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114th Congress    }                                  {   Rept. 114-882
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                  {          Part 1

======================================================================



 
    HELPING ENSURE ACCOUNTABILITY, LEADERSHIP, AND TRUST IN TRIBAL 
                             HEALTHCARE ACT

                                _______
                                

               December 20, 2016.--Ordered to be printed

                                _______
                                

       Mr. Brady of Texas, from the Committee on Ways and Means, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5406]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 5406) to amend the Indian Health Care Improvement 
Act to improve access to tribal health care by providing for 
systemic Indian Health Service workforce and funding allocation 
reforms, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND..........................................13
          A. Purpose and Summary.................................    13
          B. Background and Need for Legislation.................    13
          C. Legislative History.................................    13
 II. EXPLANATION OF THE BILL.........................................14
          A. Exclusion from Gross Income for Certain Payments 
              Made Under Indian Health Service Loan Repayment 
              Program (sec. 201 of the bill and sec. 108(f)(4) of 
              the Code)..........................................    14
III. VOTES OF THE COMMITTEE..........................................15
 IV. BUDGET EFFECTS OF THE BILL......................................16
          A. Committee Estimate of Budgetary Effects.............    16
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures.......................................    16
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    16
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......16
          A. Committee Oversight Findings and Recommendations....    16
          B. Statement of General Performance Goals and 
              Objectives.........................................    17
          C. Information Relating to Unfunded Mandates...........    17
          D. Applicability of House Rule XXI 5(b)................    17
          E. Tax Complexity Analysis.............................    17
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    17
          G. Duplication of Federal Programs.....................    18
          H. Disclosure of Directed Rule Makings.................    18
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........18
          A. Text of Existing Law Amended or Repealed by the 
              Bill, as Reported..................................    18
          B. Changes in Existing Law Proposed by the Bill, as 
              Reported...........................................    41

VII. ADDITIONAL VIEWS................................................75

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Helping Ensure 
Accountability, Leadership, and Trust in Tribal Healthcare Act'' or the 
``HEALTTH Act''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.

      TITLE I--EXPANDING AUTHORITIES AND IMPROVING ACCESS TO CARE

Sec. 101. Service hospital long-term contract pilot program.
Sec. 102. Expanded hiring authority for the Indian Health Service.
Sec. 103. Removal or demotion of employees.
Sec. 104. Improving timeliness of care.

       TITLE II--INDIAN HEALTH SERVICE RECRUITMENT AND WORKFORCE

Sec. 201. Exclusion from gross income for certain payments made under 
Indian Health Service Loan Repayment Program.
Sec. 202. Clarifying that certain degrees qualify individuals for 
eligibility in the Indian Health Service Loan Repayment Program.
Sec. 203. Cultural competency programs.
Sec. 204. Relocation reimbursement.
Sec. 205. Authority to waive Indian preference laws.
Sec. 206. Streamlining medical volunteer credentialing process.

           TITLE III--PURCHASED/REFERRED CARE PROGRAM REFORMS

Sec. 301. Codification of limitation on charges for health care 
professional services and non-hospital-based care source.
Sec. 302. Allocation of Purchased/Referred Care program funds.
Sec. 303. Purchased/referred care program backlog.
Sec. 304. Report on financial stability of Service hospitals and 
facilities.

SEC. 2. FINDINGS.

  Congress finds the following:
          (1) The United States Government has a treaty obligation to 
        provide health care to American Indians and Alaska Natives.
          (2) The Indian Health Service is the Federal agency that is 
        entrusted to carry out this obligation.
          (3) Access to high quality health care is critical for strong 
        and vibrant tribal communities in the Great Plains Area and 
        throughout the United States.
          (4) In 2010, the Senate Committee on Indian Affairs published 
        a report titled ``In Critical Condition: The Urgent Need to 
        Reform the Indian Health Service's Aberdeen Area'', which 
        detailed deficiencies, abuses, and malfeasance within the 
        Aberdeen Area of the Indian Health Service, now called the 
        Great Plains Area.
          (5) In 2015 and 2016, the Centers for Medicare & Medicaid 
        Services conducted surveys of Indian Health Service hospitals 
        in the Great Plains Area and found serious structural 
        deficiencies that put patients' health and safety in immediate 
        jeopardy.
          (6) The Indian Health Service's failures in the Great Plains 
        Area have resulted in a severe reduction in access to emergency 
        care, needlessly long wait times, patient suffering, low 
        quality of life, and several tragic deaths.
          (7) The Indian Health Service is in need of comprehensive 
        reform that will hold its management and employees accountable, 
        foster strong and capable agency leadership, and restore tribal 
        members' trust in the care it delivers.

      TITLE I--EXPANDING AUTHORITIES AND IMPROVING ACCESS TO CARE

SEC. 101. SERVICE HOSPITAL LONG-TERM CONTRACT PILOT PROGRAM.

  Title VIII of the Indian Health Care Improvement Act (25 U.S.C. 1671) 
is amended by adding at the end the following new section:

``SEC. 833. SERVICE HOSPITAL LONG-TERM CONTRACT PILOT PROGRAM.

  ``(a) In General.--The Secretary, acting through the Service, shall 
implement a 7-year pilot program to test the viability and advisability 
of entering into long-term contracts for the operation of eligible 
Service hospitals with governance structures that include tribal input.
  ``(b) Elements.--Under such pilot program, subject to subsection (e), 
the following shall apply:
          ``(1) The Secretary shall select three eligible Service 
        hospitals in rural areas to participate in the pilot program.
          ``(2) For each such participating hospital, the Secretary 
        shall enter into a long-term contract.
          ``(3) At each such participating hospital, the Secretary, in 
        consultation with the primary Indian tribes served by the 
        hospital, shall install a governing board described in 
        subsection (d), which shall be responsible for overseeing the 
        local operation of the hospital.
  ``(c) Eligible Service Hospital.--For purposes of this section, the 
term `eligible Service hospital' means a Service hospital that 
furnishes services in a rural area to direct services tribes and with 
respect to which the Secretary has obtained the permission of the 
primary Indian tribes served by the hospital for the hospital to 
participate under the pilot program under this section.
  ``(d) Governance Board Described.--For purposes of subsection (b), a 
governance board described in this subsection, with respect to a 
Service hospital participating in the pilot program, is a board that 
satisfies the following criteria:
          ``(1) Composition.--
                  ``(A) In general.--The governance board is composed, 
                in accordance with the best practices specified under 
                paragraph (3), of the following individuals:
                          ``(i) Representatives of the Service, who 
                        shall be selected by the Secretary.
                          ``(ii) Representatives of the Service 
                        hospital.
                          ``(iii) Representatives of each primary 
                        Indian tribe served by the hospital, who shall 
                        be selected by the respective Indian tribe.
                          ``(iv) Experts in health care administration 
                        and delivery, who shall--
                                  ``(I) be selected by the Secretary 
                                and respective Indian tribe; and
                                  ``(II) to the extent possible, 
                                located in the State in which the 
                                hospital is located or otherwise 
                                familiar with such State.
                  ``(B) Voting rights.--In determining the composition 
                of the board with respect to voting rights on the 
                board--
                          ``(i) the number of voting members 
                        representing the Service shall be equal to the 
                        number of voting members representing the 
                        Indian tribes involved; and
                          ``(ii) the number of voting members 
                        representing the hospital may not be greater 
                        than the number of voting members representing 
                        the Service or the Indian tribes involved.
          ``(2) Duties.--The governance board shall perform duties in 
        accordance with the best practices specified under paragraph 
        (3) and shall include developing financial and quality metrics 
        and standards for salaries, recruitment, retention, training, 
        and dismissal of employees of such hospital.
          ``(3) Best practices.--The Secretary shall specify best 
        practices for the governance board described in this 
        subsection, including best practices relating to the number of 
        members of such board, the authorities of the board, and the 
        duties of the board.
  ``(e) Treatment of Eligible Service Hospitals Currently Under 
Contract.--In the case of an eligible Service hospital that is under a 
current contract with the Secretary as of the initiation of the 
selection process period for the pilot program, in order for such 
hospital to participate in the pilot program the Secretary, with the 
agreement of the hospital, may--
          ``(1) notwithstanding any other provision of law, modify or 
        terminate such contract and in order for such hospital to enter 
        into a long-term contract under the pilot program; or
          ``(2) enter into a long-term contract under the pilot program 
        (and begin the pilot program) beginning on the date after the 
        last date of such current contract.
  ``(f) Long-Term Contract Defined.--For purposes of this section, the 
term `long-term contract' means a contract for a period of at least 5 
years.
  ``(g) Clarification.--Nothing in this section shall be construed to 
inhibit a tribe's authority to enter into a compact or contract under 
the Indian Self-Determination and Education Assistance Act.
  ``(h) Reports.--For each year of the pilot program, the Secretary 
shall submit a report to Congress on the results of the program 
demonstrated during the respective year. Each such report shall include 
the following:
          ``(1) Information related to the financial health of each 
        eligible hospital participating in the pilot program.
          ``(2) Information on the affect the pilot program has on 
        access to care.
          ``(3) Information on patient satisfaction with services 
        provided at such hospitals.
          ``(4) The number of readmissions at such hospitals.
          ``(5) The number of hospital-acquired conditions at such 
        hospitals.
          ``(6) Recommendations on the viability and advisability of 
        the long-term contracts and hospital governance structure under 
        such pilot program.
          ``(7) Any other information the Secretary considers necessary 
        for a proper analysis of the pilot program.''.

SEC. 102. EXPANDED HIRING AUTHORITY FOR THE INDIAN HEALTH SERVICE.

  Section 601(d) of the Indian Health Care Improvement Act (25 U.S.C. 
1661(d)) is amended--
          (1) in paragraph (1)(A), by inserting ``and subject to 
        paragraph (4)'' after ``paragraph (2)''; and
          (2) by adding at the end the following:
          ``(4) Employment authority.--
                  ``(A) In general.--The Secretary may, with respect to 
                any employee described in subparagraph (B), provide 
                that one or more provisions of chapter 74 of title 38, 
                United States Code (other than subchapter V of such 
                chapter or of regulations promulgated under such 
                chapter other than under such subchapter), shall 
                apply--
                          ``(i) in lieu of any provision of title 5 of 
                        the United States Code (other than as applied 
                        pursuant to section 834); or
                          ``(ii) notwithstanding any lack of specific 
                        authority for a matter with respect to which 
                        title 5 of the United States Code relates.
                  ``(B) Applicability to employees.--Authority under 
                this paragraph may be exercised with respect to any 
                employee in the Service holding a position--
                          ``(i) to which chapter 51 of title 5 of the 
                        United States Code applies, excluding any 
                        senior executive service position; and
                          ``(ii) which involves health care 
                        responsibilities.
                  ``(C) Definition.--For purposes of this paragraph, 
                `health care' means direct patient-care services or 
                services incident to direct patient-care services.''.

SEC. 103. REMOVAL OR DEMOTION OF EMPLOYEES.

  (a) In General.--Title VIII of the Indian Health Care Improvement Act 
(25 U.S.C. 1671 et seq.), as amended by section 101, is further amended 
by adding at the end the following new section:

``SEC. 834. REMOVAL OR DEMOTION OF EMPLOYEES.

  ``(a) In General.--The Secretary may remove or demote an individual 
who is an employee of the Service if the Secretary determines the 
performance or misconduct of the individual warrants such removal or 
demotion. If the Secretary so removes or demotes such an individual, 
the Secretary may--
          ``(1) remove the individual from the Service; or
          ``(2) demote the individual by means of--
                  ``(A) a reduction in grade for which the individual 
                is qualified and that the Secretary determines is 
                appropriate; or
                  ``(B) a reduction in annual rate of pay that the 
                Secretary determines is appropriate.
        In the case of an individual who is removed under paragraph (1) 
        or demoted under paragraph (2), the Secretary may require such 
        individual take unpaid administrative leave for not longer than 
        10 consecutive work days.
  ``(b) Pay of Certain Demoted Individuals.--(1) Notwithstanding any 
other provision of law, any individual subject to a demotion under 
subsection (a)(2)(A) shall, beginning on the date of such demotion, 
receive the annual rate of pay applicable to such grade.
  ``(2) An individual so demoted may not be placed on administrative 
leave or any other category of paid leave during the period during 
which an appeal (if any) under this section is ongoing, and may only 
receive pay if the individual reports for duty. If an individual so 
demoted does not report for duty, such individual shall not receive pay 
or other benefits pursuant to subsection (e)(5).
  ``(c) Notice to Secretary.--Not later than 30 days after removing or 
demoting an individual under subsection (a), the Service shall submit 
to the Secretary notice in writing of such removal or demotion and the 
reason for such removal or demotion.
  ``(d) Procedure.--(1) The procedures under section 7513(b) of title 5 
and chapter 43 of such title shall not apply to a removal or demotion 
under this section.
  ``(2)(A) Subject to subparagraph (B) and subsection (e), any removal 
or demotion under subsection (a) may be appealed to the Merit Systems 
Protection Board under section 7701 of title 5.
  ``(B) An appeal under subparagraph (A) of a removal or demotion may 
only be made if such appeal is made not later than seven days after the 
date of such removal or demotion.
  ``(e) Expedited Review by Administrative Judge.--(1) Upon receipt of 
an appeal under subsection (d)(2)(A), the Merit Systems Protection 
Board shall refer such appeal to an administrative judge pursuant to 
section 7701(b)(1) of title 5. The administrative judge shall expedite 
any such appeal under such section and, in any such case, shall issue a 
decision not later than 45 days after the date of the appeal.
  ``(2) Notwithstanding any other provision of law, including section 
7703 of title 5, the decision of an administrative judge under 
paragraph (1) shall be final and shall not be subject to any further 
appeal.
  ``(3) In any case in which the administrative judge cannot issue a 
decision in accordance with the 45-day requirement under paragraph (1), 
the removal or demotion is final. In such a case, the Merit Systems 
Protection Board shall, within 14 days after the date that such removal 
or demotion is final, submit to Congress a report that explains the 
reasons why a decision was not issued in accordance with such 
requirement.
  ``(4) The Merit Systems Protection Board or administrative judge may 
not stay any removal or demotion under this section.
  ``(5) During the period beginning on the date on which an individual 
appeals a removal from the Service under subsection (d) and ending on 
the date that the administrative judge issues a final decision on such 
appeal, such individual may not receive any pay, awards, bonuses, 
incentives, allowances, differentials, student loan repayments, special 
payments, or benefits.
  ``(6) To the maximum extent practicable, the Secretary shall provide 
to the Merit Systems Protection Board, and to any administrative judge 
to whom an appeal under this section is referred, such information and 
assistance as may be necessary to ensure an appeal under this 
subsection is expedited.
  ``(f) Termination of Investigations by Office of Special Counsel.--
Notwithstanding any other provision of law, the Special Counsel 
(established by section 1211 of title 5) may terminate an investigation 
of a prohibited personnel practice alleged by an employee or former 
employee of the Department after the Special Counsel provides to the 
employee or former employee a written statement of the reasons for the 
termination of the investigation. Such statement may not be admissible 
as evidence in any judicial or administrative proceeding without the 
consent of such employee or former employee.
  ``(g) Relation to Title 5.--The authority provided by this section is 
in addition to the authority provided by subchapter V of chapter 75 of 
title 5 and chapter 43 of such title.
  ``(h) Definitions.--In this section:
          ``(1) The term `individual' means an individual occupying a 
        position at the Service but does not include--
                  ``(A) an individual, as that term is defined in 
                section 713(g)(1); or
                  ``(B) a political appointee.
          ``(2) The term `grade' has the meaning given such term in 
        section 7511(a) of title 5.
          ``(3) The term `misconduct' includes neglect of duty, 
        malfeasance, or failure to accept a directed reassignment or to 
        accompany a position in a transfer of function.
          ``(4) The term `political appointee' means an individual who 
        is--
                  ``(A) employed in a position described under sections 
                5312 through 5316 of title 5 (relating to the Executive 
                Schedule);
                  ``(B) a limited term appointee, limited emergency 
                appointee, or noncareer appointee in the Senior 
                Executive Service, as defined under paragraphs (5), 
                (6), and (7), respectively, of section 3132(a) of title 
                5; or
                  ``(C) employed in a position of a confidential or 
                policy-determining character under schedule C of 
                subpart C of part 213 of title 5 of the Code of Federal 
                Regulations.''.
  (b) Conforming.--Section 4303(f) of title 5, United States Code, is 
amended--
          (1) by striking ``or'' at the end of paragraph (2);
          (2) by striking the period at the end of paragraph (3) and 
        inserting ``, or''; and
          (3) by adding at the end the following:
          ``(4) any removal or demotion under section 834 of the Indian 
        Health Care Improvement Act.''.

SEC. 104. IMPROVING TIMELINESS OF CARE.

  Title III of the Indian Health Care Improvement Act (25 U.S.C. 1631 
et seq.) is amended by adding at the end the following new section:

``SEC. 314. STANDARDS TO IMPROVE TIMELINESS OF CARE.

  ``(a) In General.--The Secretary, acting through the Service, shall--
          ``(1) establish, by regulation, standards to measure the 
        timeliness of the provision of health care services in Service 
        facilities; and
          ``(2) make such standards available to all Service areas and 
        Service facilities.
  ``(b) Data Collection.--The Secretary, acting through the Service, 
shall develop a process for Service facilities to submit to the 
Secretary data with respect to the standards established under 
subsection (a).''.

       TITLE II--INDIAN HEALTH SERVICE RECRUITMENT AND WORKFORCE

SEC. 201. EXCLUSION FROM GROSS INCOME FOR CERTAIN PAYMENTS MADE UNDER 
                    INDIAN HEALTH SERVICE LOAN REPAYMENT PROGRAM.

  (a) In General.--Section 108(f)(4) of the Internal Revenue Code of 
1986 is amended to read as follows:
          ``(4) Payments under national health service corps loan 
        repayment program, indian health service loan repayment 
        program, and certain state loan repayment programs.--In the 
        case of an individual, gross income shall not include any 
        amount received--
                  ``(A) under section 338B(g) of the Public Health 
                Service Act (but only if such amount is received with 
                respect to the type of health profession or specialty 
                for which an individual would have been eligible for 
                participation in the program under section 338B of such 
                Act as such program was in effect on January 1, 2016),
                  ``(B) under a State program described in section 338I 
                of such Act,
                  ``(C) under section 108 of the Indian Health Care 
                Improvement Act (but only in the case of a health 
                profession or specialty described in subparagraph (A)), 
                or
                  ``(D) under any other State loan repayment or loan 
                forgiveness program that is intended to provide for the 
                increased availability of health care services in 
                underserved or health professional shortage areas (as 
                determined by such State).''.
  (b) Effective Date.--The amendments made by this section shall apply 
to amounts received in taxable years beginning after December 31, 2016.

SEC. 202. CLARIFYING THAT CERTAIN DEGREES QUALIFY INDIVIDUALS FOR 
                    ELIGIBILITY IN THE INDIAN HEALTH SERVICE LOAN 
                    REPAYMENT PROGRAM.

  Section 108 of the Indian Health Care Improvement Act (25 U.S.C. 
1616a) is amended--
          (1) in subsection (b)(1)(B)--
                  (A) in clause (i), by inserting ``(including a degree 
                business administration with an emphasis in health care 
                management, as defined by the Secretary, or a degree in 
                health administration, hospital administration, or 
                public health)'' before the semicolon; and
                  (B) in clause (ii), by inserting ``or a license or 
                certification to practice in the field of health 
                administration, hospital administration, business 
                administration, or public health, as applicable, in a 
                State'' before the semicolon;
          (2) in subsection (f)(1)(B)(iii), by striking ``2 years or 
        such longer period as the individual may agree to serve in the 
        full-time clinical practice of such individual's profession'' 
        and inserting ``2 years or such longer period as the individual 
        may agree to serve in the full-time practice of such 
        individual's profession (or 4 years or such longer period as 
        the individual may agree to serve in the half-time practice of 
        such individual's profession)''; and
          (3) in subsection (g)(2)(A), in the first sentence--
                  (A) by inserting ``, in the case of an individual 
                agreeing to serve in the full-time practice of such 
                individual's profession,'' before ``up to $35,000''; 
                and
                  (B) by inserting ``(or, in the case of an individual 
                agreeing to serve in the half-time practice of such 
                individual's profession, up to $17,500)'' before ``on 
                behalf of''.

SEC. 203. CULTURAL COMPETENCY PROGRAMS.

  Title I of the Indian Health Care Improvement Act (25 U.S.C. 1611 et 
seq.) is amended by adding at the end the following new section:

``SEC. 125. CULTURAL COMPETENCY PROGRAMS.

  ``(a) In General.--The Secretary, acting through the Service, shall, 
not later than one year after the date of the enactment of this section 
and for each Service area, develop and implement training programs for 
cultural competency for employees of the Service, locum tenens medical 
providers, and other contracted employees who work at Service hospitals 
or other Service facilities and whose employment requires regular 
direct patient access.
  ``(b) Required Participation.--Notwithstanding any other provision of 
law, beginning with years beginning after (and for contracts entered 
into on or after) the date of implementation of the training programs 
under subsection (a), annual participation in such a program shall be a 
condition of employment (or of providing services in the capacity as a 
locum tenen medical provider or of the terms of the contracted 
employment, as applicable), and continued employment (or provision of 
such services in such capacity or contracted employment, as 
applicable), for each employee of the Service, locum tenens medical 
provider, and contracted employee described in such subsection. For 
purposes of the previous sentence, an individual shall not be 
considered as participating in such a program, with respect to a year, 
unless such individual satisfies such requirements, including testing, 
included in such program for such year, as specified by the Secretary.
  ``(c) Consultation.--In developing a training program under 
subsection (a) for a Service area, the Secretary shall consult with 
representatives of each Indian tribe served in such area.''.

SEC. 204. RELOCATION REIMBURSEMENT.

  Title I of the Indian Health Care Improvement Act (25 U.S.C. 1611 et 
seq.), as amended by section 203, is further amended by adding at the 
end the following new section:

``SEC. 126. RELOCATION REIMBURSEMENT.

  ``(a) In General.--In the case of an employee of the Service who 
relocates to serve in a different capacity or position as an employee 
of the Service, the Secretary shall, subject to subsection (b), offer 
such employee reimbursement for reasonable costs associated with such 
relocation, as determined by the Secretary, incurred by such employee 
if--
          ``(1) such relocation is to fill a position that--
                  ``(A) is at a Service facility that is located in a 
                rural area or medically underserved area; and
                  ``(B) had not been filled by a full-time non-
                contractor for a period of at least 6 months; or
          ``(2) such relocation is to fill a position that is for 
        hospital management or administration, as determined by the 
        Secretary.
  ``(b) Amount for Relocation.--
          ``(1) In general.--The amount of reimbursement to an employee 
        under subsection (a) shall be in an amount that is at least 50 
        percent, but not more than 75 percent, of the specified pay 
        amount (as described in paragraph (2)) of the employee.
          ``(2) Specified pay amount.--For purposes of paragraph (1), 
        the specified pay amount, with respect to an employee, is the 
        annual rate of basic pay of the employee in effect at the 
        beginning of the service period of such employee multiplied by 
        the number of years (including fractions of a year) in the 
        service period, not to exceed 4 years.
  ``(c) Clarification.--Nothing in this section shall be construed as 
limiting the authority of the Secretary, as in existence before the 
enactment of this section, to offer reimbursement for travel or 
relocation.''.

SEC. 205. AUTHORITY TO WAIVE INDIAN PREFERENCE LAWS.

  Title VI of the Indian Health Care Improvement Act (25 U.S.C. 1611 et 
seq.) is amended by adding at the end the following new section:

``SEC. 605. AUTHORITY TO WAIVE INDIAN PREFERENCE LAWS.

  ``To enhance recruitment and retention of employees of the Service, 
the Secretary may waive the requirements of the Indian preference laws 
(as defined in section 2(e) of Public Law 96-135 (25 U.S.C. 472a(e))) 
with respect to a personnel action with respect to a Service unit with 
the written request or resolution of an Indian tribe located within the 
applicable Service unit--
          ``(1) if such personnel action is with respect to a facility 
        that has a personnel vacancy rate of at least 20 percent; or
          ``(2) in the case such personnel action is with respect to a 
        former employee of the Service or former tribal employee who 
        was removed from such former employment or demoted for 
        misconduct that occurred during the five years prior to the 
        date of such personnel action.''.

SEC. 206. STREAMLINING MEDICAL VOLUNTEER CREDENTIALING PROCESS.

  Title I of the Indian Health Care Improvement Act (25 U.S.C. 1611 et 
seq.), as amended by sections 203 and 204, is further amended by adding 
at the end the following new section:

``SEC. 128. STREAMLINING MEDICAL VOLUNTEER CREDENTIALING PROCESS.

  ``(a) In General.--The Secretary, acting through the Service, shall, 
in accordance with subsection (b), implement a Service-wide centralized 
credentialing system to credential licensed health professionals who 
seek to volunteer at a Service facility.
  ``(b) Requirements.--The credentialing system implemented under 
subsection (a) shall be in accordance with the following:
          ``(1) Credentialing of licensed health professionals who seek 
        to volunteer at a Service facility shall occur at the Service 
        level.
          ``(2) Credentialing procedures under such system shall be 
        uniform throughout the Service.
          ``(3) Under such system, in the case that such a licensed 
        health professional has successfully completed the 
        credentialing procedures under such system, such professional 
        shall be authorized to treat patients at any Service facility 
        or other facility within a Service area.
  ``(c) Regulations.--The Secretary may promulgate regulations to 
implement this section.
  ``(d) Consultation.--The Secretary may consult with public and 
private associations of medical providers in the development of the 
credentialing system under this section.
  ``(e) Application.--The credentialing system under this section shall 
apply with respect to licensed health professionals seeking to 
volunteer with respect to--
          ``(1) providing direct health care services at a Service 
        facility; and
          ``(2) providing services at facilities operated or contracted 
        by a tribe, tribal organization, or urban Indian organization 
        under the Indian Self-Determination and Education Assistance 
        Act.
  ``(f) Clarification.--Nothing in this section shall be construed to 
inhibit a tribe's authority to enter into a compact or contract under 
the Indian Self-Determination and Education Assistance Act.''.

           TITLE III--PURCHASED/REFERRED CARE PROGRAM REFORMS

SEC. 301. CODIFICATION OF LIMITATION ON CHARGES FOR HEALTH CARE 
                    PROFESSIONAL SERVICES AND NON-HOSPITAL-BASED CARE 
                    SOURCE.

  (a) Applicability.--The requirements of this section shall apply to--
          (1) health programs operated by the Indian Health Service;
          (2) health programs operated by an urban Indian organization 
        through a contract or grant under title V of the Indian Health 
        Care Improvement Act, Public Law 94-437, as amended; and
          (3) health programs operated by an Indian tribe or tribal 
        organization pursuant to a contract or compact with the Indian 
        Health Service under the Indian Self-Determination and 
        Education Assistance Act (25 U.S.C. 450 et seq.), provided that 
        the Indian tribe or tribal organization has agreed in such 
        contract or compact to be bound by this section pursuant to 
        section 108 of the Indian Self-Determination and Education 
        Assistance Act (25 U.S.C. 450l) and section 517(e) of such Act 
        (25 U.S.C. 458aaa-16(e)), as applicable.
  (b) Definitions.--For purposes of this section, the following 
definitions apply:
          (1) The term ``notification of a claim'' means, the 
        submission of a claim, with respect to services for an 
        individual, that meets the requirements of section 136.24 of 
        title 42, Code of Federal Regulations, in accordance with the 
        following:
                  (A) Such claim is submitted within the applicable 
                period specified under such section 136.24, or if 
                applicable, section 406 of the Indian Health Care 
                Improvement Act (25 U.S.C. 1646), and includes 
                information necessary to determine the relative medical 
                need for the services and the individual's eligibility.
                  (B) The information submitted with the claim is 
                sufficient to--
                          (i) identify the individual as eligible for 
                        Indian Health Service services (such as name, 
                        address, home or referring service unit, tribal 
                        affiliation);
                          (ii) identify the medical care provided (such 
                        as the date of service and description of 
                        services); and
                          (iii) verify prior authorization by the 
                        Indian Health Service for services provided 
                        (such as the IHS purchase order number or 
                        medical referral form) or exemption from prior 
                        authorization (such as copies of pertinent 
                        clinical information for emergency care that 
                        was not prior-authorized).
                  (C) To be considered sufficient notification of a 
                claim, a claim submitted by a provider or supplier for 
                payment shall be in a format that complies with the 
                format required for submission of claims under title 
                XVIII of the Social Security Act (42 U.S.C. 1395 et 
                seq.) or recognized under section 1175 of such Act (42 
                U.S.C. 1320d-4).
          (2) The term ``provider'' means a provider of services not 
        governed by or subject to subpart D of part 136 of title 42, 
        Code of Federal Regulations, and may include a skilled nursing 
        facility, comprehensive outpatient rehabilitation facility, 
        home health agency, or hospice program.
          (3) The term ``referral'' means an authorization for medical 
        care by the appropriate ordering official in accordance with 
        subpart C of part 136 of title 42, Code of Federal Regulations.
          (4) The term ``repricing agent'' means an entity that offers 
        the Indian Health Service or a tribe, tribal organization, or 
        urban Indian organization discounted rates from public and 
        private providers that are not the Indian Health Service or a 
        tribe, tribal organization, or urban Indian organization as a 
        result of existing contracts that the public or private 
        provider other than the Indian Health Service or a tribe, 
        tribal organization, or urban Indian organization may have 
        within the commercial health care industry.
          (5) The term ``supplier'' means a physician or other 
        practitioner, a facility, or other entity (other than a 
        provider) not already governed by or subject to subpart D of 
        part 136 of title 42, Code of Federal Regulations, that 
        furnishes items or services under this section.
  (c) Payment for Provider and Supplier Services Purchased by Indian 
Health Programs.--
          (1) In general.--Payment to providers and suppliers for any 
        level of care authorized under subpart C of part 136 of title 
        42, Code of Federal Regulations, by a Purchased/Referred Care 
        program of the Indian Health Service, authorized by a tribe or 
        tribal organization carrying out such a program of the Indian 
        Health Service under the Indian Self-Determination and 
        Education Assistance Act (25 U.S.C. 450 et seq.), authorized 
        for purchase under section 136.31 of such title 42, Code of 
        Federal Regulations, by an urban Indian organization (as that 
        term is defined in 25 U.S.C. 1603(h)) (hereafter collectively 
        referred to as the ``I/T/U''), shall, subject to subsection 
        (e), be determined based on one of the methods described in the 
        following subparagraphs, as applicable:
                  (A) MFC rate method.--
                          (i) In general.--The method described in this 
                        subparagraph is that, subject to clause (ii), 
                        in the case a specific amount for an item or 
                        service has been negotiated with a specific 
                        provider or supplier or its agent by the I/T/U, 
                        the I/T/U shall pay that amount for such item 
                        or service.
                          (ii) Limitation.--The amount applied under 
                        clause (i) for an item or service shall be an 
                        amount that is at least the amount of the 
                        provider's or supplier's most favored customer 
                        rate, as defined by the Secretary of Health and 
                        Human Services, for an item or service, as 
                        evidenced by commercial price lists or paid 
                        invoices and other related pricing and discount 
                        data to ensure that the I/T/U is receiving a 
                        fair and reasonable price. The limitation under 
                        the previous sentence shall not apply with 
                        respect to an item or service if--
                                  (I) the amount offered to the I/T/U 
                                under the negotiation under clause (i) 
                                is fair and reasonable, as determined 
                                by the I/T/U, even though comparable 
                                discounts were not negotiated; and
                                  (II) the amount is otherwise in the 
                                best interest of the I/T/U, as 
                                determined by the I/T/U.
                  (B) Medicare rates.--The method described in this 
                subparagraph is that, in the case that an amount for an 
                item or service has not been negotiated in accordance 
                with subparagraph (A), the I/T/U will pay the lowest of 
                the following amounts for the item or service:
                          (i) The amount that is the applicable payment 
                        amount under the Medicare program under title 
                        XVIII of the Social Security Act for such item 
                        or service, including payment according to a 
                        fee schedule, a prospective payment system or 
                        based on reasonable cost for the period in 
                        which the service was provided, or in the event 
                        of a Medicare waiver, the payment amount will 
                        be calculated in accordance with such waiver. 
                        For purposes of this paragraph, the amount 
                        described in this clause shall be referred to 
                        as the ``Medicare rate''.
                          (ii) An amount negotiated by a repricing 
                        agent if the provider or supplier is 
                        participating within the repricing agent's 
                        network and the I/T/U has a pricing arrangement 
                        or contract with that repricing agent.
                          (iii) An amount not to exceed the provider or 
                        supplier's most favored customer rate described 
                        in subparagraph (A)(ii) for such item or 
                        service, as evidenced by commercial price lists 
                        or paid invoices and other related pricing and 
                        discount data to ensure that the I/T/U is 
                        receiving a fair and reasonable price, but only 
                        to the extent such evidence is reasonably 
                        accessible and available to the I/T/U.
                  (C) Other.--The method described in this subparagraph 
                is that, in the case that a Medicare rate does not 
                exist for an item or service, and no other method 
                described in a previous subparagraph is accessible or 
                available, the amount shall be deemed to be 65 percent 
                of authorized charges for such item or service.
          (2) Coordination of benefits and limitation on recovery.--If 
        an I/T/U has authorized payment for items and services provided 
        to an individual who is eligible for benefits under title XVIII 
        of the Social Security Act, title XIX of such Act, or another 
        third-party payer, the following shall apply:
                  (A) The I/T/U shall be the payer of last resort under 
                section 2901(b) of the Patient Protection and 
                Affordable Care Act (25 U.S.C. 1623(b)).
                  (B) If there are any third-party payers, the I/T/U 
                shall pay the amount for which the patient is being 
                held responsible after the provider or supplier of 
                services has coordinated benefits and all other 
                alternate resources have been considered and paid, 
                including applicable copayments, deductibles, and 
                coinsurance that are owed by the patient.
                  (C) The maximum payment by the I/T/U shall be only 
                the portion of the payment amount determined under this 
                section not covered by any other payer.
                  (D) The I/T/U payment may not exceed the rate 
                calculated in accordance with paragraph (1) of this 
                section (plus applicable cost sharing).
                  (E) In the case payment is made under such title XIX 
                for an item or service such payment shall be considered 
                payment in full and there shall be no additional 
                payment made by the I/T/U for such item or service.
          (3) Authorized services.--Payment shall be made only for 
        those items and services authorized by an I/T/U consistent with 
        this section or section 503(a) of the Indian Health Care 
        Improvement Act (25 U.S.C. 1653(a)).
          (4) No additional charges.--
                  (A) If an amount has not been negotiated under 
                paragraph (1)(A) for an item or service, the provider 
                or supplier shall be deemed to have accepted the 
                applicable payment amount under paragraph (1)(B) for 
                such item or service as payment in full if--
                          (i) the item or service was provided based on 
                        a referral;
                          (ii) the provider or supplier submits a 
                        notification of a claim for payment to the I/T/
                        U; or
                          (iii) the provider or supplier accepts 
                        payment for the provision of such item or 
                        service from the I/T/U.
                  (B) A payment made and accepted in accordance with 
                this section shall constitute payment in full and the 
                provider or its agent, or supplier or its agent, may 
                not impose any additional charge--
                          (i) on the individual for I/T/U authorized 
                        items and services; or
                          (ii) for information requested by the I/T/U 
                        or its agent or fiscal intermediary for the 
                        purposes of payment determinations or quality 
                        assurance.
          (5) Notification of claim.--The Indian Health Service shall 
        not adjudicate a notification of a claim that does not contain 
        the information described in subsection (b)(1) with an approval 
        or denial, except that the Service may request further 
        information from the individual, or as applicable, the provider 
        or supplier, necessary to make a decision. A notification of a 
        claim meeting the requirements specified herein does not 
        guarantee payment.
          (6) Rate authorized.--No service shall be authorized and no 
        payment shall be issued under this section in excess of the 
        rate authorized by this section.
  (d) Authorization by an Urban Indian Organization.--An urban Indian 
organization may authorize for purchase items and services for an 
eligible urban Indian as those terms are defined in section 4 of the 
Indian Health Care Improvement Act (25 U.S.C. 1603) according to 
section 503 of such Act (25 U.S.C. 1653) and applicable regulations. 
Services and items furnished by physicians and other health care 
professionals and non-hospital-based entities shall be subject to the 
payment methodology set forth in this section.
  (e) Exception.--In the case of a payment described in subsection (c) 
that is with respect to a rare specialty service, as specified by the 
Secretary of Health and Human Services, or a service furnished in 
highly rural and medically underserved areas, as specified by the 
Secretary, the Indian Health Service or tribe or tribal organization 
involved may negotiate an amount for such payment for such service that 
is greater than the payment amount that would be recognized under title 
XVIII of the Social Security for such service.
  (f) Report.--Not later than two years after the date of the enactment 
of this Act, the Secretary of Health and Human Services, acting through 
the Director of the Indian Health Service, shall submit to Congress a 
report on the impact of this section on access to care under the 
Purchased/Referred Care program, including recommendations for such 
legislative actions as the Secretary determines appropriate.

SEC. 302. ALLOCATION OF PURCHASED/REFERRED CARE PROGRAM FUNDS.

  (a) In General.--Title II of the Indian Health Care Improvement Act 
is amended by inserting after section 226 (25 U.S.C. 1621y) the 
following new section:

``SEC. 227. PURCHASED/REFERRED CARE PROGRAM DISBURSEMENT FORMULA.

  ``(a) In General.--The Secretary shall, with respect to the 
Purchased/Referred Care program (formerly referred to as the `contract 
health services program') funded by the Indian Health Service and 
operated by the Indian Health Service, an Indian tribe, or tribal 
organization, review the distribution of funds pursuant to the program 
and initiate procedures under subchapter III of chapter 5 of title 5, 
United States Code, to negotiate or promulgate regulations to develop 
and implement a revised distribution formula in accordance with the 
subsequent subsections of this section.
  ``(b) Considerations.--In developing the revised distribution formula 
under subsection (a), the Secretary shall consider--
          ``(1) the extent to which services are available at a Service 
        hospital or facility of the Service rather than the mere 
        existence of such a hospital or facility;
          ``(2) population growth and the potential for population 
        growth;
          ``(3) the socioeconomic makeup of the population of each 
        contract health service delivery area;
          ``(4) the geographic makeup of each contract health service 
        delivery area;
          ``(5) the size of the hospital or facility;
          ``(6) the relative regional cost of purchasing services;
          ``(7) actual counts of Purchased/Referred Care users; and
          ``(8) accreditation problems at the Service hospital or 
        facility of the Service.
  ``(c) Implementation Deadline.--The revised distribution formula 
under subsection (a) shall be implemented not later than the date that 
is 3 years after the first October 1 following the date of the 
enactment of this Act.
  ``(d) Transition.--
          ``(1) In general.--Notwithstanding any other provision of 
        law, for the period beginning on the first October 1 following 
        the date of the enactment of this section and ending the day 
        before the implementation date of the revised distribution 
        formula under subsection (a), the Secretary shall provide for 
        the distribution of funds, with respect to direct health care 
        services provided by a Service facility, pursuant to the 
        Purchased/Referred Care program (and with respect to services 
        provided by any other facility under such program, at the 
        option of such facility) be consistent with the following:
                  ``(A) During any portion of such period for which a 
                Service area has been designated as a high IHS level 
                area under paragraph (2)(B), such area shall not 
                receive any funds pursuant to such program in addition 
                to the base allotment determined under the distribution 
                formula under the program for 2016 with respect to such 
                area.
                  ``(B) In the case that during such period the amount 
                of funds made available to the Service for such 
                distribution under such program is in excess of the 
                total amounts of base allotments for distribution under 
                such program for 2016, the Secretary shall distribute 
                such excess amount, in accordance with a methodology 
                specified by the Secretary, to Service areas which for 
                an applicable portion of such period of excess funding 
                have been designated as a low IHS level area under 
                paragraph (2)(A).
          ``(2) Area designations.--For purposes of paragraph (1), the 
        Secretary shall, with respect to each contract health service 
        delivery area--
                  ``(A) review the services provided in the area to 
                determine the IHS medical priority level pursuant to 
                section 136.23(e) of title 42, Code of Federal 
                Regulations, of such services; and
                  ``(B) in the case majority, as specified by the 
                Secretary, of the services so provided in the area were 
                determined to have--
                          ``(i) such a priority level of a I or II, 
                        designate such area as a low IHS level area; 
                        and
                          ``(ii) any other priority level, designate 
                        such area as a high IHS level area.
  ``(e) Application of Reduction Clause.--In the case of a facility 
that, as of the date of the enactment of this section, is under 
contract with the Secretary with respect to the Purchased/Referred Care 
program and such contract applies to a period to which subsection (d) 
or the revised distribution formula under subsection (a) applies, if 
application of subsection (d) or the revised distribution formula 
results in the distribution of an amount of funds to such facility 
during such period that is less than the amount of funds that would be 
provided during such period to such facility under such contract with 
respect to the Purchased/Referred Care program before application of 
such subsection (d) or such revised distribution formula, respectively, 
the Secretary may under section 106(b) of the Indian Self-Determination 
and Education Assistance Act (25 U.S.C. 450j-1(b)) reduce such amount 
accordingly to be consistent with such subsection (d) or revised 
distribution formula, respectively.
  ``(f) Clarification.--Nothing in this section shall be construed to 
supersede a Tribe's self-governance contract under the Indian Self-
Determination and Education Assistance Act.
  ``(g) Update.--The Secretary shall periodically, but not more 
frequently than once every 3 years and not less frequently than once 
every five years, review and, as necessary, update the formula 
implemented under subsection (a).
  ``(h) Consultation.--In developing the formula under subsection (a) 
and reviewing and making updates to such formula under subsection (f), 
the Secretary shall consult with Indian tribes, including such tribes 
consulted for purposes of carrying out section 226.
  ``(i) Reports.--Not later than one year after the date of the 
enactment of this section, and annually thereafter, the Secretary shall 
submit to Congress a report on the implementation of this section. Each 
such report shall include information, with respect to the period for 
such report, on--
          ``(1) the distribution of funds for such period pursuant to 
        the Purchased/Referred Care program among the contract health 
        service delivery area, tribes, tribal organizations, and urban 
        Indian organizations;
          ``(2) whether during such period any contract health service 
        delivery area, tribe, tribal organization, or urban Indian 
        organization had a shortfall in such funding and, if so, the 
        amount of such shortfall; and
          ``(3) recommendations for such legislative action as the 
        Secretary deems appropriate.''.
  (b) Conforming Amendments.--Section 226 of the Indian Health Care 
Improvement Act (25 U.S.C. 1621y) is amended--
          (1) in subsection (a)--
                  (A) by striking ``As soon as practicable after the 
                date of enactment of the Indian Health Care Improvement 
                Reauthorization and Extension Act of 2009'' and 
                inserting ``Not later than 2 years after the date of 
                the enactment of section 227'';
                  (B) by striking ``the study'' and inserting ``a 
                study''; and
                  (C) by striking ``as requested by Congress in March 
                2009, or pursuant to section 830'' and inserting ``, 
                including as amended pursuant to section 227'';
          (2) in subsection (b)--
                  (A) in the matter preceding paragraph (1), by 
                inserting ``, and submit, not later than one year after 
                the date of the enactment of section 227 and annually 
                thereafter, to Congress a report on'' after ``pursuant 
                to the program'';
                  (B) in paragraph (3), by striking at the end ``and'';
                  (C) by redesignating paragraph (4) as paragraph (5);
                  (D) by inserting after paragraph (3) the following 
                new paragraph:
          ``(4) to determine whether during the period of the report 
        any contract health service delivery area, tribe, tribal 
        organization, or urban Indian organization had a shortfall in 
        such funding and, if so, the amount of such shortfall; and
          ``(5) recommendations for such legislative action as the 
        Secretary deems appropriate.''; and
                  (E) in paragraph (5), as redesignated by subparagraph 
                (C), by inserting ``, including recommendations for 
                such legislative actions as the Secretary determines 
                appropriate'' before the period at the end; and
          (3) by striking subsection (c).

SEC. 303. PURCHASED/REFERRED CARE PROGRAM BACKLOG.

  Title II of the Indian Health Care Improvement Act (25 U.S.C. 1621), 
as amended by section 302, is further amended by adding at the end the 
following new section:

``SEC. 228. PURCHASED/REFERRED CARE PROGRAM BACKLOG.

  ``Not later than one year after the date of the enactment of this 
section, the Secretary shall develop and implement a system to 
prioritize any backlog of unpaid balances under the Purchased/Referred 
Care program for each Service area. In developing such system, the 
Secretary shall consider--
          ``(1) the monetary amount of each such unpaid balance; and
          ``(2) how long such balance has remained unpaid.''.

SEC. 304. REPORT ON FINANCIAL STABILITY OF SERVICE HOSPITALS AND 
                    FACILITIES.

  Not later than one year after the date of the enactment of this Act, 
the Comptroller General of the United States shall submit to Congress a 
report on issues related to the financial stability of hospitals and 
facilities of the Indian Health Service that have experienced sanction 
or threat of sanction by the Centers for Medicare & Medicaid Services. 
Such report shall focus on the effects of any revenues lost as a result 
of the sanction or threat of sanction and shall include recommendations 
for legislative action.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    Section 201 of the bill, H.R. 5406, as reported by the 
Committee on Ways and Means, excludes from gross income certain 
amounts received under the Indian Health Service loan repayment 
program and related to health professions or specialties for 
which an individual would be eligible for participation in the 
National Health Service loan repayment program (as in effect on 
January 1, 2016).

                 B. Background and Need for Legislation

    While the Committee continues to work on comprehensive tax 
reform as a critical means of promoting economic growth and job 
creation, the Committee believes it is important to provide 
immediate relief from unfair taxes. The Committee believes that 
this exclusion from gross income for certain student loan 
repayments under the Indian Health Service loan repayment 
program will eliminate an unfair tax burden.

                         C. Legislative History


Background

    H.R. 5406 was introduced on June 8, 2016, and was referred 
to the Committee on Ways and Means, the Committee on Natural 
Resources, and the Committee on Energy and Commerce.

Committee action

    The Committee on Ways and Means marked up section 201 of 
H.R. 5406, the Helping Ensure Accountability, Leadership, and 
Trust in Tribal Healthcare Act, on September 21, 2016, and 
ordered the bill, as amended, favorably reported (with a quorum 
being present).

Committee hearings

    Reforms to the tax treatment of student debt were discussed 
at a Subcommittee on Tax Policy Member Day Hearing on Tax 
Legislation on May 12, 2016.

                      II. EXPLANATION OF THE BILL


 A. Exclusion From Gross Income for Certain Payments Made Under Indian 
                 Health Service Loan Repayment Program


         (SEC. 201 OF THE BILL AND SEC. 108(F)(4) OF THE CODE)

                              PRESENT LAW

    Gross income generally includes the discharge of 
indebtedness of the taxpayer. Under an exception to this 
general rule, gross income does not include any amount from the 
forgiveness (in whole or in part) of certain student loans, 
provided that the forgiveness is contingent on the student's 
working for a certain period of time in certain professions for 
any of a broad class of employers.\1\
---------------------------------------------------------------------------
    \1\Sec. 108(f).
---------------------------------------------------------------------------
    Student loans eligible for this special rule must be made 
to an individual to assist the individual in attending an 
educational institution that normally maintains a regular 
faculty and curriculum and normally has a regularly enrolled 
body of students in attendance at the place where its education 
activities are regularly carried on. Loan proceeds may be used 
not only for tuition and required fees, but also to cover room 
and board expenses. The loan must be made by (1) the United 
States (or an instrumentality or agency thereof), (2) a State 
(or any political subdivision thereof), (3) certain tax-exempt 
public benefit corporations that control a State, county, or 
municipal hospital and whose employees have been deemed to be 
public employees under State law, or (4) an educational 
organization that originally received the funds from which the 
loan was made from the United States, a State, or a tax-exempt 
public benefit corporation.
    An individual's gross income does not include amounts from 
the forgiveness of loans made by educational organizations (and 
certain tax-exempt organizations in the case of refinancing 
loans) out of private, nongovernmental funds if the proceeds of 
such loans are used to pay costs of attendance at an 
educational institution or to refinance any outstanding student 
loans (not just loans made by educational organizations) and 
the student is not employed by the lender organization. In the 
case of such loans made or refinanced by educational 
organizations (or refinancing loans made by certain tax-exempt 
organizations), cancellation of the student loan must be 
contingent upon the student working in an occupation or area 
with unmet needs and such work must be performed for, or under 
the direction of, a tax-exempt charitable organization or a 
governmental entity.
    In addition, an individual's gross income does not include 
any loan repayment amount received under the National Health 
Service Corps loan repayment program, certain State loan 
repayment programs, or any amount received by an individual 
under any State loan repayment or loan forgiveness program that 
is intended to provide for the increased availability of health 
care services in underserved or health professional shortage 
areas (as determined by the State).

                           REASONS FOR CHANGE

    The Committee believes it is important to provide an 
incentive for individuals to pursue certain health professions 
on Indian reservations and in service to Native Americans, and 
to ensure that there is a sufficient supply of such trained 
health professionals. Recognizing that the National Health 
Service Corps offers a similar program that qualifies for 
certain tax benefits, the Committee believes it is appropriate 
to align the treatment of Indian Health Service student loan 
repayments with the treatment of those made by the National 
Health Service Corps.

                        EXPLANATION OF PROVISION

    The provision modifies the gross income exclusion for 
amounts received under the National Health Service Corps loan 
repayment program or certain State loan repayment programs to 
apply to amounts received by individuals under the Indian 
Health Service loan repayment program.\2\ The exclusion as 
modified applies only with respect to those individuals whose 
type of health profession or specialty would have qualified an 
individual to participate in the National Health Service Corps 
loan repayment program as of January 1, 2016.
---------------------------------------------------------------------------
    \2\Section 108 of the Indian Health Care Improvement Act 
established the Indian Health Service loan repayment program to assure 
a sufficient supply of trained health professionals needed to provide 
health care services to Indians. Pub. L. No. 94-437, as amended by Pub. 
L. No. 100-713, sec. 108, and Pub. L. No. 102-573, sec. 106, and as 
amended, and permanently reauthorized by Pub. L. No. 111-148, sec. 
10221.
---------------------------------------------------------------------------

                             EFFECTIVE DATE

    The provision is effective for amounts received in taxable 
years beginning after December 31, 2016.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of section 201 of H.R. 5406, the ``Helping Ensure 
Accountability, Leadership, and Trust in Tribal Healthcare 
Act,'' on September 21, 2016.
    The bill, H.R. 5406, as amended, was ordered favorably 
reported to the House of Representatives by a voice vote (with 
a quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, section 201 
of H.R. 5406, as reported.
    The bill, as reported, is estimated to have the following 
effect on Federal fiscal year budget receipts for the period 
2017-2026:

                                                  FISCAL YEARS
                                              [millions of dollars]
----------------------------------------------------------------------------------------------------------------
  2017      2018      2019     2020     2021     2022     2023     2024     2025     2026    2017-21    2017-26
----------------------------------------------------------------------------------------------------------------
     -3        -3       -3       -3       -3       -3       -3       -3       -3       -3        -16        -32
----------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.

    Pursuant to clause 8 of rule XIII of the Rules of the House 
of Representatives, the following statement is made by the 
Joint Committee on Taxation with respect to the provisions of 
the bill amending the Internal Revenue Code of 1986: The gross 
budgetary effect (before incorporating macroeconomic effects) 
in any fiscal year is less than 0.25 percent of the current 
projected gross domestic product of the United States for that 
fiscal year; therefore, the bill is not ``major legislation'' 
for purposes of requiring that the estimate include the 
budgetary effects of changes in economic output, employment, 
capital stock and other macroeconomic variables.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that 
section 201 of the bill involves no new or increased budget 
authority. The Committee further states that the revenue-
reducing provisions of section 201 of the bill involve 
increased tax expenditures. See amounts shown in the table in 
Part IV.A above.

      C. Cost Estimate Prepared by the Congressional Budget Office

    With regard to clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives, an estimate prepared by the 
Director of the Congressional Budget Office under section 402 
of the Congressional Budget Act of 1974 was not submitted to 
the Committee before the filling of the report.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of section 201 of H.R. 5406 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that 
section 201 of the bill contains no measure that authorizes 
funding, so no statement of general performance goals and 
objectives for which any measure authorizes funding is 
required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that section 201 of the bill 
does not contain Federal mandates on the private sector. The 
Committee has determined that section 201 of the bill does not 
impose a Federal intergovernmental mandate on State, local, or 
tribal governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed section 201 of the bill and states that 
section 201 of the bill does not involve any Federal income tax 
rate increases within the meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (``IRS Reform Act'') 
requires the staff of the Joint Committee on Taxation (in 
consultation with the Internal Revenue Service and the Treasury 
Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code of 1986 and has widespread applicability 
to individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
section 201 of the bill contains no provisions that amend the 
Internal Revenue Code of 1986 and that have ``widespread 
applicability'' to individuals or small businesses, within the 
meaning of the rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
section 201 of the bill and states that section 201 of the bill 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that section 201 of the bill 
does not establish or reauthorize: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that section 201 of the bill 
requires no directed rule makings within the meaning of such 
section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

   Text of Existing Law Amended or Repealed by the Bill, as Reported

  In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

                   INDIAN HEALTH CARE IMPROVEMENT ACT




           *       *       *       *       *       *       *
TITLE I--INDIAN HEALTH MANPOWER

           *       *       *       *       *       *       *



             indian health service loan repayment c program

  Sec. 108. (a)(1) The Secretary, acting through the Service, 
shall establish a program to be known as the Indian Health 
Service Loan Repayment Program (hereinafter referred to as the 
``Loan Repayment Program'') in order to assure an adequate 
supply of trained health professionals necessary to maintain 
accreditation of, and provide health care services to Indians 
through, Indian health programs.
  (2) For the purposes of this section--
          (A) the term ``Indian health program'' means any 
        health program or facility funded, in whole or part, by 
        the Service for the benefit of Indians and 
        administered--
                  (i) directly by the Service;
                  (ii) by any Indian tribe or tribal or Indian 
                organization pursuant to a contract under--
                          (I) the Indian Self-Determination 
                        Act, or
                          (II) section 23 of the Act of April 
                        30, 1908 (25 U.S.C. 47), popularly 
                        known as the ``Buy-Indian'' Act; or
                  (iii) by an urban Indian organization 
                pursuant to title V of this Act; and
          (B) the term ``State'' has the same meaning given 
        such term in section 331(i)(4) of the Public Health 
        Service Act.
  (b) To be eligible to participate in the Loan Repayment 
Program, an individual must--
          (1)(A) be enrolled--
                  (i) in a course of study or program in an 
                accredited institution, as determined by the 
                Secretary, within any State and be scheduled to 
                complete such course of study in the same year 
                such individual applies to participate in such 
                program; or
                  (ii) in an approved graduate training program 
                in a health profession; or
          (B) have--
                  (i) a degree in a health profession; and
                  (ii) a license to practice a health 
                profession in a State;
          (2)(A) be eligible for, or hold, an appointment as a 
        commissioned officer in the Regular or Reserve Corps of 
        the Public Health Service;
          (B) be eligible for selection for civilian service in 
        the Regular or Reserve Corps of the Public Health 
        Service;
          (C) meet the professional standards for civil service 
        employment in the Indian Health Service; or
          (D) be employed in an Indian health program without a 
        service obligation; and
          (3) submit to the Secretary an application for a 
        contract described in subsection (f).
  (c)(1) In disseminating application forms and contract forms 
to individuals desiring to participate in the Loan Repayment 
Program, the Secretary shall include with such forms a fair 
summary of the rights and liabilities of an individual whose 
application is approved (and whose contract is accepted) by the 
Secretary, including in the summary a clear explanation of the 
damages to which the United States is entitled under subsection 
(l) in the case of the individual's breach of the contract. The 
Secretary shall provide such individuals with sufficient 
information regarding the advantages and disadvantages of 
service as a commissioned officer in the Regular or Reserve 
Corps of the Public Health Service or a civilian employee of 
the Indian Health Service to enable the individual to make a 
decision on an informed basis.
  (2) The application form, contract form, and all other 
information furnished by the Secretary under this section shall 
be written in a manner calculated to be understood by the 
average individual applying to participate in the Loan 
Repayment Program.
  (3) The Secretary shall make such application forms, contract 
forms, and other information available to individuals desiring 
to participate in the Loan Repayment Program on a date 
sufficiently early to ensure that such individuals have 
adequate time to carefully review and evaluate such forms and 
information.
  (d)(1) Consistent with paragraph (3), the Secretary, acting 
through the Service and in accordance with subsection (k), 
shall annually--
          (A) identify the positions in each Indian health 
        program for which there is a need or a vacancy, and
          (B) rank those positions in order of priority.
  (2) Consistent with the priority determined under paragraph 
(1), the Secretary, in determining which applications under the 
Loan Repayment Program to approve (and which contracts to 
accept), shall give priority to applications made by--
          (A) Indians; and
          (B) individuals recruited through the efforts of 
        Indian tribes or tribal or Indian organizations.
          (3)(A) Subject to subparagraph (B), of the total 
        amounts appropriated for each of the fiscal years 1993, 
        1994, and 1995 for loan repayment contracts under this 
        section, the Secretary shall provide that--
                  (i) not less than 25 percent be provided to 
                applicants who are nurses, nurse practitioners, 
                or nurse midwives; and
                  (ii) not less than 10 percent be provided to 
                applicants who are mental health professionals 
                (other than applicants described in clause 
                (i)).
          (B) The requirements specified in clause (i) or 
        clause (ii) of subparagraph (A) shall not apply if the 
        Secretary does not receive the number of applications 
        from the individuals described in clause (i) or clause 
        (ii), respectively, necessary to meet such 
        requirements.
  (e)(1) An individual becomes a participant in the Loan 
Repayment Program only upon the Secretary and the individual 
entering into a written contract described in subsection (f).
  (2) The Secretary shall provide written notice to an 
individual promptly on--
          (A) the Secretary's approving, under paragraph (1), 
        of the individual's participation in the Loan Repayment 
        Program, including extensions resulting in an aggregate 
        period of obligated service in excess of 4 years; or
          (B) the Secretary's disapproving an individual's 
        participation in such Program.
  (f) The written contract referred to in this section between 
the Secretary and an individual shall contain--
          (1) an agreement under which--
                  (A) subject to paragraph (3), the Secretary 
                agrees--
                          (i) to pay loans on behalf of the 
                        individual in accordance with the 
                        provisions of this section, and
                          (ii) to accept (subject to the 
                        availability of appropriated funds for 
                        carrying out this section) the 
                        individual into the Service or place 
                        the individual with a tribe or Indian 
                        organization as provided in 
                        subparagraph (B)(iii), and
                  (B) subject to paragraph (3), the individual 
                agrees--
                          (i) to accept loan payments on behalf 
                        of the individual;
                          (ii) in the case of an individual 
                        described in subsection (b)(1)--
                                  (I) to maintain enrollment in 
                                a course of study or training 
                                described in subsection 
                                (b)(1)(A) until the individual 
                                completes the course of study 
                                or training, and
                                  (II) while enrolled in such 
                                course of study or training, to 
                                maintain an acceptable level of 
                                academic standing (as 
                                determined under regulations of 
                                the Secretary by the 
                                educational institution 
                                offering such course of study 
                                or training);
                          (iii) to serve for a time period 
                        (hereinafter in this section referred 
                        to as the ``period of obligated 
                        service'') equal to 2 years or such 
                        longer period as the individual may 
                        agree to serve in the full-time 
                        clinical practice of such individual's 
                        profession in an Indian health program 
                        to which the individual may be assigned 
                        by the Secretary;
          (2) a provision permitting the Secretary to extend 
        for such longer additional periods, as the individual 
        may agree to, the period of obligated service agreed to 
        by the individual under paragraph (1)(B)(iii);
          (3) a provision that any financial obligation of the 
        United States arising out of a contract entered into 
        under this section and any obligation of the individual 
        which is conditioned thereon is contingent upon funds 
        being appropriated for loan repayments under this 
        section;
          (4) a statement of the damages to which the United 
        States is entitled under subsection (l) for the 
        individual's breach of the contract; and
          (5) such other statements of the rights and 
        liabilities of the Secretary and of the individual, not 
        inconsistent with this section.
  (g)(1) A loan repayment provided for an individual under a 
written contract under the Loan Repayment Program shall consist 
of payment, in accordance with paragraph (2), on behalf of the 
individual of the principal, interest, and related expenses on 
government and commercial loans received by the individual 
regarding the undergraduate or graduate education of the 
individual (or both), which loans were made for--
          (A) tuition expenses;
          (B) all other reasonable educational expenses, 
        including fees, books, and laboratory expenses, 
        incurred by the individual; and
          (C) reasonable living expenses as determined by the 
        Secretary.
  (2)(A) For each year of obligated service that an individual 
contracts to serve under subsection (f) the Secretary may pay 
up to $35,000 (or an amount equal to the amount specified in 
section 338B(g)(2)(A) of the Public Health Service Act) on 
behalf of the individual for loans described in paragraph (1). 
In making a determination of the amount to pay for a year of 
such service by an individual, the Secretary shall consider the 
extent to which each such determination--
          (i) affects the ability of the Secretary to maximize 
        the number of contracts that can be provided under the 
        Loan Repayment Program from the amounts appropriated 
        for such contracts;
          (ii) provides an incentive to serve in Indian health 
        programs with the greatest shortages of health 
        professionals; and
          (iii) provides an incentive with respect to the 
        health professional involved remaining in an Indian 
        health program with such a health professional 
        shortage, and continuing to provide primary health 
        services, after the completion of the period of 
        obligated service under the Loan Repayment Program.
  (B) Any arrangement made by the Secretary for the making of 
loan repayments in accordance with this subsection shall 
provide that any repayments for a year of obligated service 
shall be made no later than the end of the fiscal year in which 
the individual completes such year of service.
  (3) For the purpose of providing reimbursements for tax 
liability resulting from payments under paragraph (2) on behalf 
of an individual, the Secretary--
          (A) in addition to such payments, may make payments 
        to the individual in an amount not less than 20 percent 
        and not more than 39 percent of the total amount of 
        loan repayments made for the taxable year involved; and
          (B) may make such additional payments as the 
        Secretary determines to be appropriate with respect to 
        such purpose.
  (4) The Secretary may enter into an agreement with the holder 
of any loan for which payments are made under the Loan 
Repayment Program to establish a schedule for the making of 
such payments.
  (h) Notwithstanding any other provision of law, individuals 
who have entered into written contracts with the Secretary 
under this section, while undergoing academic training, shall 
not be counted against any employment ceiling affecting the 
Department of Health and Human Services.
  (i) The Secretary shall conduct recruiting programs for the 
Loan Repayment Program and other health professional programs 
of the Service at educational institutions training health 
professionals or specialists identified in subsection (a).
  (j) Section 214 of the Public Health Service Act (42 U.S.C. 
215) shall not apply to individuals during their period of 
obligated service under the Loan Repayment Program.
  (k) The Secretary, in assigning individuals to serve in 
Indian health programs pursuant to contracts entered into under 
this section, shall--
          (1) ensure that the staffing needs of Indian health 
        programs administered by an Indian tribe or tribal or 
        health organization receive consideration on an equal 
        basis with programs that are administered directly by 
        the Service; and
          (2) give priority to assigning individuals to Indian 
        health programs that have a need for health 
        professionals to provide health care services as a 
        result of individuals having breached contracts entered 
        into under this section.
  (l)(1) An individual who has entered into a written contract 
with the Secretary under this section and who--
          (A) is enrolled in the final year of a course of 
        study and who--
                  (i) fails to maintain an acceptable level of 
                academic standing in the educational 
                institution in which he is enrolled (such level 
                determined by the educational institution under 
                regulations of the Secretary);
                  (ii) voluntarily terminates such enrollment; 
                or
                  (iii) is dismissed from such educational 
                institution before completion of such course of 
                study; or
          (B) is enrolled in a graduate training program, fails 
        to complete such training program, and does not receive 
        a waiver from the Secretary under subsection 
        (b)(1)(B)(ii),
shall be liable, in lieu of any service obligation arising 
under such contract, to the United States for the amount which 
has been paid on such individual's behalf under the contract.
  (2) If, for any reason not specified in paragraph (1), an 
individual breaches his written contract under this section by 
failing either to begin, or complete, such individual's period 
of obligated service in accordance with subsection (f), the 
United States shall be entitled to recover from such individual 
an amount to be determined in accordance with the following 
formula:


 
A=3Z(t-s/t)

in which--
          (A) ``A'' is the amount the United States is entitled 
        to recover;
          (B) ``Z'' is the sum of the amounts paid under this 
        section to, or on behalf of, the individual and the 
        interest on such amounts which would be payable if, at 
        the time the amounts were paid, they were loans bearing 
        interest at the maximum legal prevailing rate, as 
        determined by the Treasurer of the United States;
          (C) ``t'' is the total number of months in the 
        individual's period of obligated service in accordance 
        with subsection (f); and
          (D) ``s'' is the number of months of such period 
        served by such individual in accordance with this 
        section.
Amounts not paid within such period shall be subject to 
collection through deductions in Medicare payments pursuant to 
section 1892 of the Social Security Act.
  (3)(A) Any amount of damages which the United States is 
entitled to recover under this subsection shall be paid to the 
United States within the 1-year period beginning on the date of 
the breach or such longer period beginning on such date as 
shall be specified by the Secretary.
  (B) If damages described in subparagraph (A) are delinquent 
for 3 months, the Secretary shall, for the purpose of 
recovering such damages--
          (i) utilize collection agencies contracted with by 
        the Administrator of the General Services 
        Administration; or
          (ii) enter into contracts for the recovery of such 
        damages with collection agencies selected by the 
        Secretary.
  (C) Each contract for recovering damages pursuant to this 
subsection shall provide that the contractor will, not less 
than once each 6 months, submit to the Secretary a status 
report on the success of the contractor in collecting such 
damages. Section 3718 of title 31, United States Code, shall 
apply to any such contract to the extent not inconsistent with 
this subsection.
  (m)(1) Any obligation of an individual under the Loan 
Repayment Program for service or payment of damages shall be 
canceled upon the death of the individual.
  (2) The Secretary shall by regulation provide for the partial 
or total waiver or suspension of any obligation of service or 
payment by an individual under the Loan Repayment Program 
whenever compliance by the individual is impossible or would 
involve extreme hardship to the individual and if enforcement 
of such obligation with respect to any individual would be 
unconscionable.
  (3) The Secretary may waive, in whole or in part, the rights 
of the United States to recover amounts under this section in 
any case of extreme hardship or other good cause shown, as 
determined by the Secretary.
  (4) Any obligation of an individual under the Loan Repayment 
Program for payment of damages may be released by a discharge 
in bankruptcy under title 11 of the United States Code only if 
such discharge is granted after the expiration of the 5-year 
period beginning on the first date that payment of such damages 
is required, and only if the bankruptcy court finds that 
nondischarge of the obligation would be unconscionable.
  (n) The Secretary shall submit to the President, for 
inclusion in each report required to be submitted to the 
Congress under section 801, a report concerning the previous 
fiscal year which sets forth--
          (1) the health professional positions maintained by 
        the Service or by tribal or Indian organizations for 
        which recruitment or retention is difficult;
          (2) the number of Loan Repayment Program applications 
        filed with respect to each type of health profession;
          (3) the number of contracts described in subsection 
        (f) that are entered into with respect to each health 
        profession;
          (4) the amount of loan payments made under this 
        section, in total and by health profession;
          (5) the number of scholarship grants that are 
        provided under section 104 with respect to each health 
        profession;
          (6) the amount of scholarship grants provided under 
        section 104, in total and by health profession;
          (7) the number of providers of health care that will 
        be needed by Indian health programs, by location and 
        profession, during the three fiscal years beginning 
        after the date the report is filed; and
          (8) the measures the Secretary plans to take to fill 
        the health professional positions maintained by the 
        Service or by tribes or tribal or Indian organizations 
        for which recruitment or retention is difficult.

           *       *       *       *       *       *       *


TITLE II--HEALTH SERVICES

           *       *       *       *       *       *       *



SEC. 226. CONTRACT HEALTH SERVICE ADMINISTRATION AND DISBURSEMENT 
                    FORMULA.

  (a) Submission of Report.--As soon as practicable after the 
date of enactment of the Indian Health Care Improvement 
Reauthorization and Extension Act of 2009, the Comptroller 
General of the United States shall submit to the Secretary, the 
Committee on Indian Affairs of the Senate, and the Committee on 
Natural Resources of the House of Representatives, and make 
available to each Indian tribe, a report describing the results 
of the study of the Comptroller General regarding the funding 
of the contract health service program (including historic 
funding levels and a recommendation of the funding level needed 
for the program) and the administration of the contract health 
service program (including the distribution of funds pursuant 
to the program), as requested by Congress in March 2009, or 
pursuant to section 830.
  (b) Consultation With Tribes.--On receipt of the report under 
subsection (a), the Secretary shall consult with Indian tribes 
regarding the contract health service program, including the 
distribution of funds pursuant to the program--
          (1) to determine whether the current distribution 
        formula would require modification if the contract 
        health service program were funded at the level 
        recommended by the Comptroller General;
          (2) to identify any inequities in the current 
        distribution formula under the current funding level or 
        inequitable results for any Indian tribe under the 
        funding level recommended by the Comptroller General;
          (3) to identify any areas of program administration 
        that may result in the inefficient or ineffective 
        management of the program; and
          (4) to identify any other issues and recommendations 
        to improve the administration of the contract health 
        services program and correct any unfair results or 
        funding disparities identified under paragraph (2).
  [(c) Subsequent Action by Secretary.--If, after consultation 
with Indian tribes under subsection (b), the Secretary 
determines that any issue described in subsection (b)(2) 
exists, the Secretary may initiate procedures under subchapter 
III of chapter 5 of title 5, United States Code, to negotiate 
or promulgate regulations to establish a disbursement formula 
for the contract health service program funding.]

           *       *       *       *       *       *       *


                 TITLE VI--ORGANIZATIONAL IMPROVEMENTS


SEC. 601. ESTABLISHMENT OF THE INDIAN HEALTH SERVICE AS AN AGENCY OF 
                    THE PUBLIC HEALTH SERVICE.

  (a) Establishment.--
          (1) In general.--In order to more effectively and 
        efficiently carry out the responsibilities, 
        authorities, and functions of the United States to 
        provide health care services to Indians and Indian 
        tribes, as are or may be hereafter provided by Federal 
        statute or treaties, there is established within the 
        Public Health Service of the Department the Indian 
        Health Service.
          (2) Director.--The Service shall be administered by a 
        Director, who shall be appointed by the President, by 
        and with the advice and consent of the Senate. The 
        Director shall report to the Secretary. Effective with 
        respect to an individual appointed by the President, by 
        and with the advice and consent of the Senate, after 
        January 1, 2008, the term of service of the Director 
        shall be 4 years. A Director may serve more than 1 
        term.
          (3) Incumbent.--The individual serving in the 
        position of Director of the Service on the day before 
        the date of enactment of the Indian Health Care 
        Improvement Reauthorization and Extension Act of 2009 
        shall serve as Director.
          (4) Advocacy and consultation.--The position of 
        Director is established to, in a manner consistent with 
        the government-to-government relationship between the 
        United States and Indian Tribes--
                  (A) facilitate advocacy for the development 
                of appropriate Indian health policy; and
                  (B) promote consultation on matters relating 
                to Indian health.
  (b) Agency.--The Service shall be an agency within the Public 
Health Service of the Department, and shall not be an office, 
component, or unit of any other agency of the Department.
  (c) Duties.--The Director shall--
          (1) perform all functions that were, on the day 
        before the date of enactment of the Indian Health Care 
        Improvement Reauthorization and Extension Act of 2009, 
        carried out by or under the direction of the individual 
        serving as Director of the Service on that day;
          (2) perform all functions of the Secretary relating 
        to the maintenance and operation of hospital and health 
        facilities for Indians and the planning for, and 
        provision and utilization of, health services for 
        Indians, including by ensuring that all agency 
        directors, managers, and chief executive officers have 
        appropriate and adequate training, experience, skill 
        levels, knowledge, abilities, and education (including 
        continuing training requirements) to competently 
        fulfill the duties of the positions and the mission of 
        the Service;
          (3) administer all health programs under which health 
        care is provided to Indians based upon their status as 
        Indians which are administered by the Secretary, 
        including programs under--
                  (A) this Act;
                  (B) the Act of November 2, 1921 (25 U.S.C. 
                13);
                  (C) the Act of August 5, 1954 (42 U.S.C. 2001 
                et seq.);
                  (D) the Act of August 16, 1957 (42 U.S.C. 
                2005 et seq.); and
                  (E) the Indian Self-Determination and 
                Education Assistance Act (25 U.S.C. 450 et 
                seq.);
          (4) administer all scholarship and loan functions 
        carried out under title I;
          (5) directly advise the Secretary concerning the 
        development of all policy- and budget-related matters 
        affecting Indian health;
          (6) collaborate with the Assistant Secretary for 
        Health concerning appropriate matters of Indian health 
        that affect the agencies of the Public Health Service;
          (7) advise each Assistant Secretary of the Department 
        concerning matters of Indian health with respect to 
        which that Assistant Secretary has authority and 
        responsibility;
          (8) advise the heads of other agencies and programs 
        of the Department concerning matters of Indian health 
        with respect to which those heads have authority and 
        responsibility;
          (9) coordinate the activities of the Department 
        concerning matters of Indian health; and
          (10) perform such other functions as the Secretary 
        may designate.
  (d) Authority.--
          (1) In general.--The Secretary, acting through the 
        Director, shall have the authority--
                  (A) except to the extent provided for in 
                paragraph (2), to appoint and compensate 
                employees for the Service in accordance with 
                title 5, United States Code;
                  (B) to enter into contracts for the 
                procurement of goods and services to carry out 
                the functions of the Service; and
                  (C) to manage, expend, and obligate all funds 
                appropriated for the Service.
          (2) Personnel actions.--Notwithstanding any other 
        provision of law, the provisions of section 12 of the 
        Act of June 18, 1934 (48 Stat. 986; 25 U.S.C. 472), 
        shall apply to all personnel actions taken with respect 
        to new positions created within the Service as a result 
        of its establishment under subsection (a).

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 5, UNITED STATES CODE




           *       *       *       *       *       *       *
PART III--EMPLOYEES

           *       *       *       *       *       *       *


SUBPART C--EMPLOYEE PERFORMANCE

           *       *       *       *       *       *       *


                   CHAPTER 43--PERFORMANCE APPRAISAL


SUBCHAPTER I--GENERAL PROVISIONS

           *       *       *       *       *       *       *



Sec. 4303. Actions based on unacceptable performance

  (a) Subject to the provisions of this section, an agency may 
reduce in grade or remove an employee for unacceptable 
performance.
  (b)(1) An employee whose reduction in grade or removal is 
proposed under this section is entitled to--
          (A) 30 days' advance written notice of the proposed 
        action which identifies--
                  (i) specific instances of unacceptable 
                performance by the employee on which the 
                proposed action is based; and
                  (ii) the critical elements of the employee's 
                position involved in each instance of 
                unacceptable performance;
          (B) be represented by an attorney or other 
        representative;
          (C) a reasonable time to answer orally and in 
        writing; and
          (D) a written decision which--
                  (i) in the case of a reduction in grade or 
                removal under this section, specifies the 
                instances of unacceptable performance by the 
                employee on which the reduction in grade or 
                removal is based, and
                  (ii) unless proposed by the head of the 
                agency, has been concurred in by an employee 
                who is in a higher position than the employee 
                who proposed the action.
  (2) An agency may, under regulations prescribed by the head 
of such agency, extend the notice period under subsection 
(b)(1)(A) of this section for not more than 30 days. An agency 
may extend the notice period for more than 30 days only in 
accordance with regulations issued by the Office of Personnel 
Management.
  (c) The decision to retain, reduce in grade, or remove an 
employee--
          (1) shall be made within 30 days after the date of 
        expiration of the notice period, and
          (2) in the case of a reduction in grade or removal, 
        may be based only on those instances of unacceptable 
        performance by the employee--
                  (A) which occurred during the 1-year period 
                ending on the date of the notice under 
                subsection (b)(1)(A) of this section in 
                connection with the decision; and
                  (B) for which the notice and other 
                requirements of this section are complied with.
  (d) If, because of performance improvement by the employee 
during the notice period, the employee is not reduced in grade 
or removed, and the employee's performance continues to be 
acceptable for 1 year from the date of the advance written 
notice provided under subsection (b)(1)(A) of this section, any 
entry or other notation of the unacceptable performance for 
which the action was proposed under this section shall be 
removed from any agency record relating to the employee.
  (e) Any employee who is--
          (1) a preference eligible;
          (2) in the competitive service; or
          (3) in the excepted service and covered by subchapter 
        II of chapter 75,
and who has been reduced in grade or removed under this section 
is entitled to appeal the action to the Merit Systems 
Protection Board under section 7701.
  (f) This section does not apply to--
          (1) the reduction to the grade previously held of a 
        supervisor or manager who has not completed the 
        probationary period under section 3321(a)(2) of this 
        title,
          (2) the reduction in grade or removal of an employee 
        in the competitive service who is serving a 
        probationary or trial period under an initial 
        appointment or who has not completed 1 year of current 
        continuous employment under other than a temporary 
        appointment limited to 1 year or less, or
          (3) the reduction in grade or removal of an employee 
        in the excepted service who has not completed 1 year of 
        current continuous employment in the same or similar 
        positions.

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                              ----------                              


                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle A--Income Taxes

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CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME

           *       *       *       *       *       *       *



SEC. 108. INCOME FROM DISCHARGE OF INDEBTEDNESS.

  (a) Exclusion from Gross Income.--
          (1) In general.--Gross income does not include any 
        amount which (but for this subsection) would be 
        includible in gross income by reason of the discharge 
        (in whole or in part) of indebtedness of the taxpayer 
        if--
                  (A) the discharge occurs in a title 11 case,
                  (B) the discharge occurs when the taxpayer is 
                insolvent,
                  (C) the indebtedness discharged is qualified 
                farm indebtedness,
                  (D) in the case of a taxpayer other than a C 
                corporation, the indebtedness discharged is 
                qualified real property business indebtedness, 
                or
                  (E) the indebtedness discharged is qualified 
                principal residence indebtedness which is 
                discharged--
                          (i) before January 1, 2017, or ii) 
                        subject to an arrangement that is 
                        entered into and evidenced in writing 
                        before January 1, 2017.
          (2) Coordination of exclusions.--
                  (A) Title 11 exclusion takes precedence.--
                Subparagraphs (B), (C), (D), and (E) of 
                paragraph (1) shall not apply to a discharge 
                which occurs in a title 11 case.
                  (B) Insolvency exclusion takes precedence 
                over qualified farm exclusion and qualified 
                real property business exclusion.--
                Subparagraphs (C) and (D) of paragraph (1) 
                shall not apply to a discharge to the extent 
                the taxpayer is insolvent.
                  (C) Principal residence exclusion takes 
                precedence over insolvency exclusion unless 
                elected otherwise.--Paragraph (1)(B) shall not 
                apply to a discharge to which paragraph (1)(E) 
                applies unless the taxpayer elects to apply 
                paragraph (1)(B) in lieu of paragraph (1)(E).
          (3) Insolvency exclusion limited to amount of 
        insolvency.--In the case of a discharge to which 
        paragraph (1)(B) applies, the amount excluded under 
        paragraph (1)(B) shall not exceed the amount by which 
        the taxpayer is insolvent.
  (b) Reduction of Tax Attributes.--
          (1) In general.--The amount excluded from gross 
        income under subparagraph (A), (B), or (C) of 
        subsection (a)(1) shall be applied to reduce the tax 
        attributes of the taxpayer as provided in paragraph 
        (2).
          (2) Tax attributes affected; order of reduction.--
        Except as provided in paragraph (5), the reduction 
        referred to in paragraph (1) shall be made in the 
        following tax attributes in the following order:
                  (A) NOL.--Any net operating loss for the 
                taxable year of the discharge, and any net 
                operating loss carryover to such taxable year.
                  (B) General business credit.--Any carryover 
                to or from the taxable year of a discharge of 
                an amount for purposes for determining the 
                amount allowable as a credit under section 38 
                (relating to general business credit).
                  (C) Minimum tax credit.--The amount of the 
                minimum tax credit available under section 
                53(b) as of the beginning of the taxable year 
                immediately following the taxable year of the 
                discharge.
                  (D) Capital loss carryovers.--Any net capital 
                loss for the taxable year of the discharge, and 
                any capital loss carryover to such taxable year 
                under section 1212.
                  (E) Basis reduction.--
                          (i) In general.--The basis of the 
                        property of the taxpayer.
                          (ii) Cross reference.--For provisions 
                        for making the reduction described in 
                        clause (i), see section 1017.
                  (F) Passive activity loss and credit 
                carryovers.--Any passive activity loss or 
                credit carryover of the taxpayer under section 
                469(b) from the taxable year of the discharge.
                  (G) Foreign tax credit carryovers.--Any 
                carryover to or from the taxable year of the 
                discharge for purposes of determining the 
                amount of the credit allowable under section 
                27.
          (3) Amount of reduction.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the reductions described in 
                paragraph (2) shall be one dollar for each 
                dollar excluded by subsection (a).
                  (B) Credit carryover reduction.--The 
                reductions described in subparagraphs (B), (C), 
                and (G) shall be 33 1/3 cents for each dollar 
                excluded by subsection (a). The reduction 
                described in subparagraph (F) in any passive 
                activity credit carryover shall be 33 1/3 cents 
                for each dollar excluded by subsection (a).
          (4) Ordering rules.--
                  (A) Reductions made after determination of 
                tax for year.--The reductions described in 
                paragraph (2) shall be made after the 
                determination of the tax imposed by this 
                chapter for the taxable year of the discharge.
                  (B) Reductions under subparagraph (A) or (D) 
                of paragraph (2).--The reductions described in 
                subparagraph (A) or (D) of paragraph (2) (as 
                the case may be) shall be made first in the 
                loss for the taxable year of the discharge and 
                then in the carryovers to such taxable year in 
                the order of the taxable years from which each 
                such carryover arose.
                  (C) Reductions under subparagraphs (B) and 
                (G) of paragraph (2).--The reductions described 
                in subparagraphs (B) and (G) of paragraph (2) 
                shall be made in the order in which carryovers 
                are taken into account under this chapter for 
                the taxable year of the discharge.
          (5) Election to apply reduction first against 
        depreciable property.--
                  (A) In general.--The taxpayer may elect to 
                apply any portion of the reduction referred to 
                in paragraph (1) to the reduction under section 
                1017 of the basis of the depreciable property 
                of the taxpayer.
                  (B) Limitation.--The amount to which an 
                election under subparagraph (A) applies shall 
                not exceed the aggregate adjusted bases of the 
                depreciable property held by the taxpayer as of 
                the beginning of the taxable year following the 
                taxable year in which the discharge occurs.
                  (C) Other tax attributes not reduced.--
                Paragraph (2) shall not apply to any amount to 
                which an election under this paragraph applies.
  (c) Treatment of Discharge of Qualified Real Property 
Business Indebtedness.--
          (1) Basis reduction.--
                  (A) In general.--The amount excluded from 
                gross income under subparagraph (D) of 
                subsection (a)(1) shall be applied to reduce 
                the basis of the depreciable real property of 
                the taxpayer.
                  (B) Cross reference.--For provisions making 
                the reduction described in subparagraph (A), 
                see section 1017.
          (2) Limitations.--
                  (A) Indebtedness in excess of value.--The 
                amount excluded under subparagraph (D) of 
                subsection (a)(1) with respect to any qualified 
                real property business indebtedness shall not 
                exceed the excess (if any) of--
                          (i) the outstanding principal amount 
                        of such indebtedness (immediately 
                        before the discharge), over
                          (ii) the fair market value of the 
                        real property described in paragraph 
                        (3)(A) (as of such time), reduced by 
                        the outstanding principal amount of any 
                        other qualified real property business 
                        indebtedness secured by such property 
                        (as of such time).
                  (B) Overall limitation.--The amount excluded 
                under subparagraph (D) of subsection (a)(1) 
                shall not exceed the aggregate adjusted bases 
                of depreciable real property (determined after 
                any reductions under subsections (b) and (g)) 
                held by the taxpayer immediately before the 
                discharge (other than depreciable real property 
                acquired in contemplation of such discharge).
          (3) Qualified real property business indebtedness.--
        The term ``qualified real property business 
        indebtedness'' means indebtedness which--
                  (A) was incurred or assumed by the taxpayer 
                in connection with real property used in a 
                trade or business and is secured by such real 
                property,
                  (B) was incurred or assumed before January 1, 
                1993, or if incurred or assumed on or after 
                such date, is qualified acquisition 
                indebtedness, and
                  (C) with respect to which such taxpayer makes 
                an election to have this paragraph apply.
        Such term shall not include qualified farm 
        indebtedness. Indebtedness under subparagraph (B) shall 
        include indebtedness resulting from the refinancing of 
        indebtedness under subparagraph (B) (or this sentence), 
        but only to the extent it does not exceed the amount of 
        the indebtedness being refinanced.
          (4) Qualified acquisition indebtedness.--For purposes 
        of paragraph (3)(B), the term ``qualified acquisition 
        indebtedness'' means, with respect to any real property 
        described in paragraph (3)(A), indebtedness incurred or 
        assumed to acquire, construct, reconstruct, or 
        substantially improve such property.
          (5) Regulations.--The Secretary shall issue such 
        regulations as are necessary to carry out this 
        subsection, including regulations preventing the abuse 
        of this subsection through cross-collateralization or 
        other means.
  (d) Meaning of Terms; Special Rules Relating to Certain 
Provisions.--
          (1) Indebtedness of taxpayer.--For purposes of this 
        section, the term ``indebtedness of the taxpayer'' 
        means any indebtedness--
                  (A) for which the taxpayer is liable, or
                  (B) subject to which the taxpayer holds 
                property.
          (2) Title 11 case.--For purposes of this section, the 
        term ``title 11 case'' means a case under title 11 of 
        the United States Code (relating to bankruptcy), but 
        only if the taxpayer is under the jurisdiction of the 
        court in such case and the discharge of indebtedness is 
        granted by the court or is pursuant to a plan approved 
        by the court.
          (3) Insolvent.--For purposes of this section, the 
        term ``insolvent'' means the excess of liabilities over 
        the fair market value of assets. With respect to any 
        discharge, whether or not the taxpayer is insolvent, 
        and the amount by which the taxpayer is insolvent, 
        shall be determined on the basis of the taxpayer's 
        assets and liabilities immediately before the 
        discharge.
          (5) Depreciable property.--The term ``depreciable 
        property'' has the same meaning as when used in section 
        1017.
          (6) Certain provisions to be applied at partner 
        level.--In the case of a partnership, subsections (a), 
        (b), (c), and (g) shall be applied at the partner 
        level.
          (7) Special rules for S corporation.--
                  (A) Certain provisions to be applied at 
                corporate level.--In the case of an S 
                corporation, subsections (a), (b), (c), and (g) 
                shall be applied at the corporate level, 
                including by not taking into account under 
                section 1366(a) any amount excluded under 
                subsection (a) of this section.
                  (B) Reduction in carryover of disallowed 
                losses and deductions.--In the case of an S 
                corporation, for purposes of subparagraph (A) 
                of subsection (b)(2), any loss or deduction 
                which is disallowed for the taxable year of the 
                discharge under section 1366(d)(1) shall be 
                treated as a net operating loss for such 
                taxable year. The preceding sentence shall not 
                apply to any discharge to the extent that 
                subsection (a)(1)(D) applies to such discharge.
                  (C) Coordination with basis adjustments under 
                section 1367(b)(2).--For purposes of subsection 
                (e)(6), a shareholder's adjusted basis in 
                indebtedness of an S corporation shall be 
                determined without regard to any adjustments 
                made under section 1367(b)(2).
          (8) Reductions of tax attributes in title 11 cases of 
        individuals to be made by estate.--In any case under 
        chapter 7 or 11 of title 11 of the United States Code 
        to which section 1398 applies, for purposes of 
        paragraphs (1) and (5) of subsection (b) the estate 
        (and not the individual) shall be treated as the 
        taxpayer. The preceding sentence shall not apply for 
        purposes of applying section 1017 to property 
        transferred by the estate to the individual.
          (9) Time for making election, etc..--
                  (A) Time.--An election under paragraph (5) of 
                subsection (b) or under paragraph (3)(C) of 
                subsection (c) shall be made on the taxpayer's 
                return for the taxable year in which the 
                discharge occurs or at such other time as may 
                be permitted in regulations prescribed by the 
                Secretary.
                  (B) Revocation only with consent.--An 
                election referred to in subparagraph (A), once 
                made, may be revoked only with the consent of 
                the Secretary.
                  (C) Manner.--An election referred to in 
                subparagraph (A) shall be made in such manner 
                as the Secretary may by regulations prescribe.
          (10) Cross reference.--For provision that no 
        reduction is to be made in the basis of exempt property 
        of an individual debtor, see section 1017(c)(1).
  (e) General Rules for Discharge of Indebtedness (Including 
Discharges Not in Title 11 Cases or Insolvency).--For purposes 
of this title--
          (1) No other insolvency exception.--Except as 
        otherwise provided in this section, there shall be no 
        insolvency exception from the general rule that gross 
        income includes income from the discharge of 
        indebtedness.
          (2) Income not realized to extent of lost 
        deductions.--No income shall be realized from the 
        discharge of indebtedness to the extent that payment of 
        the liability would have given rise to a deduction.
          (3) Adjustments for unamortized premium and 
        discount.--The amount taken into account with respect 
        to any discharge shall be properly adjusted for 
        unamortized premium and unamortized discount with 
        respect to the indebtedness discharged.
          (4) Acquisition of indebtedness by person related to 
        debtor.--
                  (A) Treated as acquisition by debtor.--For 
                purposes of determining income of the debtor 
                from discharge of indebtedness, to the extent 
                provided in regulations prescribed by the 
                Secretary, the acquisition of outstanding 
                indebtedness by a person bearing a relationship 
                to the debtor specified in section 267(b) or 
                707(b)(1) from a person who does not bear such 
                a relationship to the debtor shall be treated 
                as the acquisition of such indebtedness by the 
                debtor. Such regulations shall provide for such 
                adjustments in the treatment of any subsequent 
                transactions involving the indebtedness as may 
                be appropriate by reason of the application of 
                the preceding sentence.
                  (B) Members of family.--For purposes of this 
                paragraph, sections 267(b) and 707(b)(1) shall 
                be applied as if section 267(c)(4) provided 
                that the family of an individual consists of 
                the individual's spouse, the individual's 
                children, grandchildren, and parents, and any 
                spouse of the individual's children or 
                grandchildren.
                  (C) Entities under common control treated as 
                related.--For purposes of this paragraph, two 
                entities which are treated as a single employer 
                under subsection (b) or (c) of section 414 
                shall be treated as bearing a relationship to 
                each other which is described in section 
                267(b).
          (5) Purchase-money debt reduction for solvent debtor 
        treated as price reduction.--If--
                  (A) the debt of a purchaser of property to 
                the seller of such property which arose out of 
                the purchase of such property is reduced,
                  (B) such reduction does not occur--
                          (i) in a title 11 case, or
                          (ii) when the purchaser is insolvent, 
                        and
                  (C) but for this paragraph, such reduction 
                would be treated as income to the purchaser 
                from the discharge of indebtedness,
        then such reduction shall be treated as a purchase 
        price adjustment.
          (6) Indebtedness contributed to capital.--Except as 
        provided in regulations, for purposes of determining 
        income of the debtor from discharge of indebtedness, if 
        a debtor corporation acquires its indebtedness from a 
        shareholder as a contribution to capital--
                  (A) section 118 shall not apply, but
                  (B) such corporation shall be treated as 
                having satisfied the indebtedness with an 
                amount of money equal to the shareholder's 
                adjusted basis in the indebtedness.
          (7) Recapture of gain on subsequent sale of stock.--
                  (A) In general.--If a creditor acquires stock 
                of a debtor corporation in satisfaction of such 
                corporation's indebtedness, for purposes of 
                section 1245--
                          (i) such stock (and any other 
                        property the basis of which is 
                        determined in whole or in part by 
                        reference to the adjusted basis of such 
                        stock) shall be treated as section 1245 
                        property,
                          (ii) the aggregate amount allowed to 
                        the creditor--
                                  (I) as deductions under 
                                subsection (a) or (b) of 
                                section 166 (by reason of the 
                                worthlessness or partial 
                                worthlessness of the 
                                indebtedness), or
                                  (II) as an ordinary loss on 
                                the exchange, shall be treated 
                                as an amount allowed as a 
                                deduction for depreciation, and
                          (iii) an exchange of such stock 
                        qualifying under section 354(a), 
                        355(a), or 356(a) shall be treated as 
                        an exchange to which section 1245(b)(3) 
                        applies.
                The amount determined under clause (ii) shall 
                be reduced by the amount (if any) included in 
                the creditor's gross income on the exchange.
                  (B) Special rule for cash basis taxpayers.--
                In the case of any creditor who computes his 
                taxable income under the cash receipts and 
                disbursements method, proper adjustment shall 
                be made in the amount taken into account under 
                clause (ii) of subparagraph (A) for any amount 
                which was not included in the creditor's gross 
                income but which would have been included in 
                such gross income if such indebtedness had been 
                satisfied in full.
                  (C) Stock of parent corporation.--For 
                purposes of this paragraph, stock of a 
                corporation in control (within the meaning of 
                section 368(c)) of the debtor corporation shall 
                be treated as stock of the debtor corporation.
                  (D) Treatment of successor corporation.--For 
                purposes of this paragraph, the term ``debtor 
                corporation'' includes a successor corporation.
                  (E) Partnership rule.--Under regulations 
                prescribed by the Secretary, rules similar to 
                the rules of the foregoing subparagraphs of 
                this paragraph shall apply with respect to the 
                indebtedness of a partnership.
          (8) Indebtedness satisfied by corporate stock or 
        partnership interest.--For purposes of determining 
        income of a debtor from discharge of indebtedness, if--
                  (A) a debtor corporation transfers stock, or
                  (B) a debtor partnership transfers a capital 
                or profits interest in such partnership,
        to a creditor in satisfaction of its recourse or 
        nonrecourse indebtedness, such corporation or 
        partnership shall be treated as having satisfied the 
        indebtedness with an amount of money equal to the fair 
        market value of the stock or interest. In the case of 
        any partnership, any discharge of indebtedness income 
        recognized under this paragraph shall be included in 
        the distributive shares of taxpayers which were the 
        partners in the partnership immediately before such 
        discharge.
          (9) Discharge of indebtedness income not taken into 
        account in determining whether entity meets REIT 
        qualifications.--Any amount included in gross income by 
        reason of the discharge of indebtedness shall not be 
        taken into account for purposes of paragraphs (2) and 
        (3) of section 856(c).
          (10) Indebtedness satisfied by issuance of debt 
        instrument.--
                  (A) In general.--For purposes of determining 
                income of a debtor from discharge of 
                indebtedness, if a debtor issues a debt 
                instrument in satisfaction of indebtedness, 
                such debtor shall be treated as having 
                satisfied the indebtedness with an amount of 
                money equal to the issue price of such debt 
                instrument.
                  (B) Issue price.--For purposes of 
                subparagraph (A), the issue price of any debt 
                instrument shall be determined under sections 
                1273 and 1274. For purposes of the preceding 
                sentence, section 1273(b)(4) shall be applied 
                by reducing the stated redemption price of any 
                instrument by the portion of such stated 
                redemption price which is treated as interest 
                for purposes of this chapter.
  (f) Student Loans.--
          (1) In general.--In the case of an individual, gross 
        income does not include any amount which (but for this 
        subsection) would be includible in gross income by 
        reason of the discharge (in whole or in part) of any 
        student loan if such discharge was pursuant to a 
        provision of such loan under which all or part of the 
        indebtedness of the individual would be discharged if 
        the individual worked for a certain period of time in 
        certain professions for any of a broad class of 
        employers.
          (2) Student loan.--For purposes of this subsection, 
        the term ``student loan'' means any loan to an 
        individual to assist the individual in attending an 
        educational organization described in section 
        170(b)(1)(A)(ii) made by--
                  (A) the United States, or an instrumentality 
                or agency thereof,
                  (B) a State, territory, or possession of the 
                United States, or the District of Columbia, or 
                any political subdivision thereof,
                  (C) a public benefit corporation--
                          (i) which is exempt from taxation 
                        under section 501(c)(3),
                          (ii) which has assumed control over a 
                        State, county, or municipal hospital, 
                        and
                          (iii) whose employees have been 
                        deemed to be public employees under 
                        State law, or
                  (D) any educational organization described in 
                section 170(b)(1)(A)(ii) if such loan is made--
                          (i) pursuant to an agreement with any 
                        entity described in subparagraph (A), 
                        (B), or (C) under which the funds from 
                        which the loan was made were provided 
                        to such educational organization, or
                          (ii) pursuant to a program of such 
                        educational organization which is 
                        designed to encourage its students to 
                        serve in occupations with unmet needs 
                        or in areas with unmet needs and under 
                        which the services provided by the 
                        students (or former students) are for 
                        or under the direction of a 
                        governmental unit or an organization 
                        described in section 501(c)(3) and 
                        exempt from tax under section 501(a).
        The term ``student loan'' includes any loan made by an 
        educational organization described in section 
        170(b)(1)(A)(ii) or by an organization exempt from tax 
        under section 501(a) to refinance a loan to an 
        individual to assist the individual in attending any 
        such educational organization but only if the 
        refinancing loan is pursuant to a program of the 
        refinancing organization which is designed as described 
        in subparagraph (D)(ii).
          (3) Exception for discharges on account of services 
        performed for certain lenders.--Paragraph (1) shall not 
        apply to the discharge of a loan made by an 
        organization described in paragraph (2)(D) if the 
        discharge is on account of services performed for 
        either such organization.
          (4) Payments under National Health Service Corps loan 
        repayment program and certain state loan repayment 
        programs.--In the case of an individual, gross income 
        shall not include any amount received under section 
        338B(g) of the Public Health Service Act, under a State 
        program described in section 338I of such Act, or under 
        any other State loan repayment or loan forgiveness 
        program that is intended to provide for the increased 
        availability of health care services in underserved or 
        health professional shortage areas (as determined by 
        such State).
  (g) Special Rules for Discharge of Qualified Farm 
Indebtedness.--
          (1) Discharge must be by qualified person.--
                  (A) In general.--Subparagraph (C) of 
                subsection (a)(1) shall apply only if the 
                discharge is by a qualified person.
                  (B) Qualified person.--For purposes of 
                subparagraph (A), the term ``qualified person'' 
                has the meaning given to such term by section 
                49(a)(1)(D)(iv); except that such term shall 
                include any Federal, State, or local government 
                or agency or instrumentality thereof.
          (2) Qualified farm indebtedness.--For purposes of 
        this section, indebtedness of a taxpayer shall be 
        treated as qualified farm indebtedness if--
                  (A) such indebtedness was incurred directly 
                in connection with the operation by the 
                taxpayer of the trade or business of farming, 
                and
                  (B) 50 percent or more of the aggregate gross 
                receipts of the taxpayer for the 3 taxable 
                years preceding the taxable year in which the 
                discharge of such indebtedness occurs is 
                attributable to the trade or business of 
                farming.
          (3) Amount excluded cannot exceed sum of tax 
        attributes and business and investment assets.--
                  (A) In general.--The amount excluded under 
                subparagraph (C) of subsection (a)(1) shall not 
                exceed the sum of--
                          (i) the adjusted tax attributes of 
                        the taxpayer, and
                          (ii) the aggregate adjusted bases of 
                        qualified property held by the taxpayer 
                        as of the beginning of the taxable year 
                        following the taxable year in which the 
                        discharge occurs.
                  (B) Adjusted tax attributes.--For purposes of 
                subparagraph (A), the term ``adjusted tax 
                attributes'' means the sum of the tax 
                attributes described in subparagraphs (A), (B), 
                (C), (D), (F), and (G) of subsection (b)(2) 
                determined by taking into account $3 for each 
                $1 of the attributes described in subparagraphs 
                (B), (C), and (G) of subsection (b)(2) and the 
                attribute described in subparagraph (F) of 
                subsection (b)(2) to the extent attributable to 
                any passive activity credit carryover.
                  (C) Qualified property.--For purposes of this 
                paragraph, the term ``qualified property'' 
                means any property which is used or is held for 
                use in a trade or business or for the 
                production of income.
                  (D) Coordination with insolvency exclusion.--
                For purposes of this paragraph, the adjusted 
                basis of any qualified property and the amount 
                of the adjusted tax attributes shall be 
                determined after any reduction under subsection 
                (b) by reason of amounts excluded from gross 
                income under subsection (a)(1)(B).
  (h) Special Rules Relating to Qualified Principal Residence 
Indebtedness.--
          (1) Basis reduction.--The amount excluded from gross 
        income by reason of subsection (a)(1)(E) shall be 
        applied to reduce (but not below zero) the basis of the 
        principal residence of the taxpayer.
          (2) Qualified principal residence indebtedness.--For 
        purposes of this section, the term ``qualified 
        principal residence indebtedness'' means acquisition 
        indebtedness (within the meaning of section 
        163(h)(3)(B), applied by substituting ``$2,000,000 
        ($1,000,000'' for ``$1,000,000 ($500,000'' in clause 
        (ii) thereof) with respect to the principal residence 
        of the taxpayer.
          (3) Exception for certain discharges not related to 
        taxpayer's financial condition.--Subsection (a)(1)(E) 
        shall not apply to the discharge of a loan if the 
        discharge is on account of services performed for the 
        lender or any other factor not directly related to a 
        decline in the value of the residence or to the 
        financial condition of the taxpayer.
          (4) Ordering rule.--If any loan is discharged, in 
        whole or in part, and only a portion of such loan is 
        qualified principal residence indebtedness, subsection 
        (a)(1)(E) shall apply only to so much of the amount 
        discharged as exceeds the amount of the loan (as 
        determined immediately before such discharge) which is 
        not qualified principal residence indebtedness.
          (5) Principal residence.--For purposes of this 
        subsection, the term ``principal residence'' has the 
        same meaning as when used in section 121.
  (i) Deferral and Ratable Inclusion of Income Arising from 
Business Indebtedness Discharged by the Reacquisition of a Debt 
Instrument.--
          (1) In general.--At the election of the taxpayer, 
        income from the discharge of indebtedness in connection 
        with the reacquisition after December 31, 2008, and 
        before January 1, 2011, of an applicable debt 
        instrument shall be includible in gross income ratably 
        over the 5-taxable-year period beginning with--
                  (A) in the case of a reacquisition occurring 
                in 2009, the fifth taxable year following the 
                taxable year in which the reacquisition occurs, 
                and
                  (B) in the case of a reacquisition occurring 
                in 2010, the fourth taxable year following the 
                taxable year in which the reacquisition occurs.
          (2) Deferral of deduction for original issue discount 
        in debt for debt exchanges.--
                  (A) In general.--If, as part of a 
                reacquisition to which paragraph (1) applies, 
                any debt instrument is issued for the 
                applicable debt instrument being reacquired (or 
                is treated as so issued under subsection (e)(4) 
                and the regulations thereunder) and there is 
                any original issue discount determined under 
                subpart A of part V of subchapter P of this 
                chapter with respect to the debt instrument so 
                issued--
                          (i) except as provided in clause 
                        (ii), no deduction otherwise allowable 
                        under this chapter shall be allowed to 
                        the issuer of such debt instrument with 
                        respect to the portion of such original 
                        issue discount which--
                                  (I) accrues before the 1st 
                                taxable year in the 5-taxable-
                                year period in which income 
                                from the discharge of 
                                indebtedness attributable to 
                                the reacquisition of the debt 
                                instrument is includible under 
                                paragraph (1), and
                                  (II) does not exceed the 
                                income from the discharge of 
                                indebtedness with respect to 
                                the debt instrument being 
                                reacquired, and
                          (ii) the aggregate amount of 
                        deductions disallowed under clause (i) 
                        shall be allowed as a deduction ratably 
                        over the 5-taxable-year period 
                        described in clause (i)(I).
                If the amount of the original issue discount 
                accruing before such 1st taxable year exceeds 
                the income from the discharge of indebtedness 
                with respect to the applicable debt instrument 
                being reacquired, the deductions shall be 
                disallowed in the order in which the original 
                issue discount is accrued.
                  (B) Deemed debt for debt exchanges.--For 
                purposes of subparagraph (A), if any debt 
                instrument is issued by an issuer and the 
                proceeds of such debt instrument are used 
                directly or indirectly by the issuer to 
                reacquire an applicable debt instrument of the 
                issuer, the debt instrument so issued shall be 
                treated as issued for the debt instrument being 
                reacquired. If only a portion of the proceeds 
                from a debt instrument are so used, the rules 
                of subparagraph (A) shall apply to the portion 
                of any original issue discount on the newly 
                issued debt instrument which is equal to the 
                portion of the proceeds from such instrument 
                used to reacquire the outstanding instrument.
          (3) Applicable debt instrument.--For purposes of this 
        subsection--
                  (A) Applicable debt instrument.--The term 
                ``applicable debt instrument'' means any debt 
                instrument which was issued by--
                          (i) a C corporation, or
                          (ii) any other person in connection 
                        with the conduct of a trade or business 
                        by such person.
                  (B) Debt instrument.--The term ``debt 
                instrument'' means a bond, debenture, note, 
                certificate, or any other instrument or 
                contractual arrangement constituting 
                indebtedness (within the meaning of section 
                1275(a)(1)).
          (4) Reacquisition.--For purposes of this subsection--
                  (A) In general.--The term ``reacquisition'' 
                means, with respect to any applicable debt 
                instrument, any acquisition of the debt 
                instrument by--
                          (i) the debtor which issued (or is 
                        otherwise the obligor under) the debt 
                        instrument, or
                          (ii) a related person to such debtor.
                  (B) Acquisition.--The term ``acquisition'' 
                shall, with respect to any applicable debt 
                instrument, include an acquisition of the debt 
                instrument for cash, the exchange of the debt 
                instrument for another debt instrument 
                (including an exchange resulting from a 
                modification of the debt instrument), the 
                exchange of the debt instrument for corporate 
                stock or a partnership interest, and the 
                contribution of the debt instrument to capital. 
                Such term shall also include the complete 
                forgiveness of the indebtedness by the holder 
                of the debt instrument.
          (5) Other definitions and rules.--For purposes of 
        this subsection--
                  (A) Related person.--The determination of 
                whether a person is related to another person 
                shall be made in the same manner as under 
                subsection (e)(4).
                  (B) Election.--
                          (i) In general.--An election under 
                        this subsection with respect to any 
                        applicable debt instrument shall be 
                        made by including with the return of 
                        tax imposed by chapter 1 for the 
                        taxable year in which the reacquisition 
                        of the debt instrument occurs a 
                        statement which--
                                  (I) clearly identifies such 
                                instrument, and
                                  (II) includes the amount of 
                                income to which paragraph (1) 
                                applies and such other 
                                information as the Secretary 
                                may prescribe.
                          (ii) Election irrevocable.--Such 
                        election, once made, is irrevocable.
                          (iii) Pass-thru entities.--In the 
                        case of a partnership, S corporation, 
                        or other pass-thru entity, the election 
                        under this subsection shall be made by 
                        the partnership, the S corporation, or 
                        other entity involved.
                  (C) Coordination with other exclusions.--If a 
                taxpayer elects to have this subsection apply 
                to an applicable debt instrument, subparagraphs 
                (A), (B), (C), and (D) of subsection (a)(1) 
                shall not apply to the income from the 
                discharge of such indebtedness for the taxable 
                year of the election or any subsequent taxable 
                year.
                  (D) Acceleration of deferred items.--
                          (i) In general.--In the case of the 
                        death of the taxpayer, the liquidation 
                        or sale of substantially all the assets 
                        of the taxpayer (including in a title 
                        11 or similar case), the cessation of 
                        business by the taxpayer, or similar 
                        circumstances, any item of income or 
                        deduction which is deferred under this 
                        subsection (and has not previously been 
                        taken into account) shall be taken into 
                        account in the taxable year in which 
                        such event occurs (or in the case of a 
                        title 11 or similar case, the day 
                        before the petition is filed).
                          (ii) Special rule for pass-thru 
                        entities.--The rule of clause (i) shall 
                        also apply in the case of the sale or 
                        exchange or redemption of an interest 
                        in a partnership, S corporation, or 
                        other pass- thru entity by a partner, 
                        shareholder, or other person holding an 
                        ownership interest in such entity.
          (6) Special rule for partnerships.--In the case of a 
        partnership, any income deferred under this subsection 
        shall be allocated to the partners in the partnership 
        immediately before the discharge in the manner such 
        amounts would have been included in the distributive 
        shares of such partners under section 704 if such 
        income were recognized at such time. Any decrease in a 
        partner's share of partnership liabilities as a result 
        of such discharge shall not be taken into account for 
        purposes of section 752 at the time of the discharge to 
        the extent it would cause the partner to recognize gain 
        under section 731. Any decrease in partnership 
        liabilities deferred under the preceding sentence shall 
        be taken into account by such partner at the same time, 
        and to the extent remaining in the same amount, as 
        income deferred under this subsection is recognized.
          (7) Secretarial authority.--The Secretary may 
        prescribe such regulations, rules, or other guidance as 
        may be necessary or appropriate for purposes of 
        applying this subsection, including--
                  (A) extending the application of the rules of 
                paragraph (5)(D) to other circumstances where 
                appropriate,
                  (B) requiring reporting of the election (and 
                such other information as the Secretary may 
                require) on returns of tax for subsequent 
                taxable years, and
                  (C) rules for the application of this 
                subsection to partnerships, S corporations, and 
                other pass-thru entities, including for the 
                allocation of deferred deductions.

           *       *       *       *       *       *       *


      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italics, existing law in 
which no change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
made by the bill, as reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                   INDIAN HEALTH CARE IMPROVEMENT ACT




           *       *       *       *       *       *       *
TITLE I--INDIAN HEALTH MANPOWER

           *       *       *       *       *       *       *



             indian health service loan repayment c program

  Sec. 108. (a)(1) The Secretary, acting through the Service, 
shall establish a program to be known as the Indian Health 
Service Loan Repayment Program (hereinafter referred to as the 
``Loan Repayment Program'') in order to assure an adequate 
supply of trained health professionals necessary to maintain 
accreditation of, and provide health care services to Indians 
through, Indian health programs.
  (2) For the purposes of this section--
          (A) the term ``Indian health program'' means any 
        health program or facility funded, in whole or part, by 
        the Service for the benefit of Indians and 
        administered--
                  (i) directly by the Service;
                  (ii) by any Indian tribe or tribal or Indian 
                organization pursuant to a contract under--
                          (I) the Indian Self-Determination 
                        Act, or
                          (II) section 23 of the Act of April 
                        30, 1908 (25 U.S.C. 47), popularly 
                        known as the ``Buy-Indian'' Act; or
                  (iii) by an urban Indian organization 
                pursuant to title V of this Act; and
          (B) the term ``State'' has the same meaning given 
        such term in section 331(i)(4) of the Public Health 
        Service Act.
  (b) To be eligible to participate in the Loan Repayment 
Program, an individual must--
          (1)(A) be enrolled--
                  (i) in a course of study or program in an 
                accredited institution, as determined by the 
                Secretary, within any State and be scheduled to 
                complete such course of study in the same year 
                such individual applies to participate in such 
                program; or
                  (ii) in an approved graduate training program 
                in a health profession; or
          (B) have--
                  (i) a degree in a health profession 
                (including a degree business administration 
                with an emphasis in health care management, as 
                defined by the Secretary, or a degree in health 
                administration, hospital administration, or 
                public health); and
                  (ii) a license to practice a health 
                profession in a State or a license or 
                certification to practice in the field of 
                health administration, hospital administration, 
                business administration, or public health, as 
                applicable, in a State;
          (2)(A) be eligible for, or hold, an appointment as a 
        commissioned officer in the Regular or Reserve Corps of 
        the Public Health Service;
          (B) be eligible for selection for civilian service in 
        the Regular or Reserve Corps of the Public Health 
        Service;
          (C) meet the professional standards for civil service 
        employment in the Indian Health Service; or
          (D) be employed in an Indian health program without a 
        service obligation; and
          (3) submit to the Secretary an application for a 
        contract described in subsection (f).
  (c)(1) In disseminating application forms and contract forms 
to individuals desiring to participate in the Loan Repayment 
Program, the Secretary shall include with such forms a fair 
summary of the rights and liabilities of an individual whose 
application is approved (and whose contract is accepted) by the 
Secretary, including in the summary a clear explanation of the 
damages to which the United States is entitled under subsection 
(l) in the case of the individual's breach of the contract. The 
Secretary shall provide such individuals with sufficient 
information regarding the advantages and disadvantages of 
service as a commissioned officer in the Regular or Reserve 
Corps of the Public Health Service or a civilian employee of 
the Indian Health Service to enable the individual to make a 
decision on an informed basis.
  (2) The application form, contract form, and all other 
information furnished by the Secretary under this section shall 
be written in a manner calculated to be understood by the 
average individual applying to participate in the Loan 
Repayment Program.
  (3) The Secretary shall make such application forms, contract 
forms, and other information available to individuals desiring 
to participate in the Loan Repayment Program on a date 
sufficiently early to ensure that such individuals have 
adequate time to carefully review and evaluate such forms and 
information.
  (d)(1) Consistent with paragraph (3), the Secretary, acting 
through the Service and in accordance with subsection (k), 
shall annually--
          (A) identify the positions in each Indian health 
        program for which there is a need or a vacancy, and
          (B) rank those positions in order of priority.
  (2) Consistent with the priority determined under paragraph 
(1), the Secretary, in determining which applications under the 
Loan Repayment Program to approve (and which contracts to 
accept), shall give priority to applications made by--
          (A) Indians; and
          (B) individuals recruited through the efforts of 
        Indian tribes or tribal or Indian organizations.
          (3)(A) Subject to subparagraph (B), of the total 
        amounts appropriated for each of the fiscal years 1993, 
        1994, and 1995 for loan repayment contracts under this 
        section, the Secretary shall provide that--
                  (i) not less than 25 percent be provided to 
                applicants who are nurses, nurse practitioners, 
                or nurse midwives; and
                  (ii) not less than 10 percent be provided to 
                applicants who are mental health professionals 
                (other than applicants described in clause 
                (i)).
          (B) The requirements specified in clause (i) or 
        clause (ii) of subparagraph (A) shall not apply if the 
        Secretary does not receive the number of applications 
        from the individuals described in clause (i) or clause 
        (ii), respectively, necessary to meet such 
        requirements.
  (e)(1) An individual becomes a participant in the Loan 
Repayment Program only upon the Secretary and the individual 
entering into a written contract described in subsection (f).
  (2) The Secretary shall provide written notice to an 
individual promptly on--
          (A) the Secretary's approving, under paragraph (1), 
        of the individual's participation in the Loan Repayment 
        Program, including extensions resulting in an aggregate 
        period of obligated service in excess of 4 years; or
          (B) the Secretary's disapproving an individual's 
        participation in such Program.
  (f) The written contract referred to in this section between 
the Secretary and an individual shall contain--
          (1) an agreement under which--
                  (A) subject to paragraph (3), the Secretary 
                agrees--
                          (i) to pay loans on behalf of the 
                        individual in accordance with the 
                        provisions of this section, and
                          (ii) to accept (subject to the 
                        availability of appropriated funds for 
                        carrying out this section) the 
                        individual into the Service or place 
                        the individual with a tribe or Indian 
                        organization as provided in 
                        subparagraph (B)(iii), and
                  (B) subject to paragraph (3), the individual 
                agrees--
                          (i) to accept loan payments on behalf 
                        of the individual;
                          (ii) in the case of an individual 
                        described in subsection (b)(1)--
                                  (I) to maintain enrollment in 
                                a course of study or training 
                                described in subsection 
                                (b)(1)(A) until the individual 
                                completes the course of study 
                                or training, and
                                  (II) while enrolled in such 
                                course of study or training, to 
                                maintain an acceptable level of 
                                academic standing (as 
                                determined under regulations of 
                                the Secretary by the 
                                educational institution 
                                offering such course of study 
                                or training);
                          (iii) to serve for a time period 
                        (hereinafter in this section referred 
                        to as the ``period of obligated 
                        service'') equal to [2 years or such 
                        longer period as the individual may 
                        agree to serve in the full-time 
                        clinical practice of such individual's 
                        profession] 2 years or such longer 
                        period as the individual may agree to 
                        serve in the full-time practice of such 
                        individual's profession (or 4 years or 
                        such longer period as the individual 
                        may agree to serve in the half-time 
                        practice of such individual's 
                        profession) in an Indian health program 
                        to which the individual may be assigned 
                        by the Secretary;
          (2) a provision permitting the Secretary to extend 
        for such longer additional periods, as the individual 
        may agree to, the period of obligated service agreed to 
        by the individual under paragraph (1)(B)(iii);
          (3) a provision that any financial obligation of the 
        United States arising out of a contract entered into 
        under this section and any obligation of the individual 
        which is conditioned thereon is contingent upon funds 
        being appropriated for loan repayments under this 
        section;
          (4) a statement of the damages to which the United 
        States is entitled under subsection (l) for the 
        individual's breach of the contract; and
          (5) such other statements of the rights and 
        liabilities of the Secretary and of the individual, not 
        inconsistent with this section.
  (g)(1) A loan repayment provided for an individual under a 
written contract under the Loan Repayment Program shall consist 
of payment, in accordance with paragraph (2), on behalf of the 
individual of the principal, interest, and related expenses on 
government and commercial loans received by the individual 
regarding the undergraduate or graduate education of the 
individual (or both), which loans were made for--
          (A) tuition expenses;
          (B) all other reasonable educational expenses, 
        including fees, books, and laboratory expenses, 
        incurred by the individual; and
          (C) reasonable living expenses as determined by the 
        Secretary.
  (2)(A) For each year of obligated service that an individual 
contracts to serve under subsection (f) the Secretary may pay, 
in the case of an individual agreeing to serve in the full-time 
practice of such individual's profession, up to $35,000 (or an 
amount equal to the amount specified in section 338B(g)(2)(A) 
of the Public Health Service Act) (or, in the case of an 
individual agreeing to serve in the half-time practice of such 
individual's profession, up to $17,500) on behalf of the 
individual for loans described in paragraph (1). In making a 
determination of the amount to pay for a year of such service 
by an individual, the Secretary shall consider the extent to 
which each such determination--
          (i) affects the ability of the Secretary to maximize 
        the number of contracts that can be provided under the 
        Loan Repayment Program from the amounts appropriated 
        for such contracts;
          (ii) provides an incentive to serve in Indian health 
        programs with the greatest shortages of health 
        professionals; and
          (iii) provides an incentive with respect to the 
        health professional involved remaining in an Indian 
        health program with such a health professional 
        shortage, and continuing to provide primary health 
        services, after the completion of the period of 
        obligated service under the Loan Repayment Program.
  (B) Any arrangement made by the Secretary for the making of 
loan repayments in accordance with this subsection shall 
provide that any repayments for a year of obligated service 
shall be made no later than the end of the fiscal year in which 
the individual completes such year of service.
  (3) For the purpose of providing reimbursements for tax 
liability resulting from payments under paragraph (2) on behalf 
of an individual, the Secretary--
          (A) in addition to such payments, may make payments 
        to the individual in an amount not less than 20 percent 
        and not more than 39 percent of the total amount of 
        loan repayments made for the taxable year involved; and
          (B) may make such additional payments as the 
        Secretary determines to be appropriate with respect to 
        such purpose.
  (4) The Secretary may enter into an agreement with the holder 
of any loan for which payments are made under the Loan 
Repayment Program to establish a schedule for the making of 
such payments.
  (h) Notwithstanding any other provision of law, individuals 
who have entered into written contracts with the Secretary 
under this section, while undergoing academic training, shall 
not be counted against any employment ceiling affecting the 
Department of Health and Human Services.
  (i) The Secretary shall conduct recruiting programs for the 
Loan Repayment Program and other health professional programs 
of the Service at educational institutions training health 
professionals or specialists identified in subsection (a).
  (j) Section 214 of the Public Health Service Act (42 U.S.C. 
215) shall not apply to individuals during their period of 
obligated service under the Loan Repayment Program.
  (k) The Secretary, in assigning individuals to serve in 
Indian health programs pursuant to contracts entered into under 
this section, shall--
          (1) ensure that the staffing needs of Indian health 
        programs administered by an Indian tribe or tribal or 
        health organization receive consideration on an equal 
        basis with programs that are administered directly by 
        the Service; and
          (2) give priority to assigning individuals to Indian 
        health programs that have a need for health 
        professionals to provide health care services as a 
        result of individuals having breached contracts entered 
        into under this section.
  (l)(1) An individual who has entered into a written contract 
with the Secretary under this section and who--
          (A) is enrolled in the final year of a course of 
        study and who--
                  (i) fails to maintain an acceptable level of 
                academic standing in the educational 
                institution in which he is enrolled (such level 
                determined by the educational institution under 
                regulations of the Secretary);
                  (ii) voluntarily terminates such enrollment; 
                or
                  (iii) is dismissed from such educational 
                institution before completion of such course of 
                study; or
          (B) is enrolled in a graduate training program, fails 
        to complete such training program, and does not receive 
        a waiver from the Secretary under subsection 
        (b)(1)(B)(ii),
shall be liable, in lieu of any service obligation arising 
under such contract, to the United States for the amount which 
has been paid on such individual's behalf under the contract.
  (2) If, for any reason not specified in paragraph (1), an 
individual breaches his written contract under this section by 
failing either to begin, or complete, such individual's period 
of obligated service in accordance with subsection (f), the 
United States shall be entitled to recover from such individual 
an amount to be determined in accordance with the following 
formula:


 
A=3Z(t-s/t)

in which--
          (A) ``A'' is the amount the United States is entitled 
        to recover;
          (B) ``Z'' is the sum of the amounts paid under this 
        section to, or on behalf of, the individual and the 
        interest on such amounts which would be payable if, at 
        the time the amounts were paid, they were loans bearing 
        interest at the maximum legal prevailing rate, as 
        determined by the Treasurer of the United States;
          (C) ``t'' is the total number of months in the 
        individual's period of obligated service in accordance 
        with subsection (f); and
          (D) ``s'' is the number of months of such period 
        served by such individual in accordance with this 
        section.
Amounts not paid within such period shall be subject to 
collection through deductions in Medicare payments pursuant to 
section 1892 of the Social Security Act.
  (3)(A) Any amount of damages which the United States is 
entitled to recover under this subsection shall be paid to the 
United States within the 1-year period beginning on the date of 
the breach or such longer period beginning on such date as 
shall be specified by the Secretary.
  (B) If damages described in subparagraph (A) are delinquent 
for 3 months, the Secretary shall, for the purpose of 
recovering such damages--
          (i) utilize collection agencies contracted with by 
        the Administrator of the General Services 
        Administration; or
          (ii) enter into contracts for the recovery of such 
        damages with collection agencies selected by the 
        Secretary.
  (C) Each contract for recovering damages pursuant to this 
subsection shall provide that the contractor will, not less 
than once each 6 months, submit to the Secretary a status 
report on the success of the contractor in collecting such 
damages. Section 3718 of title 31, United States Code, shall 
apply to any such contract to the extent not inconsistent with 
this subsection.
  (m)(1) Any obligation of an individual under the Loan 
Repayment Program for service or payment of damages shall be 
canceled upon the death of the individual.
  (2) The Secretary shall by regulation provide for the partial 
or total waiver or suspension of any obligation of service or 
payment by an individual under the Loan Repayment Program 
whenever compliance by the individual is impossible or would 
involve extreme hardship to the individual and if enforcement 
of such obligation with respect to any individual would be 
unconscionable.
  (3) The Secretary may waive, in whole or in part, the rights 
of the United States to recover amounts under this section in 
any case of extreme hardship or other good cause shown, as 
determined by the Secretary.
  (4) Any obligation of an individual under the Loan Repayment 
Program for payment of damages may be released by a discharge 
in bankruptcy under title 11 of the United States Code only if 
such discharge is granted after the expiration of the 5-year 
period beginning on the first date that payment of such damages 
is required, and only if the bankruptcy court finds that 
nondischarge of the obligation would be unconscionable.
  (n) The Secretary shall submit to the President, for 
inclusion in each report required to be submitted to the 
Congress under section 801, a report concerning the previous 
fiscal year which sets forth--
          (1) the health professional positions maintained by 
        the Service or by tribal or Indian organizations for 
        which recruitment or retention is difficult;
          (2) the number of Loan Repayment Program applications 
        filed with respect to each type of health profession;
          (3) the number of contracts described in subsection 
        (f) that are entered into with respect to each health 
        profession;
          (4) the amount of loan payments made under this 
        section, in total and by health profession;
          (5) the number of scholarship grants that are 
        provided under section 104 with respect to each health 
        profession;
          (6) the amount of scholarship grants provided under 
        section 104, in total and by health profession;
          (7) the number of providers of health care that will 
        be needed by Indian health programs, by location and 
        profession, during the three fiscal years beginning 
        after the date the report is filed; and
          (8) the measures the Secretary plans to take to fill 
        the health professional positions maintained by the 
        Service or by tribes or tribal or Indian organizations 
        for which recruitment or retention is difficult.

           *       *       *       *       *       *       *


SEC. 125. CULTURAL COMPETENCY PROGRAMS.

  (a) In General.--The Secretary, acting through the Service, 
shall, not later than one year after the date of the enactment 
of this section and for each Service area, develop and 
implement training programs for cultural competency for 
employees of the Service, locum tenens medical providers, and 
other contracted employees who work at Service hospitals or 
other Service facilities and whose employment requires regular 
direct patient access.
  (b) Required Participation.--Notwithstanding any other 
provision of law, beginning with years beginning after (and for 
contracts entered into on or after) the date of implementation 
of the training programs under subsection (a), annual 
participation in such a program shall be a condition of 
employment (or of providing services in the capacity as a locum 
tenen medical provider or of the terms of the contracted 
employment, as applicable), and continued employment (or 
provision of such services in such capacity or contracted 
employment, as applicable), for each employee of the Service, 
locum tenens medical provider, and contracted employee 
described in such subsection. For purposes of the previous 
sentence, an individual shall not be considered as 
participating in such a program, with respect to a year, unless 
such individual satisfies such requirements, including testing, 
included in such program for such year, as specified by the 
Secretary.
  (c) Consultation.--In developing a training program under 
subsection (a) for a Service area, the Secretary shall consult 
with representatives of each Indian tribe served in such area.

SEC. 126. RELOCATION REIMBURSEMENT.

  (a) In General.--In the case of an employee of the Service 
who relocates to serve in a different capacity or position as 
an employee of the Service, the Secretary shall, subject to 
subsection (b), offer such employee reimbursement for 
reasonable costs associated with such relocation, as determined 
by the Secretary, incurred by such employee if--
          (1) such relocation is to fill a position that--
                  (A) is at a Service facility that is located 
                in a rural area or medically underserved area; 
                and
                  (B) had not been filled by a full-time non-
                contractor for a period of at least 6 months; 
                or
          (2) such relocation is to fill a position that is for 
        hospital management or administration, as determined by 
        the Secretary.
  (b) Amount for Relocation.--
          (1) In general.--The amount of reimbursement to an 
        employee under subsection (a) shall be in an amount 
        that is at least 50 percent, but not more than 75 
        percent, of the specified pay amount (as described in 
        paragraph (2)) of the employee.
          (2) Specified pay amount.--For purposes of paragraph 
        (1), the specified pay amount, with respect to an 
        employee, is the annual rate of basic pay of the 
        employee in effect at the beginning of the service 
        period of such employee multiplied by the number of 
        years (including fractions of a year) in the service 
        period, not to exceed 4 years.
  (c) Clarification.--Nothing in this section shall be 
construed as limiting the authority of the Secretary, as in 
existence before the enactment of this section, to offer 
reimbursement for travel or relocation.

SEC. 128. STREAMLINING MEDICAL VOLUNTEER CREDENTIALING PROCESS.

  (a) In General.--The Secretary, acting through the Service, 
shall, in accordance with subsection (b), implement a Service-
wide centralized credentialing system to credential licensed 
health professionals who seek to volunteer at a Service 
facility.
  (b) Requirements.--The credentialing system implemented under 
subsection (a) shall be in accordance with the following:
          (1) Credentialing of licensed health professionals 
        who seek to volunteer at a Service facility shall occur 
        at the Service level.
          (2) Credentialing procedures under such system shall 
        be uniform throughout the Service.
          (3) Under such system, in the case that such a 
        licensed health professional has successfully completed 
        the credentialing procedures under such system, such 
        professional shall be authorized to treat patients at 
        any Service facility or other facility within a Service 
        area.
  (c) Regulations.--The Secretary may promulgate regulations to 
implement this section.
  (d) Consultation.--The Secretary may consult with public and 
private associations of medical providers in the development of 
the credentialing system under this section.
  (e) Application.--The credentialing system under this section 
shall apply with respect to licensed health professionals 
seeking to volunteer with respect to--
          (1) providing direct health care services at a 
        Service facility; and
          (2) providing services at facilities operated or 
        contracted by a tribe, tribal organization, or urban 
        Indian organization under the Indian Self-Determination 
        and Education Assistance Act.
  (f) Clarification.--Nothing in this section shall be 
construed to inhibit a tribe's authority to enter into a 
compact or contract under the Indian Self-Determination and 
Education Assistance Act.

TITLE II--HEALTH SERVICES

           *       *       *       *       *       *       *


SEC. 226. CONTRACT HEALTH SERVICE ADMINISTRATION AND DISBURSEMENT 
                    FORMULA.

  (a) Submission of Report.--[As soon as practicable after the 
date of enactment of the Indian Health Care Improvement 
Reauthorization and Extension Act of 2009] Not later than 2 
years after the date of the enactment of section 227, the 
Comptroller General of the United States shall submit to the 
Secretary, the Committee on Indian Affairs of the Senate, and 
the Committee on Natural Resources of the House of 
Representatives, and make available to each Indian tribe, a 
report describing the results of [the study] a study of the 
Comptroller General regarding the funding of the contract 
health service program (including historic funding levels and a 
recommendation of the funding level needed for the program) and 
the administration of the contract health service program 
(including the distribution of funds pursuant to the program), 
[as requested by Congress in March 2009, or pursuant to section 
830], including as amended pursuant to section 227.
  (b) Consultation With Tribes.--On receipt of the report under 
subsection (a), the Secretary shall consult with Indian tribes 
regarding the contract health service program, including the 
distribution of funds pursuant to the program, and submit, not 
later than one year after the date of the enactment of section 
227 and annually thereafter, to Congress a report on--
          (1) to determine whether the current distribution 
        formula would require modification if the contract 
        health service program were funded at the level 
        recommended by the Comptroller General;
          (2) to identify any inequities in the current 
        distribution formula under the current funding level or 
        inequitable results for any Indian tribe under the 
        funding level recommended by the Comptroller General;
          (3) to identify any areas of program administration 
        that may result in the inefficient or ineffective 
        management of the program; [and]
          (4) to determine whether during the period of the 
        report any contract health service delivery area, 
        tribe, tribal organization, or urban Indian 
        organization had a shortfall in such funding and, if 
        so, the amount of such shortfall; and
          (5) recommendations for such legislative action as 
        the Secretary deems appropriate.
          [(4)] (5) to identify any other issues and 
        recommendations to improve the administration of the 
        contract health services program and correct any unfair 
        results or funding disparities identified under 
        paragraph (2), including recommendations for such 
        legislative actions as the Secretary determines 
        appropriate.
  [(c) Subsequent Action by Secretary.--If, after consultation 
with Indian tribes under subsection (b), the Secretary 
determines that any issue described in subsection (b)(2) 
exists, the Secretary may initiate procedures under subchapter 
III of chapter 5 of title 5, United States Code, to negotiate 
or promulgate regulations to establish a disbursement formula 
for the contract health service program funding.]

SEC. 227. PURCHASED/REFERRED CARE PROGRAM DISBURSEMENT FORMULA.

  (a) In General.--The Secretary shall, with respect to the 
Purchased/Referred Care program (formerly referred to as the 
``contract health services program'') funded by the Indian 
Health Service and operated by the Indian Health Service, an 
Indian tribe, or tribal organization, review the distribution 
of funds pursuant to the program and initiate procedures under 
subchapter III of chapter 5 of title 5, United States Code, to 
negotiate or promulgate regulations to develop and implement a 
revised distribution formula in accordance with the subsequent 
subsections of this section.
  (b) Considerations.--In developing the revised distribution 
formula under subsection (a), the Secretary shall consider--
          (1) the extent to which services are available at a 
        Service hospital or facility of the Service rather than 
        the mere existence of such a hospital or facility;
          (2) population growth and the potential for 
        population growth;
          (3) the socioeconomic makeup of the population of 
        each contract health service delivery area;
          (4) the geographic makeup of each contract health 
        service delivery area;
          (5) the size of the hospital or facility;
          (6) the relative regional cost of purchasing 
        services;
          (7) actual counts of Purchased/Referred Care users; 
        and
          (8) accreditation problems at the Service hospital or 
        facility of the Service.
  (c) Implementation Deadline.--The revised distribution 
formula under subsection (a) shall be implemented not later 
than the date that is 3 years after the first October 1 
following the date of the enactment of this Act.
  (d) Transition.--
          (1) In general.--Notwithstanding any other provision 
        of law, for the period beginning on the first October 1 
        following the date of the enactment of this section and 
        ending the day before the implementation date of the 
        revised distribution formula under subsection (a), the 
        Secretary shall provide for the distribution of funds, 
        with respect to direct health care services provided by 
        a Service facility, pursuant to the Purchased/Referred 
        Care program (and with respect to services provided by 
        any other facility under such program, at the option of 
        such facility) be consistent with the following:
                  (A) During any portion of such period for 
                which a Service area has been designated as a 
                high IHS level area under paragraph (2)(B), 
                such area shall not receive any funds pursuant 
                to such program in addition to the base 
                allotment determined under the distribution 
                formula under the program for 2016 with respect 
                to such area.
                  (B) In the case that during such period the 
                amount of funds made available to the Service 
                for such distribution under such program is in 
                excess of the total amounts of base allotments 
                for distribution under such program for 2016, 
                the Secretary shall distribute such excess 
                amount, in accordance with a methodology 
                specified by the Secretary, to Service areas 
                which for an applicable portion of such period 
                of excess funding have been designated as a low 
                IHS level area under paragraph (2)(A).
          (2) Area designations.--For purposes of paragraph 
        (1), the Secretary shall, with respect to each contract 
        health service delivery area--
                  (A) review the services provided in the area 
                to determine the IHS medical priority level 
                pursuant to section 136.23(e) of title 42, Code 
                of Federal Regulations, of such services; and
                  (B) in the case majority, as specified by the 
                Secretary, of the services so provided in the 
                area were determined to have--
                          (i) such a priority level of a I or 
                        II, designate such area as a low IHS 
                        level area; and
                          (ii) any other priority level, 
                        designate such area as a high IHS level 
                        area.
  (e) Application of Reduction Clause.--In the case of a 
facility that, as of the date of the enactment of this section, 
is under contract with the Secretary with respect to the 
Purchased/Referred Care program and such contract applies to a 
period to which subsection (d) or the revised distribution 
formula under subsection (a) applies, if application of 
subsection (d) or the revised distribution formula results in 
the distribution of an amount of funds to such facility during 
such period that is less than the amount of funds that would be 
provided during such period to such facility under such 
contract with respect to the Purchased/Referred Care program 
before application of such subsection (d) or such revised 
distribution formula, respectively, the Secretary may under 
section 106(b) of the Indian Self-Determination and Education 
Assistance Act (25 U.S.C. 450j-1(b)) reduce such amount 
accordingly to be consistent with such subsection (d) or 
revised distribution formula, respectively.
  (f) Clarification.--Nothing in this section shall be 
construed to supersede a Tribe's self-governance contract under 
the Indian Self-Determination and Education Assistance Act.
  (g) Update.--The Secretary shall periodically, but not more 
frequently than once every 3 years and not less frequently than 
once every five years, review and, as necessary, update the 
formula implemented under subsection (a).
  (h) Consultation.--In developing the formula under subsection 
(a) and reviewing and making updates to such formula under 
subsection (f), the Secretary shall consult with Indian tribes, 
including such tribes consulted for purposes of carrying out 
section 226.
  (i) Reports.--Not later than one year after the date of the 
enactment of this section, and annually thereafter, the 
Secretary shall submit to Congress a report on the 
implementation of this section. Each such report shall include 
information, with respect to the period for such report, on--
          (1) the distribution of funds for such period 
        pursuant to the Purchased/Referred Care program among 
        the contract health service delivery area, tribes, 
        tribal organizations, and urban Indian organizations;
          (2) whether during such period any contract health 
        service delivery area, tribe, tribal organization, or 
        urban Indian organization had a shortfall in such 
        funding and, if so, the amount of such shortfall; and
          (3) recommendations for such legislative action as 
        the Secretary deems appropriate.

SEC. 228. PURCHASED/REFERRED CARE PROGRAM BACKLOG.

  Not later than one year after the date of the enactment of 
this section, the Secretary shall develop and implement a 
system to prioritize any backlog of unpaid balances under the 
Purchased/Referred Care program for each Service area. In 
developing such system, the Secretary shall consider--
          (1) the monetary amount of each such unpaid balance; 
        and
          (2) how long such balance has remained unpaid.

TITLE III--HEALTH FACILITIES

           *       *       *       *       *       *       *


SEC. 314. STANDARDS TO IMPROVE TIMELINESS OF CARE.

  (a) In General.--The Secretary, acting through the Service, 
shall--
          (1) establish, by regulation, standards to measure 
        the timeliness of the provision of health care services 
        in Service facilities; and
          (2) make such standards available to all Service 
        areas and Service facilities.
  (b) Data Collection.--The Secretary, acting through the 
Service, shall develop a process for Service facilities to 
submit to the Secretary data with respect to the standards 
established under subsection (a).

           *       *       *       *       *       *       *


                 TITLE VI--ORGANIZATIONAL IMPROVEMENTS

SEC. 601. ESTABLISHMENT OF THE INDIAN HEALTH SERVICE AS AN AGENCY OF 
                    THE PUBLIC HEALTH SERVICE.

  (a) Establishment.--
          (1) In general.--In order to more effectively and 
        efficiently carry out the responsibilities, 
        authorities, and functions of the United States to 
        provide health care services to Indians and Indian 
        tribes, as are or may be hereafter provided by Federal 
        statute or treaties, there is established within the 
        Public Health Service of the Department the Indian 
        Health Service.
          (2) Director.--The Service shall be administered by a 
        Director, who shall be appointed by the President, by 
        and with the advice and consent of the Senate. The 
        Director shall report to the Secretary. Effective with 
        respect to an individual appointed by the President, by 
        and with the advice and consent of the Senate, after 
        January 1, 2008, the term of service of the Director 
        shall be 4 years. A Director may serve more than 1 
        term.
          (3) Incumbent.--The individual serving in the 
        position of Director of the Service on the day before 
        the date of enactment of the Indian Health Care 
        Improvement Reauthorization and Extension Act of 2009 
        shall serve as Director.
          (4) Advocacy and consultation.--The position of 
        Director is established to, in a manner consistent with 
        the government-to-government relationship between the 
        United States and Indian Tribes--
                  (A) facilitate advocacy for the development 
                of appropriate Indian health policy; and
                  (B) promote consultation on matters relating 
                to Indian health.
  (b) Agency.--The Service shall be an agency within the Public 
Health Service of the Department, and shall not be an office, 
component, or unit of any other agency of the Department.
  (c) Duties.--The Director shall--
          (1) perform all functions that were, on the day 
        before the date of enactment of the Indian Health Care 
        Improvement Reauthorization and Extension Act of 2009, 
        carried out by or under the direction of the individual 
        serving as Director of the Service on that day;
          (2) perform all functions of the Secretary relating 
        to the maintenance and operation of hospital and health 
        facilities for Indians and the planning for, and 
        provision and utilization of, health services for 
        Indians, including by ensuring that all agency 
        directors, managers, and chief executive officers have 
        appropriate and adequate training, experience, skill 
        levels, knowledge, abilities, and education (including 
        continuing training requirements) to competently 
        fulfill the duties of the positions and the mission of 
        the Service;
          (3) administer all health programs under which health 
        care is provided to Indians based upon their status as 
        Indians which are administered by the Secretary, 
        including programs under--
                  (A) this Act;
                  (B) the Act of November 2, 1921 (25 U.S.C. 
                13);
                  (C) the Act of August 5, 1954 (42 U.S.C. 2001 
                et seq.);
                  (D) the Act of August 16, 1957 (42 U.S.C. 
                2005 et seq.); and
                  (E) the Indian Self-Determination and 
                Education Assistance Act (25 U.S.C. 450 et 
                seq.);
          (4) administer all scholarship and loan functions 
        carried out under title I;
          (5) directly advise the Secretary concerning the 
        development of all policy- and budget-related matters 
        affecting Indian health;
          (6) collaborate with the Assistant Secretary for 
        Health concerning appropriate matters of Indian health 
        that affect the agencies of the Public Health Service;
          (7) advise each Assistant Secretary of the Department 
        concerning matters of Indian health with respect to 
        which that Assistant Secretary has authority and 
        responsibility;
          (8) advise the heads of other agencies and programs 
        of the Department concerning matters of Indian health 
        with respect to which those heads have authority and 
        responsibility;
          (9) coordinate the activities of the Department 
        concerning matters of Indian health; and
          (10) perform such other functions as the Secretary 
        may designate.
  (d) Authority.--
          (1) In general.--The Secretary, acting through the 
        Director, shall have the authority--
                  (A) except to the extent provided for in 
                paragraph (2) and subject to paragraph (4), to 
                appoint and compensate employees for the 
                Service in accordance with title 5, United 
                States Code;
                  (B) to enter into contracts for the 
                procurement of goods and services to carry out 
                the functions of the Service; and
                  (C) to manage, expend, and obligate all funds 
                appropriated for the Service.
          (2) Personnel actions.--Notwithstanding any other 
        provision of law, the provisions of section 12 of the 
        Act of June 18, 1934 (48 Stat. 986; 25 U.S.C. 472), 
        shall apply to all personnel actions taken with respect 
        to new positions created within the Service as a result 
        of its establishment under subsection (a).
          (4) Employment authority.--
                  (A) In general.--The Secretary may, with 
                respect to any employee described in 
                subparagraph (B), provide that one or more 
                provisions of chapter 74 of title 38, United 
                States Code (other than subchapter V of such 
                chapter or of regulations promulgated under 
                such chapter other than under such subchapter), 
                shall apply--
                          (i) in lieu of any provision of title 
                        5 of the United States Code (other than 
                        as applied pursuant to section 834); or
                          (ii) notwithstanding any lack of 
                        specific authority for a matter with 
                        respect to which title 5 of the United 
                        States Code relates.
                  (B) Applicability to employees.--Authority 
                under this paragraph may be exercised with 
                respect to any employee in the Service holding 
                a position--
                          (i) to which chapter 51 of title 5 of 
                        the United States Code applies, 
                        excluding any senior executive service 
                        position; and
                          (ii) which involves health care 
                        responsibilities.
                  (C) Definition.--For purposes of this 
                paragraph, ``health care'' means direct 
                patient-care services or services incident to 
                direct patient-care services.

           *       *       *       *       *       *       *


SEC. 605. AUTHORITY TO WAIVE INDIAN PREFERENCE LAWS.

  To enhance recruitment and retention of employees of the 
Service, the Secretary may waive the requirements of the Indian 
preference laws (as defined in section 2(e) of Public Law 96-
135 (25 U.S.C. 472a(e))) with respect to a personnel action 
with respect to a Service unit with the written request or 
resolution of an Indian tribe located within the applicable 
Service unit--
          (1) if such personnel action is with respect to a 
        facility that has a personnel vacancy rate of at least 
        20 percent; or
          (2) in the case such personnel action is with respect 
        to a former employee of the Service or former tribal 
        employee who was removed from such former employment or 
        demoted for misconduct that occurred during the five 
        years prior to the date of such personnel action.

           *       *       *       *       *       *       *


TITLE VIII--MISCELLANEOUS

           *       *       *       *       *       *       *


SEC. 833. SERVICE HOSPITAL LONG-TERM CONTRACT PILOT PROGRAM.

  (a) In General.--The Secretary, acting through the Service, 
shall implement a 7-year pilot program to test the viability 
and advisability of entering into long-term contracts for the 
operation of eligible Service hospitals with governance 
structures that include tribal input.
  (b) Elements.--Under such pilot program, subject to 
subsection (e), the following shall apply:
          (1) The Secretary shall select three eligible Service 
        hospitals in rural areas to participate in the pilot 
        program.
          (2) For each such participating hospital, the 
        Secretary shall enter into a long-term contract.
          (3) At each such participating hospital, the 
        Secretary, in consultation with the primary Indian 
        tribes served by the hospital, shall install a 
        governing board described in subsection (d), which 
        shall be responsible for overseeing the local operation 
        of the hospital.
  (c) Eligible Service Hospital.--For purposes of this section, 
the term ``eligible Service hospital'' means a Service hospital 
that furnishes services in a rural area to direct services 
tribes and with respect to which the Secretary has obtained the 
permission of the primary Indian tribes served by the hospital 
for the hospital to participate under the pilot program under 
this section.
  (d) Governance Board Described.--For purposes of subsection 
(b), a governance board described in this subsection, with 
respect to a Service hospital participating in the pilot 
program, is a board that satisfies the following criteria:
          (1) Composition.--
                  (A) In general.--The governance board is 
                composed, in accordance with the best practices 
                specified under paragraph (3), of the following 
                individuals:
                          (i) Representatives of the Service, 
                        who shall be selected by the Secretary.
                          (ii) Representatives of the Service 
                        hospital.
                          (iii) Representatives of each primary 
                        Indian tribe served by the hospital, 
                        who shall be selected by the respective 
                        Indian tribe.
                          (iv) Experts in health care 
                        administration and delivery, who 
                        shall--
                                  (I) be selected by the 
                                Secretary and respective Indian 
                                tribe; and
                                  (II) to the extent possible, 
                                located in the State in which 
                                the hospital is located or 
                                otherwise familiar with such 
                                State.
                  (B) Voting rights.--In determining the 
                composition of the board with respect to voting 
                rights on the board--
                          (i) the number of voting members 
                        representing the Service shall be equal 
                        to the number of voting members 
                        representing the Indian tribes 
                        involved; and
                          (ii) the number of voting members 
                        representing the hospital may not be 
                        greater than the number of voting 
                        members representing the Service or the 
                        Indian tribes involved.
          (2) Duties.--The governance board shall perform 
        duties in accordance with the best practices specified 
        under paragraph (3) and shall include developing 
        financial and quality metrics and standards for 
        salaries, recruitment, retention, training, and 
        dismissal of employees of such hospital.
          (3) Best practices.--The Secretary shall specify best 
        practices for the governance board described in this 
        subsection, including best practices relating to the 
        number of members of such board, the authorities of the 
        board, and the duties of the board.
  (e) Treatment of Eligible Service Hospitals Currently Under 
Contract.--In the case of an eligible Service hospital that is 
under a current contract with the Secretary as of the 
initiation of the selection process period for the pilot 
program, in order for such hospital to participate in the pilot 
program the Secretary, with the agreement of the hospital, 
may--
          (1) notwithstanding any other provision of law, 
        modify or terminate such contract and in order for such 
        hospital to enter into a long-term contract under the 
        pilot program; or
          (2) enter into a long-term contract under the pilot 
        program (and begin the pilot program) beginning on the 
        date after the last date of such current contract.
  (f) Long-Term Contract Defined.--For purposes of this 
section, the term ``long-term contract'' means a contract for a 
period of at least 5 years.
  (g) Clarification.--Nothing in this section shall be 
construed to inhibit a tribe's authority to enter into a 
compact or contract under the Indian Self-Determination and 
Education Assistance Act.
  (h) Reports.--For each year of the pilot program, the 
Secretary shall submit a report to Congress on the results of 
the program demonstrated during the respective year. Each such 
report shall include the following:
          (1) Information related to the financial health of 
        each eligible hospital participating in the pilot 
        program.
          (2) Information on the affect the pilot program has 
        on access to care.
          (3) Information on patient satisfaction with services 
        provided at such hospitals.
          (4) The number of readmissions at such hospitals.
          (5) The number of hospital-acquired conditions at 
        such hospitals.
          (6) Recommendations on the viability and advisability 
        of the long-term contracts and hospital governance 
        structure under such pilot program.
          (7) Any other information the Secretary considers 
        necessary for a proper analysis of the pilot program.

SEC. 834. REMOVAL OR DEMOTION OF EMPLOYEES.

  (a) In General.--The Secretary may remove or demote an 
individual who is an employee of the Service if the Secretary 
determines the performance or misconduct of the individual 
warrants such removal or demotion. If the Secretary so removes 
or demotes such an individual, the Secretary may--
          (1) remove the individual from the Service; or
          (2) demote the individual by means of--
                  (A) a reduction in grade for which the 
                individual is qualified and that the Secretary 
                determines is appropriate; or
                  (B) a reduction in annual rate of pay that 
                the Secretary determines is appropriate.
        In the case of an individual who is removed under 
        paragraph (1) or demoted under paragraph (2), the 
        Secretary may require such individual take unpaid 
        administrative leave for not longer than 10 consecutive 
        work days.
  (b) Pay of Certain Demoted Individuals.--(1) Notwithstanding 
any other provision of law, any individual subject to a 
demotion under subsection (a)(2)(A) shall, beginning on the 
date of such demotion, receive the annual rate of pay 
applicable to such grade.
  (2) An individual so demoted may not be placed on 
administrative leave or any other category of paid leave during 
the period during which an appeal (if any) under this section 
is ongoing, and may only receive pay if the individual reports 
for duty. If an individual so demoted does not report for duty, 
such individual shall not receive pay or other benefits 
pursuant to subsection (e)(5).
  (c) Notice to Secretary.--Not later than 30 days after 
removing or demoting an individual under subsection (a), the 
Service shall submit to the Secretary notice in writing of such 
removal or demotion and the reason for such removal or 
demotion.
  (d) Procedure.--(1) The procedures under section 7513(b) of 
title 5 and chapter 43 of such title shall not apply to a 
removal or demotion under this section.
  (2)(A) Subject to subparagraph (B) and subsection (e), any 
removal or demotion under subsection (a) may be appealed to the 
Merit Systems Protection Board under section 7701 of title 5.
  (B) An appeal under subparagraph (A) of a removal or demotion 
may only be made if such appeal is made not later than seven 
days after the date of such removal or demotion.
  (e) Expedited Review by Administrative Judge.--(1) Upon 
receipt of an appeal under subsection (d)(2)(A), the Merit 
Systems Protection Board shall refer such appeal to an 
administrative judge pursuant to section 7701(b)(1) of title 5. 
The administrative judge shall expedite any such appeal under 
such section and, in any such case, shall issue a decision not 
later than 45 days after the date of the appeal.
  (2) Notwithstanding any other provision of law, including 
section 7703 of title 5, the decision of an administrative 
judge under paragraph (1) shall be final and shall not be 
subject to any further appeal.
  (3) In any case in which the administrative judge cannot 
issue a decision in accordance with the 45-day requirement 
under paragraph (1), the removal or demotion is final. In such 
a case, the Merit Systems Protection Board shall, within 14 
days after the date that such removal or demotion is final, 
submit to Congress a report that explains the reasons why a 
decision was not issued in accordance with such requirement.
  (4) The Merit Systems Protection Board or administrative 
judge may not stay any removal or demotion under this section.
  (5) During the period beginning on the date on which an 
individual appeals a removal from the Service under subsection 
(d) and ending on the date that the administrative judge issues 
a final decision on such appeal, such individual may not 
receive any pay, awards, bonuses, incentives, allowances, 
differentials, student loan repayments, special payments, or 
benefits.
  (6) To the maximum extent practicable, the Secretary shall 
provide to the Merit Systems Protection Board, and to any 
administrative judge to whom an appeal under this section is 
referred, such information and assistance as may be necessary 
to ensure an appeal under this subsection is expedited.
  (f) Termination of Investigations by Office of Special 
Counsel.--Notwithstanding any other provision of law, the 
Special Counsel (established by section 1211 of title 5) may 
terminate an investigation of a prohibited personnel practice 
alleged by an employee or former employee of the Department 
after the Special Counsel provides to the employee or former 
employee a written statement of the reasons for the termination 
of the investigation. Such statement may not be admissible as 
evidence in any judicial or administrative proceeding without 
the consent of such employee or former employee.
  (g) Relation to Title 5.--The authority provided by this 
section is in addition to the authority provided by subchapter 
V of chapter 75 of title 5 and chapter 43 of such title.
  (h) Definitions.--In this section:
          (1) The term ``individual'' means an individual 
        occupying a position at the Service but does not 
        include--
                  (A) an individual, as that term is defined in 
                section 713(g)(1); or
                  (B) a political appointee.
          (2) The term ``grade'' has the meaning given such 
        term in section 7511(a) of title 5.
          (3) The term ``misconduct'' includes neglect of duty, 
        malfeasance, or failure to accept a directed 
        reassignment or to accompany a position in a transfer 
        of function.
          (4) The term ``political appointee'' means an 
        individual who is--
                  (A) employed in a position described under 
                sections 5312 through 5316 of title 5 (relating 
                to the Executive Schedule);
                  (B) a limited term appointee, limited 
                emergency appointee, or noncareer appointee in 
                the Senior Executive Service, as defined under 
                paragraphs (5), (6), and (7), respectively, of 
                section 3132(a) of title 5; or
                  (C) employed in a position of a confidential 
                or policy-determining character under schedule 
                C of subpart C of part 213 of title 5 of the 
                Code of Federal Regulations.
                              ----------                              


                      TITLE 5, UNITED STATES CODE



           *       *       *       *       *       *       *
PART III--EMPLOYEES

           *       *       *       *       *       *       *


SUBPART C--EMPLOYEE PERFORMANCE

           *       *       *       *       *       *       *


                   CHAPTER 43--PERFORMANCE APPRAISAL

SUBCHAPTER I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


Sec. 4303. Actions based on unacceptable performance

  (a) Subject to the provisions of this section, an agency may 
reduce in grade or remove an employee for unacceptable 
performance.
  (b)(1) An employee whose reduction in grade or removal is 
proposed under this section is entitled to--
          (A) 30 days' advance written notice of the proposed 
        action which identifies--
                  (i) specific instances of unacceptable 
                performance by the employee on which the 
                proposed action is based; and
                  (ii) the critical elements of the employee's 
                position involved in each instance of 
                unacceptable performance;
          (B) be represented by an attorney or other 
        representative;
          (C) a reasonable time to answer orally and in 
        writing; and
          (D) a written decision which--
                  (i) in the case of a reduction in grade or 
                removal under this section, specifies the 
                instances of unacceptable performance by the 
                employee on which the reduction in grade or 
                removal is based, and
                  (ii) unless proposed by the head of the 
                agency, has been concurred in by an employee 
                who is in a higher position than the employee 
                who proposed the action.
  (2) An agency may, under regulations prescribed by the head 
of such agency, extend the notice period under subsection 
(b)(1)(A) of this section for not more than 30 days. An agency 
may extend the notice period for more than 30 days only in 
accordance with regulations issued by the Office of Personnel 
Management.
  (c) The decision to retain, reduce in grade, or remove an 
employee--
          (1) shall be made within 30 days after the date of 
        expiration of the notice period, and
          (2) in the case of a reduction in grade or removal, 
        may be based only on those instances of unacceptable 
        performance by the employee--
                  (A) which occurred during the 1-year period 
                ending on the date of the notice under 
                subsection (b)(1)(A) of this section in 
                connection with the decision; and
                  (B) for which the notice and other 
                requirements of this section are complied with.
  (d) If, because of performance improvement by the employee 
during the notice period, the employee is not reduced in grade 
or removed, and the employee's performance continues to be 
acceptable for 1 year from the date of the advance written 
notice provided under subsection (b)(1)(A) of this section, any 
entry or other notation of the unacceptable performance for 
which the action was proposed under this section shall be 
removed from any agency record relating to the employee.
  (e) Any employee who is--
          (1) a preference eligible;
          (2) in the competitive service; or
          (3) in the excepted service and covered by subchapter 
        II of chapter 75,
and who has been reduced in grade or removed under this section 
is entitled to appeal the action to the Merit Systems 
Protection Board under section 7701.
  (f) This section does not apply to--
          (1) the reduction to the grade previously held of a 
        supervisor or manager who has not completed the 
        probationary period under section 3321(a)(2) of this 
        title,
          (2) the reduction in grade or removal of an employee 
        in the competitive service who is serving a 
        probationary or trial period under an initial 
        appointment or who has not completed 1 year of current 
        continuous employment under other than a temporary 
        appointment limited to 1 year or less, [or]
          (3) the reduction in grade or removal of an employee 
        in the excepted service who has not completed 1 year of 
        current continuous employment in the same or similar 
        positions[.], or
          (4) any removal or demotion under section 834 of the 
        Indian Health Care Improvement Act.

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                              ----------                              


                     INTERNAL REVENUE CODE OF 1986



           *       *       *       *       *       *       *
Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME

           *       *       *       *       *       *       *


SEC. 108. INCOME FROM DISCHARGE OF INDEBTEDNESS.

  (a) Exclusion from Gross Income.--
          (1) In general.--Gross income does not include any 
        amount which (but for this subsection) would be 
        includible in gross income by reason of the discharge 
        (in whole or in part) of indebtedness of the taxpayer 
        if--
                  (A) the discharge occurs in a title 11 case,
                  (B) the discharge occurs when the taxpayer is 
                insolvent,
                  (C) the indebtedness discharged is qualified 
                farm indebtedness,
                  (D) in the case of a taxpayer other than a C 
                corporation, the indebtedness discharged is 
                qualified real property business indebtedness, 
                or
                  (E) the indebtedness discharged is qualified 
                principal residence indebtedness which is 
                discharged--
                          (i) before January 1, 2017, or ii) 
                        subject to an arrangement that is 
                        entered into and evidenced in writing 
                        before January 1, 2017.
          (2) Coordination of exclusions.--
                  (A) Title 11 exclusion takes precedence.--
                Subparagraphs (B), (C), (D), and (E) of 
                paragraph (1) shall not apply to a discharge 
                which occurs in a title 11 case.
                  (B) Insolvency exclusion takes precedence 
                over qualified farm exclusion and qualified 
                real property business exclusion.--
                Subparagraphs (C) and (D) of paragraph (1) 
                shall not apply to a discharge to the extent 
                the taxpayer is insolvent.
                  (C) Principal residence exclusion takes 
                precedence over insolvency exclusion unless 
                elected otherwise.--Paragraph (1)(B) shall not 
                apply to a discharge to which paragraph (1)(E) 
                applies unless the taxpayer elects to apply 
                paragraph (1)(B) in lieu of paragraph (1)(E).
          (3) Insolvency exclusion limited to amount of 
        insolvency.--In the case of a discharge to which 
        paragraph (1)(B) applies, the amount excluded under 
        paragraph (1)(B) shall not exceed the amount by which 
        the taxpayer is insolvent.
  (b) Reduction of Tax Attributes.--
          (1) In general.--The amount excluded from gross 
        income under subparagraph (A), (B), or (C) of 
        subsection (a)(1) shall be applied to reduce the tax 
        attributes of the taxpayer as provided in paragraph 
        (2).
          (2) Tax attributes affected; order of reduction.--
        Except as provided in paragraph (5), the reduction 
        referred to in paragraph (1) shall be made in the 
        following tax attributes in the following order:
                  (A) NOL.--Any net operating loss for the 
                taxable year of the discharge, and any net 
                operating loss carryover to such taxable year.
                  (B) General business credit.--Any carryover 
                to or from the taxable year of a discharge of 
                an amount for purposes for determining the 
                amount allowable as a credit under section 38 
                (relating to general business credit).
                  (C) Minimum tax credit.--The amount of the 
                minimum tax credit available under section 
                53(b) as of the beginning of the taxable year 
                immediately following the taxable year of the 
                discharge.
                  (D) Capital loss carryovers.--Any net capital 
                loss for the taxable year of the discharge, and 
                any capital loss carryover to such taxable year 
                under section 1212.
                  (E) Basis reduction.--
                          (i) In general.--The basis of the 
                        property of the taxpayer.
                          (ii) Cross reference.--For provisions 
                        for making the reduction described in 
                        clause (i), see section 1017.
                  (F) Passive activity loss and credit 
                carryovers.--Any passive activity loss or 
                credit carryover of the taxpayer under section 
                469(b) from the taxable year of the discharge.
                  (G) Foreign tax credit carryovers.--Any 
                carryover to or from the taxable year of the 
                discharge for purposes of determining the 
                amount of the credit allowable under section 
                27.
          (3) Amount of reduction.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the reductions described in 
                paragraph (2) shall be one dollar for each 
                dollar excluded by subsection (a).
                  (B) Credit carryover reduction.--The 
                reductions described in subparagraphs (B), (C), 
                and (G) shall be 33 1/3 cents for each dollar 
                excluded by subsection (a). The reduction 
                described in subparagraph (F) in any passive 
                activity credit carryover shall be 33 1/3 cents 
                for each dollar excluded by subsection (a).
          (4) Ordering rules.--
                  (A) Reductions made after determination of 
                tax for year.--The reductions described in 
                paragraph (2) shall be made after the 
                determination of the tax imposed by this 
                chapter for the taxable year of the discharge.
                  (B) Reductions under subparagraph (A) or (D) 
                of paragraph (2).--The reductions described in 
                subparagraph (A) or (D) of paragraph (2) (as 
                the case may be) shall be made first in the 
                loss for the taxable year of the discharge and 
                then in the carryovers to such taxable year in 
                the order of the taxable years from which each 
                such carryover arose.
                  (C) Reductions under subparagraphs (B) and 
                (G) of paragraph (2).--The reductions described 
                in subparagraphs (B) and (G) of paragraph (2) 
                shall be made in the order in which carryovers 
                are taken into account under this chapter for 
                the taxable year of the discharge.
          (5) Election to apply reduction first against 
        depreciable property.--
                  (A) In general.--The taxpayer may elect to 
                apply any portion of the reduction referred to 
                in paragraph (1) to the reduction under section 
                1017 of the basis of the depreciable property 
                of the taxpayer.
                  (B) Limitation.--The amount to which an 
                election under subparagraph (A) applies shall 
                not exceed the aggregate adjusted bases of the 
                depreciable property held by the taxpayer as of 
                the beginning of the taxable year following the 
                taxable year in which the discharge occurs.
                  (C) Other tax attributes not reduced.--
                Paragraph (2) shall not apply to any amount to 
                which an election under this paragraph applies.
  (c) Treatment of Discharge of Qualified Real Property 
Business Indebtedness.--
          (1) Basis reduction.--
                  (A) In general.--The amount excluded from 
                gross income under subparagraph (D) of 
                subsection (a)(1) shall be applied to reduce 
                the basis of the depreciable real property of 
                the taxpayer.
                  (B) Cross reference.--For provisions making 
                the reduction described in subparagraph (A), 
                see section 1017.
          (2) Limitations.--
                  (A) Indebtedness in excess of value.--The 
                amount excluded under subparagraph (D) of 
                subsection (a)(1) with respect to any qualified 
                real property business indebtedness shall not 
                exceed the excess (if any) of--
                          (i) the outstanding principal amount 
                        of such indebtedness (immediately 
                        before the discharge), over
                          (ii) the fair market value of the 
                        real property described in paragraph 
                        (3)(A) (as of such time), reduced by 
                        the outstanding principal amount of any 
                        other qualified real property business 
                        indebtedness secured by such property 
                        (as of such time).
                  (B) Overall limitation.--The amount excluded 
                under subparagraph (D) of subsection (a)(1) 
                shall not exceed the aggregate adjusted bases 
                of depreciable real property (determined after 
                any reductions under subsections (b) and (g)) 
                held by the taxpayer immediately before the 
                discharge (other than depreciable real property 
                acquired in contemplation of such discharge).
          (3) Qualified real property business indebtedness.--
        The term ``qualified real property business 
        indebtedness'' means indebtedness which--
                  (A) was incurred or assumed by the taxpayer 
                in connection with real property used in a 
                trade or business and is secured by such real 
                property,
                  (B) was incurred or assumed before January 1, 
                1993, or if incurred or assumed on or after 
                such date, is qualified acquisition 
                indebtedness, and
                  (C) with respect to which such taxpayer makes 
                an election to have this paragraph apply.
        Such term shall not include qualified farm 
        indebtedness. Indebtedness under subparagraph (B) shall 
        include indebtedness resulting from the refinancing of 
        indebtedness under subparagraph (B) (or this sentence), 
        but only to the extent it does not exceed the amount of 
        the indebtedness being refinanced.
          (4) Qualified acquisition indebtedness.--For purposes 
        of paragraph (3)(B), the term ``qualified acquisition 
        indebtedness'' means, with respect to any real property 
        described in paragraph (3)(A), indebtedness incurred or 
        assumed to acquire, construct, reconstruct, or 
        substantially improve such property.
          (5) Regulations.--The Secretary shall issue such 
        regulations as are necessary to carry out this 
        subsection, including regulations preventing the abuse 
        of this subsection through cross-collateralization or 
        other means.
  (d) Meaning of Terms; Special Rules Relating to Certain 
Provisions.--
          (1) Indebtedness of taxpayer.--For purposes of this 
        section, the term ``indebtedness of the taxpayer'' 
        means any indebtedness--
                  (A) for which the taxpayer is liable, or
                  (B) subject to which the taxpayer holds 
                property.
          (2) Title 11 case.--For purposes of this section, the 
        term ``title 11 case'' means a case under title 11 of 
        the United States Code (relating to bankruptcy), but 
        only if the taxpayer is under the jurisdiction of the 
        court in such case and the discharge of indebtedness is 
        granted by the court or is pursuant to a plan approved 
        by the court.
          (3) Insolvent.--For purposes of this section, the 
        term ``insolvent'' means the excess of liabilities over 
        the fair market value of assets. With respect to any 
        discharge, whether or not the taxpayer is insolvent, 
        and the amount by which the taxpayer is insolvent, 
        shall be determined on the basis of the taxpayer's 
        assets and liabilities immediately before the 
        discharge.
          (5) Depreciable property.--The term ``depreciable 
        property'' has the same meaning as when used in section 
        1017.
          (6) Certain provisions to be applied at partner 
        level.--In the case of a partnership, subsections (a), 
        (b), (c), and (g) shall be applied at the partner 
        level.
          (7) Special rules for S corporation.--
                  (A) Certain provisions to be applied at 
                corporate level.--In the case of an S 
                corporation, subsections (a), (b), (c), and (g) 
                shall be applied at the corporate level, 
                including by not taking into account under 
                section 1366(a) any amount excluded under 
                subsection (a) of this section.
                  (B) Reduction in carryover of disallowed 
                losses and deductions.--In the case of an S 
                corporation, for purposes of subparagraph (A) 
                of subsection (b)(2), any loss or deduction 
                which is disallowed for the taxable year of the 
                discharge under section 1366(d)(1) shall be 
                treated as a net operating loss for such 
                taxable year. The preceding sentence shall not 
                apply to any discharge to the extent that 
                subsection (a)(1)(D) applies to such discharge.
                  (C) Coordination with basis adjustments under 
                section 1367(b)(2).--For purposes of subsection 
                (e)(6), a shareholder's adjusted basis in 
                indebtedness of an S corporation shall be 
                determined without regard to any adjustments 
                made under section 1367(b)(2).
          (8) Reductions of tax attributes in title 11 cases of 
        individuals to be made by estate.--In any case under 
        chapter 7 or 11 of title 11 of the United States Code 
        to which section 1398 applies, for purposes of 
        paragraphs (1) and (5) of subsection (b) the estate 
        (and not the individual) shall be treated as the 
        taxpayer. The preceding sentence shall not apply for 
        purposes of applying section 1017 to property 
        transferred by the estate to the individual.
          (9) Time for making election, etc..--
                  (A) Time.--An election under paragraph (5) of 
                subsection (b) or under paragraph (3)(C) of 
                subsection (c) shall be made on the taxpayer's 
                return for the taxable year in which the 
                discharge occurs or at such other time as may 
                be permitted in regulations prescribed by the 
                Secretary.
                  (B) Revocation only with consent.--An 
                election referred to in subparagraph (A), once 
                made, may be revoked only with the consent of 
                the Secretary.
                  (C) Manner.--An election referred to in 
                subparagraph (A) shall be made in such manner 
                as the Secretary may by regulations prescribe.
          (10) Cross reference.--For provision that no 
        reduction is to be made in the basis of exempt property 
        of an individual debtor, see section 1017(c)(1).
  (e) General Rules for Discharge of Indebtedness (Including 
Discharges Not in Title 11 Cases or Insolvency).--For purposes 
of this title--
          (1) No other insolvency exception.--Except as 
        otherwise provided in this section, there shall be no 
        insolvency exception from the general rule that gross 
        income includes income from the discharge of 
        indebtedness.
          (2) Income not realized to extent of lost 
        deductions.--No income shall be realized from the 
        discharge of indebtedness to the extent that payment of 
        the liability would have given rise to a deduction.
          (3) Adjustments for unamortized premium and 
        discount.--The amount taken into account with respect 
        to any discharge shall be properly adjusted for 
        unamortized premium and unamortized discount with 
        respect to the indebtedness discharged.
          (4) Acquisition of indebtedness by person related to 
        debtor.--
                  (A) Treated as acquisition by debtor.--For 
                purposes of determining income of the debtor 
                from discharge of indebtedness, to the extent 
                provided in regulations prescribed by the 
                Secretary, the acquisition of outstanding 
                indebtedness by a person bearing a relationship 
                to the debtor specified in section 267(b) or 
                707(b)(1) from a person who does not bear such 
                a relationship to the debtor shall be treated 
                as the acquisition of such indebtedness by the 
                debtor. Such regulations shall provide for such 
                adjustments in the treatment of any subsequent 
                transactions involving the indebtedness as may 
                be appropriate by reason of the application of 
                the preceding sentence.
                  (B) Members of family.--For purposes of this 
                paragraph, sections 267(b) and 707(b)(1) shall 
                be applied as if section 267(c)(4) provided 
                that the family of an individual consists of 
                the individual's spouse, the individual's 
                children, grandchildren, and parents, and any 
                spouse of the individual's children or 
                grandchildren.
                  (C) Entities under common control treated as 
                related.--For purposes of this paragraph, two 
                entities which are treated as a single employer 
                under subsection (b) or (c) of section 414 
                shall be treated as bearing a relationship to 
                each other which is described in section 
                267(b).
          (5) Purchase-money debt reduction for solvent debtor 
        treated as price reduction.--If--
                  (A) the debt of a purchaser of property to 
                the seller of such property which arose out of 
                the purchase of such property is reduced,
                  (B) such reduction does not occur--
                          (i) in a title 11 case, or
                          (ii) when the purchaser is insolvent, 
                        and
                  (C) but for this paragraph, such reduction 
                would be treated as income to the purchaser 
                from the discharge of indebtedness,
        then such reduction shall be treated as a purchase 
        price adjustment.
          (6) Indebtedness contributed to capital.--Except as 
        provided in regulations, for purposes of determining 
        income of the debtor from discharge of indebtedness, if 
        a debtor corporation acquires its indebtedness from a 
        shareholder as a contribution to capital--
                  (A) section 118 shall not apply, but
                  (B) such corporation shall be treated as 
                having satisfied the indebtedness with an 
                amount of money equal to the shareholder's 
                adjusted basis in the indebtedness.
          (7) Recapture of gain on subsequent sale of stock.--
                  (A) In general.--If a creditor acquires stock 
                of a debtor corporation in satisfaction of such 
                corporation's indebtedness, for purposes of 
                section 1245--
                          (i) such stock (and any other 
                        property the basis of which is 
                        determined in whole or in part by 
                        reference to the adjusted basis of such 
                        stock) shall be treated as section 1245 
                        property,
                          (ii) the aggregate amount allowed to 
                        the creditor--
                                  (I) as deductions under 
                                subsection (a) or (b) of 
                                section 166 (by reason of the 
                                worthlessness or partial 
                                worthlessness of the 
                                indebtedness), or
                                  (II) as an ordinary loss on 
                                the exchange, shall be treated 
                                as an amount allowed as a 
                                deduction for depreciation, and
                          (iii) an exchange of such stock 
                        qualifying under section 354(a), 
                        355(a), or 356(a) shall be treated as 
                        an exchange to which section 1245(b)(3) 
                        applies.
                The amount determined under clause (ii) shall 
                be reduced by the amount (if any) included in 
                the creditor's gross income on the exchange.
                  (B) Special rule for cash basis taxpayers.--
                In the case of any creditor who computes his 
                taxable income under the cash receipts and 
                disbursements method, proper adjustment shall 
                be made in the amount taken into account under 
                clause (ii) of subparagraph (A) for any amount 
                which was not included in the creditor's gross 
                income but which would have been included in 
                such gross income if such indebtedness had been 
                satisfied in full.
                  (C) Stock of parent corporation.--For 
                purposes of this paragraph, stock of a 
                corporation in control (within the meaning of 
                section 368(c)) of the debtor corporation shall 
                be treated as stock of the debtor corporation.
                  (D) Treatment of successor corporation.--For 
                purposes of this paragraph, the term ``debtor 
                corporation'' includes a successor corporation.
                  (E) Partnership rule.--Under regulations 
                prescribed by the Secretary, rules similar to 
                the rules of the foregoing subparagraphs of 
                this paragraph shall apply with respect to the 
                indebtedness of a partnership.
          (8) Indebtedness satisfied by corporate stock or 
        partnership interest.--For purposes of determining 
        income of a debtor from discharge of indebtedness, if--
                  (A) a debtor corporation transfers stock, or
                  (B) a debtor partnership transfers a capital 
                or profits interest in such partnership,
        to a creditor in satisfaction of its recourse or 
        nonrecourse indebtedness, such corporation or 
        partnership shall be treated as having satisfied the 
        indebtedness with an amount of money equal to the fair 
        market value of the stock or interest. In the case of 
        any partnership, any discharge of indebtedness income 
        recognized under this paragraph shall be included in 
        the distributive shares of taxpayers which were the 
        partners in the partnership immediately before such 
        discharge.
          (9) Discharge of indebtedness income not taken into 
        account in determining whether entity meets REIT 
        qualifications.--Any amount included in gross income by 
        reason of the discharge of indebtedness shall not be 
        taken into account for purposes of paragraphs (2) and 
        (3) of section 856(c).
          (10) Indebtedness satisfied by issuance of debt 
        instrument.--
                  (A) In general.--For purposes of determining 
                income of a debtor from discharge of 
                indebtedness, if a debtor issues a debt 
                instrument in satisfaction of indebtedness, 
                such debtor shall be treated as having 
                satisfied the indebtedness with an amount of 
                money equal to the issue price of such debt 
                instrument.
                  (B) Issue price.--For purposes of 
                subparagraph (A), the issue price of any debt 
                instrument shall be determined under sections 
                1273 and 1274. For purposes of the preceding 
                sentence, section 1273(b)(4) shall be applied 
                by reducing the stated redemption price of any 
                instrument by the portion of such stated 
                redemption price which is treated as interest 
                for purposes of this chapter.
  (f) Student Loans.--
          (1) In general.--In the case of an individual, gross 
        income does not include any amount which (but for this 
        subsection) would be includible in gross income by 
        reason of the discharge (in whole or in part) of any 
        student loan if such discharge was pursuant to a 
        provision of such loan under which all or part of the 
        indebtedness of the individual would be discharged if 
        the individual worked for a certain period of time in 
        certain professions for any of a broad class of 
        employers.
          (2) Student loan.--For purposes of this subsection, 
        the term ``student loan'' means any loan to an 
        individual to assist the individual in attending an 
        educational organization described in section 
        170(b)(1)(A)(ii) made by--
                  (A) the United States, or an instrumentality 
                or agency thereof,
                  (B) a State, territory, or possession of the 
                United States, or the District of Columbia, or 
                any political subdivision thereof,
                  (C) a public benefit corporation--
                          (i) which is exempt from taxation 
                        under section 501(c)(3),
                          (ii) which has assumed control over a 
                        State, county, or municipal hospital, 
                        and
                          (iii) whose employees have been 
                        deemed to be public employees under 
                        State law, or
                  (D) any educational organization described in 
                section 170(b)(1)(A)(ii) if such loan is made--
                          (i) pursuant to an agreement with any 
                        entity described in subparagraph (A), 
                        (B), or (C) under which the funds from 
                        which the loan was made were provided 
                        to such educational organization, or
                          (ii) pursuant to a program of such 
                        educational organization which is 
                        designed to encourage its students to 
                        serve in occupations with unmet needs 
                        or in areas with unmet needs and under 
                        which the services provided by the 
                        students (or former students) are for 
                        or under the direction of a 
                        governmental unit or an organization 
                        described in section 501(c)(3) and 
                        exempt from tax under section 501(a).
        The term ``student loan'' includes any loan made by an 
        educational organization described in section 
        170(b)(1)(A)(ii) or by an organization exempt from tax 
        under section 501(a) to refinance a loan to an 
        individual to assist the individual in attending any 
        such educational organization but only if the 
        refinancing loan is pursuant to a program of the 
        refinancing organization which is designed as described 
        in subparagraph (D)(ii).
          (3) Exception for discharges on account of services 
        performed for certain lenders.--Paragraph (1) shall not 
        apply to the discharge of a loan made by an 
        organization described in paragraph (2)(D) if the 
        discharge is on account of services performed for 
        either such organization.
          [(4) Payments under National Health Service Corps 
        loan repayment program and certain state loan repayment 
        programs.--In the case of an individual, gross income 
        shall not include any amount received under section 
        338B(g) of the Public Health Service Act, under a State 
        program described in section 338I of such Act, or under 
        any other State loan repayment or loan forgiveness 
        program that is intended to provide for the increased 
        availability of health care services in underserved or 
        health professional shortage areas (as determined by 
        such State).]
          (4) Payments under national health service corps loan 
        repayment program, indian health service loan repayment 
        program, and certain state loan repayment programs.--In 
        the case of an individual, gross income shall not 
        include any amount received--
                  (A) under section 338B(g) of the Public 
                Health Service Act (but only if such amount is 
                received with respect to the type of health 
                profession or specialty for which an individual 
                would have been eligible for participation in 
                the program under section 338B of such Act as 
                such program was in effect on January 1, 2016),
                  (B) under a State program described in 
                section 338I of such Act,
                  (C) under section 108 of the Indian Health 
                Care Improvement Act (but only in the case of a 
                health profession or specialty described in 
                subparagraph (A)), or
                  (D) under any other State loan repayment or 
                loan forgiveness program that is intended to 
                provide for the increased availability of 
                health care services in underserved or health 
                professional shortage areas (as determined by 
                such State).
  (g) Special Rules for Discharge of Qualified Farm 
Indebtedness.--
          (1) Discharge must be by qualified person.--
                  (A) In general.--Subparagraph (C) of 
                subsection (a)(1) shall apply only if the 
                discharge is by a qualified person.
                  (B) Qualified person.--For purposes of 
                subparagraph (A), the term ``qualified person'' 
                has the meaning given to such term by section 
                49(a)(1)(D)(iv); except that such term shall 
                include any Federal, State, or local government 
                or agency or instrumentality thereof.
          (2) Qualified farm indebtedness.--For purposes of 
        this section, indebtedness of a taxpayer shall be 
        treated as qualified farm indebtedness if--
                  (A) such indebtedness was incurred directly 
                in connection with the operation by the 
                taxpayer of the trade or business of farming, 
                and
                  (B) 50 percent or more of the aggregate gross 
                receipts of the taxpayer for the 3 taxable 
                years preceding the taxable year in which the 
                discharge of such indebtedness occurs is 
                attributable to the trade or business of 
                farming.
          (3) Amount excluded cannot exceed sum of tax 
        attributes and business and investment assets.--
                  (A) In general.--The amount excluded under 
                subparagraph (C) of subsection (a)(1) shall not 
                exceed the sum of--
                          (i) the adjusted tax attributes of 
                        the taxpayer, and
                          (ii) the aggregate adjusted bases of 
                        qualified property held by the taxpayer 
                        as of the beginning of the taxable year 
                        following the taxable year in which the 
                        discharge occurs.
                  (B) Adjusted tax attributes.--For purposes of 
                subparagraph (A), the term ``adjusted tax 
                attributes'' means the sum of the tax 
                attributes described in subparagraphs (A), (B), 
                (C), (D), (F), and (G) of subsection (b)(2) 
                determined by taking into account $3 for each 
                $1 of the attributes described in subparagraphs 
                (B), (C), and (G) of subsection (b)(2) and the 
                attribute described in subparagraph (F) of 
                subsection (b)(2) to the extent attributable to 
                any passive activity credit carryover.
                  (C) Qualified property.--For purposes of this 
                paragraph, the term ``qualified property'' 
                means any property which is used or is held for 
                use in a trade or business or for the 
                production of income.
                  (D) Coordination with insolvency exclusion.--
                For purposes of this paragraph, the adjusted 
                basis of any qualified property and the amount 
                of the adjusted tax attributes shall be 
                determined after any reduction under subsection 
                (b) by reason of amounts excluded from gross 
                income under subsection (a)(1)(B).
  (h) Special Rules Relating to Qualified Principal Residence 
Indebtedness.--
          (1) Basis reduction.--The amount excluded from gross 
        income by reason of subsection (a)(1)(E) shall be 
        applied to reduce (but not below zero) the basis of the 
        principal residence of the taxpayer.
          (2) Qualified principal residence indebtedness.--For 
        purposes of this section, the term ``qualified 
        principal residence indebtedness'' means acquisition 
        indebtedness (within the meaning of section 
        163(h)(3)(B), applied by substituting ``$2,000,000 
        ($1,000,000'' for ``$1,000,000 ($500,000'' in clause 
        (ii) thereof) with respect to the principal residence 
        of the taxpayer.
          (3) Exception for certain discharges not related to 
        taxpayer's financial condition.--Subsection (a)(1)(E) 
        shall not apply to the discharge of a loan if the 
        discharge is on account of services performed for the 
        lender or any other factor not directly related to a 
        decline in the value of the residence or to the 
        financial condition of the taxpayer.
          (4) Ordering rule.--If any loan is discharged, in 
        whole or in part, and only a portion of such loan is 
        qualified principal residence indebtedness, subsection 
        (a)(1)(E) shall apply only to so much of the amount 
        discharged as exceeds the amount of the loan (as 
        determined immediately before such discharge) which is 
        not qualified principal residence indebtedness.
          (5) Principal residence.--For purposes of this 
        subsection, the term ``principal residence'' has the 
        same meaning as when used in section 121.
  (i) Deferral and Ratable Inclusion of Income Arising from 
Business Indebtedness Discharged by the Reacquisition of a Debt 
Instrument.--
          (1) In general.--At the election of the taxpayer, 
        income from the discharge of indebtedness in connection 
        with the reacquisition after December 31, 2008, and 
        before January 1, 2011, of an applicable debt 
        instrument shall be includible in gross income ratably 
        over the 5-taxable-year period beginning with--
                  (A) in the case of a reacquisition occurring 
                in 2009, the fifth taxable year following the 
                taxable year in which the reacquisition occurs, 
                and
                  (B) in the case of a reacquisition occurring 
                in 2010, the fourth taxable year following the 
                taxable year in which the reacquisition occurs.
          (2) Deferral of deduction for original issue discount 
        in debt for debt exchanges.--
                  (A) In general.--If, as part of a 
                reacquisition to which paragraph (1) applies, 
                any debt instrument is issued for the 
                applicable debt instrument being reacquired (or 
                is treated as so issued under subsection (e)(4) 
                and the regulations thereunder) and there is 
                any original issue discount determined under 
                subpart A of part V of subchapter P of this 
                chapter with respect to the debt instrument so 
                issued--
                          (i) except as provided in clause 
                        (ii), no deduction otherwise allowable 
                        under this chapter shall be allowed to 
                        the issuer of such debt instrument with 
                        respect to the portion of such original 
                        issue discount which--
                                  (I) accrues before the 1st 
                                taxable year in the 5-taxable-
                                year period in which income 
                                from the discharge of 
                                indebtedness attributable to 
                                the reacquisition of the debt 
                                instrument is includible under 
                                paragraph (1), and
                                  (II) does not exceed the 
                                income from the discharge of 
                                indebtedness with respect to 
                                the debt instrument being 
                                reacquired, and
                          (ii) the aggregate amount of 
                        deductions disallowed under clause (i) 
                        shall be allowed as a deduction ratably 
                        over the 5-taxable-year period 
                        described in clause (i)(I).
                If the amount of the original issue discount 
                accruing before such 1st taxable year exceeds 
                the income from the discharge of indebtedness 
                with respect to the applicable debt instrument 
                being reacquired, the deductions shall be 
                disallowed in the order in which the original 
                issue discount is accrued.
                  (B) Deemed debt for debt exchanges.--For 
                purposes of subparagraph (A), if any debt 
                instrument is issued by an issuer and the 
                proceeds of such debt instrument are used 
                directly or indirectly by the issuer to 
                reacquire an applicable debt instrument of the 
                issuer, the debt instrument so issued shall be 
                treated as issued for the debt instrument being 
                reacquired. If only a portion of the proceeds 
                from a debt instrument are so used, the rules 
                of subparagraph (A) shall apply to the portion 
                of any original issue discount on the newly 
                issued debt instrument which is equal to the 
                portion of the proceeds from such instrument 
                used to reacquire the outstanding instrument.
          (3) Applicable debt instrument.--For purposes of this 
        subsection--
                  (A) Applicable debt instrument.--The term 
                ``applicable debt instrument'' means any debt 
                instrument which was issued by--
                          (i) a C corporation, or
                          (ii) any other person in connection 
                        with the conduct of a trade or business 
                        by such person.
                  (B) Debt instrument.--The term ``debt 
                instrument'' means a bond, debenture, note, 
                certificate, or any other instrument or 
                contractual arrangement constituting 
                indebtedness (within the meaning of section 
                1275(a)(1)).
          (4) Reacquisition.--For purposes of this subsection--
                  (A) In general.--The term ``reacquisition'' 
                means, with respect to any applicable debt 
                instrument, any acquisition of the debt 
                instrument by--
                          (i) the debtor which issued (or is 
                        otherwise the obligor under) the debt 
                        instrument, or
                          (ii) a related person to such debtor.
                  (B) Acquisition.--The term ``acquisition'' 
                shall, with respect to any applicable debt 
                instrument, include an acquisition of the debt 
                instrument for cash, the exchange of the debt 
                instrument for another debt instrument 
                (including an exchange resulting from a 
                modification of the debt instrument), the 
                exchange of the debt instrument for corporate 
                stock or a partnership interest, and the 
                contribution of the debt instrument to capital. 
                Such term shall also include the complete 
                forgiveness of the indebtedness by the holder 
                of the debt instrument.
          (5) Other definitions and rules.--For purposes of 
        this subsection--
                  (A) Related person.--The determination of 
                whether a person is related to another person 
                shall be made in the same manner as under 
                subsection (e)(4).
                  (B) Election.--
                          (i) In general.--An election under 
                        this subsection with respect to any 
                        applicable debt instrument shall be 
                        made by including with the return of 
                        tax imposed by chapter 1 for the 
                        taxable year in which the reacquisition 
                        of the debt instrument occurs a 
                        statement which--
                                  (I) clearly identifies such 
                                instrument, and
                                  (II) includes the amount of 
                                income to which paragraph (1) 
                                applies and such other 
                                information as the Secretary 
                                may prescribe.
                          (ii) Election irrevocable.--Such 
                        election, once made, is irrevocable.
                          (iii) Pass-thru entities.--In the 
                        case of a partnership, S corporation, 
                        or other pass-thru entity, the election 
                        under this subsection shall be made by 
                        the partnership, the S corporation, or 
                        other entity involved.
                  (C) Coordination with other exclusions.--If a 
                taxpayer elects to have this subsection apply 
                to an applicable debt instrument, subparagraphs 
                (A), (B), (C), and (D) of subsection (a)(1) 
                shall not apply to the income from the 
                discharge of such indebtedness for the taxable 
                year of the election or any subsequent taxable 
                year.
                  (D) Acceleration of deferred items.--
                          (i) In general.--In the case of the 
                        death of the taxpayer, the liquidation 
                        or sale of substantially all the assets 
                        of the taxpayer (including in a title 
                        11 or similar case), the cessation of 
                        business by the taxpayer, or similar 
                        circumstances, any item of income or 
                        deduction which is deferred under this 
                        subsection (and has not previously been 
                        taken into account) shall be taken into 
                        account in the taxable year in which 
                        such event occurs (or in the case of a 
                        title 11 or similar case, the day 
                        before the petition is filed).
                          (ii) Special rule for pass-thru 
                        entities.--The rule of clause (i) shall 
                        also apply in the case of the sale or 
                        exchange or redemption of an interest 
                        in a partnership, S corporation, or 
                        other pass- thru entity by a partner, 
                        shareholder, or other person holding an 
                        ownership interest in such entity.
          (6) Special rule for partnerships.--In the case of a 
        partnership, any income deferred under this subsection 
        shall be allocated to the partners in the partnership 
        immediately before the discharge in the manner such 
        amounts would have been included in the distributive 
        shares of such partners under section 704 if such 
        income were recognized at such time. Any decrease in a 
        partner's share of partnership liabilities as a result 
        of such discharge shall not be taken into account for 
        purposes of section 752 at the time of the discharge to 
        the extent it would cause the partner to recognize gain 
        under section 731. Any decrease in partnership 
        liabilities deferred under the preceding sentence shall 
        be taken into account by such partner at the same time, 
        and to the extent remaining in the same amount, as 
        income deferred under this subsection is recognized.
          (7) Secretarial authority.--The Secretary may 
        prescribe such regulations, rules, or other guidance as 
        may be necessary or appropriate for purposes of 
        applying this subsection, including--
                  (A) extending the application of the rules of 
                paragraph (5)(D) to other circumstances where 
                appropriate,
                  (B) requiring reporting of the election (and 
                such other information as the Secretary may 
                require) on returns of tax for subsequent 
                taxable years, and
                  (C) rules for the application of this 
                subsection to partnerships, S corporations, and 
                other pass-thru entities, including for the 
                allocation of deferred deductions.

           *       *       *       *       *       *       *


                         VII. ADDITIONAL VIEWS

    Setting aside the merits of the legislation that the 
Committee has recently considered, there remains good reason to 
object to the path that Republicans have charted with respect 
to consideration of these tax bills. Over the last two weeks, 
the Committee has marked up seven Republican revenue bills. 
While it is true that some of these bills have bipartisan 
support, it is inexcusable that none of the bills recommended 
for consideration by the Democrats on the Committee were 
brought up at either of the Committee's most recent markups.
    Republicans on the Committee squandered the opportunity to 
take up legislation that would provide incentives for other 
low-carbon energy alternatives, including efforts to correct an 
unintentional omission from the tax legislation that the 
Congress considered in December of last year. While the 
Congress provided a long-term extension of the section 48 
investment tax credit for solar facilities, the legislation 
that was signed into law inadvertently excluded the other 
technologies included in the section 48 investment tax credit. 
The omitted extension applies to investments in fuel cell 
property, microturbine property, geothermal property, small 
wind property, combined heat and power property, and fiber 
optic solar property. Committee Members on both sides of the 
aisle expressed impassioned support for these provisions, yet 
the Republicans continue to reject legislation to right this 
wrong. Although the Chairman committed to continuing to listen 
to supporters of the bill, I would argue that given that it has 
such broad support, the time to listen has passed, and it is 
now time to act.
    It is my hope that the Republicans on this Committee will 
abandon their extraordinary partisanship, and move away from 
this piecemeal consideration of legislation. The need for 
comprehensive tax reform has never been more pressing, and the 
Committee should turn its focus from these miscellaneous 
provisions and towards a reform that makes our nation's tax 
code fair, addresses the problems of income and wealth 
inequality, and provides opportunities for all Americans to 
succeed.

                                   Sander M. Levin, Ranking Member.

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