[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 872 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 872

To provide for the establishment of a modernized and simplified health 
 information network for medicare and medicaid, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                 May 26 (legislative day, May 15), 1995

Mr. Bond (for himself and Mr. Lieberman) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 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Act of 1974 (29 U.S.C. 1021(f)) are repealed.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) Persons Dealing With Health Plans.--A person conducting an 
information transaction with a health plan 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--
                            ``(i) the transmission by health care 
                        providers of financial or administrative 
                        transactions in electronic form to health plans 
                        and requires the use of the standards adopted 
                        under this part relating to information 
                        transactions and data elements; or
                            ``(ii) the privacy of individually 
                        identifiable health information;
                    ``(B) provides for the coordination of benefits and 
                such provision is in effect on the date of the 
                enactment of this part; or
                    ``(C) 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 20 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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