[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1766 Introduced in House (IH)]
104th CONGRESS
1st Session
H. R. 1766
To provide for the establishment of a modernized and simplified health
information network for medicare and medicaid, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 7, 1995
Mr. Hobson (for himself, Mr. Sawyer, and Mrs. Johnson of Connecticut)
introduced the following bill; which was referred to the Committee on
Commerce, and in addition to the Committee on Ways and Means, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To provide for the establishment of a modernized and simplified health
information network for medicare and medicaid, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Health Information
Modernization and Security Act''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I--PURPOSE AND REPEAL OF DATA BANK
Sec. 101. Purpose.
Sec. 102. Repeal of data bank.
TITLE II--ADMINISTRATIVE SIMPLIFICATION
Sec. 201. Administrative simplification.
TITLE III--EFFECTIVE DATES
Sec. 301. Effective dates.
TITLE I--PURPOSE AND REPEAL OF DATA BANK
SEC. 101. PURPOSE.
It is the purpose of this Act to improve the medicare program under
title XVIII of the Social Security Act, the medicaid program under
title XIX of such Act, and the efficiency and effectiveness of the
health care system, by encouraging the development of a health
information network through the establishment of standards and
requirements for the electronic transmission of certain health
information.
SEC. 102. REPEAL OF DATA BANK.
(a) In General.--Section 1144 of the Social Security Act (42 U.S.C.
1320b-14) and section 101(f) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1021(f)) are repealed.
(b) Internal Revenue Code Provision.--Section 6103(l) of the
Internal Revenue Code of 1986 is amended by striking paragraph (12).
(c) Identification of Medicare Secondary Payer Situations.--Section
1862(b) of the Social Security Act (42 U.S.C. 1395y(b)) is amended by
striking paragraph (5).
(d) Conforming Amendments.--
(1) Section 1902(a)(25)(A)(i) of the Social Security Act
(42 U.S.C. 1396a(a)(25)(A)(i)) is amended by striking
``including the use of information collected by the Medicare
and Medicaid Coverage Data Bank under section 1144 and any
additional measures''.
(2) Subsection (a)(8)(B) of section 552a of title 5, United
States Code, is amended--
(A) in clause (v), by inserting ``; or'' at the
end;
(B) in clause (vi), by striking ``or'' at the end;
and
(C) by striking clause (vii).
TITLE II--ADMINISTRATIVE SIMPLIFICATION
SEC. 201. ADMINISTRATIVE SIMPLIFICATION.
(a) In General.--Title XI of the Social Security Act (42 U.S.C.
1301 et seq.) is amended by adding at the end the following new part:
``PART C--ADMINISTRATIVE SIMPLIFICATION
``SEC. 1171. DEFINITIONS.
``For purposes of this part:
``(1) Code set.--The term `code set' means any set of codes
used for encoding data elements, such as tables of terms,
medical concepts, medical diagnostic codes, or medical
procedure codes.
``(2) Coordination of benefits.--The term `coordination of
benefits' means determining and coordinating the financial
obligations of health plans when health care benefits are
payable under 2 or more health plans.
``(3) Equivalent health care program.--The term `equivalent
health care program' means--
``(A) the health care program for active military
personnel under title 10, United States Code;
``(B) the veterans health care program under
chapter 17 of title 38, United States Code;
``(C) the Civilian Health and Medical Program of
the Uniformed Services (CHAMPUS), as defined in section
1073(4) of title 10, United States Code;
``(D) the Indian health service program under the
Indian Health Care Improvement Act (25 U.S.C. 1601 et
seq.); and
``(E) the Federal Employees Health Benefit Plan
under chapter 89 of title 5, United States Code.
(4) Health care provider.--The term `health care provider'
includes a provider of services (as defined in section 1861(u),
a provider of medical or other health services (as defined in
section 1861(s))), and any other person furnishing health care
services or supplies.
``(5) Health information.--The term `health information'
means any information, whether oral or recorded in any form or
medium that--
``(A) is created or received by a health care
provider, health plan, public health authority,
employer, life insurer, school or university, or health
information network service; and
``(B) relates to the past, present, or future
physical or mental health or condition of an
individual, the provision of health care to an
individual, or the past, present, or future payment for
the provision of health care to an individual.
``(6) Health information network.--The term `health
information network' means the health information system that
is formed through the application of the requirements and
standards established under this part.
``(7) Health information network service.--The term `health
information network service' means a public or private entity
that--
``(A) processes or facilitates the processing of
nonstandard data elements of health information into
standard data elements;
``(B) provides the means by which persons may meet
the requirements of this part; or
``(C) provides specific information processing
services.
``(8) Health plan.--The term `health plan' means a plan
which provides, or pays the cost of, health benefits. Such term
includes the following, or any combination thereof:
``(A) Part A or part B of the medicare program
under title XVIII.
``(B) The medicaid program under title XIX.
``(C) A medicare supplemental policy (as defined in
section 1882(g)(1)).
``(D) Coverage issued as a supplement to liability
insurance.
``(E) General liability insurance.
``(F) Worker's compensation or similar insurance.
``(G) Automobile or automobile medical-payment
insurance.
``(H) A long-term care policy, including a nursing
home fixed indemnity policy (unless the Secretary
determines that such a policy does not provide
sufficiently comprehensive coverage of a benefit so
that the policy should be treated as a health plan).
``(I) A hospital or fixed indemnity income-
protection policy.
``(J) An equivalent health care program.
``(K) An employee welfare benefit plan, as defined
in section 3(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(1)), but only to
the extent the plan is established or maintained for
the purpose of providing health benefits and has 50 or
more participating employees.
``(L) An employee welfare benefit plan or any other
arrangement which is established or maintained for the
purpose of offering or providing health benefits to the
employees of 2 or more employers.
``(M) Such other plan or arrangement as the
Secretary determines is a health plan.
``(9) Individually identifiable health information.--The
term `individually identifiable health information' means any
information, including demographic information collected from
an individual, that--
``(A) is created or received by a health care
provider, health plan, employer, or health information
network service; and
``(B) relates to the past, present, or future
physical or mental health or condition of an
individual, the provision of health care to an
individual, or the past, present, or future payment for
the provision of health care to an individual, and--
``(i) identifies an individual; or
``(ii) with respect to which there is a
reasonable basis to believe that the
information can be used to identify an
individual.
``(10) Secretary.--The term `Secretary' means the Secretary
of Health and Human Services.
``(11) Standard setting organization.--The term `standard
setting organization' means a standard setting organization
accredited by the American National Standards Institute or any
other private organization (including the National Council for
Prescription Drug Programs and the Health Information Standards
Planning Panel) that develops standards for information
transactions, data elements, or any other standard that is
necessary to or will facilitate the implementation of this
part, if the standard development procedures of the
organization are open to the public and are based on a broad
consensus of opinion.
``(12) Standard transaction.--The term `standard
transaction' means, when referring to an information
transaction or to data elements of health information, any
transaction that meets the requirements and implementation
specifications adopted by the Secretary under sections 1172 and
1173.
``SEC. 1172. GENERAL REQUIREMENTS ON SECRETARY.
``(a) Adoption of Standards.--
``(1) In general.--Pursuant to section 1173, the Secretary
shall adopt standards for information transactions and data
elements of health information and modifications to the
standards under this part that are--
``(A) consistent with the objective of reducing the
administrative costs of providing and paying for health
care; and
``(B) developed or modified by a standards setting
organization.
``(2) Additional standards under certain conditions.--If
the Secretary determines that a standard developed or modified
by a standard setting organization is impractical and more
costly to implement than a standard that is in use and
generally accepted, the Secretary may adopt the standard that
is in use and generally accepted in addition to the standard
developed or modified by the standard setting organization. The
Secretary shall publish in the Federal Register the analysis
upon which the Secretary based the determination to adopt such
additional standard.
``(3) Special rule relating to data elements.--The
Secretary may adopt or modify a standard relating to data
elements that is different from the standard developed by a
standard setting organization, if--
``(A) the different standard or modification will
substantially reduce administrative costs to health
care providers and health plans compared to the
alternative; and
``(B) the standard or modification is promulgated
in accordance with the rulemaking procedures of
subchapter III of chapter 5 of title 5, United States
Code.
``(b) Security Standards for Health Information Network.--
``(1) In general.--Each person, who maintains or transmits
health information or data elements of health information and
is subject to this part, shall maintain reasonable and
appropriate administrative, technical, and physical
safeguards--
``(A) to ensure the integrity and confidentiality
of the information;
``(B) to protect against any reasonably
anticipated--
``(i) threats or hazards to the security or
integrity of the information; and
``(ii) unauthorized uses or disclosures of
the information; and
``(C) to otherwise ensure compliance with this part
by the officers and employees of such person.
``(2) Security standards.--The Secretary shall establish
security standards and modifications to such standards with
respect to health information network services, health plans,
and health care providers that--
``(A) take into account--
``(i) the technical capabilities of record
systems used to maintain health information;
``(ii) the costs of security measures;
``(iii) the need for training persons who
have access to health information;
``(iv) the value of audit trails in
computerized record systems; and
``(v) the needs and capabilities of small
health care providers and rural health care
providers (as such providers are defined by the
Secretary); and
``(B) ensure that a health information network
service, if it is part of a larger organization, has
policies and security procedures which isolate the
activities of such service with respect to processing
information in a manner that prevents unauthorized
access to such information by such larger organization.
The security standards established by the Secretary shall be
based on the standards developed or modified by standard
setting organizations. If such standards do not exist, the
Secretary shall rely on the recommendations of the Health
Information Advisory Committee and shall consult with
appropriate government agencies and private organizations in
accordance with subsection (e).
``(c) Privacy Standards for Health Information Network.--The
Secretary shall establish standards and modifications to such standards
with respect to the privacy of individually identifiable health
information that is in the health information network. Such standards
shall include standards concerning at least the following:
``(1) The rights of an individual who is the subject of
such information.
``(2) The procedures to be established for the exercise of
such rights.
``(3) The uses and disclosures of such information that are
authorized or required.
``(4) Safeguards for the security of such information and
adequate security practices.
``(d) Implementation Specifications.--The Secretary shall establish
specifications for implementing each of the standards and the
modifications to the standards adopted pursuant to subsection (a).
``(e) Assistance to the Secretary.--In complying with the
requirements of this part, the Secretary shall rely on recommendations
of the Health Information Advisory Committee established under section
1179 and shall consult with appropriate Federal and State agencies and
private organizations. The Secretary shall publish in the Federal
Register the recommendations of the Health Information Advisory
Committee regarding the adoption of a standard under this part.
``SEC. 1173. STANDARDS FOR INFORMATION TRANSACTIONS AND DATA ELEMENTS.
``(a) In General.--
``(1) General requirements.--The Secretary shall adopt
standards for transactions and data elements to make health
information uniformly available to be exchanged electronically,
that is--
``(A) appropriate for the following financial and
administrative transactions: claims (including
coordination of benefits) or equivalent encounter
information, claims attachments, enrollment and
disenrollment, eligibility, health care payment and
remittance advice, premium payments, first report of
injury, claims status, and referral certification and
authorization; and
``(B) related to other financial and administrative
transactions determined appropriate by the Secretary
consistent with the goals of improving the operation of
the health care system and reducing administrative
costs.
``(2) Accommodation of specific providers.--Nothing in this
part shall prevent the Secretary from adopting standards that
accommodate the specific needs of different types of health
care providers.
``(b) Unique Health Identifiers.--
``(1) Adoption of standards.--The Secretary shall adopt
standards providing for a standard unique health identifier for
each individual, employer, health plan, and health care
provider for use in the health care system. In developing
unique health identifiers for each health plan and health care
provider, the Secretary shall take into account multiple uses
for identifiers and multiple locations and specialty
classifications for health care providers.
``(2) Penalties.--For provision regarding criminal
penalties, see section 1177.
``(c) Code Sets.--
``(1) In general.--The Secretary, in consultation with the
Health Information Advisory Committee, experts from the private
sector, and Federal and State agencies, shall--
``(A) select code sets for appropriate data
elements from among the code sets that have been
developed by private and public entities; or
``(B) establish code sets for such data elements if
no code sets for the data elements have been developed.
``(2) Distribution.--The Secretary shall establish
efficient and low-cost procedures for distribution (including
electronic distribution) of code sets and modifications made to
such code sets under section 1174(b).
``(d) Electronic Signature.--
``(1) In general.--The Secretary, in coordination with the
Secretary of Commerce and after consultation with the Health
Information Advisory Committee, shall promulgate regulations
specifying procedures for the electronic transmission and
authentication of signatures, compliance with which will be
deemed to satisfy Federal and State statutory requirements for
written signatures with respect to information transactions
required by this part and written signatures on medical records
and prescriptions.
``(2) Payments for services and premiums.--Nothing in this
part shall be construed to prohibit the payment of health care
services or health plan premiums by debit, credit, payment card
or numbers, or other electronic means.
``(e) Transfer of Information Between Health Plans.--The Secretary
shall develop rules and procedures--
``(1) for determining the financial liability of health
plans when health care benefits are payable under two or more
health plans; and
``(2) for transferring among health plans appropriate
standard data elements needed for the coordination of benefits,
the sequential processing of claims, and other data elements
for individuals who have more than one health plan.
``(f) Coordination of Benefits.--If, at the end of the 5-year
period beginning on the date of the enactment of this part, the
Secretary determines that additional transaction standards for
coordinating benefits are necessary to reduce administrative costs or
duplicative (or inappropriate) payment of claims, the Secretary shall
establish further transaction standards for the coordination of
benefits between health plans.
``(g) Protection of Trade Secrets.--Except as otherwise required by
law, the standards adopted under this part, shall not require
disclosure of trade secrets or confidential commercial information by
an entity operating a health information network.
``SEC. 1174. TIMETABLES FOR ADOPTION OF STANDARDS.
``(a) Initial Standards.--Not later than 18 months after the date
of the enactment of this part, the Secretary shall adopt standards
relating to the information transactions, data elements of health
information, security, and privacy described in sections 1172 and 1173.
Standards relating to claims attachments shall be adopted not later
than 30 months after such date.
``(b) Additions and Modifications to Standards.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall review the standards adopted under this part
and shall adopt additional or modified standards, that have
been developed or modified by a standard setting organization,
as determined appropriate, but not more frequently than once
every 6 months. Any addition or modification to such standards
shall be completed in a manner which minimizes the disruption
and cost of compliance.
``(2) Special rules.--
``(A) First 12-month period.--Except with respect
to additions and modifications to code sets under
subparagraph (B), the Secretary shall not adopt any
modifications to the standards adopted under this part
during the 12-month period beginning on the date such
standards are initially adopted under paragraph (1)
unless the Secretary determines that a modification is
necessary in order to permit compliance with
requirements relating to the standards.
``(B) Additions and modifications to code sets.--
``(i) In general.--The Secretary shall
ensure that procedures exist for the routine
maintenance, testing, enhancement, and
expansion of code sets.
``(ii) Additional rules.--If a code set is
modified under this subsection, the modified
code set shall include instructions on how data
elements of health information that were
encoded prior to the modification may be
converted or translated so as to preserve the
informational value of the data elements that
existed before the modification. Any
modification to a code set under this
subsection shall be implemented in a manner
that minimizes the disruption and cost of
complying with such modification.
``SEC. 1175. REQUIREMENTS FOR HEALTH PLANS.
``(a) In General.--If a person desires to conduct any of the
information transactions described in section 1173(a) with a health
plan as a standard transaction, the health plan shall conduct such
standard transaction in a timely manner and the information transmitted
or received in connection with such transaction shall be in the form of
standard data elements of health information.
``(b) Satisfaction of Requirements.--A health plan may satisfy the
requirement imposed on such plan under subsection (a) by directly
transmitting standard data elements of health information or submitting
nonstandard data elements to a health information network service for
processing into standard data elements and transmission.
``(c) Health Plans Dealing With Persons.--A health plan conducting
an information transaction with a person may not--
``(1) adversely affect the time, manner, or amount of
payment of a claim because an information transaction is
conducted as a standard transaction pursuant to this part; or
``(2) in any other manner discourage the use of a standard
adopted under this part.
``(d) Timetables for Compliance With Requirements.--
``(1) Initial compliance.--
``(A) In general.--Not later than 24 months after
the date on which standards are adopted under sections
1172 and 1173 with respect to any type of information
transaction or data element of health information or
with respect to security or privacy, a health plan
shall comply with the requirements of this part with
respect to such transaction or data element.
``(B) Special rule for small health plans.--In the
case of a small health plan, paragraph (1) shall be
applied by substituting ``36 months'' for ``24
months''. For purposes of this subsection, the
Secretary shall determine the plans that qualify as
small health plans.
``(e) Compliance With Modified Standards.--If the Secretary adopts
a modified standard under section 1172 or 1173, a health plan shall be
required to comply with the modified standard at such time as the
Secretary determines appropriate taking into account the time needed to
comply due to the nature and extent of the modification. However, the
time determined appropriate under the preceding sentence shall be not
earlier than the last day of the 180-day period beginning on the date
such modified standard is adopted. The Secretary may extend the time
for compliance for small health plans, if the Secretary determines such
extension is appropriate.
``SEC. 1176. GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIREMENTS
AND STANDARDS.
``(a) General Penalty.--
``(1) In general.--Except as provided in subsection (b),
the Secretary shall impose on any person that violates a
requirement or standard--
``(A) with respect to information transactions,
data elements of health information, or security
imposed under section 1172 or 1173; or
``(B) with respect to health plans imposed under
section 1175;
a penalty of not more than $100 for each such violation of a
specific standard or requirement, but the total amount imposed
for all such violations of a specific standard or requirement
during the calendar year shall not exceed $25,000.
``(2) Procedures.--The provisions of section 1128A (other
than subsections (a) and (b) and the second sentence of
subsection (f)) shall apply to the imposition of a civil money
penalty under this subsection in the same manner as such
provisions apply to the imposition of a penalty under such
section 1128A.
``(b) Limitations.--
``(1) Noncompliance not discovered.--A penalty may not be
imposed under subsection (a) if it is established to the
satisfaction of the Secretary that the person liable for the
penalty did not know, and by exercising reasonable diligence
would not have known, that such person failed to comply with
the requirement or standard described in subsection (a).
``(2) Failures due to reasonable cause.--
``(A) In general.--Except as provided in
subparagraph (B), a penalty may not be imposed under
subsection (a) if--
``(i) the failure to comply was due to
reasonable cause and not to willful neglect;
and
``(ii) the failure to comply is corrected
during the 30-day period beginning on the 1st
date the person liable for the penalty knew, or
by exercising reasonable diligence would have
known, that the failure to comply occurred.
``(B) Extension of period.--
``(i) No penalty.--The period referred to
in subparagraph (A)(ii) may be extended as
determined appropriate by the Secretary based
on the nature and extent of the failure to
comply.
``(ii) Assistance.--If the Secretary
determines that a health plan failed to comply
because such plan was unable to comply, the
Secretary may provide technical assistance to
such plan during the period described in clause
(i). Such assistance shall be provided in any
manner determined appropriate by the Secretary.
``(3) Reduction.--In the case of a failure to comply which
is due to reasonable cause and not to willful neglect, any
penalty under subsection (a) that is not entirely waived under
paragraph (2) may be waived to the extent that the payment of
such penalty would be excessive relative to the compliance
failure involved.
``SEC. 1177. WRONGFUL DISCLOSURE OF INDIVIDUALLY IDENTIFIABLE HEALTH
INFORMATION.
``(a) Offense.--A person who knowingly--
``(1) uses or causes to be used a unique health identifier
for a purpose that is not authorized by the Secretary;
``(2) obtains individually identifiable health information
relating to an individual in violation of the privacy standards
established pursuant to this part; or
``(3) discloses individually identifiable health
information to another person in violation of the privacy
standards established pursuant to this part,
shall be punished as provided in subsection (b).
``(b) Penalties.--A person described in subsection (a) shall--
``(1) be fined not more than $50,000, imprisoned not more
than 1 year, or both;
``(2) if the offense is committed under false pretenses, be
fined not more than $100,000, imprisoned not more than 5 years,
or both; and
``(3) if the offense is committed with intent to sell,
transfer, or use individually identifiable health information
for commercial advantage, personal gain, or malicious harm,
fined not more than $250,000, imprisoned not more than 10
years, or both.
``SEC. 1178. EFFECT ON STATE LAW.
``(a) General Effect.--
``(1) General rule.--Except as provided in paragraph (2), a
provision, requirement, or standard under this part shall
supersede any contrary provision of State law, including a
provision of State law that requires medical or health plan
records (including billing information) to be maintained or
transmitted in written rather than electronic form.
``(2) Exceptions.--A provision, requirement, or standard
under this part shall not supersede a contrary provision of
State law, if the provision of State law--
``(A) provides requirements or standards that are
more stringent than the requirements or standards under
this part with respect to the privacy of individually
identifiable health information; or
``(B) is a provision the Secretary determines is
necessary to prevent fraud and abuse with respect to
controlled substances, or for other purposes.
``(b) Public Health Reporting.--Nothing in this part shall be
construed to invalidate or limit the authority, power, or procedures
established under any law providing for the reporting of disease or
injury, child abuse, birth, or death, public health surveillance, or
public health investigation or intervention.
``SEC. 1179. HEALTH INFORMATION ADVISORY COMMITTEE.
``(a) Establishment.--There is established a committee to be known
as the Health Information Advisory Committee (hereafter in this section
referred to as the `committee').
``(b) Duties.--The committee shall--
``(1) provide assistance to the Secretary in complying with
the requirements imposed on the Secretary under this part;
``(2) study the issues related to the adoption of uniform
data standards for patient medical record information and the
electronic exchange of such information;
``(3) report to the Secretary not later than 4 years after
the date of the enactment of this part recommendations and
legislative proposals for such standards and electronic
exchange; and
``(4) be generally responsible for advising the Secretary
and the Congress on the status and the future of the health
information network.
``(c) Membership.--
``(1) In general.--The committee shall consist of 15
members of whom--
``(A) 3 shall be appointed by the President;
``(B) 6 shall be appointed by the Speaker of the
House of Representatives after consultation with the
minority leader of the House of Representatives; and
``(C) 6 shall be appointed by the President pro
tempore of the Senate after consultation with the
minority leader of the Senate.
The appointments of the members shall be made not later than 60
days after the date of the enactment of this part. The
President shall designate 1 member as the Chair.
``(2) Expertise.--The membership of the committee shall
consist of individuals who are of recognized standing and
distinction in the areas of information systems, information
networking and integration, consumer health, health care
financial management, or privacy, and who possess the
demonstrated capacity to discharge the duties imposed on the
committee.
``(3) Terms.--Each member of the committee shall be
appointed for a term of 5 years, except that the members first
appointed shall serve staggered terms such that the terms of
not more than 3 members expire at one time.
``(4) Initial meeting.--Not later than 30 days after the
date on which a majority of the members have been appointed,
the committee shall hold its first meeting.
``(d) Reports.--Not later than 1 year after the date of the
enactment of this part, and annually thereafter, the committee shall
submit a report to Congress, health care providers, health plans, and
other entities that use the health information network to exchange
health information regarding--
``(1) the extent to which entities using the health
information network are meeting the standards adopted under
this part and working together to form an integrated network
that meets the needs of its users;
``(2) the extent to which such entities are meeting the
privacy and security standards established pursuant to this
part and the types of penalties assessed for noncompliance with
such standards;
``(3) whether the Federal and State Governments are
receiving information of sufficient quality to meet their
responsibilities under this part;
``(4) any problems that exist with respect to
implementation of the health information network; and
``(5) the extent to which timetables under this part are
being met.
``SEC. 1180. STANDARDS FOR PATIENT MEDICAL RECORD INFORMATION.
``The Secretary shall, not earlier than 4 years and not later than
6 years after the date of the enactment of this part recommend to
Congress a plan for developing and implementing uniform data standards
for patient medical record information and the electronic exchange of
such information.
``SEC. 1181. GRANTS FOR DEMONSTRATION PROJECTS.
``(a) In General.--The Secretary may make grants for demonstration
projects to promote the development and use of electronically
integrated clinical information systems and computerized patient
medical records.
``(b) Applications.--
``(1) Submission.--To apply for a grant under this section
for any fiscal year, an applicant shall submit an application
to the Secretary in accordance with the procedures established
by the Secretary.
``(2) Criteria for approval.--The Secretary may not approve
an application submitted under paragraph (1) unless the
application includes assurances satisfactory to the Secretary
regarding the following:
``(A) Use of existing technology.--Funds received
under this section will be used to apply
telecommunications and information systems technology
that is in existence on the date the application is
submitted in a manner that improves the quality of
health care, reduces the costs of such care, and
protects the privacy and confidentiality of information
relating to the physical or mental condition of an
individual.
``(B) Use of existing information systems.--Funds
received under this section will be used--
``(i) to enhance telecommunications or
information systems that are operating on the
date the application is submitted;
``(ii) to integrate telecommunications or
information systems that are operating on such
date; or
``(iii) to connect additional users to
telecommunications or information networks or
systems that are operating on such date.
``(C) Matching funds.--The applicant shall make
available funds for the demonstration project in an
amount that equals at least 50 percent of the cost of
the project.
``(c) Geographic Diversity.--In making grants under this section,
the Secretary shall, to the extent practicable, make grants to persons
representing different geographic areas of the United States, including
urban and rural areas.
``(d) Review and Sanctions.--The Secretary shall review at least
annually the compliance of a person receiving a grant under this
section with the provisions of this part. The Secretary shall establish
a procedure for determining whether such a person has failed to comply
substantially with the provisions of this part and the sanctions to be
imposed for any such noncompliance.
``(e) Annual Report.--The Secretary shall submit an annual report
to the President for transmittal to Congress containing a description
of the activities carried out under this section.
``SEC. 1182. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated such sums as may be
necessary to carry out the purposes of this part.''.
(b) Conforming Amendments.--
(1) Requirement for medicare providers.--Section 1866(a)(1)
of the Social Security Act (42 U.S.C. 1395cc(a)(1)) is
amended--
(A) by striking ``and'' at the end of subparagraph
(P);
(B) by striking the period at the end of
subparagraph (Q) and inserting ``; and''; and
(C) by inserting immediately after subparagraph (Q)
the following new subparagraph:
``(R) to contract only with a health information
network service (as defined in section 1171(7)) that
meets the standards established under sections 1172 and
1173.''.
(2) Clerical amendments.--
(A) Title XI of the Social Security Act (42 U.S.C.
1301 et seq.) is amended by striking the title and
inserting the following:
``TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
SIMPLIFICATION
(B) Parts A and B of title XI of the Social
Security Act (42 U.S.C. 1301 et seq.) are amended by
striking ``this title'' each place it appears and
inserting ``parts A and B of this title''.
TITLE III--EFFECTIVE DATES
SEC. 301. EFFECTIVE DATES.
(a) In General.--Except as provided in subsection (b), the
provisions of this Act shall take effect on the date of the enactment
of this Act.
(b) Repeal of Data Bank.--The provisions of section 102 shall take
effect on the date the Secretary of Health and Human Services provides
written notice to the Congress that the Medicare and Medicaid Coverage
Data Bank is no longer necessary because of the operation of the health
information network established pursuant to this Act.
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