|Sponsor||Rep. Dingell, John D.|
|Date||June 24, 2010 (111th Congress, 2nd Session)|
|Staff Contact||Brian McManus|
H.R. 3962 is expected to be considered on the floor of the House of Representatives today, June 24, 2010, under a motion to suspend the rules, which requires a two-thirds majority vote. Rep. John Dingell (MI) introduced H.R. 3962 on October 29, 2010. The House passed the bill on November 7, 2009, and the Senate passed the bill under unanimous consent on June 18, 2010, after the bill was amended with its current language.
Title I of H.R. 3962 contains three health care provisions:
Medicare Physician Payments—The Doc Fix: H.R. 3962 provides a 2.2 percent increase in Medicare reimbursement payments for doctors from June 1, 2010, to November 30, 2010 (six months). After November 2010, this 2.2 percent increase will be disregarded when calculating sustainable growth rate (SGR) in the future.
3-Day Payment Window: This section prohibits Medicare from reopening or readjusting a claim submitted by a hospital during the three days preceding a patient’s inpatient admission. This provision is an offset to the doc fix funding.
IRS Data Match: This section allows the Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) to share tax return data, including delinquent tax debt, about providers or suppliers who have applied to enroll or reenroll in the program. This section is an offset to the doc fix funding.
Title II of H.R. 3962 contains pension funding relief:
Extend Period for Single-Employer Defined Benefit Plans to Amortize Certain Shortfall Amortization Rates: The bill would permit single employer defined plan sponsors to elect an extended 9-year amortization period for funding shortfalls in 2009, 2010, and 2011, with interest only being paid in the first two years. The plan sponsor may also elect a 15-year amortization period.
Conditions for Using Relief: Single-employer defined benefit funding relief would be reduced, on a dollar-for dollar-basis, by amounts an employer spends on certain other business activities, including: providing employee compensation, including nonqualified deferred compensation, above $1 million per year or making stock repurchases or paying dividends above certain thresholds. These conditions would generally apply for three years for plans using the nine-year amortization and for five years for plans using the fifteen-year amortization. Certain exceptions would apply, including that dividends and redemptions could be paid to the extent of earnings before interest, taxes, depreciation, and amortization in the prior year.
Other Single Employer Defined Benefit Provisions: The bill contains additional provisions: (1) permit the use of a plan's 2008 funding status for purposes of determining the applicability of certain benefit restrictions imposed on underfunded plans for 2010 and 2011, (2) provide plans subject to benefit restrictions because of underfunding with temporary increased flexibility to provide Social Security leveling payments (providing retirees who are too young to receive with an increased portion of their defined payout before Social Security begins), (3) exempt multiple employer plans run by charities from certain funding requirements until 2017, (4) increase the flexibility of plans run by charities with respect to the use of credit balances, and (5) provide to plans that are not yet subject to certain funding requirements funding relief that is similar to the relief provided to other plans.
Optional Use of 30-Year Amortization Periods: This provision would allow multiemployer pension plans to elect a 30-year amortization period for certain losses incurred in 2008 and 2009.
Congress has repeatedly voted to prevent cuts in doctor reimbursement payments. The Sustainable Growth Rate (SGR) is a target rate of growth in Medicare Part B spending. It is designed to bring actual spending in line with allowable spending. The increases are tied to increases in health care spending per Medicare beneficiary to growth in the Gross Domestic Product (GDP). If the target is exceeded, then Medicare reduces its payments to providers. If the targets are not reached, then Medicare increases its payments.
In 2006, the Pension Protection Act established new funding rules for defined benefit pension plans. Under that legislation, defined benefit pension plans were required to meet minimum funding standards to ensure that pensions would be paid without default (in order to avoid defaults such as those that occurred in some airline and steel company pension plans). Many of the standards have not been met, especially by multi-employer pension plans, which are collectively bargained plans maintained by more than one employer and a labor union. Under these provisions, the funding requirements of the Pension Protection Act would be lowered for many defined-benefit plans. Some Members may be concerned that allowing companies to decrease the amount of funding for their pension plans could result in even less solvent plans. Unsolvent defined benefit pension plans would be the responsibility of the Pension Benefit Guaranty Corporation (PBGC), and therefore, ultimately taxpayers.
The Congressional Budget Office estimate that the doc fix will cost $2.7 billion in 2010 and $6.4 billion over ten years. The Joint Tax Committee estimates the IRS data match provision will save $175 million over five years and $425 million over ten. However, H.R. 3962 raises revenue by $2.1 billion because of fewer, tax-deductible contributions to pension plan, which increase taxable income. Therefore, it is estimated the bill satisfies the Democrats’ PAYGO requirements.