‘‘(G) OTHER 
ADJUSTMENT.—For purposes’’ (and redesignating subclauses (I) 
through (V) as clauses (i) through (v), respectively, with appro-
priate indentation). 
SEC. 1106. PHYSICIAN OWNERSHIP-REFERRAL. 
Section 1877(i) of the Social Security Act (42 U.S.C. 1395nn(i)), 
as added by section 6001(a)(3) of the Patient Protection and Afford-
able Care Act and as amended by section 10601(a) of such Act, 
is amended— 
(1) in paragraph (1)(A)(i), by striking ‘‘August 1, 2010’’ 
and inserting ‘‘December 31, 2010’’; and 
(2) in paragraph (3)— 
(A) in subparagraph (A)(i), by striking ‘‘an applicable 
hospital (as defined in subparagraph (E))’’ and inserting 
‘‘a hospital that is an applicable hospital (as defined in 
subparagraph (E)) or is a high Medicaid facility described 
in subparagraph (F)’’; 
Ante, p. 484, 949. 
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124 STAT. 1050 
PUBLIC LAW 111–152—MAR. 30, 2010 
(B) in subparagraph (C)(iii), by inserting after ‘‘date 
of enactment of this subsection’’ the following: ‘‘(or, in the 
case of a hospital that did not have a provider agreement 
in effect as of such date but does have such an agreement 
in effect on December 31, 2010, the effective date of such 
provider agreement)’’; 
(C) by redesignating subparagraphs (F) through (H) 
as subparagraphs (G) through (I), respectively; and 
(D) by inserting after subparagraph (E) the following 
new subparagraph: 
‘‘(F) HIGH MEDICAID FACILITY DESCRIBED.—A high Med-
icaid facility described in this subparagraph is a hospital 
that— 
‘‘(i) is not the sole hospital in a county; 
‘‘(ii) with respect to each of the 3 most recent 
years for which data are available, has an annual 
percent of total inpatient admissions that represent 
inpatient admissions under title XIX that is estimated 
to be greater than such percent with respect to such 
admissions for any other hospital located in the county 
in which the hospital is located; and 
‘‘(iii) meets the conditions described in subpara-
graph (E)(iii).’’. 
SEC. 1107. PAYMENT FOR IMAGING SERVICES. 
Section 1848 of the Social Security Act (42 U.S.C. 1395w– 
4), as amended by section 3135(a) of the Patient Protection and 
Affordable Care Act, is amended— 
(1) in subsection (b)(4)— 
(A) in subparagraph (B), by striking ‘‘this paragraph’’ 
and inserting ‘‘subparagraph (A)’’; and 
(B) by amending subparagraph (C) to read as follows: 
‘‘(C) ADJUSTMENT IN IMAGING UTILIZATION RATE.—With 
respect to fee schedules established for 2011 and subse-
quent years, in the methodology for determining practice 
expense relative value units for expensive diagnostic 
imaging equipment under the final rule published by the 
Secretary in the Federal Register on November 25, 2009 
(42 CFR 410 et al.), the Secretary shall use a 75 percent 
assumption instead of the utilization rates otherwise estab-
lished in such final rule.’’; and 
(2) in subsection (c)(2)(B)(v), by striking subclauses (III), 
(IV), and (V) and inserting the following new subclause: 
‘‘(III) CHANGE IN UTILIZATION RATE FOR CER-
TAIN IMAGING SERVICES.—Effective for fee sched-
ules established beginning with 2011, reduced 
expenditures attributable to the change in the 
utilization rate applicable to 2011, as described 
in subsection (b)(4)(C).’’. 
SEC. 1108. PE GPCI ADJUSTMENT FOR 2010. 
Effective as if included in the enactment of the Patient Protec-
tion and Affordable Care Act, section 1848(e)(1)(H)(i) of the Social 
Security Act (42 U.S.C. 1395w–4(e)(1)(H)(i)), as added by section 
3102(b)(2) of the Patient Protection and Affordable Care Act, is 
amended by striking ‘‘3⁄4’’ and inserting ‘‘1⁄2’’. 
Effective date. 
42 USC 1395w–4 
note. 
Effective date. 
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124 STAT. 1051 
PUBLIC LAW 111–152—MAR. 30, 2010 
SEC. 1109. PAYMENT FOR QUALIFYING HOSPITALS. 
(a) IN GENERAL.—From the amount available under subsection 
(b), the Secretary of Health and Human Services shall provide 
for a payment to qualifying hospitals (as defined in subsection 
(d)) for fiscal years 2011 and 2012 of the amount determined under 
subsection (c). 
(b) AMOUNTS AVAILABLE.—There shall be available from the 
Federal Hospital Insurance Trust Fund $400,000,000 for payments 
under this section for fiscal years 2011 and 2012. 
(c) PAYMENT AMOUNT.—The amount of payment under this 
section for a qualifying hospital shall be determined, in a manner 
consistent with the amount available under subsection (b), in 
proportion to the portion of the amount of the aggregate payments 
under section 1886(d) of the Social Security Act to the hospital 
for fiscal year 2009 bears to the sum of all such payments to 
all qualifying hospitals for such fiscal year. 
(d) QUALIFYING HOSPITAL DEFINED.—In this section, the term 
‘‘qualifying hospital’’ means a subsection (d) hospital (as defined 
for purposes of section 1886(d) of the Social Security Act) that 
is located in a county that ranks, based upon its ranking in age, 
sex, and race adjusted spending for benefits under parts A and 
B under title XVIII of such Act per enrollee, within the lowest 
quartile of such counties in the United States. 
Subtitle C—Medicaid 
SEC. 1201. FEDERAL FUNDING FOR STATES. 
Section 1905 of the Social Security Act (42 U.S.C. 1396d), 
as amended by sections 2001(a)(3) and 10201(c) of the Patient 
Protection and Affordable Care Act, is amended— 
(1) in subsection (y)— 
(A) by redesignating subclause (II) of paragraph 
(1)(B)(ii) as paragraph (5) of subsection (z) and realigning 
the left margins accordingly; and 
(B) by striking paragraph (1) and inserting the fol-
lowing: 
‘‘(1) AMOUNT
OF
INCREASE.—Notwithstanding subsection 
(b), the Federal medical assistance percentage for a State that 
is one of the 50 States or the District of Columbia, with respect 
to amounts expended by such State for medical assistance 
for newly eligible individuals described in subclause (VIII) of 
section 1902(a)(10)(A)(i), shall be equal to— 
‘‘(A) 100 percent for calendar quarters in 2014, 2015, 
and 2016; 
‘‘(B) 95 percent for calendar quarters in 2017; 
‘‘(C) 94 percent for calendar quarters in 2018; 
‘‘(D) 93 percent for calendar quarters in 2019; and 
‘‘(E) 90 percent for calendar quarters in 2020 and each 
year thereafter.’’; and 
(2) in subsection (z)— 
(A) in paragraph (1), by striking ‘‘September 30, 2019’’ 
and inserting ‘‘December 31, 2015’’ and by striking ‘‘sub-
section (y)(1)(B)(ii)(II)’’ and inserting ‘‘paragraph (3)’’; 
(B) by striking paragraphs (2) through (4) and inserting 
the following: 
42 USC 1395ww 
note. 
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124 STAT. 1052 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(2)(A) For calendar quarters in 2014 and each year there-
after, the Federal medical assistance percentage otherwise 
determined under subsection (b) for an expansion State 
described in paragraph (3) with respect to medical assistance 
for individuals described in section 1902(a)(10)(A)(i)(VIII) who 
are nonpregnant childless adults with respect to whom the 
State may require enrollment in benchmark coverage under 
section 1937 shall be equal to the percent specified in subpara-
graph (B)(i) for such year. 
‘‘(B)(i) The percent specified in this subparagraph for a 
State for a year is equal to the Federal medical assistance 
percentage (as defined in the first sentence of subsection (b)) 
for the State increased by a number of percentage points equal 
to the transition percentage (specified in clause (ii) for the 
year) of the number of percentage points by which— 
‘‘(I) such Federal medical assistance percentage for 
the State, is less than 
‘‘(II) the percent specified in subsection (y)(1) for the 
year. 
‘‘(ii) The transition percentage specified in this clause for— 
‘‘(I) 2014 is 50 percent; 
‘‘(II) 2015 is 60 percent; 
‘‘(III) 2016 is 70 percent; 
‘‘(IV) 2017 is 80 percent; 
‘‘(V) 2018 is 90 percent; and 
‘‘(VI) 2019 and each subsequent year is 100 percent.’’; 
and 
(C) by redesignating paragraph (5) (as added by para-
graph (1)(A) of this section) as paragraph (3), realigning 
the left margins to align with paragraph (2), and striking 
the heading and all that follows through ‘‘a State is’’ and 
inserting ‘‘A State is’’. 
SEC. 1202. PAYMENTS TO PRIMARY CARE PHYSICIANS. 
(a) IN GENERAL.— 
(1) FEE-FOR-SERVICE PAYMENTS.—Section 1902 of the Social 
Security Act (42 U.S.C. 1396a), as amended by section 
2303(a)(2) of the Patient Protection and Affordable Care Act, 
is amended— 
(A) in subsection (a)(13)— 
(i) by striking ‘‘and’’ at the end of subparagraph 
(A); 
(ii) by adding ‘‘and’’ at the end of subparagraph 
(B); and 
(iii) by adding at the end the following new 
subparagraph: 
‘‘(C) payment for primary care services (as defined 
in subsection (jj)) furnished in 2013 and 2014 by a physician 
with a primary specialty designation of family medicine, 
general internal medicine, or pediatric medicine at a rate 
not less than 100 percent of the payment rate that applies 
to such services and physician under part B of title XVIII 
(or, if greater, the payment rate that would be applicable 
under such part if the conversion factor under section 
1848(d) for the year involved were the conversion factor 
under such section for 2009);’’; and 
(B) by adding at the end the following new subsection: 
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124 STAT. 1053 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(jj) PRIMARY CARE SERVICES DEFINED.—For purposes of sub-
section (a)(13)(C), the term ‘primary care services’ means— 
‘‘(1) evaluation and management services that are proce-
dure codes (for services covered under title XVIII) for services 
in the category designated Evaluation and Management in 
the Healthcare Common Procedure Coding System (established 
by the Secretary under section 1848(c)(5) as of December 31, 
2009, and as subsequently modified); and 
‘‘(2) services related to immunization administration for 
vaccines and toxoids for which CPT codes 90465, 90466, 90467, 
90468, 90471, 90472, 90473, or 90474 (as subsequently modi-
fied) apply under such System.’’. 
(2) UNDER
MEDICAID
MANAGED
CARE
PLANS.—Section 
1932(f) of such Act (42 U.S.C. 1396u–2(f)) is amended— 
(A) in the heading, by adding at the end the following: 
‘‘; ADEQUACY OF PAYMENT FOR PRIMARY CARE SERVICES’’; 
and 
(B) by inserting before the period at the end the fol-
lowing: ‘‘and, in the case of primary care services described 
in section 1902(a)(13)(C), consistent with the minimum pay-
ment rates specified in such section (regardless of the 
manner in which such payments are made, including in 
the form of capitation or partial capitation)’’. 
(b) INCREASE IN PAYMENT USING INCREASED FMAP.—Section 
1905 of the Social Security Act, as amended by section 1004(b) 
of this Act and section 10201(c)(6) of the Patient Protection and 
Affordable Care Act, is amended by adding at the end the following 
new subsection: 
‘‘(dd) INCREASED FMAP FOR ADDITIONAL EXPENDITURES FOR 
PRIMARY CARE SERVICES.—Notwithstanding subsection (b), with 
respect to the portion of the amounts expended for medical assist-
ance for services described in section 1902(a)(13)(C) furnished on 
or after January 1, 2013, and before January 1, 2015, that is 
attributable to the amount by which the minimum payment rate 
required under such section (or, by application, section 1932(f)) 
exceeds the payment rate applicable to such services under the 
State plan as of July 1, 2009, the Federal medical assistance 
percentage for a State that is one of the 50 States or the District 
of Columbia shall be equal to 100 percent. The preceding sentence 
does not prohibit the payment of Federal financial participation 
based on the Federal medical assistance percentage for amounts 
in excess of those specified in such sentence.’’. 
SEC. 1203. DISPROPORTIONATE SHARE HOSPITAL PAYMENTS. 
(a) IN GENERAL.—Section 1923(f) of the Social Security Act 
(42 U.S.C. 1396r–4(f)), as amended by sections 2551(a)(4) and 
10201(e)(1) of the Patient Protection and Affordable Care Act, is 
amended— 
(1) in paragraph (6)(B)(iii), in the matter preceding sub-
clause (I), by striking ‘‘or paragraph (7)’’; and 
(2) by striking paragraph (7) and inserting the following: 
‘‘(7) MEDICAID DSH REDUCTIONS.— 
‘‘(A) REDUCTIONS.— 
‘‘(i) IN GENERAL.—For each of fiscal years 2014 
through 2020 the Secretary shall effect the following 
reductions: 
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124 STAT. 1054 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(I) REDUCTION IN DSH ALLOTMENTS.—The Sec-
retary shall reduce DSH allotments to States in 
the amount specified under the DSH health reform 
methodology under subparagraph (B) for the State 
for the fiscal year. 
‘‘(II) REDUCTIONS
IN
PAYMENTS.—The Sec-
retary shall reduce payments to States under sec-
tion 1903(a) for each calendar quarter in the fiscal 
year, in the manner specified in clause (iii), in 
an amount equal to 1⁄4 of the DSH allotment reduc-
tion under subclause (I) for the State for the fiscal 
year. 
‘‘(ii) 
AGGREGATE
REDUCTIONS.—The 
aggregate 
reductions in DSH allotments for all States under 
clause (i)(I) shall be equal to— 
‘‘(I) $500,000,000 for fiscal year 2014; 
‘‘(II) $600,000,000 for fiscal year 2015; 
‘‘(III) $600,000,000 for fiscal year 2016; 
‘‘(IV) $1,800,000,000 for fiscal year 2017; 
‘‘(V) $5,000,000,000 for fiscal year 2018; 
‘‘(VI) $5,600,000,000 for fiscal year 2019; and 
‘‘(VII) $4,000,000,000 for fiscal year 2020. 
The Secretary shall distribute such aggregate reduc-
tions among States in accordance with subparagraph 
(B). 
‘‘(iii) MANNER
OF
PAYMENT
REDUCTION.—The 
amount of the payment reduction under clause (i)(II) 
for a State for a quarter shall be deemed an overpay-
ment to the State under this title to be disallowed 
against the State’s regular quarterly draw for all 
spending under section 1903(d)(2). Such a disallowance 
is not subject to a reconsideration under subsections 
(d) and (e) of section 1116. 
‘‘(iv) DEFINITION.—In this paragraph, the term 
‘State’ means the 50 States and the District of 
Columbia. 
‘‘(B) DSH HEALTH REFORM METHODOLOGY.—The Sec-
retary shall carry out subparagraph (A) through use of 
a DSH Health Reform methodology that meets the fol-
lowing requirements: 
‘‘(i) The methodology imposes the largest percent-
age reductions on the States that— 
‘‘(I) have the lowest percentages of uninsured 
individuals (determined on the basis of data from 
the Bureau of the Census, audited hospital cost 
reports, and other information likely to yield 
accurate data) during the most recent year for 
which such data are available; or 
‘‘(II) do not target their DSH payments on— 
‘‘(aa) hospitals with high volumes of Med-
icaid inpatients (as defined in subsection 
(b)(1)(A)); and 
‘‘(bb) hospitals that have high levels of 
uncompensated care (excluding bad debt). 
‘‘(ii) The methodology imposes a smaller percentage 
reduction on low DSH States described in paragraph 
(5)(B). 
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124 STAT. 1055 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(iii) The methodology takes into account the 
extent to which the DSH allotment for a State was 
included in the budget neutrality calculation for a cov-
erage expansion approved under section 1115 as of 
July 31, 2009.’’. 
(b) EXTENSION OF DSH ALLOTMENT.—Section 1923(f)(6)(A) of 
the Social Security Act (42 U.S.C. 1396r–4(f)(6)(A)) is amended 
by adding at the end the following: 
‘‘(v) ALLOTMENT FOR 2D, 3RD, AND 4TH QUARTERS 
OF FISCAL YEAR 2012 AND FOR FISCAL YEAR 2013.—Not-
withstanding the table set forth in paragraph (2): 
‘‘(I) 2D, 3RD, AND
4TH
QUARTERS
OF
FISCAL 
YEAR 2012.—In the case of a State that has a DSH 
allotment of $0 for the 2d, 3rd, and 4th quarters 
of fiscal year 2012, the DSH allotment shall be 
$47,200,000 for such quarters. 
‘‘(II) FISCAL YEAR 2013.—In the case of a State 
that has a DSH allotment of $0 for fiscal year 
2013, the DSH allotment shall be $53,100,000 for 
such fiscal year.’’. 
SEC. 1204. FUNDING FOR THE TERRITORIES. 
(a) IN GENERAL.—Part III of subtitle D of title I of the Patient 
Protection and Affordable Care Act, as amended by section 10104(m) 
of such Act, is amended by inserting after section 1322 the following 
section: 
‘‘SEC. 1323. FUNDING FOR THE TERRITORIES. 
‘‘(a) IN GENERAL.—A territory that— 
‘‘(1) elects consistent with subsection (b) to establish an 
Exchange in accordance with part II of this subtitle and estab-
lishes such an Exchange in accordance with such part shall 
be treated as a State for purposes of such part and shall 
be entitled to payment from the amount allocated to the terri-
tory under subsection (c); or 
‘‘(2) does not make such election shall be entitled to an 
increase in the dollar limitation applicable to the territory 
under subsections (f) and (g) of section 1108 of the Social 
Security Act (42 U.S.C. 1308) for such period in such amount 
for such territory and such increase shall not be taken into 
account in computing any other amount under such subsections. 
‘‘(b) TERMS
AND CONDITIONS.—An election under subsection 
(a)(1) shall— 
‘‘(1) not be effective unless the election is consistent with 
section 1321 and is received not later than October 1, 2013; 
and 
‘‘(2) be contingent upon entering into an agreement between 
the territory and the Secretary that requires that— 
‘‘(A) funds provided under the agreement shall be used 
only to provide premium and cost-sharing assistance to 
residents of the territory obtaining health insurance cov-
erage through the Exchange; and 
‘‘(B) the premium and cost-sharing assistance provided 
under such agreement shall be structured in such a manner 
so as to prevent any gap in assistance for individuals 
between the income level at which medical assistance is 
available through the territory’s Medicaid plan under title 
XIX of the Social Security Act and the income level at 
Contracts. 
Deadline. 
42 USC 18043. 
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124 STAT. 1056 
PUBLIC LAW 111–152—MAR. 30, 2010 
which premium and cost-sharing assistance is available 
under the agreement. 
‘‘(c) APPROPRIATION AND ALLOCATION.— 
‘‘(1) APPROPRIATION.—Out of any funds in the Treasury 
not otherwise appropriated, there is appropriated for purposes 
of payment pursuant to subsection (a) $1,000,000,000, to be 
available during the period beginning with 2014 and ending 
with 2019. 
‘‘(2) ALLOCATION.—The Secretary shall allocate the amount 
appropriated under paragraph (1) among the territories for 
purposes of carrying out this section as follows: 
‘‘(A) For Puerto Rico, $925,000,000. 
‘‘(B) For another territory, the portion of $75,000,000 
specified by the Secretary.’’. 
(b) MEDICAID FUNDING.— 
(1) INCREASE
IN
FUNDING
CAPS.—Section 1108(g) of the 
Social Security Act (42 U.S.C. 1308(g)), as amended by section 
2005(a) of the Patient Protection and Affordable Care Act, 
is amended— 
(A) in paragraph (2), by inserting ‘‘and section 
1323(a)(2) of the Patient Protection and Affordable Care 
Act’’ after ‘‘subject to’’; and 
(B) by striking paragraph (5) and inserting the fol-
lowing: 
‘‘(5) ADDITIONAL INCREASE.—The Secretary shall increase 
the amounts otherwise determined under this subsection for 
Puerto Rico, the Virgin Islands, Guam, the Northern Mariana 
Islands, and American Samoa (after the application of sub-
section (f) and the preceding paragraphs of this subsection) 
for the period beginning July 1, 2011, and ending on September 
30, 2019, by such amounts that the total additional payments 
under title XIX to such territories equals $6,300,000,000 for 
such period. The Secretary shall increase such amounts in 
proportion to the amounts applicable to such territories under 
this subsection and subsection (f) on the date of enactment 
of this paragraph.’’. 
(2) DISREGARD
OF
PAYMENTS; INCREASED
FMAP.—Section 
2005 of the Patient Protection and Affordable Care Act is 
amended— 
(A) by repealing subsection (b) (and the amendments 
made by that subsection) and section 1108(g)(4) of the 
Social Security Act shall be applied as if such amendments 
had never been enacted; and 
(B) in subsection (c)(2), by striking ‘‘January’’ and 
inserting ‘‘July’’. 
SEC. 1205. DELAY IN COMMUNITY FIRST CHOICE OPTION. 
Section 1915(k)(1) of the Social Security Act (42 U.S.C. 
1396n(k)), as added by section 2401 of the Patient Protection and 
Affordable Care Act, is amended by striking ‘‘October 1, 2010’’ 
and inserting ‘‘October 1, 2011’’. 
SEC. 1206. DRUG REBATES FOR NEW FORMULATIONS OF EXISTING 
DRUGS. 
(a) TREATMENT OF NEW FORMULATIONS.—Subparagraph (C) of 
section 1927(c)(2) of the Social Security Act (42 U.S.C. 1396r– 
8(c)(2)), as added by section 2501(d) of the Patient Protection and 
Affordable Care Act, is amended to read as follows: 
Applicability. 
Ante, p. 283. 
Time period. 
Time period. 
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124 STAT. 1057 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(C) TREATMENT OF NEW FORMULATIONS.—In the case 
of a drug that is a line extension of a single source drug 
or an innovator multiple source drug that is an oral solid 
dosage form, the rebate obligation with respect to such 
drug under this section shall be the amount computed 
under this section for such new drug or, if greater, the 
product of— 
‘‘(i) the average manufacturer price of the line 
extension of a single source drug or an innovator mul-
tiple source drug that is an oral solid dosage form; 
‘‘(ii) the highest additional rebate (calculated as 
a percentage of average manufacturer price) under this 
section for any strength of the original single source 
drug or innovator multiple source drug; and 
‘‘(iii) the total number of units of each dosage 
form and strength of the line extension product paid 
for under the State plan in the rebate period (as 
reported by the State). 
In this subparagraph, the term ‘line extension’ means, with 
respect to a drug, a new formulation of the drug, such 
as an extended release formulation.’’. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect as if included in the enactment of the Patient 
Protection and Affordable Care Act. 
Subtitle D—Reducing Fraud, Waste, and 
Abuse 
SEC. 1301. COMMUNITY MENTAL HEALTH CENTERS. 
(a) IN GENERAL.—Section 1861(ff)(3)(B) of the Social Security 
Act (42 U.S.C. 1395x(ff)(3)(B)) is amended— 
(1) in clause (ii), by striking ‘‘and’’ at the end; 
(2) by redesignating clause (iii) as clause (iv); and 
(3) by inserting after clause (ii) the following: 
‘‘(iii) provides at least 40 percent of its services to individ-
uals who are not eligible for benefits under this title; and’’. 
(b) RESTRICTION.—Section 1861(ff)(3)(A) of such Act (42 U.S.C. 
1395x(ff)(3)(A)) is amended by inserting ‘‘other than in an individ-
ual’s home or in an inpatient or residential setting’’ before the 
period. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to items and services furnished on or after the first 
day of the first calendar quarter that begins at least 12 months 
after the date of the enactment of this Act. 
SEC. 1302. MEDICARE PREPAYMENT MEDICAL REVIEW LIMITATIONS. 
Section 1874A(h) of the Social Security Act (42 U.S.C. 1395w– 
3a(h)) is repealed. 
SEC. 1303. FUNDING TO FIGHT FRAUD, WASTE, AND ABUSE. 
(a) FUNDING TO FIGHT FRAUD, WASTE, AND ABUSE.— 
(1) IN GENERAL.—Section 1817(k) of the Social Security 
Act 42 U.S.C. 1395i(k)), as amended by section 6402(i) of the 
Patient Protection and Affordable Care Act, is further 
amended— 
(A) by adding at the end the following new paragraph: 
42 USC 
1395kk–1. 
Applicability. 
42 USC 1395x 
note. 
42 USC 1396r–8 
note. 
Definition. 
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124 STAT. 1058 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(8) ADDITIONAL FUNDING.— 
‘‘(A) IN GENERAL.—In addition to the funds otherwise 
appropriated to the Account from the Trust Fund under 
paragraphs (3)(C) and (4)(A) and for purposes described 
in paragraphs (3)(C) and (4)(A), there are hereby appro-
priated to such Account from such Trust Fund the following 
additional amounts: 
‘‘(i) For fiscal year 2011, $95,000,000. 
‘‘(ii) For fiscal year 2012, $55,000,000. 
‘‘(iii) For each of fiscal years 2013 and 2014, 
$30,000,000. 
‘‘(iv) For each of fiscal years 2015 and 2016, 
$20,000,000. 
‘‘(B) ALLOCATION.—The funds appropriated under this 
paragraph shall be allocated in the same proportion as 
the total funding appropriated with respect to paragraphs 
(3)(A) and (4)(A) was allocated with respect to fiscal year 
2010, and shall be available without further appropriation 
until expended.’’; and 
(B) in paragraph (4)(A), by inserting ‘‘for activities 
described in paragraph (3)(C) and’’ after ‘‘necessary’’. 
(b) MEDICAID INTEGRITY PROGRAM.—Section 1936(e)(1) of such 
Act (42 U.S.C. 1396–u6(e)(1)) is amended— 
(1) in subparagraph (B), by striking at the end ‘‘and’’; 
(2) in subparagraph (C)— 
(A) by striking ‘‘for each fiscal year thereafter’’ and 
inserting ‘‘for each of fiscal years 2009 and 2010’’; and 
(B) by striking the period and inserting ‘‘; and’’; and 
(3) by adding at the end the following new subparagraph: 
‘‘(D) for each fiscal year after fiscal year 2010, the 
amount appropriated under this paragraph for the previous 
fiscal year, increased by the percentage increase in the 
consumer price index for all urban consumers (all items; 
United States city average) over the previous year.’’. 
SEC. 1304. 90-DAY PERIOD OF ENHANCED OVERSIGHT FOR INITIAL 
CLAIMS OF DME SUPPLIERS. 
Section 1866(j), as amended by section 6401 of the Patient 
Protection and Affordable Care Act, is further amended— 
(1) by redesignating paragraphs (4) through (7) as para-
graphs (5) through (8), respectively; and 
(2) by inserting after paragraph (3) the following new para-
graph: 
‘‘(4) 90-DAY PERIOD OF ENHANCED OVERSIGHT FOR INITIAL 
CLAIMS
OF
DME
SUPPLIERS.—For periods beginning after 
January 1, 2011, if the Secretary determines that there is 
a significant risk of fraudulent activity among suppliers of 
durable medical equipment, in the case of a supplier of durable 
medical equipment who is within a category or geographic 
area under title XVIII identified pursuant to such determina-
tion and who is initially enrolling under such title, the Secretary 
shall, notwithstanding sections 1816(c), 1842(c), and 1869(a)(2), 
withhold payment under such title with respect to durable 
medical equipment furnished by such supplier during the 90- 
day period beginning on the date of the first submission of 
a claim under such title for durable medical equipment fur-
nished by such supplier.’’. 
Determination. 
42 USC 1395cc. 
42 USC 1396u–6. 
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124 STAT. 1059 
PUBLIC LAW 111–152—MAR. 30, 2010 
Subtitle E—Provisions Relating to 
Revenue 
SEC. 1401. HIGH-COST PLAN EXCISE TAX. 
(a) IN GENERAL.—Section 4980I of the Internal Revenue Code 
of 1986, as added by section 9001 of the Patient Protection and 
Affordable Care Act and amended by section 10901 of such Act, 
is amended— 
(1) in subsection (b)(3)(B)— 
(A) by striking ‘‘The annual’’ and inserting the fol-
lowing: 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), the annual’’; and 
(B) by adding at the end the following new clause: 
‘‘(ii) MULTIEMPLOYER PLAN COVERAGE.—Any cov-
erage provided under a multiemployer plan (as defined 
in section 414(f)) shall be treated as coverage other 
than self-only coverage.’’; 
(2) in subsection (b)(3)(C)— 
(A) by striking ‘‘Except as provided in subparagraph 
(D)—’’; 
(B) in clause (i)— 
(i) by striking ‘‘2013’’ each place it appears in 
the heading and the text and inserting ‘‘2018’’; 
(ii) by striking ‘‘$8,500’’ in subclause (I) and 
inserting ‘‘$10,200 multiplied by the health cost adjust-
ment percentage (determined by only taking into 
account self-only coverage)’’; and 
(iii) by striking ‘‘$23,000’’ in subclause (II) and 
inserting ‘‘$27,500 multiplied by the health cost adjust-
ment percentage (determined by only taking into 
account coverage other than self-only coverage)’’; 
(C) by redesignating clauses (ii) and (iii) as clauses 
(iv) and (v), respectively, and by inserting after clause 
(i) the following new clauses: 
‘‘(ii) HEALTH COST ADJUSTMENT PERCENTAGE.—For 
purposes of clause (i), the health cost adjustment 
percentage is equal to 100 percent plus the excess 
(if any) of— 
‘‘(I) the percentage by which the per employee 
cost for providing coverage under the Blue Cross/ 
Blue Shield standard benefit option under the Fed-
eral Employees Health Benefits Plan for plan year 
2018 (determined by using the benefit package 
for such coverage in 2010) exceeds such cost for 
plan year 2010, over 
‘‘(II) 55 percent. 
‘‘(iii) AGE AND GENDER ADJUSTMENT.— 
‘‘(I) IN
GENERAL.—The amount determined 
under subclause (I) or (II) of clause (i), whichever 
is applicable, for any taxable period shall be 
increased by the amount determined under sub-
clause (II). 
‘‘(II) 
AMOUNT
DETERMINED.—The 
amount 
determined under this subclause is an amount 
equal to the excess (if any) of— 
Ante, p. 848, 
1015. 
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124 STAT. 1060 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(aa) the premium cost of the Blue Cross/ 
Blue Shield standard benefit option under the 
Federal Employees Health Benefits Plan for 
the type of coverage provided such individual 
in such taxable period if priced for the age 
and gender characteristics of all employees of 
the individual’s employer, over 
‘‘(bb) that premium cost for the provision 
of such coverage under such option in such 
taxable period if priced for the age and gender 
characteristics of the national workforce.’’. 
(D) in clause (iv), as redesignated by subparagraph 
(C)— 
(i) by inserting ‘‘covered by the plan’’ after ‘‘whose 
employees’’; and 
(ii) by striking subclauses (I) and (II) and inserting 
the following: 
‘‘(I) the dollar amount in clause (i)(I) shall 
be increased by $1,650, and 
‘‘(II) the dollar amount in clause (i)(II) shall 
be increased by $3,450,’’, and 
(E) in clause (v), as redesignated by subparagraph 
(C)— 
(i) by striking ‘‘2013’’ and inserting ‘‘2018’’; 
(ii) by striking ‘‘clauses (i) and (ii)’’ and inserting 
‘‘clauses (i) (after the application of clause (ii)) and 
(iv)’’; and 
(iii) by inserting ‘‘in the case of determinations 
for calendar years beginning before 2020’’ after ‘‘1 
percentage point’’ in subclause (II) thereof; 
(3) by striking subparagraph (D) of subsection (b)(3); 
(4) in subsection (d)(1)(B), by redesignating clause (ii) as 
clause (iii) and by inserting after clause (i) the following new 
clause: 
‘‘(ii) any coverage under a separate policy, certifi-
cate, or contract of insurance which provides benefits 
substantially all of which are for treatment of the 
mouth (including any organ or structure within the 
mouth) or for treatment of the eye, or’’; and 
(5) in subsection (d), by adding at the end the following 
new paragraph: 
‘‘(3) EMPLOYEE.—The term ‘employee’ includes any former 
employee, surviving spouse, or other primary insured indi-
vidual.’’. 
(b) EFFECTIVE DATES.— 
(1) Section 9001(c) of the Patient Protection and Affordable 
Care Act is amended by striking ‘‘2012’’ and inserting ‘‘2017’’. 
(2) Section 10901(c) of the Patient Protection and Affordable 
Care Act is amended by striking ‘‘2012’’ and inserting ‘‘2017’’. 
SEC. 1402. UNEARNED INCOME MEDICARE CONTRIBUTION. 
(a) INVESTMENT INCOME.— 
(1) IN GENERAL.—Subtitle A of the Internal Revenue Code 
of 1986 is amended by inserting after chapter 2 the following 
new chapter: 
Ante, p. 1016. 
Ante, p. 853. 
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124 STAT. 1061 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘CHAPTER 2A—UNEARNED INCOME MEDICARE 
CONTRIBUTION 
‘‘Sec. 1411. Imposition of tax. 
‘‘SEC. 1411. IMPOSITION OF TAX. 
‘‘(a) IN GENERAL.—Except as provided in subsection (e)— 
‘‘(1) APPLICATION TO INDIVIDUALS.—In the case of an indi-
vidual, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) for each taxable year a tax equal 
to 3.8 percent of the lesser of— 
‘‘(A) net investment income for such taxable year, or 
‘‘(B) the excess (if any) of— 
‘‘(i) the modified adjusted gross income for such 
taxable year, over 
‘‘(ii) the threshold amount. 
‘‘(2) APPLICATION TO ESTATES AND TRUSTS.—In the case 
of an estate or trust, there is hereby imposed (in addition 
to any other tax imposed by this subtitle) for each taxable 
year a tax of 3.8 percent of the lesser of— 
‘‘(A) the undistributed net investment income for such 
taxable year, or 
‘‘(B) the excess (if any) of— 
‘‘(i) the adjusted gross income (as defined in section 
67(e)) for such taxable year, over 
‘‘(ii) the dollar amount at which the highest tax 
bracket in section 1(e) begins for such taxable year. 
‘‘(b) THRESHOLD AMOUNT.—For purposes of this chapter, the 
term ‘threshold amount’ means— 
‘‘(1) in the case of a taxpayer making a joint return under 
section 6013 or a surviving spouse (as defined in section 2(a)), 
$250,000, 
‘‘(2) in the case of a married taxpayer (as defined in section 
7703) filing a separate return, 1⁄2 of the dollar amount deter-
mined under paragraph (1), and 
‘‘(3) in any other case, $200,000. 
‘‘(c) NET INVESTMENT INCOME.—For purposes of this chapter— 
‘‘(1) IN GENERAL.—The term ‘net investment income’ means 
the excess (if any) of— 
‘‘(A) the sum of— 
‘‘(i) gross income from interest, dividends, annu-
ities, royalties, and rents, other than such income 
which is derived in the ordinary course of a trade 
or business not described in paragraph (2), 
‘‘(ii) other gross income derived from a trade or 
business described in paragraph (2), and 
‘‘(iii) net gain (to the extent taken into account 
in computing taxable income) attributable to the dis-
position of property other than property held in a trade 
or business not described in paragraph (2), over 
‘‘(B) the deductions allowed by this subtitle which are 
properly allocable to such gross income or net gain. 
‘‘(2) TRADES AND BUSINESSES TO WHICH TAX APPLIES.—A 
trade or business is described in this paragraph if such trade 
or business is— 
‘‘(A) a passive activity (within the meaning of section 
469) with respect to the taxpayer, or 
Definitions. 
26 USC 1411. 
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124 STAT. 1062 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(B) a trade or business of trading in financial 
instruments 
or 
commodities 
(as 
defined 
in 
section 
475(e)(2)). 
‘‘(3) INCOME ON INVESTMENT OF WORKING CAPITAL SUBJECT 
TO TAX.—A rule similar to the rule of section 469(e)(1)(B) shall 
apply for purposes of this subsection. 
‘‘(4) EXCEPTION FOR CERTAIN ACTIVE INTERESTS IN PARTNER-
SHIPS AND S CORPORATIONS.—In the case of a disposition of 
an interest in a partnership or S corporation— 
‘‘(A) gain from such disposition shall be taken into 
account under clause (iii) of paragraph (1)(A) only to the 
extent of the net gain which would be so taken into account 
by the transferor if all property of the partnership or S 
corporation were sold for fair market value immediately 
before the disposition of such interest, and 
‘‘(B) a rule similar to the rule of subparagraph (A) 
shall apply to a loss from such disposition. 
‘‘(5) EXCEPTION
FOR
DISTRIBUTIONS
FROM
QUALIFIED 
PLANS.—The term ‘net investment income’ shall not include 
any distribution from a plan or arrangement described in sec-
tion 401(a), 403(a), 403(b), 408, 408A, or 457(b). 
‘‘(6) SPECIAL
RULE.—Net investment income shall not 
include any item taken into account in determining self-employ-
ment income for such taxable year on which a tax is imposed 
by section 1401(b). 
‘‘(d) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this 
chapter, the term ‘modified adjusted gross income’ means adjusted 
gross income increased by the excess of— 
‘‘(1) the amount excluded from gross income under section 
911(a)(1), over 
‘‘(2) the amount of any deductions (taken into account 
in computing adjusted gross income) or exclusions disallowed 
under section 911(d)(6) with respect to the amounts described 
in paragraph (1). 
‘‘(e) NONAPPLICATION OF SECTION.—This section shall not apply 
to— 
‘‘(1) a nonresident alien, or 
‘‘(2) a trust all of the unexpired interests in which are 
devoted to one or more of the purposes described in section 
170(c)(2)(B).’’. 
(2) ESTIMATED TAXES.—Section 6654 of the Internal Rev-
enue Code of 1986 is amended— 
(A) in subsection (a), by striking ‘‘and the tax under 
chapter 2’’ and inserting ‘‘the tax under chapter 2, and 
the tax under chapter 2A’’; and 
(B) in subsection (f)— 
(i) by striking ‘‘minus’’ at the end of paragraph 
(2) and inserting ‘‘plus’’; and 
(ii) by redesignating paragraph (3) as paragraph 
(4) and inserting after paragraph (2) the following new 
paragraph: 
‘‘(3) the taxes imposed by chapter 2A, minus’’. 
(3) CLERICAL AMENDMENT.—The table of chapters for sub-
title A of chapter 1 of the Internal Revenue Code of 1986 
is amended by inserting after the item relating to chapter 
2 the following new item: 
26 USC 6654. 
Applicability. 
Applicability. 
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124 STAT. 1063 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘CHAPTER 2A—UNEARNED INCOME MEDICARE CONTRIBUTION’’. 
(4) EFFECTIVE DATES.—The amendments made by this sub-
section shall apply to taxable years beginning after December 
31, 2012. 
(b) EARNED INCOME.— 
(1) THRESHOLD.— 
(A) FICA.—Paragraph (2) of section 3101(b) of the 
Internal Revenue Code of 1986, as added by section 9015 
of the Patient Protection and Affordable Care Act and 
amended by section 10906 of such Act, is amended by 
striking ‘‘and’’ at the end of subparagraph (A), by redesig-
nating subparagraph (B) as subparagraph (C), and by 
inserting after subparagraph (A) the following new 
subparagraph: 
‘‘(B) in the case of a married taxpayer (as defined 
in section 7703) filing a separate return, 1⁄2 of the dollar 
amount determined under subparagraph (A), and’’. 
(B) SECA.—Section 1401(b)(2) of the Internal Revenue 
Code of 1986, as added by section 9015 of the Patient 
Protection and Affordable Care Act and amended by section 
10906 of such Act, is amended— 
(i) in subparagraph (A), by striking ‘‘and’’ at the 
end of clause (i), by redesignating clause (ii) as clause 
(iii), and by inserting after clause (i) the following 
new clause: 
‘‘(ii) in the case of a married taxpayer (as defined 
in section 7703) filing a separate return, 1⁄2 of the 
dollar amount determined under clause (i), and’’; and 
(ii) in subparagraph (B), by striking ‘‘under clauses 
(i) and (ii)’’ and inserting ‘‘under clause (i), (ii), or 
(iii) (whichever is applicable)’’. 
(2) ESTIMATED TAXES.—Section 6654 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(m) as subsection (n) and by inserting after subsection (l) the 
following new subsection: 
‘‘(m) SPECIAL RULE FOR MEDICARE TAX.—For purposes of this 
section, the tax imposed under section 3101(b)(2) (to the extent 
not withheld) shall be treated as a tax imposed under chapter 
2.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply with respect to remuneration received, and 
taxable years beginning after, December 31, 2012. 
SEC. 1403. DELAY OF LIMITATION ON HEALTH FLEXIBLE SPENDING 
ARRANGEMENTS UNDER CAFETERIA PLANS. 
(a) IN GENERAL.—Section 10902(b) of the Patient Protection 
and Affordable Care Act is amended by striking ‘‘December 31, 
2010’’ and inserting ‘‘December 31, 2012’’. 
(b) INFLATION ADJUSTMENT.—Paragraph (2) of section 125(i) 
of the Internal Revenue Code of 1986, as added by section 9005 
of the Patient Protection and Affordable Care Act and amended 
by section 10902 of such Act, is amended— 
(1) in the matter preceding subparagraph (A), by striking 
‘‘December 31, 2011’’ and inserting ‘‘December 31, 2013’’; and 
(2) in subparagraph (B), by striking ‘‘2010’’ and inserting 
‘‘2012’’. 
Ante, p. 855, 
1016. 
Ante, p. 1016. 
Applicability. 
26 USC 1401 
note. 
26 USC 6654. 
26 USC 1401. 
26 USC 3101. 
26 USC 1411 
note. 
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124 STAT. 1064 
PUBLIC LAW 111–152—MAR. 30, 2010 
SEC. 1404. BRAND NAME PHARMACEUTICALS. 
(a) IN GENERAL.—Section 9008 of the Patient Protection and 
Affordable Care Act is amended— 
(1) in subsection (a)(1), by striking ‘‘2009’’ and inserting 
‘‘2010’’; 
(2) in subsection (b)— 
(A) by striking ‘‘$2,300,000,000’’ in paragraph (1) and 
inserting ‘‘the applicable amount’’; and 
(B) by adding at the end the following new paragraph: 
‘‘(4) APPLICABLE AMOUNT.—For purposes of paragraph (1), 
the applicable amount shall be determined in accordance with 
the following table: 
‘‘Calendar year 
Applicable amount 
2011 ...............................................................................
$2,500,000,000 
2012 ...............................................................................
$2,800,000,000 
2013 ...............................................................................
$2,800,000,000 
2014 ...............................................................................
$3,000,000,000 
2015 ...............................................................................
$3,000,000,000 
2016 ...............................................................................
$3,000,000,000 
2017 ...............................................................................
$4,000,000,000 
2018 ...............................................................................
$4,100,000,000 
2019 and thereafter ......................................................
$2,800,000,000.’’; 
(3) in subsection (d), by adding at the end the following 
new paragraph: 
‘‘(3) JOINT AND SEVERAL LIABILITY.—If more than one per-
son is liable for payment of the fee under subsection (a) with 
respect to a single covered entity by reason of the application 
of paragraph (2), all such persons shall be jointly and severally 
liable for payment of such fee.’’; and 
(4) by striking subsection (j) and inserting the following 
new subsection: 
‘‘(j) EFFECTIVE DATE.—This section shall apply to calendar years 
beginning after December 31, 2010.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect as if included in section 9008 of the Patient Protec-
tion and Affordable Care Act. 
SEC. 1405. EXCISE TAX ON MEDICAL DEVICE MANUFACTURERS. 
(a) IN GENERAL.—Chapter 32 of the Internal Revenue Code 
of 1986 is amended— 
(1) by inserting after subchapter D the following new sub-
chapter: 
‘‘Subchapter E—Medical Devices 
‘‘Sec. 4191. Medical devices. 
‘‘SEC. 4191. MEDICAL DEVICES. 
‘‘(a) IN GENERAL.—There is hereby imposed on the sale of 
any taxable medical device by the manufacturer, producer, or 
importer a tax equal to 2.3 percent of the price for which so 
sold. 
‘‘(b) TAXABLE MEDICAL DEVICE.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘taxable medical device’ means 
any device (as defined in section 201(h) of the Federal Food, 
Drug, and Cosmetic Act) intended for humans. 
‘‘(2) EXEMPTIONS.—Such term shall not include— 
Definition. 
26 USC 4191. 
26 USC 4001 
note prec. 
Ante, p. 859. 
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124 STAT. 1065 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(A) eyeglasses, 
‘‘(B) contact lenses, 
‘‘(C) hearing aids, and 
‘‘(D) any other medical device determined by the Sec-
retary to be of a type which is generally purchased by 
the general public at retail for individual use.’’, and 
(2) by inserting after the item relating to subchapter D 
in the table of subchapters for such chapter the following new 
item: 
‘‘SUBCHAPTER E. MEDICAL DEVICES’’. 
(b) CERTAIN EXEMPTIONS NOT TO APPLY.— 
(1) Section 4221(a) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sentence: 
‘‘In the case of the tax imposed by section 4191, paragraphs 
(3), (4), (5), and (6) shall not apply.’’. 
(2) Section 6416(b)(2) of such Code is amended by adding 
at the end the following: ‘‘In the case of the tax imposed 
by section 4191, subparagraphs (B), (C), (D), and (E) shall 
not apply.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to sales after December 31, 2012. 
(d) REPEAL
OF SECTION 9009 OF
THE PATIENT PROTECTION 
AND AFFORDABLE CARE ACT.—Section 9009 of the Patient Protection 
and Affordable Care Act, as amended by section 10904 of such 
Act, is repealed effective as of the date of enactment of that Act. 
SEC. 1406. HEALTH INSURANCE PROVIDERS. 
(a) IN GENERAL.—Section 9010 of the Patient Protection and 
Affordable Care Act, as amended by section 10905 of such Act, 
is amended— 
(1) in subsection (a)(1), by striking ‘‘2010’’ and inserting 
‘‘2013’’; 
(2) in subsection (b)(2)— 
(A) by striking ‘‘For purposes of paragraph (1), the 
net premiums’’ and inserting ‘‘For purposes of paragraph 
(1)— 
‘‘(A) IN GENERAL.—The net premiums’’; and 
(B) by adding at the end the following subparagraph: 
‘‘(B) PARTIAL EXCLUSION FOR CERTAIN EXEMPT ACTIVI-
TIES.—After the application of subparagraph (A), only 50 
percent of the remaining net premiums written with respect 
to health insurance for any United States health risk that 
are attributable to the activities (other than activities of 
an unrelated trade or business as defined in section 513 
of the Internal Revenue Code of 1986) of any covered 
entity qualifying under paragraph (3), (4), (26), or (29) 
of section 501(c) of such Code and exempt from tax under 
section 501(a) of such Code shall be taken into account.’’; 
(3) in subsection (c)— 
(A) by inserting ‘‘during the calendar year in which 
the fee under this section is due’’ in paragraph (1) after 
‘‘risk’’; 
(B) in paragraph (2), by striking subparagraphs (C), 
(D), and (E) and inserting the following new subparagraphs: 
‘‘(C) any entity— 
Ante, p. 865, 
1017. 
Ante, p. 862, 
1016. 
Effective date. 
26 USC 4191 
note. 
26 USC 6416. 
26 USC 4221. 
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124 STAT. 1066 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(i) which is incorporated as a nonprofit corpora-
tion under a State law, 
‘‘(ii) no part of the net earnings of which inures 
to the benefit of any private shareholder or individual, 
no substantial part of the activities of which is carrying 
on propaganda, or otherwise attempting, to influence 
legislation (except as otherwise provided in section 
501(h) of the Internal Revenue Code of 1986), and 
which does not participate in, or intervene in (including 
the publishing or distributing of statements), any polit-
ical campaign on behalf of (or in opposition to) any 
candidate for public office, and 
‘‘(iii) more than 80 percent of the gross revenues 
of which is received from government programs that 
target low-income, elderly, or disabled populations 
under titles XVIII, XIX, and XXI of the Social Security 
Act, and 
‘‘(D) any entity which is described in section 501(c)(9) 
of such Code and which is established by an entity (other 
than by an employer or employers) for purposes of providing 
health care benefits.’’; 
(C) in paragraph (3)(A), by striking ‘‘subparagraph 
(C)(i)(I), (D)(i)(I), or (E)(i)’’ and inserting ‘‘subparagraph 
(C) or (D)’’; and 
(D) by adding at the end the following new paragraph: 
‘‘(4) JOINT AND SEVERAL LIABILITY.—If more than one per-
son is liable for payment of the fee under subsection (a) with 
respect to a single covered entity by reason of the application 
of paragraph (3), all such persons shall be jointly and severally 
liable for payment of such fee.’’; 
(4) by striking subsection (e) and inserting the following: 
‘‘(e) APPLICABLE AMOUNT.—For purposes of subsection (b)(1)— 
‘‘(1) YEARS BEFORE 2019.—In the case of calendar years 
beginning before 2019, the applicable amount shall be deter-
mined in accordance with the following table: 
‘‘Calendar year 
Applicable amount 
2014 ...............................................................................
$8,000,000,000 
2015 ...............................................................................
$11,300,000,000 
2016 ...............................................................................
$11,300,000,000 
2017 ...............................................................................
$13,900,000,000 
2018 ...............................................................................
$14,300,000,000. 
‘‘(2) YEARS AFTER 2018.—In the case of any calendar year 
beginning after 2018, the applicable amount shall be the 
applicable amount for the preceding calendar year increased 
by the rate of premium growth (within the meaning of section 
36B(b)(3)(A)(ii) of the Internal Revenue Code of 1986) for such 
preceding calendar year.’’; 
(5) in subsection (g), by adding at the end the following 
new paragraphs: 
‘‘(3) ACCURACY-RELATED PENALTY.— 
‘‘(A) IN GENERAL.—In the case of any understatement 
of a covered entity’s net premiums written with respect 
to health insurance for any United States health risk for 
any calendar year, there shall be paid by the covered 
entity making such understatement, an amount equal to 
the excess of— 
Determination. 
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124 STAT. 1067 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(i) the amount of the covered entity’s fee under 
this section for the calendar year the Secretary deter-
mines should have been paid in the absence of any 
such understatement, over 
‘‘(ii) the amount of such fee the Secretary deter-
mined based on such understatement. 
‘‘(B) UNDERSTATEMENT.—For purposes of this para-
graph, an understatement of a covered entity’s net pre-
miums written with respect to health insurance for any 
United States health risk for any calendar year is the 
difference between the amount of such net premiums writ-
ten as reported on the return filed by the covered entity 
under paragraph (1) and the amount of such net premiums 
written that should have been reported on such return. 
‘‘(C) TREATMENT OF PENALTY.—The penalty imposed 
under subparagraph (A) shall be subject to the provisions 
of subtitle F of the Internal Revenue Code of 1986 that 
apply to assessable penalties imposed under chapter 68 
of such Code. 
‘‘(4) TREATMENT
OF
INFORMATION.—Section 6103 of the 
Internal Revenue Code of 1986 shall not apply to any informa-
tion reported under this subsection.’’; and 
(6) by striking subsection (j) and inserting the following 
new subsection: 
‘‘(j) EFFECTIVE DATE.—This section shall apply to calendar years 
beginning after December 31, 2013.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect as if included in section 9010 of the Patient Protec-
tion and Affordable Care Act. 
SEC. 1407. DELAY OF ELIMINATION OF DEDUCTION FOR EXPENSES 
ALLOCABLE TO MEDICARE PART D SUBSIDY. 
Section 9012(b) of the Patient Protection and Affordable Care 
Act is amended by striking ‘‘2010’’ and inserting ‘‘2012’’. 
SEC. 1408. ELIMINATION OF UNINTENDED APPLICATION OF CEL-
LULOSIC BIOFUEL PRODUCER CREDIT. 
(a) IN GENERAL.—Section 40(b)(6)(E) of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new 
clause: 
‘‘(iii) EXCLUSION
OF
UNPROCESSED
FUELS.—The 
term ‘cellulosic biofuel’ shall not include any fuel if— 
‘‘(I) more than 4 percent of such fuel (deter-
mined by weight) is any combination of water and 
sediment, or 
‘‘(II) the ash content of such fuel is more than 
1 percent (determined by weight).’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to fuels sold or used on or after January 1, 2010. 
SEC. 1409. CODIFICATION OF ECONOMIC SUBSTANCE DOCTRINE AND 
PENALTIES. 
(a) IN GENERAL.—Section 7701 of the Internal Revenue Code 
of 1986 is amended by redesignating subsection (o) as subsection 
(p) and by inserting after subsection (n) the following new sub-
section: 
‘‘(o) CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.— 
26 USC 7701. 
26 USC 40 note. 
26 USC 40. 
Ante, p. 868. 
26 USC 4001 
note prec. 
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124 STAT. 1068 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(1) APPLICATION OF DOCTRINE.—In the case of any trans-
action to which the economic substance doctrine is relevant, 
such transaction shall be treated as having economic substance 
only if— 
‘‘(A) the transaction changes in a meaningful way 
(apart from Federal income tax effects) the taxpayer’s eco-
nomic position, and 
‘‘(B) the taxpayer has a substantial purpose (apart 
from Federal income tax effects) for entering into such 
transaction. 
‘‘(2) SPECIAL
RULE
WHERE
TAXPAYER
RELIES
ON
PROFIT 
POTENTIAL.— 
‘‘(A) IN GENERAL.—The potential for profit of a trans-
action shall be taken into account in determining whether 
the requirements of subparagraphs (A) and (B) of para-
graph (1) are met with respect to the transaction only 
if the present value of the reasonably expected pre-tax 
profit from the transaction is substantial in relation to 
the present value of the expected net tax benefits that 
would be allowed if the transaction were respected. 
‘‘(B) TREATMENT OF FEES AND FOREIGN TAXES.—Fees 
and other transaction expenses shall be taken into account 
as expenses in determining pre-tax profit under subpara-
graph (A). The Secretary shall issue regulations requiring 
foreign taxes to be treated as expenses in determining 
pre-tax profit in appropriate cases. 
‘‘(3) STATE AND LOCAL TAX BENEFITS.—For purposes of para-
graph (1), any State or local income tax effect which is related 
to a Federal income tax effect shall be treated in the same 
manner as a Federal income tax effect. 
‘‘(4) FINANCIAL
ACCOUNTING
BENEFITS.—For purposes of 
paragraph (1)(B), achieving a financial accounting benefit shall 
not be taken into account as a purpose for entering into a 
transaction if the origin of such financial accounting benefit 
is a reduction of Federal income tax. 
‘‘(5) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
subsection— 
‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.—The term ‘eco-
nomic substance doctrine’ means the common law doctrine 
under which tax benefits under subtitle A with respect 
to a transaction are not allowable if the transaction does 
not have economic substance or lacks a business purpose. 
‘‘(B) EXCEPTION
FOR
PERSONAL
TRANSACTIONS
OF 
INDIVIDUALS.—In the case of an individual, paragraph (1) 
shall apply only to transactions entered into in connection 
with a trade or business or an activity engaged in for 
the production of income. 
‘‘(C) DETERMINATION OF APPLICATION OF DOCTRINE NOT 
AFFECTED.—The determination of whether the economic 
substance doctrine is relevant to a transaction shall be 
made in the same manner as if this subsection had never 
been enacted. 
‘‘(D) TRANSACTION.—The term ‘transaction’ includes a 
series of transactions.’’. 
(b) PENALTY FOR UNDERPAYMENTS ATTRIBUTABLE TO TRANS-
ACTIONS LACKING ECONOMIC SUBSTANCE.— 
Applicability. 
Regulations. 
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124 STAT. 1069 
PUBLIC LAW 111–152—MAR. 30, 2010 
(1) IN GENERAL.—Subsection (b) of section 6662 is amended 
by inserting after paragraph (5) the following new paragraph: 
‘‘(6) Any disallowance of claimed tax benefits by reason 
of a transaction lacking economic substance (within the 
meaning of section 7701(o)) or failing to meet the requirements 
of any similar rule of law.’’. 
(2) 
INCREASED
PENALTY
FOR
NONDISCLOSED
TRANS-
ACTIONS.—Section 6662 is amended by adding at the end the 
following new subsection: 
‘‘(i) INCREASE IN PENALTY IN CASE OF NONDISCLOSED NON-
ECONOMIC SUBSTANCE TRANSACTIONS.— 
‘‘(1) IN GENERAL.—In the case of any portion of an under-
payment which is attributable to one or more nondisclosed 
noneconomic substance transactions, subsection (a) shall be 
applied with respect to such portion by substituting ‘40 percent’ 
for ‘20 percent’. 
‘‘(2) NONDISCLOSED
NONECONOMIC
SUBSTANCE
TRANS-
ACTIONS.—For purposes of this subsection, the term ‘nondis-
closed noneconomic substance transaction’ means any portion 
of a transaction described in subsection (b)(6) with respect 
to which the relevant facts affecting the tax treatment are 
not adequately disclosed in the return nor in a statement 
attached to the return. 
‘‘(3) SPECIAL RULE FOR AMENDED RETURNS.—In no event 
shall any amendment or supplement to a return of tax be 
taken into account for purposes of this subsection if the amend-
ment or supplement is filed after the earlier of the date the 
taxpayer is first contacted by the Secretary regarding the exam-
ination of the return or such other date as is specified by 
the Secretary.’’. 
(3) CONFORMING AMENDMENT.—Subparagraph (B) of section 
6662A(e)(2) is amended— 
(A) by striking ‘‘section 6662(h)’’ and inserting ‘‘sub-
sections (h) or (i) of section 6662’’; and 
(B) by striking ‘‘GROSS VALUATION MISSTATEMENT PEN-
ALTY’’ in the heading and inserting ‘‘CERTAIN INCREASED 
UNDERPAYMENT PENALTIES’’. 
(c) REASONABLE CAUSE EXCEPTION NOT APPLICABLE TO NON-
ECONOMIC SUBSTANCE TRANSACTIONS.— 
(1) REASONABLE CAUSE EXCEPTION FOR UNDERPAYMENTS.— 
Subsection (c) of section 6664 is amended— 
(A) by redesignating paragraphs (2) and (3) as para-
graphs (3) and (4), respectively; 
(B) by striking ‘‘paragraph (2)’’ in paragraph (4)(A), 
as so redesignated, and inserting ‘‘paragraph (3)’’; and 
(C) by inserting after paragraph (1) the following new 
paragraph: 
‘‘(2) EXCEPTION.—Paragraph (1) shall not apply to any por-
tion of an underpayment which is attributable to one or more 
transactions described in section 6662(b)(6).’’. 
(2) REASONABLE CAUSE EXCEPTION FOR REPORTABLE TRANS-
ACTION UNDERSTATEMENTS.—Subsection (d) of section 6664 is 
amended— 
(A) by redesignating paragraphs (2) and (3) as para-
graphs (3) and (4), respectively; 
(B) by striking ‘‘paragraph (2)(C)’’ in paragraph (4), 
as so redesignated, and inserting ‘‘paragraph (3)(C)’’; and 
26 USC 6664. 
26 USC 6662A. 
Definition. 
Applicability. 
26 USC 6662. 
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124 STAT. 1070 
PUBLIC LAW 111–152—MAR. 30, 2010 
(C) by inserting after paragraph (1) the following new 
paragraph: 
‘‘(2) EXCEPTION.—Paragraph (1) shall not apply to any por-
tion of a reportable transaction understatement which is attrib-
utable to one or more transactions described in section 
6662(b)(6).’’. 
(d) APPLICATION
OF PENALTY
FOR ERRONEOUS CLAIM
FOR 
REFUND OR CREDIT TO NONECONOMIC SUBSTANCE TRANSACTIONS.— 
Section 6676 is amended by redesignating subsection (c) as sub-
section (d) and inserting after subsection (b) the following new 
subsection: 
‘‘(c) NONECONOMIC
SUBSTANCE
TRANSACTIONS
TREATED
AS 
LACKING REASONABLE BASIS.—For purposes of this section, any 
excessive amount which is attributable to any transaction described 
in section 6662(b)(6) shall not be treated as having a reasonable 
basis.’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall apply to 
transactions entered into after the date of the enactment of 
this Act. 
(2) UNDERPAYMENTS.—The amendments made by sub-
sections (b) and (c)(1) shall apply to underpayments attributable 
to transactions entered into after the date of the enactment 
of this Act. 
(3) UNDERSTATEMENTS.—The amendments made by sub-
section (c)(2) shall apply to understatements attributable to 
transactions entered into after the date of the enactment of 
this Act. 
(4) REFUNDS AND CREDITS.—The amendment made by sub-
section (d) shall apply to refunds and credits attributable to 
transactions entered into after the date of the enactment of 
this Act. 
SEC. 1410. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES. 
The percentage under paragraph (1) of section 202(b) of the 
Corporate Estimated Tax Shift Act of 2009 in effect on the date 
of the enactment of this Act is increased by 15.75 percentage 
points. 
Subtitle F—Other Provisions 
SEC. 1501. COMMUNITY COLLEGE AND CAREER TRAINING GRANT PRO-
GRAM. 
Section 279(b) of the Trade Act of 1974 (19 U.S.C. 2372a(b)) 
is amended by striking ‘‘SUPPLEMENT’’ and all that follows through 
‘‘Funds’’ and inserting ‘‘There are’’ and by striking ‘‘pursuant’’ and 
all that follows and inserting ‘‘$500,000,000 for each of fiscal years 
2011, 2012, 2013, and 2014 to carry out this subchapter, except 
that the limitations contained in section 278(a)(2) shall not apply 
to such funds and each State shall receive not less than 0.5 percent 
of the amount appropriated pursuant to this subsection for each 
such fiscal year.’’. 
26 USC 6655 
note. 
Applicability. 
26 USC 6662 
note. 
26 USC 6676. 
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124 STAT. 1071 
PUBLIC LAW 111–152—MAR. 30, 2010 
TITLE II—EDUCATION AND HEALTH 
Subtitle A—Education 
SEC. 2001. SHORT TITLE; REFERENCES. 
(a) SHORT TITLE.—This subtitle may be cited as the ‘‘SAFRA 
Act’’. 
(b) REFERENCES.—Except as otherwise expressly provided, 
whenever in this subtitle an amendment or repeal is expressed 
in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section 
or other provision of the Higher Education Act of 1965 (20 U.S.C. 
1001 et seq.). 
PART I—INVESTING IN STUDENTS AND 
FAMILIES 
SEC. 2101. FEDERAL PELL GRANTS. 
(a) AMOUNT OF GRANTS.—Section 401(b) (20 U.S.C. 1070a(b)) 
is amended— 
(1) by amending paragraph (2)(A) to read as follows: 
‘‘(A) The amount of the Federal Pell Grant for a student 
eligible under this part shall be— 
‘‘(i) the maximum Federal Pell Grant, as specified 
in the last enacted appropriation Act applicable to 
that award year, plus 
‘‘(ii) the amount of the increase calculated under 
paragraph (8)(B) for that year, less 
‘‘(iii) an amount equal to the amount determined 
to be the expected family contribution with respect 
to that student for that year.’’; and 
(2) in paragraph (8)— 
(A) in subparagraph (A)— 
(i) in the matter preceding clause (i), by striking 
‘‘, to carry out subparagraph (B) of this paragraph’’; 
and 
(ii) by striking clauses (iii) through (x) and 
inserting the following: 
‘‘(iii) to carry out subparagraph (B) of this para-
graph, such sums as may be necessary for fiscal year 
2010 and each subsequent fiscal year to provide the 
amount of increase of the maximum Federal Pell Grant 
required by clauses (ii) and (iii) of subparagraph (B); 
and 
‘‘(iv) to carry out this section, $13,500,000,000 for 
fiscal year 2011.’’; 
(B) in subparagraph (B)— 
(i) in the matter preceding clause (i), by striking 
‘‘subparagraph (A)’’ and inserting ‘‘clauses (i) through 
(iii) of subparagraph (A)’’; 
(ii) in clause (ii), by striking ‘‘and 2011–2012’’ and 
inserting ‘‘, 2011–2012, and 2012–2013’’; and 
(iii) by striking clause (iii) and inserting the fol-
lowing: 
20 USC 1001 
note. 
SAFRA Act. 
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124 STAT. 1072 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(iii) the amount determined under subparagraph 
(C) for each succeeding award year.’’; and 
(C) by striking subparagraph (C) and inserting the 
following: 
‘‘(C) ADJUSTMENT AMOUNTS.— 
‘‘(i) AWARD YEAR 2013–2014.—For award year 2013– 
2014, the amount determined under this subparagraph 
for purposes of subparagraph (B)(iii) shall be equal 
to— 
‘‘(I) $5,550 or the total maximum Federal Pell 
Grant for the preceding award year (as determined 
under 
clause 
(v)(II)), 
whichever 
is 
greater, 
increased by a percentage equal to the annual 
adjustment percentage for award year 2013–2014, 
reduced by 
‘‘(II) $4,860 or the maximum Federal Pell 
Grant for which a student was eligible for the 
preceding award year, as specified in the last 
enacted appropriation Act applicable to that year, 
whichever is greater; and 
‘‘(III) rounded to the nearest $5. 
‘‘(ii) AWARD YEARS 2014–2015 THROUGH 2017–2018.— 
For each of the award years 2014–2015 through 2017– 
2018, the amount determined under this subparagraph 
for purposes of subparagraph (B)(iii) shall be equal 
to— 
‘‘(I) the total maximum Federal Pell Grant 
for the preceding award year (as determined under 
clause (v)(II)), increased by a percentage equal to 
the annual adjustment percentage for the award 
year for which the amount under this subpara-
graph is being determined, reduced by 
‘‘(II) $4,860 or the maximum Federal Pell 
Grant for which a student was eligible for the 
preceding award year, as specified in the last 
enacted appropriation Act applicable to that year, 
whichever is greater; and 
‘‘(III) rounded to the nearest $5. 
‘‘(iii) SUBSEQUENT AWARD YEARS.—For award year 
2018–2019 and each subsequent award year, the 
amount determined under this subparagraph for pur-
poses of subparagraph (B)(iii) shall be equal to the 
amount determined under clause (ii) for award year 
2017–2018. 
‘‘(iv) DEFINITIONS.—For purposes of this subpara-
graph— 
‘‘(I) the term ‘annual adjustment percentage’ 
as applied to an award year, is equal to the esti-
mated percentage change in the Consumer Price 
Index (as determined by the Secretary, using the 
definition in section 478(f)) for the most recent 
calendar year ending prior to the beginning of 
that award year; and 
‘‘(II) the term ‘total maximum Federal Pell 
Grant’ as applied to a preceding award year, is 
equal to the sum of— 
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124 STAT. 1073 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(aa) the maximum Federal Pell Grant 
for which a student is eligible during an award 
year, as specified in the last enacted appro-
priation Act applicable to that preceding 
award year; and 
‘‘(bb) the amount of the increase in the 
maximum Federal Pell Grant required by this 
paragraph for that preceding award year.’’. 
(b) CONFORMING AMENDMENTS.—Title IV (20 U.S.C. 1070 et 
seq.) is further amended— 
(1) in section 401(b) (20 U.S.C. 1070a(b))— 
(A) in paragraph (4)— 
(i) by striking ‘‘maximum basic grant level speci-
fied in the appropriate appropriation Act’’ and inserting 
‘‘maximum amount of a Federal Pell Grant award 
determined under paragraph (2)(A)’’; and 
(ii) by striking ‘‘such level’’ each place it appears 
and inserting ‘‘such Federal Pell Grant amount’’ in 
each such place; and 
(B) in paragraph (6), by striking ‘‘the grant level speci-
fied in the appropriate Appropriation Act for this subpart 
for such year’’ and inserting ‘‘the maximum amount of 
a Federal Pell Grant award determined under paragraph 
(2)(A), for which a student is eligible during such award 
year’’; 
(2) in section 402D(d)(1) (20 U.S.C. 1070a–14(d)(1)), by 
striking ‘‘exceed the maximum’’ and all that follows through 
‘‘Grant, for’’ and inserting ‘‘exceed the Federal Pell Grant 
amount, determined under section 401(b)(2)(A), for which a 
student is eligible, or be less than the minimum Federal Pell 
Grant amount described in section 401(b)(4), for’’; 
(3) in section 435(a)(5)(A)(i)(I) (20 U.S.C. 1085(a)(5)(A)(i)(I)), 
by striking ‘‘one-half the maximum Federal Pell Grant award 
for which a student would be eligible’’ and inserting ‘‘one- 
half the Federal Pell Grant amount, determined under section 
401(b)(2)(A), for which a student would be eligible’’; 
(4) in section 483(e)(3)(A)(ii) (20 U.S.C. 1090(e)(3)(A)(ii)), 
by striking ‘‘based on the maximum Federal Pell Grant award 
at the time of application’’ and inserting ‘‘based on the Federal 
Pell Grant amount, determined under section 401(b)(2)(A), for 
which a student is eligible at the time of application’’; 
(5) in section 485E(b)(1)(A) (20 U.S.C. 1092f(b)(1)(A)), by 
striking ‘‘of such students’ potential eligibility for a maximum 
Federal Pell Grant under subpart 1 of part A’’ and inserting 
‘‘of such students’ potential eligibility for the Federal Pell Grant 
amount, determined under section 401(b)(2)(A), for which the 
student would be eligible’’; and 
(6) 
in 
section 
894(f)(2)(C)(ii)(I) 
(20 
U.S.C. 
1161y(f)(2)(C)(ii)(I)), by striking ‘‘the maximum Federal Pell 
Grant for each award year’’ and inserting ‘‘the Federal Pell 
Grant amount, determined under section 401(b)(2)(A), for which 
a student may be eligible for each award year’’. 
(c) EFFECTIVE DATE.—The amendments made by subsections 
(a) and (b) shall take effect on July 1, 2010. 
SEC. 2102. COLLEGE ACCESS CHALLENGE GRANT PROGRAM. 
Section 781 (20 U.S.C. 1141) is amended— 
20 USC 1070a 
note. 
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124 STAT. 1074 
PUBLIC LAW 111–152—MAR. 30, 2010 
(1) in the first sentence of subsection (a), by striking 
‘‘$66,000,000’’ and all that follows through the period and 
inserting ‘‘$150,000,000 for each of the fiscal years 2010 through 
2014. The authority to award grants under this section shall 
expire at the end of fiscal year 2014.’’; and 
(2) in subsection (c)(2), by striking ‘‘0.5 percent’’ and 
inserting ‘‘1.0 percent’’. 
SEC. 2103. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND 
UNIVERSITIES AND MINORITY-SERVING INSTITUTIONS. 
Section 371(b)(1)(A) (20 U.S.C. 1067q(b)(1)(A)) is amended by 
striking ‘‘and 2009.’’ and all that follows and inserting ‘‘through 
2019. The authority to award grants under this section shall expire 
at the end of fiscal year 2019.’’. 
PART II—STUDENT LOAN REFORM 
SEC. 2201. TERMINATION OF FEDERAL FAMILY EDUCATION LOAN 
APPROPRIATIONS. 
Section 421 (20 U.S.C. 1071) is amended— 
(1) in subsection (b), in the first sentence of the matter 
following paragraph (6), by inserting ‘‘, except that no sums 
may be expended after June 30, 2010, with respect to loans 
under this part for which the first disbursement is after such 
date’’ after ‘‘expended’’; and 
(2) by adding at the end the following new subsection: 
‘‘(d) TERMINATION OF AUTHORITY TO MAKE OR INSURE NEW 
LOANS.—Notwithstanding paragraphs (1) through (6) of subsection 
(b) or any other provision of law— 
‘‘(1) no new loans (including consolidation loans) may be 
made or insured under this part after June 30, 2010; and 
‘‘(2) no funds are authorized to be appropriated, or may 
be expended, under this Act or any other Act to make or 
insure loans under this part (including consolidation loans) 
for which the first disbursement is after June 30, 2010, 
except as expressly authorized by an Act of Congress enacted after 
the date of enactment of the SAFRA Act.’’. 
SEC. 2202. TERMINATION OF FEDERAL LOAN INSURANCE PROGRAM. 
Section 424(a) (20 U.S.C. 1074(a)) is amended by striking ‘‘Sep-
tember 30, 1976,’’ and all that follows and inserting ‘‘September 
30, 1976, for each of the succeeding fiscal years ending prior to 
October 1, 2009, and for the period from October 1, 2009, to June 
30, 2010, for loans first disbursed on or before June 30, 2010.’’. 
SEC. 2203. TERMINATION OF APPLICABLE INTEREST RATES. 
Section 427A(l) (20 U.S.C. 1077a(l)) is amended— 
(1) in the subsection heading, by inserting ‘‘AND BEFORE 
JULY 1, 2010’’ after ‘‘2006’’; 
(2) in paragraph (1), by inserting ‘‘and before July 1, 2010,’’ 
after ‘‘July 1, 2006,’’; 
(3) in paragraph (2), by inserting ‘‘and before July 1, 2010,’’ 
after ‘‘July 1, 2006,’’; 
(4) in paragraph (3), by inserting ‘‘and that was disbursed 
before July 1, 2010,’’ after ‘‘July 1, 2006,’’; and 
(5) in paragraph (4)— 
(A) in the matter preceding subparagraph (A), by 
striking ‘‘July 1, 2012’’ and inserting ‘‘July 1, 2010’’; and 
Expiration date. 
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124 STAT. 1075 
PUBLIC LAW 111–152—MAR. 30, 2010 
(B) by repealing subparagraphs (D) and (E). 
SEC. 2204. TERMINATION OF FEDERAL PAYMENTS TO REDUCE STU-
DENT INTEREST COSTS. 
(a) HIGHER EDUCATION ACT OF 1965.—Section 428 (20 U.S.C. 
1078) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1), in the matter preceding subpara-
graph (A), by inserting ‘‘for which the first disbursement 
is made before July 1, 2010, and’’ after ‘‘eligible institution’’; 
and 
(B) in paragraph (5), by striking ‘‘September 30, 2014,’’ 
and all that follows through the period and inserting ‘‘June 
30, 2010.’’; 
(2) in subsection (b)(1)— 
(A) in subparagraph (G)(ii), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘July 1, 2006,’’; and 
(B) in subparagraph (H)(ii), by inserting ‘‘and that 
are first disbursed before July 1, 2010,’’ after ‘‘July 1, 
2006,’’; 
(3) in subsection (f)(1)(A)(ii)— 
(A) by striking ‘‘during fiscal years beginning’’; and 
(B) by inserting ‘‘and first disbursed before July 1, 
2010,’’ after ‘‘October 1, 2003,’’; and 
(4) in subsection (j)(1), by inserting ‘‘, before July 1, 2010,’’ 
after ‘‘section 435(d)(1)(D) of this Act shall’’. 
(b) COLLEGE COST REDUCTION AND ACCESS ACT.—Section 303 
of the College Cost Reduction and Access Act (Public Law 110– 
84) is repealed. 
SEC. 2205. TERMINATION OF FFEL PLUS LOANS. 
Section 428B(a)(1) (20 U.S.C. 1078–2(a)(1)) is amended by 
striking ‘‘A graduate’’ and inserting ‘‘Prior to July 1, 2010, a grad-
uate’’. 
SEC. 2206. FEDERAL CONSOLIDATION LOANS. 
(a) IN
GENERAL.—Section 428C (20 U.S.C. 1078–3) is 
amended— 
(1) in subsection (a)(4)(A), by inserting ‘‘, and first disbursed 
before July 1, 2010’’ after ‘‘under this part’’; 
(2) in subsection (b)— 
(A) in paragraph (1)(E), by inserting before the semi-
colon ‘‘, and before July 1, 2010’’; and 
(B) in paragraph (5), by striking ‘‘In the event that’’ 
and inserting ‘‘If, before July 1, 2010,’’; 
(3) in subsection (c)(1)— 
(A) in subparagraph (A)(ii), by inserting ‘‘and that is 
disbursed before July 1, 2010,’’ after ‘‘2006,’’; and 
(B) in subparagraph (C), by inserting ‘‘and disbursed 
before July 1, 2010,’’ after ‘‘1994,’’; and 
(4) in subsection (e), by striking ‘‘September 30, 2014.’’ 
and inserting ‘‘June 30, 2010. No loan may be made under 
this section for which the disbursement is on or after July 
1, 2010.’’. 
(b) TEMPORARY LOAN CONSOLIDATION AUTHORITY.—Part D of 
title IV (20 U.S.C. 1087a et seq.) is amended by inserting after 
section 459A (20 U.S.C. 1087i) the following: 
20 USC 1078 and 
note. 
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124 STAT. 1076 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘SEC. 459B. TEMPORARY LOAN CONSOLIDATION AUTHORITY. 
‘‘(a) TEMPORARY LOAN CONSOLIDATION AUTHORITY.— 
‘‘(1) IN GENERAL.—A borrower who has 1 or more loans 
in 2 or more of the categories described in paragraph (2), 
and who has not yet entered repayment on 1 or more of those 
loans in any of the categories, may consolidate all of the loans 
of the borrower that are described in paragraph (2) into a 
Federal Direct Consolidation Loan during the period described 
in paragraph (3). 
‘‘(2) CATEGORIES OF LOANS THAT MAY BE CONSOLIDATED.— 
The categories of loans that may be consolidated under para-
graph (1) are— 
‘‘(A) loans made under this part; 
‘‘(B) loans purchased by the Secretary pursuant to 
section 459A; and 
‘‘(C) loans made under part B that are held by an 
eligible lender, as such term is defined in section 435(d). 
‘‘(3) TIME PERIOD IN WHICH LOANS MAY BE CONSOLIDATED.— 
The Secretary may make a Federal Direct Consolidation Loan 
under this section to a borrower whose application for such 
Federal Direct Consolidation Loan is received on or after July 
1, 2010, and before July 1, 2011. 
‘‘(b) TERMS OF LOANS.—A Federal Direct Consolidation Loan 
made under this section shall have the same terms and conditions 
as a Federal Direct Consolidation Loan made under section 455(g), 
except that— 
‘‘(1) in determining the applicable rate of interest on the 
Federal Direct Consolidation Loan made under this section 
(other than on a Federal Direct Consolidation Loan described 
in paragraph (2)), section 427A(l)(3) shall be applied without 
rounding the weighted average of the interest rate on the 
loans consolidated to the nearest higher one-eighth of 1 percent 
as described in subparagraph (A) of section 427A(l)(3); and 
‘‘(2) if a Federal Direct Consolidation Loan made under 
this section that repays a loan which is subject to an interest 
rate determined under section 427A(g)(2), (j)(2), or (k)(2), then 
the interest rate for such Federal Direct Consolidation Loan 
shall be calculated— 
‘‘(A) by using the applicable rate of interest described 
in section 427A(g)(2), (j)(2), or (k)(2), respectively; and 
‘‘(B) in accordance with section 427A(l)(3).’’. 
SEC. 2207. TERMINATION OF UNSUBSIDIZED STAFFORD LOANS FOR 
MIDDLE-INCOME BORROWERS. 
Section 428H (20 U.S.C. 1078–8) is amended— 
(1) in subsection (a), by inserting ‘‘that are first disbursed 
before July 1, 2010,’’ after ‘‘under this part’’; 
(2) in subsection (b)— 
(A) by striking ‘‘Any student’’ and inserting ‘‘Prior to 
July 1, 2010, any student’’; and 
(B) by inserting ‘‘for which the first disbursement is 
made before such date’’ after ‘‘unsubsidized Federal Staf-
ford Loan’’; and 
(3) in subsection (h), by inserting ‘‘and that are first dis-
bursed before July 1, 2010,’’ after ‘‘July 1, 2006,’’. 
Applicability. 
20 USC 1087i–2. 
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124 STAT. 1077 
PUBLIC LAW 111–152—MAR. 30, 2010 
SEC. 2208. TERMINATION OF SPECIAL ALLOWANCES. 
Section 438 (20 U.S.C. 1087–1) is amended— 
(1) in subsection (b)(2)(I)— 
(A) in the subclause heading, by inserting ‘‘, AND 
BEFORE JULY 1, 2010’’ after ‘‘2000’’; 
(B) in clause (i), by inserting ‘‘and before July 1, 2010,’’ 
after ‘‘2000,’’; 
(C) in clause (ii)(II), by inserting ‘‘and before July 
1, 2010,’’ after ‘‘2006,’’; 
(D) in clause (iii), by inserting ‘‘and before July 1, 
2010,’’ after ‘‘2000,’’; 
(E) in clause (iv), by inserting ‘‘and that is disbursed 
before July 1, 2010,’’ after ‘‘2000,’’; 
(F) in clause (v)(I), by inserting ‘‘and before July 1, 
2010,’’ after ‘‘2006,’’; and 
(G) in clause (vi)— 
(i) in the clause heading, by inserting ‘‘, AND 
BEFORE JULY 1, 2010’’ after ‘‘2007’’; and 
(ii) in the matter preceding subclause (I), by 
inserting ‘‘and before July 1, 2010,’’ after ‘‘2007,’’; 
(2) in subsection (c)— 
(A) in paragraph (2)(B)— 
(i) in clause (iii), by inserting ‘‘and’’ after the semi-
colon; 
(ii) in clause (iv), by striking ‘‘; and’’ and inserting 
a period; and 
(iii) by striking clause (v); and 
(B) in paragraph (6), by inserting ‘‘and first disbursed 
before July 1, 2010,’’ after ‘‘1992,’’; and 
(3) in subsection (d)(2)(B), by inserting ‘‘, and before July 
1, 2010’’ after ‘‘2007’’. 
SEC. 2209. ORIGINATION OF DIRECT LOANS AT INSTITUTIONS OUTSIDE 
THE UNITED STATES. 
(a) LOANS FOR STUDENTS ATTENDING INSTITUTIONS OUTSIDE 
THE UNITED STATES.—Section 452 (20 U.S.C. 1087b) is amended 
by adding at the end the following: 
‘‘(d) INSTITUTIONS OUTSIDE THE UNITED STATES.—Loan funds 
for students (and parents of students) attending institutions outside 
the United States shall be disbursed through a financial institution 
located or operating in the United States and designated by the 
Secretary to serve as the agent of such institutions with respect 
to the receipt of the disbursements of such loan funds and the 
transfer of such funds to such institutions. To be eligible to receive 
funds under this part, an institution outside the United States 
shall make arrangements with the agent designated by the Sec-
retary under this subsection to receive funds under this part.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) AMENDMENTS.—Section 102 (20 U.S.C. 1002), as 
amended by section 102 of the Higher Education Opportunity 
Act (Public Law 110–315) and section 101 of Public Law 111– 
39, is amended— 
(A) by striking ‘‘part B’’ each place the term appears 
and inserting ‘‘part D’’; 
(B) in subsection (a)(1)(C), by inserting ‘‘, consistent 
with the requirements of section 452(d)’’ before the period 
at the end; and 
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124 STAT. 1078 
PUBLIC LAW 111–152—MAR. 30, 2010 
(C) in subsection (a)(2)(A)— 
(i) in the second sentence of the matter preceding 
clause (i), by striking ‘‘made, insured, or guaranteed’’ 
and inserting ‘‘made’’; and 
(ii) in clause (iii)— 
(I) in subclause (III), by striking ‘‘only Federal 
Stafford’’ and all that follows through ‘‘section 
428B’’ and inserting ‘‘only Federal Direct Stafford 
Loans under section 455(a)(2)(A), Federal Direct 
Unsubsidized 
Stafford 
Loans 
under 
section 
455(a)(2)(D), or Federal Direct PLUS Loans under 
section 455(a)(2)(B)’’; and 
(II) in subclause (V), by striking ‘‘a Federal 
Stafford’’ and all that follows through ‘‘section 
428B’’ and inserting ‘‘a Federal Direct Stafford 
Loan under section 455(a)(2)(A), a Federal Direct 
Unsubsidized 
Stafford 
Loan 
under 
section 
455(a)(2)(D), or a Federal Direct PLUS Loan under 
section 455(a)(2)(B)’’. 
(2) EFFECTIVE DATE.—The amendments made by subpara-
graph (C) of paragraph (1) shall be effective on July 1, 2010, 
as if enacted as part of section 102(a)(1) of the Higher Education 
Opportunity Act (Public Law 110–315) and subject to section 
102(e) of such Act as amended by section 101(a)(2) of Public 
Law 111–39 (20 U.S.C. 1002 note). 
SEC. 2210. CONFORMING AMENDMENTS. 
(a) AMENDMENTS.—Section 454 (20 U.S.C. 1087d) is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (4); and 
(B) by redesignating paragraphs (5) through (7) as 
paragraphs (4) through (6), respectively; and 
(2) in subsection (b)(2), by striking ‘‘(5), (6), and (7)’’ and 
inserting ‘‘(5), and (6)’’. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall take effect on July 1, 2010. 
SEC. 2211. TERMS AND CONDITIONS OF LOANS. 
(a) IN GENERAL.—Section 455 (20 U.S.C. 1087e) is amended— 
(1) in subsection (a)(1), by inserting ‘‘, and first disbursed 
on June 30, 2010,’’ before ‘‘under sections 428’’; and 
(2) in subsection (g)— 
(A) by inserting ‘‘, including any loan made under 
part B and first disbursed before July 1, 2010’’ after ‘‘section 
428C(a)(4)’’; and 
(B) by striking the third sentence. 
(b) EFFECTIVE DATE.—The amendment made by subsection 
(a)(1) shall apply with respect to loans first disbursed under part 
D of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1087a et seq.) on or after July 1, 2010. 
SEC. 2212. CONTRACTS; MANDATORY FUNDS. 
(a) CONTRACTS.—Section 456 (20 U.S.C. 1087f) is amended— 
(1) in subsection (a)— 
(A) by inserting after paragraph (3) the following new 
paragraph: 
‘‘(4) SERVICING BY ELIGIBLE NOT-FOR-PROFIT SERVICERS.— 
‘‘(A) SERVICING CONTRACTS.— 
Applicability. 
20 USC 1087d 
note. 
20 USC 1002 
note. 
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124 STAT. 1079 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(i) IN
GENERAL.—The Secretary shall contract 
with each eligible not-for-profit servicer to service loans 
originated under this part, if the servicer— 
‘‘(I) meets the standards for servicing Federal 
assets that apply to contracts awarded pursuant 
to paragraph (1); and 
‘‘(II) has the capacity to service the applicable 
loan volume allocation described in subparagraph 
(B). 
‘‘(ii) COMPETITIVE
MARKET
RATE
DETERMINATION 
FOR FIRST 100,000 BORROWER ACCOUNTS.—The Secretary 
shall establish a separate pricing tier for each of the 
first 100,000 borrower loan accounts at a competitive 
market rate. 
‘‘(iii) 
INELIGIBILITY.—An 
eligible 
not-for-profit 
servicer shall no longer be eligible for a contract under 
this paragraph after July 1, 2014, if— 
‘‘(I) the servicer has not been awarded such 
a contract before that date; or 
‘‘(II) the servicer’s contract was terminated, 
and the servicer had not reapplied for, and been 
awarded, a contract under this paragraph. 
‘‘(B) ALLOCATIONS.— 
‘‘(i) IN GENERAL.—The Secretary shall (except as 
provided in clause (ii)) allocate to an eligible not-for- 
profit servicer, subject to the contract of such servicer 
described in subparagraph (A), the servicing rights 
for the loan accounts of 100,000 borrowers (including 
borrowers who borrowed loans in a prior year that 
were serviced by the servicer). 
‘‘(ii) SERVICER
ALLOCATION.—The Secretary may 
reallocate, increase, reduce, or terminate an eligible 
not-for-profit servicer’s allocation of servicing rights 
under clause (i) based on the performance of such 
servicer, on the same terms as loan allocations provided 
by contracts awarded pursuant to paragraph (1).’’; and 
(2) by adding at the end the following: 
‘‘(c) DEFINITION
OF ELIGIBLE NOT-FOR-PROFIT SERVICER.—In 
this section: 
‘‘(1) IN GENERAL.—The term ‘eligible not-for-profit servicer’ 
means an entity— 
‘‘(A) that is not owned or controlled in whole or in 
part by— 
‘‘(i) a for-profit entity; or 
‘‘(ii) a nonprofit entity having its principal place 
of business in another State; and 
‘‘(B) that— 
‘‘(i) as of July 1, 2009— 
‘‘(I) meets the definition of an eligible not- 
for-profit holder under section 435(p), except that 
such term does not include eligible lenders 
described in paragraph (1)(D) of such section; and 
‘‘(II) was performing, or had entered into a 
contract with a third party servicer (as such term 
is defined in section 481(c)) who was performing, 
student loan servicing functions for loans made 
under part B of this title; 
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124 STAT. 1080 
PUBLIC LAW 111–152—MAR. 30, 2010 
‘‘(ii) notwithstanding clause (i), as of July 1, 2009— 
‘‘(I) is the sole beneficial owner of a loan for 
which the special allowance rate is calculated 
under section 438(b)(2)(I)(vi)(II) because the loan 
is held by an eligible lender trustee that is an 
eligible not-for-profit holder as defined under sec-
tion 435(p)(1)(D); and 
‘‘(II) was performing, or had entered into a 
contract with a third party servicer (as such term 
is defined in section 481(c)) who was performing, 
student loan servicing functions for loans made 
under part B of this title; or 
‘‘(iii) is an affiliated entity of an eligible not-for- 
profit servicer described in clause (i) or (ii) that— 
‘‘(I) directly employs, or will directly employ 
(on or before the date the entity begins servicing 
loans under a contract awarded by the Secretary 
pursuant to subsection (a)(3)(A)), the majority of 
individuals who perform borrower-specific student 
loan servicing functions; and 
‘‘(II) as of July 1, 2009, was performing, or 
had entered into a contract with a third party 
servicer (as such term is defined in section 481(c)) 
who was performing, student loan servicing func-
tions for loans made under part B of this title. 
‘‘(2) AFFILIATED ENTITY.—For the purposes of paragraph 
(1), the term ‘affiliated entity’— 
‘‘(A) means an entity contracted to perform services 
for an eligible not-for-profit servicer that— 
‘‘(i) is a nonprofit entity or is wholly owned by 
a nonprofit entity; and 
‘‘(ii) is not owned or controlled, in whole or in 
part, by— 
‘‘(I) a for-profit entity; or 
‘‘(II) an entity having its principal place of 
business in another State; and 
‘‘(B) may include an affiliated entity that is established 
by an eligible not-for-profit servicer after the date of enact-
ment of the SAFRA Act, if such affiliated entity is otherwise 
described in paragraph (1)(B)(iii)(I) and subparagraph (A) 
of this paragraph.’’. 
(b) MANDATORY FUNDS.— 
(1) AMENDMENTS.—Section 458(a) (20 U.S.C. 1087h(a)) is 
amended— 
(A) by redesignating paragraph (5) as paragraph (8); 
(B) by redesignating paragraphs (2) through (4) as 
paragraphs (3) through (5), respectively; 
(C) by inserting after paragraph (1) the following new 
paragraph: 
‘‘(2) MANDATORY
FUNDS
FOR
ELIGIBLE
NOT-FOR-PROFIT 
SERVICERS.—For fiscal years 2010 through 2019, there shall 
be available to the Secretary, in addition to any other amounts 
appropriated to carry out this paragraph and out of any money 
in the Treasury not otherwise appropriated, funds to be obli-
gated for administrative costs of servicing contracts with 
eligible not-for-profit servicers as described in section 456.’’; 
and 
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124 STAT. 1081 
PUBLIC LAW 111–152—MAR. 30, 2010 
(D) by inserting after paragraph (5), as redesignated 
by subparagraph (B) of this paragraph, the following: 
‘‘(6) TECHNICAL
ASSISTANCE
TO
INSTITUTIONS
OF
HIGHER 
EDUCATION.— 
‘‘(A) PROVISION OF ASSISTANCE.—The Secretary shall 
provide institutions of higher education participating, or 
seeking to participate, in the loan programs under this 
part with technical assistance in establishing and admin-
istering such programs. 
‘‘(B) FUNDS.—There are authorized to be appropriated, 
and there are appropriated, to carry out this paragraph 
(in addition to any other amounts appropriated to carry 
out this paragraph and out of any money in the Treasury 
not otherwise appropriated), $50,000,000 for fiscal year 
2010. 
‘‘(C) DEFINITION.—In this paragraph, the term ‘assist-
ance’ means the provision of technical support, training, 
materials, technical assistance, and financial assistance. 
‘‘(7) ADDITIONAL PAYMENTS.— 
‘‘(A) PROVISION OF ASSISTANCE.—The Secretary shall 
provide payments to loan servicers for retaining jobs at 
locations in the United States where such servicers were 
operating under part B on January 1, 2010. 
‘‘(B) FUNDS.—There are authorized to be appropriated, 
and there are appropriated, to carry out this paragraph 
(in addition to any other amounts appropriated to carry 
out this paragraph and out of any money in the Treasury 
not otherwise appropriated), $25,000,000 for each of the 
fiscal years 2010 and 2011.’’. 
(2) CONFORMING
AMENDMENT.—Section 458 (20 U.S.C. 
1087h) is further amended by striking ‘‘subsection (a)(3)’’ in 
subsection (b) and inserting ‘‘subsection (a)(4)’’. 
SEC. 2213. INCOME-BASED REPAYMENT. 
Section 493C (20 U.S.C. 1098e) is amended by adding at the 
end the following new subsection: 
‘‘(e) SPECIAL TERMS FOR NEW BORROWERS ON AND AFTER JULY 
1, 2014.—With respect to any loan made to a new borrower on 
or after July 1, 2014— 
‘‘(1) subsection (a)(3)(B) shall be applied by substituting 
‘10 percent’ for ‘15 percent’; and 
‘‘(2) subsection (b)(7)(B) shall be applied by substituting 
‘20 years’ for ‘25 years’.’’. 
Subtitle B—Health 
SEC. 2301. INSURANCE REFORMS. 
(a) EXTENDING
CERTAIN
INSURANCE
REFORMS
TO
GRAND-
FATHERED PLANS.—Section 1251(a) of the Patient Protection and 
Affordable Care Act, as added by section 10103(d) of such Act, 
is amended by adding at the end the following: 
‘‘(4) APPLICATION OF CERTAIN PROVISIONS.— 
‘‘(A) IN
GENERAL.—The following provisions of the 
Public Health Service Act (as added by this title) shall 
Ante, p. 161, 894. 
Effective date. 
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124 STAT. 1082 
PUBLIC LAW 111–152—MAR. 30, 2010 
apply to grandfathered health plans for plan years begin-
ning with the first plan year to which such provisions 
would otherwise apply: 
‘‘(i) Section 2708 (relating to excessive waiting 
periods). 
‘‘(ii) Those provisions of section 2711 relating to 
lifetime limits. 
‘‘(iii) Section 2712 (relating to rescissions). 
‘‘(iv) Section 2714 (relating to extension of 
dependent coverage). 
‘‘(B) PROVISIONS APPLICABLE ONLY TO GROUP HEALTH 
PLANS.— 
‘‘(i) PROVISIONS DESCRIBED.—Those provisions of 
section 2711 relating to annual limits and the provi-
sions of section 2704 (relating to pre-existing condition 
exclusions) of the Public Health Service Act (as added 
by this subtitle) shall apply to grandfathered health 
plans that are group health plans for plan years begin-
ning with the first plan year to which such provisions 
otherwise apply. 
‘‘(ii) ADULT
CHILD
COVERAGE.—For plan years 
beginning before January 1, 2014, the provisions of 
section 2714 of the Public Health Service Act (as added 
by this subtitle) shall apply in the case of an adult 
child with respect to a grandfathered health plan that 
is a group health plan only if such adult child is 
not eligible to enroll in an eligible employer-sponsored 
health plan (as defined in section 5000A(f)(2) of the 
Internal Revenue Code of 1986) other than such grand-
fathered health plan.’’. 
(b) CLARIFICATION REGARDING DEPENDENT COVERAGE.—Section 
2714(a) of the Public Health Service Act, as added by section 
1001(5) of the Patient Protection and Affordable Care Act, is 
amended by striking ‘‘(who is not married)’’. 
SEC. 2302. DRUGS PURCHASED BY COVERED ENTITIES. 
Section 340B of the Public Health Service Act (42 U.S.C. 256b), 
as amended by sections 7101 and 7102 of the Patient Protection 
and Affordable Care Act, is amended— 
(1) in subsection (a)— 
(A) in paragraphs (1), (2), (5), (7), and (9), by striking 
the terms ‘‘covered drug’’ and ‘‘covered drugs’’ each place 
either term appears and inserting ‘‘covered outpatient 
drug’’ or ‘‘covered outpatient drugs’’, respectively; 
(B) in paragraph (4)(L)— 
(i) in clause (i), by striking ‘‘and’’ at the end; 
(ii) in clause (ii), by striking the period and 
inserting ‘‘; and’’; and 
(iii) by inserting after clause (ii), the following: 
‘‘(iii) does not obtain covered outpatient drugs 
through a group purchasing organization or other 
group purchasing arrangement.’’; and 
(C) in paragraph (5)— 
(i) by striking subparagraph (C); 
(ii) by redesignating subparagraphs (D) and (E) 
as subparagraphs (C) and (D), respectively; and 
Ante, p. 130. 
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124 STAT. 1083 
PUBLIC LAW 111–152—MAR. 30, 2010 
LEGISLATIVE HISTORY—H.R. 4872: 
HOUSE REPORTS: No. 111–443 (Comm. on the Budget). 
CONGRESSIONAL RECORD, Vol. 156 (2010): 
Mar. 21, considered and passed House. 
Mar. 23, 24, considered in Senate. 
Mar. 25, considered and passed Senate, amended. House concurred in Senate 
amendments. 
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2010): 
Mar. 30, Presidential remarks. 
(iii) in subparagraph (D), as so redesignated, by 
striking ‘‘subparagraph (D)’’ and inserting ‘‘subpara-
graph (C)’’; 
(2) by striking subsection (c); 
(3) in subsection (d)— 
(A) by striking ‘‘covered drugs’’ each place it appears 
and inserting ‘‘covered outpatient drugs’’; 
(B) by striking ‘‘(a)(5)(D)’’ each place it appears and 
inserting ‘‘(a)(5)(C)’’; and 
(C) by striking ‘‘(a)(5)(E)’’ each place it appears and 
inserting ‘‘(a)(5)(D)’’; and 
(4) by inserting after subsection (d) the following: 
‘‘(e) EXCLUSION OF ORPHAN DRUGS FOR CERTAIN COVERED ENTI-
TIES.—For covered entities described in subparagraph (M), (N), 
or (O) of subsection (a)(4), the term ‘covered outpatient drug’ shall 
not include a drug designated by the Secretary under section 526 
of the Federal Food, Drug, and Cosmetic Act for a rare disease 
or condition.’’. 
SEC. 2303. COMMUNITY HEALTH CENTERS. 
Section 10503(b)(1) of the Patient Protection and Affordable 
Care Act is amended— 
(1) in subparagraph (A), by striking ‘‘700,000,000’’ and 
inserting ‘‘1,000,000,000’’; 
(2) in subparagraph (B), by striking ‘‘800,000,000’’ and 
inserting ‘‘1,200,000,000’’; 
(3) in subparagraph (C), by striking ‘‘1,000,000,000’’ and 
inserting ‘‘1,500,000,000’’; 
(4) in subparagraph (D), by striking ‘‘1,600,000,000’’ and 
inserting ‘‘2,200,000,000’’; and 
(5) in subparagraph (E), by striking ‘‘2,900,000,000’’ and 
inserting ‘‘3,600,000,000’’. 
Approved March 30, 2010. 
Ante, p. 1004. 
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