[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5338 Introduced in House (IH)]







108th CONGRESS
  2d Session
                                H. R. 5338

 To reduce health care disparities and improve health care quality, to 
 improve the collection of racial, ethnic, primary language, and socio-
   economic determination data for use by healthcare researchers and 
  policymakers, to provide performance incentives for high performing 
 hospitals and community health centers, and to expand current Federal 
           programs seeking to eliminate health disparities.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 8, 2004

   Mr. Rush introduced the following bill; which was referred to the 
 Committee on Energy and 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 reduce health care disparities and improve health care quality, to 
 improve the collection of racial, ethnic, primary language, and socio-
   economic determination data for use by healthcare researchers and 
  policymakers, to provide performance incentives for high performing 
 hospitals and community health centers, and to expand current Federal 
           programs seeking to eliminate health disparities.

    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 ``Faircare 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.
Sec. 3. Definitions.
                  TITLE I--DEMOGRAPHIC DATA COLLECTION

Sec. 101. Data on race, ethnicity, highest education level attained, 
                            and primary language.
        ``Sec. 249. Data on race, ethnicity, highest education level 
                            attained, and primary language.
Sec. 102. Revision of HIPAA claims standards.
             TITLE II--IMPROVED COLLECTION OF QUALITY DATA

Sec. 201. Authority of Agency for Healthcare Research and Quality.
             ``Part C--Improved Collection of Quality Data

        ``Sec. 921. General authority of the Agency to determine 
                            measures.
        ``Sec. 922. Use of hospital-specific measures.
        ``Sec. 923. Outpatient-specific measures.
        ``Sec. 924. Ranking of measures.
        ``Sec. 925. Advisory Committee on Quality.
        ``Sec. 926. Updates of conditions.
        ``Sec. 927. Reporting of measures.
        ``Sec. 928. Effectiveness research grants.
        ``Sec. 929. Protection of data.
        ``Sec. 929A. Authorization of appropriations.
Sec. 202. Office of national healthcare disparities and quality.
                  TITLE III--FAIRCARE HOSPITAL PROGRAM

Sec. 301. Faircare hospital program.
Sec. 302. Technical assistance grants.
                  TITLE IV--COMMUNITY HEALTH CENTERS.

Sec. 401. Authority of Bureau of Primary Health Care to develop new 
                            reporting standards.
Sec. 402. Faircare designation for health centers.
        ``Sec. 399P. Faircare designation for health centers.
Sec. 403. Grants for technical assistance.
        ``Sec. 399Q. Grants for technical assistance in improving 
                            quality.
Sec. 404. Health disparity collaboratives.
                          TITLE V--REACH 2010

Sec. 501. Expansion of REACH 2010
                 TITLE VI--MALPRACTICE INSURANCE RELIEF

Sec. 601. Refundable tax credit for the cost of malpractice insurance 
                            for certain providers.
        ``Sec. 36. Certain malpractice insurance costs.
Sec. 602. Grants to non-profit hospitals.
Sec. 603. Grants for research into quality of care and medical errors.
Sec. 604. Authorization of appropriations.

SEC. 2. FINDINGS.

    (a) Evidence of Healthcare Disparities.--With respect to evidence 
of healthcare disparities, Congress makes the following findings:
            (1) Healthcare disparities affect the lives, health, and 
        livelihood of Americans, and increase the overall cost of 
        health care in the United States.
            (2) Minority patients with chronic diseases have been found 
        less likely to receive the necessary services required to 
        manage effectively these illnesses, such as routine blood 
        pressure checks or eye examinations, and are less likely to 
        receive treatments to cure these conditions, such as heart 
        surgeries or kidney transplants.
            (3) Studies have shown that non-English speaking patients 
        report more satisfaction with health encounters and have better 
        health outcomes after encounters with healthcare providers who 
        speak their primary language.
            (4) The Institute of Medicine's report ``In the Nation's 
        Compelling Interest'', concluded that racial and ethnic 
        minority healthcare providers are significantly more likely 
        than their white peers to serve minority and medically 
        underserved communities, thereby helping to improve problems of 
        limited minority access to care.
            (5) Data from the National Center for Health Statistics 
        demonstrates that minorities are less likely to receive routine 
        cancer screenings even when they do have health insurance and 
        access to healthcare providers, and once diagnosed with cancer, 
        elderly minority patients are also less likely to receive 
        appropriate treatment for pain associated with cancer.
    (b) Evidence of Inconsistencies in Healthcare Quality.--With 
respect to evidence of inconsistencies in healthcare quality, Congress 
makes the following findings:
            (1) Inconsistent healthcare quality threatens the health of 
        all Americans regardless of race, ethnicity, or socio-economic 
        status.
            (2) Studies by the RAND Corporation have shown that all 
        patients in the United States have only a 55 percent 
        possibility of receiving clinically appropriate care in the 
        healthcare setting, despite the fact that the United States 
        spends twice as much as other industrialized countries on 
        health care.
            (3) The control of hypertension is essential to reducing 
        mortality from heart disease, stroke, and diabetes 
        complications, yet, only 23 percent of Americans with 
        hypertension are adequately treated.
            (4) About 1 in 5 elderly Americans are prescribed 
        inappropriate medications.
            (5) Only 21 percent of Americans with diabetes get all 
        recommended checkups.
            (6) One of the safest, simplest, and most cost-effective 
        ways to reduce cancer morbidity and mortality is to increase 
        screening rates for selected cancers including colorectal 
        cancers, yet, less than half of men and women over the age of 
        50 report screening for colorectal cancers.
            (7) In the United States, over \1/4\ of infants and 
        toddlers of all races and ethnicities do not receive all 
        recommended vaccines.
            (8) Breakthroughs in treatments have enabled more patients 
        to survive and live better, yet too many of these treatments 
        are not being administered to all those who can benefit from 
        them.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Health disparity populations.--The term ``health 
        disparity populations'' has the meaning given that term in 
        section 485E(d) of the Public Health Service Act (42 U.S.C. 
        287c-31(d)).
            (2) Racial and ethnic minority.--The term ``racial and 
        ethnic minority'' has the meaning given the term ``racial and 
        ethnic minority group'' in section 1707(g)(1) of the Public 
        Health Service Act (42 U.S.C. 300u-6(g)(1)).

                  TITLE I--DEMOGRAPHIC DATA COLLECTION

SEC. 101. DATA ON RACE, ETHNICITY, HIGHEST EDUCATION LEVEL ATTAINED, 
              AND PRIMARY LANGUAGE.

    (a) Purpose.--It is the purpose of this section to promote data 
collection and reporting by race, ethnicity, highest education level 
attained, and primary language among federally supported health 
programs.
    (b) Amendment.--Part B of title II of the Public Health Service Act 
(42 U.S.C. 238 et seq.) is amended by adding at the end the following:

``SEC. 249. DATA ON RACE, ETHNICITY, HIGHEST EDUCATION LEVEL ATTAINED, 
              AND PRIMARY LANGUAGE.

    ``(a) Requirements.--
            ``(1) In general.--Each health-related program operated by 
        or that receives funding or reimbursement, in whole or in part, 
        either directly or indirectly from the Department of Health and 
        Human Services shall, in accordance with the schedule described 
        in subsection (e)--
                    ``(A) require the collection, by the agency or 
                program involved, of data on the race, ethnicity, 
                highest education level attained, and primary language 
                of each applicant for and recipient of health-related 
                assistance under such program--
                            ``(i) using, at a minimum, the categories 
                        for race and ethnicity described in the 1997 
                        Office of Management and Budget Standards for 
                        Maintaining, Collecting, and Presenting Federal 
                        Data on Race and Ethnicity;
                            ``(ii) using the standards developed under 
                        subsection (d) for the collection of language 
                        data;
                            ``(iii) where practicable, collecting data 
                        for additional population groups if such groups 
                        can be aggregated into the minimum race and 
                        ethnicity categories as defined by the Office 
                        of Management and Budget; and
                            ``(iv) where practicable, through self-
                        reporting;
                    ``(B) with respect to the collection of the data 
                described in subparagraph (A) for applicants and 
                recipients who are minors or otherwise legally 
                incapacitated, require that--
                            ``(i) such data be collected from the 
                        parent or legal guardian of such an applicant 
                        or recipient; and
                            ``(ii) the preferred language of the parent 
                        or legal guardian of such an applicant or 
                        recipient be collected; and
                    ``(C) ensure that the provision of assistance to an 
                applicant or recipient of assistance is not denied or 
                otherwise adversely affected because of the failure of 
                the applicant or recipient to provide race, ethnicity, 
                highest education level attained, and primary language 
                data.
            ``(2) Rule of construction.--Nothing in this subsection 
        shall be construed to permit the use of information collected 
        under this subsection in a manner that would adversely affect 
        any individual providing any such information.
    ``(b) Protection of Data.--The Secretary shall ensure (through the 
promulgation of regulations or otherwise) that all data collected 
pursuant to subsection (a) is protected--
            ``(1) under the same privacy protections as the Secretary 
        applies to other health data under the regulations promulgated 
        under section 264(c) of the Health Insurance Portability and 
        Accountability Act of 1996 (Public Law 104-191; 110 Stat. 2033) 
        relating to the privacy of individually identifiable health 
        information and other protections; and
            ``(2) from all inappropriate internal use by any entity 
        that collects, stores, or receives the data, including use of 
        such data in determinations of eligibility (or continued 
        eligibility) in health plans, and from other inappropriate 
        uses, as defined by the Secretary.
    ``(c) Compliance With Standards.--Data collected under subsection 
(a) shall be obtained, maintained, and presented (including for 
reporting purposes) in accordance with, at a minimum, the 1997 Office 
of Management and Budget Standards for Maintaining, Collecting, and 
Presenting Federal Data on Race and Ethnicity.
    ``(d) Language Collection Standards.--Not later than 1 year after 
the date of enactment of this section, the Director of the Office of 
Minority Health, in consultation with the Office for Civil Rights of 
the Department of Health and Human Services, shall develop and 
disseminate Standards for the Classification of Federal Data on 
Preferred Written and Spoken Language.
    ``(e) Schedule of Compliance.--Data collection under subsection (a) 
shall be required within the following time periods:
            ``(1) With respect to medicare-related data (under title 
        XVIII of the Social Security Act), such data shall be collected 
        not later than 2 years after the date of enactment of this 
        section, including data related to--
                    ``(A) the Medicare Hospital Quality Initiative;
                    ``(B) the Center for Medicare and Medicaid Services 
                Abstraction or Reporting Tools (referred to in this 
                section as `CART');
                    ``(C) all CART equivalent private databases used to 
                submit data for the Medicare Hospital Quality 
                Initiative or medicare billing (including data for both 
                medicare and non-medicare patients); and
                    ``(D) all medicare billing communications.
            ``(2) With respect to data that is not currently mandated 
        or collected and reported by the medicaid and State Children's 
        Health Insurance Program (under titles XIX and XXI of the 
        Social Security Act), such data shall be collected not later 
than 4 years after the date of enactment of this section.
            ``(3) With respect to data relating to biomedical and 
        health services research that is described in subsection (a), 
        such data shall be collected not later than 6 years after the 
        date of enactment of this section.
            ``(4) With respect to data relating to all other programs 
        described in subsection (a), such data shall be collected not 
        later than 6 years after the date of enactment of this section.
    ``(f) Technical Assistance for the Collection and Reporting of 
Data.--
            ``(1) In general.--The Secretary may, either directly or 
        through grant or contract, provide technical assistance to 
        enable a healthcare program or an entity operating under such 
        program to comply with the requirements of this section.
            ``(2) Types of assistance.--Assistance provided under this 
        subsection may include assistance to--
                    ``(A) enhance or upgrade information technology 
                that will facilitate race, ethnicity, highest education 
                level attained, and primary language data collection 
                and analysis;
                    ``(B) improve methods for health data collection 
                and analysis including additional population groups 
                beyond the Office of Management and Budget categories 
                if such groups can be aggregated into the minimum race 
                and ethnicity categories;
                    ``(C) develop mechanisms for submitting collected 
                data subject to existing privacy and confidentiality 
                regulations; and
                    ``(D) develop educational programs to inform health 
                insurance issuers, health plans, health providers, 
                health-related agencies, and the general public that 
                data collection and reporting by race, ethnicity, and 
                preferred language are legal and essential for 
                eliminating health and healthcare disparities.
    ``(g) Grants for Data Collection by Community Health Centers and 
Hospitals.--
            ``(1) In general.--The Secretary, in consultation with the 
        Administrator of the Centers for Medicare & Medicaid Services 
        and the Administrator of the Health Resources and Services 
        Administration, is authorized to award grants for the conduct 
        of 100 demonstration programs, 50 percent of which shall be 
        conducted by community health centers and 50 percent of which 
        shall be conducted by hospitals, to enhance the ability of such 
        centers and hospitals to collect, analyze, and report the data 
        required under subsection (a).
            ``(2) Eligibility.--To be eligible to receive a grant under 
        paragraph (1), a community health center or hospital shall--
                    ``(A) prepare and submit to the Secretary an 
                application at such time, in such manner, and 
                containing such information as the Secretary may 
                require; and
                    ``(B) provide assurances that the community health 
                center or hospital will use, at a minimum, the racial 
                and ethnic categories and the standards for collection 
                described in the 1997 Office of Management and Budget 
                Standards for Maintaining, Collecting, and Presenting 
                Federal Data on Race and Ethnicity and available 
                standards for language.
            ``(3) Activities.--A grantee shall use amounts received 
        under a grant under paragraph (1) to--
                    ``(A) collect, analyze, and report data by race, 
                ethnicity, highest education level attained, and 
                primary language for patients served by the hospital 
                (including emergency room patients and patients served 
                on an outpatient basis) or community health center;
                    ``(B) enhance or upgrade computer technology that 
                will facilitate racial, ethnic, highest education level 
                attained, and primary language data collection and 
                analysis;
                    ``(C) provide analyses of disparities in health and 
                healthcare, including specific disease conditions, 
                diagnostic and therapeutic procedures, or outcomes;
                    ``(D) improve health data collection and analysis 
                for additional population groups beyond the Office of 
                Management and Budget categories if such groups can be 
                aggregated into the minimum race and ethnicity 
                categories;
                    ``(E) develop mechanisms for sharing collected data 
                subject to privacy and confidentiality regulations;
                    ``(F) develop educational programs to inform health 
                insurance issuers, health plans, health providers, 
                health-related agencies, patients, enrollees, and the 
                general public that data collection, analysis, and 
                reporting by race, ethnicity, and preferred language 
                are legal and essential for eliminating disparities in 
                health and healthcare; and
                    ``(G) develop quality assurance systems designed to 
                track disparities and quality improvement systems 
                designed to eliminate disparities.
            ``(4) Community health center; hospital.--In this 
        subsection:
                    ``(A) Community health center.--The term `community 
                health center' means a federally qualified health 
                center as defined in section 1861(aa)(4) of the Social 
                Security Act.
                    ``(B) Hospital.--The term `hospital' means a 
                hospital participating in the prospective payment 
                system under section 1886 of the Social Security Act 
                and that is submitting quality indicators data in 
                accordance with section 1886(b)(3)(B)(vii)(II) of the 
                Social Security Act.
    ``(h) Definition.--In this section, the term `health-related 
program' means a program--
            ``(1) under the Social Security Act (42 U.S.C. 301 et seq.) 
        that pays for healthcare and services; and
            ``(2) under this Act that provides Federal financial 
        assistance for healthcare, biomedical research, health services 
research, and other programs designated by the Secretary.
    ``(i) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $50,000,000 for fiscal year 
2005, and such sums as may be necessary for each of fiscal years 2006 
through 2015.''.

SEC. 102. REVISION OF HIPAA CLAIMS STANDARDS.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary of Health and Human Services shall revise 
the regulations promulgated under part C of title XI of the Social 
Security Act (42 U.S.C. 1320d et seq.), as added by the Health 
Insurance Portability and Accountability Act of 1996 (Public Law 104-
191), relating to the collection of data on race, ethnicity, highest 
education level attained, and primary language in a health-related 
transaction to require--
            (1) the use, at a minimum, of the categories for race and 
        ethnicity described in the 1997 Office of Management and Budget 
        Standards for Maintaining, Collecting, and Presenting Federal 
        Data on Race and Ethnicity;
            (2) the establishment of new data code sets for highest 
        education level attained and primary language; and
            (3) the designation of the racial, ethnic, highest 
        education level attained, and primary language code sets as 
        ``required'' for claims and enrollment data.
    (b) Dissemination.--The Secretary of Health and Human Services 
shall disseminate the new standards developed under subsection (a) to 
all health entities that are subject to the regulations described in 
such subsection and provide technical assistance with respect to the 
collection of the data involved.
    (c) Compliance.--Not later than 1 year after the final promulgation 
of the regulations developed under subsection (a), the Secretary of 
Health and Human Services shall require that health entities comply 
with such standards.
    (d) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, such sums as may be necessary 
for each of fiscal years 2005 through 2015.

             TITLE II--IMPROVED COLLECTION OF QUALITY DATA

SEC. 201. AUTHORITY OF AGENCY FOR HEALTHCARE RESEARCH AND QUALITY.

    Title IX of the Public Health Service Act (42 U.S.C. 299 et seq.) 
is amended--
            (1) by redesignating part C as part D;
            (2) by redesignating sections 921 through 928, as sections 
        931 through 938, respectively;
            (3) in section 938(1) (as so redesignated), by striking 
        ``921'' and inserting ``931''; and
            (4) by inserting after part B the following:

             ``PART C--IMPROVED COLLECTION OF QUALITY DATA

``SEC. 921. GENERAL AUTHORITY OF THE AGENCY TO DETERMINE MEASURES.

    ``(a) In General.--The Agency, in consultation with the Centers for 
Medicare & Medicaid Services, the Health Resources and Services 
Administration, the Office for Civil Rights of the Department of Health 
and Human Services, and the Office of Minority Health, shall have the 
authority to develop a new set of quality measures for each of the most 
common treatment settings. Such settings shall include, but not be 
limited to, hospitals, outpatient facilities, community health centers, 
long term care facilities, and other independent health care 
facilities.
    ``(b) Requirements.--The quality measures developed under 
subsection (a) shall--
            ``(1) as closely as possible reflect the healthcare 
        priority areas determined by the Institute of Medicine, the 
        National Quality Forum, the Quality Initiative, and other 
        healthcare quality and health care disparity organizations as 
        determined by the Secretary;
            ``(2) reflect the Institute of Medicine's goal of 
        inclusiveness, improvability, and impact, addressing pervasive 
        health and healthcare problems that produce a high level of 
        morbidity and mortality, that disproportionally affect health 
        disparity populations, and that have the potential for 
        improvement with the consistent application of proven medical 
        interventions; and
            ``(3) where practical, employ process measures of care.

``SEC. 922. USE OF HOSPITAL-SPECIFIC MEASURES.

    ``(a) Development.--
            ``(1) In general.--The Agency, in conjunction with the 
        Centers for Medicare & Medicaid Services, shall develop a set 
        of hospital quality measures.
            ``(2) Use.--The Secretary shall ensure that the Hospital 
        Quality Initiative and the Robust Project Measures of the 
        Centers for Medicare & Medicaid Services, and other Centers for 
        Medicare & Medicaid Services directed quality initiatives use 
        the hospital quality measures developed under paragraph (1).
    ``(b) Submission.--The information required under the measures 
developed under subsection (a) shall be submitted in accordance with 
section 1886(b)(3)(B)(vii) except that any reference to `2007' shall be 
deemed to be a reference to `2015'.

``SEC. 923. OUTPATIENT-SPECIFIC MEASURES.

    ``(a) In General.--The Agency, in conjunction with the Bureau of 
Primary Health Care within the Health Resources and Services 
Administration, shall develop a set of outpatient quality measures. 
Such measures may be used as a supplement to existing demographic or 
quality reporting instruments or other quality reporting instruments 
utilized by the Health Resources and Services Administration.
    ``(b) Voluntary Submission.--Submission of the supplementary 
information required under the measures developed under subsection (a) 
shall be voluntary.
    ``(c) Discretionary Use.--The measures developed under subsection 
(a) may be used as appropriate by the Hospital Quality Initiative and 
the Robust Project Measures and other Centers for Medicare & Medicaid 
Services-directed quality initiatives.

``SEC. 924. RANKING OF MEASURES.

    ``The Agency shall--
            ``(1) determine which of the quality measures developed 
        under this part have the greatest potential to remedy 
        healthcare disparities;
            ``(2) rank such quality measures according to such 
        potential; and
            ``(3) rank such quality measures separately as applicable 
        to hospitals and outpatients.

``SEC. 925. ADVISORY COMMITTEE ON QUALITY.

    ``(a) In General.--The Agency shall establish an Advisory Committee 
on Quality (referred to in this section as the `Advisory Committee') to 
recommend quality indicators for all quality data sets developed under 
this section. The Agency may designate a governmental or 
nongovernmental committee existing on the date of enactment of this 
part to serve as the Advisory Committee so long as the membership 
requirements of subsection (b) are complied with.
    ``(b) Membership.--The Advisory Committee shall be composed of not 
less than 10 members, including--
            ``(1) the Director;
            ``(2) the Administrator of the Centers for Medicare & 
        Medicaid Services;
            ``(3) the Director of the Centers for Disease Control and 
        Prevention;
            ``(4) the Administrator of the Health Resources and 
        Services Administration;
            ``(5) the Director of the Office of Minority Health of the 
        Department of Health and Human Services;
            ``(6) the Director of the Office for Civil Rights of the 
        Department of Health and Human Services;
            ``(7) the Director of the Indian Health Service;
            ``(8) the chairperson of the Institute of Medicine National 
        Roundtable on Healthcare Quality or other representatives of 
        the Institute of Medicine;
            ``(9) the chairperson of the National Quality Forum;
            ``(10) the Director of the Joint Commission on 
        Accreditation of Healthcare Organizations;
            ``(11) a representative of the Quality Initiative; and
            ``(12) other members to be appointed by the Secretary to 
        represent other private, public, and non-profit stakeholders 
        from medicine, healthcare, patient groups, and academia, who 
        shall serve for a term of 3 years, and shall include a mix of 
        different professions and broad geographic and culturally 
        diverse representation.
    ``(c) Duties.--The Advisory Committee shall--
            ``(1) for each 3 year period beginning with fiscal year 
        2005, report to the Agency recommendations of quality 
        indicators for all quality data sets described in this part;
            ``(2) in making the recommendations described in paragraph 
        (1), focus on how best to integrate the findings of the 
        Institute of Medicine, the National Quality Forum, the Quality 
        Initiative, and other healthcare quality and healthcare 
        disparity organizations as determined by the Secretary into 
        quality measures that can be used in carrying out sections 922 
        and 923; and
            ``(3) address issues of continuity of care between 
        ambulatory care and inpatient settings to the maximum extent 
        practicable.

``SEC. 926. UPDATES OF CONDITIONS.

    ``(a) In General.--At least once during every 3-year period 
beginning in fiscal year 2006, the Secretary shall direct the Agency to 
update the list of measures as described in sections 922 and 923. Such 
updates shall be based on recommendations of the Advisory Committee 
established under section 925 and determined in consultation with the 
Centers for Medicare & Medicaid Services and the Health Resources and 
Services Administration.
    ``(b) Requirement.--For each period in which an update is 
undertaken under subsection (a), the Agency shall ensure that the 
recommendations referred to such subsection include measures for at 
least 4 additional conditions identified by the Institute of Medicine 
National Roundtable on Healthcare Quality, or measures developed by 
other healthcare disparity or healthcare quality organizations as 
determined by the Secretary, and not addressed by the quality reporting 
initiatives administered by the Secretary on the date of enactment of 
this part. The requirement of this section shall apply until there are 
measures for all Institute of Medicine priority areas.

``SEC. 927. REPORTING OF MEASURES.

    ``(a) In General.--Not later than 5 years after the date of 
enactment of the Faircare Act, the Secretary shall enter into a 
contract with the Institute of Medicine to produce a report on the 
effectiveness of the quality measures developed by the Agency under 
this part in accurately assessing the quality of healthcare and 
healthcare disparities present in hospitals, community health centers, 
and other appropriate health care settings. Such report shall evaluate 
the progress made in improving the quality and consistency of 
healthcare and reducing healthcare disparities.
    ``(b) Manner of Reporting.--All data reported under the Faircare 
Act (including data reported under this part) shall, to the maximum 
extent practicable, be reported by race, ethnicity, primary language, 
and highest educational level attained in accordance with section 249.

``SEC. 928. EFFECTIVENESS RESEARCH GRANTS.

    ``The Office of Minority Health shall have the authority to award 
grants to study the effectiveness of all measures and programs 
established under this part. The Office shall recommend ways to improve 
such measure and programs and to implement the findings of the study 
conducted under section 927.

``SEC. 929. PROTECTION OF DATA.

    ``(a) Rule of Construction.--Nothing in this part shall be 
construed to permit the use of information collected under this part in 
a manner that would adversely affect any individual providing any such 
information.
    ``(b) Protection of Data.--The Secretary shall ensure (through the 
promulgation of regulations or otherwise) that all data collected 
pursuant to this part is protected--
            ``(1) under the same privacy protections as the Secretary 
        applies to other health data under the regulations promulgated 
        under section 264(c) of the Health Insurance Portability and 
        Accountability Act of 1996 (Public Law 104-191; 110 Stat. 2033) 
        relating to the privacy of individually identifiable health 
        information and other protections; and
            ``(2) from all inappropriate internal use by any entity 
        that collects, stores, or receives the data, including use of 
        such data in determinations of eligibility (or continued 
        eligibility) in health plans, and from other inappropriate 
        uses, as defined by the Secretary.

``SEC. 929A. AUTHORIZATION OF APPROPRIATIONS.

    ``There is authorized to be appropriated to carry out this section, 
$5,000,000 for each of fiscal years 2005 through 2007, and such sums as 
may be necessary for each of fiscal years 2008 through 2015.''.

SEC. 202. OFFICE OF NATIONAL HEALTHCARE DISPARITIES AND QUALITY.

    Part A of title IX of the Public Health Service Act (42 U.S.C. 299 
et seq.) is amended by adding at the end the following:

``SEC. 904. OFFICE OF NATIONAL HEALTHCARE DISPARITIES AND QUALITY.

    ``(a) In General.--There is established within the Agency an Office 
of National Healthcare Disparities and Quality (referred to in this 
section as the `Office'). Such Office shall administer the development 
and submission of the annual National Healthcare Disparities Report 
(under section 903(a)(6)) and the National Healthcare Quality Report 
(under section 913(b)(2)) and carry out any other activities determined 
appropriate by the Secretary.
    ``(b) National Healthcare Disparities and Quality Reports.--
            ``(1) Reporting requirements.--Not later than 1 year after 
        the date of enactment of this section, and annually thereafter, 
        the Office, in consultation with the Advisory Committee under 
        section 925, the Office of Minority Health, and the Office for 
        Civil Rights of the Department of Health and Human Services, 
        shall submit to the Secretary, the appropriate committees of 
        Congress, and the public--
                    ``(A) a report on the disparities in healthcare 
                which shall include data using the quality measures 
                developed by the Agency under part C; and
                    ``(B) a report on general healthcare quality.
            ``(2) Limitations.--The reports under paragraph (1) shall 
        not identify individual hospitals or healthcare providers but 
        shall include regional and State level data. To the maximum 
        extent practicable, such reports shall--
                    ``(A) indicate variations in healthcare quality 
                between States and regions; and
                    ``(B) to the maximum extent practicable, include 
                data reported by race, ethnicity, primary language, and 
                highest educational level attained in accordance with 
                section 249.
            ``(3) Availability.--The Office shall make such reports 
        available to States, tribal organizations, and territorial 
        governments upon request.
            ``(4) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection, $10,000,000 
        for each of fiscal years 2005 through 2007, and such sums as 
        may be necessary for each of fiscal years 2008 through 2015.
    ``(c) Activities Relating to Best Practices.--
            ``(1) Report.--The Office of National Healthcare 
        Disparities and Quality shall annually publish a report that 
        describes the specific activities undertaken by Faircare Level 
        I institutions, as designated under section 330P of this Act or 
        section 1898(b) of the Social Security Act, that have resulted 
        in a decrease in healthcare disparities or improved quality. 
        Such reports shall include recommendations for carrying out 
        such activities at other healthcare institutions.
            ``(2) Conference.--In conjunction with the publication of 
        each report under paragraph (1), Office of National Healthcare 
        Disparities and Quality shall hold an annual conference at 
        which personnel from the Faircare institutions described in 
        paragraph (1) can interact, advise, and consult with other 
        healthcare institutions.
            ``(3) Technical assistance.--The Office of National 
        Healthcare Disparities and Quality shall offer technical 
        assistance to healthcare institutions in reducing healthcare 
        disparities, including through the dissemination of information 
        through the Office Internet website, the development of an 
        electronic mail list of best practices, the maintenance of a 
        database and clearinghouse of best practices, and through other 
        activities determined appropriate by the Office.
            ``(4) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection, $5,000,000 for 
        each of fiscal years 2005 to 2007, and such sums as may be 
        necessary for each of fiscal years 2008 through 2015.''.

                  TITLE III--FAIRCARE HOSPITAL PROGRAM

SEC. 301. FAIRCARE HOSPITAL PROGRAM.

    (a) Purposes.--The purposes of this section are to--
            (1) require the Administrator of the Center for Medicare & 
        Medicaid Services to--
                    (A) determine which hospitals have successfully 
                reduced healthcare disparities between health disparity 
                populations and other patients and improved healthcare 
                quality based on the Hospital Quality Initiative 
                measures established by the Agency for Healthcare 
                Research and Quality under part C of title IX of the 
                Public Health Service Act, as added by title II;
                    (B) verify the accuracy of the data submitted by 
                such hospitals for purposes of being designated as a 
                Faircare Hospital; and
                    (C) designate such hospitals as Faircare hospitals; 
                and
            (2) provide such hospitals with increased payments under 
        the medicare program.
    (b) Program.--Title XVIII of the Social Security Act, as amended by 
section 1016 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2447), is 
amended by adding at the end the following new section:

                ``performance incentive payment program

    ``Sec. 1898. (a) Establishment.--
            ``(1) In general.--The Secretary shall establish a program 
        under which financial incentive payments are made in accordance 
        with subsection (c) to subsection (d) hospitals (as defined in 
        paragraph (2)) that have been designated under subsection (b).
            ``(2) Subsection (d) hospital.--In this section, the term 
        `subsection (d) hospital' has the meaning given that term in 
        section 1886(d)(1)(B).
    ``(b) Designation of Faircare Hospitals.--
            ``(1) In general.--For each of fiscal years 2006 through 
        2014, the Secretary shall designate subsection (d) hospitals as 
        follows:
                    ``(A) Level iii faircare hospital.--The Secretary 
                shall designate a subsection (d) hospital as a Level 
                III Faircare hospital if the following requirements are 
                met:
                            ``(i) The subsection (d) hospital submitted 
                        data described in section 249 of the Public 
                        Health Service Act and part C of title IX of 
                        such Act to the Secretary in such form and 
                        manner and at such time specified by the 
                        Secretary under such section and part and all 
                        such data submitted relating to patient quality 
                        includes data on the race, ethnicity, highest 
                        education level attained, and primary language 
                        of such patients.
                            ``(ii) The Secretary determines that the 
                        subsection (d) hospital has improved the rate 
                        of delivery of high quality care during the 24-
                        month period preceding such determination. A 
                        hospital shall be determined to meet the 
                        requirement in the preceding sentence if the 
                        Secretary determines that the hospital has 
                        increased the frequency of appropriate care for 
                        the majority of the applicable measures during 
                        such 24-month period by at least 5 percentage 
                        points within each such measure.
                    ``(B) Level ii faircare hospital.--The Secretary 
                shall designate a subsection (d) hospital as a Level II 
                Faircare hospital if the following requirements are 
                met:
                            ``(i) The requirements described in clauses 
                        (i) and (ii) of subparagraph (A) are met.
                            ``(ii) The Secretary determines that the 
                        subsection (d) hospital, during the 24-month 
                        period preceding such determination, has made a 
                        significant reduction in the disparities in the 
                        treatment of health disparity populations 
                        relative to other patients for--
                                    ``(I) the majority of the 
                                applicable measures; or
                                    ``(II) all of the 25 percent 
                                highest ranked applicable measures, as 
                                ranked for their importance for 
                                healthcare equity by the Agency for 
                                Healthcare Research and Quality under 
                                section 925 of the Public Health 
                                Service Act.
                    ``(C) Level i faircare hospital.--The Secretary 
                shall designate a subsection (d) hospital as a Level I 
                Faircare hospital if the following requirements are 
                met:
                            ``(i) The requirement described in 
                        subparagraph (A)(i) is met.
                            ``(ii) Either--
                                    ``(I) the requirement described in 
                                subparagraph (A)(ii) is met; or
                                    ``(II) the Secretary determines 
                                that the frequency of appropriate care 
                                provided by the subsection (d) hospital 
                                for each applicable measure is at least 
                                10 percentage points greater than the 
                                national average for the frequency of 
                                appropriate care for each applicable 
                                measure.
                            ``(iii) The Secretary determines that the 
                        subsection (d) hospital, during the 24-month 
                        period preceding such determination, has had no 
                        significant disparity in the treatment of 
                        health disparity populations relative to other 
                        patients for all of the 75 percent highest 
                        ranked applicable measures, as ranked for their 
                        importance for healthcare equity by the Agency 
                        for Healthcare Research and Quality under 
                        section 925 of the Public Health Service Act.
            ``(2) Applicable measures defined.--For purposes of this 
        subsection, the term `applicable measures' means the Hospital 
        Quality Initiative measures established by the Agency for 
        Healthcare Research and Quality under part C of title IX of the 
        Public Health Service Act.
            ``(3) Health disparity population defined.--For purposes of 
        this subsection, the term `health disparity population' has the 
        meaning given that term in section 485E(d) of the Public Health 
        Service Act.
    ``(c) Financial Incentive Payments.--
            ``(1) In general.--Subject to paragraph (2) and subsection 
        (d), for purposes of subclauses (XIX) and (XX) of section 
        1886(b)(3)(B)(i) for each of fiscal years 2007 through 2015, in 
        the case of a subsection (d) hospital that has been designated 
        under subsection (b) for a fiscal year, the Secretary shall 
        increase the applicable percentage increase for the subsequent 
        fiscal year for such hospital--
                    ``(A) in the case of a Level I Faircare hospital, 
                by 4 percentage points (or 8 percentage points in the 
                case of such a hospital who is also described in 
                subparagraph (B) of section 1923(b)(1)(B));
                    ``(B) in the case of a Level II Faircare hospital, 
                by 2 percentage points (or 4 percentage points in the 
                case of such a hospital who is also described in 
subparagraph (B) of section 1923(b)(1)(B)); and
                    ``(C) in the case of a Level III Faircare hospital, 
                by 1 percentage point (or 2 percentage points in the 
                case of such a hospital who is also described in 
                subparagraph (B) of section 1923(b)(1)(B)).
            ``(2) Reduction in financial incentive payments if 
        insufficient funding available.--If the Secretary estimates 
        that the total amount of increased payments under paragraph (1) 
        for a fiscal year will exceed the funding available under 
        subsection (d) for such increased payments for the fiscal year, 
        the Secretary shall proportionately reduce the percentage 
        points described in subparagraphs (A), (B), and (C) of 
        paragraph (1) in order to eliminate such excess.
            ``(3) Increased payment not built into the base.--Any 
        increased payment under paragraph (1) shall only apply to the 
        fiscal year involved and the Secretary shall not take into 
        account any such increased payment in computing the applicable 
        percentage increase under clause (i)(XIX) for a subsequent 
        fiscal year.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated for making payments under subsection (b) such sums as may 
be necessary for each of fiscal years 2007 through 2015.''.

SEC. 302. TECHNICAL ASSISTANCE GRANTS.

    (a) In General.--The Secretary of Health and Human Services shall 
provide technical assistance to eligible entities for the conduct of 
demonstration projects to improve the quality of healthcare and to 
reduce healthcare disparities.
    (b) Eligibility.--To be eligible to receive technical assistance 
under subsection (a), an entity shall--
            (1) be a hospital--
                    (A) that, by legal mandate or explicitly adopted 
                mission, provides patients with access to services 
                regardless of their ability to pay;
                    (B) that provides care or treatment for a 
                substantial number of patients who are uninsured, are 
                receiving assistance under a State program under title 
                XIX of the Social Security Act, or are members of 
                health disparity populations, as determined by the 
                Secretary; and
                    (C)(i) with respect to which, not less than 50 
                percent of the entity's patient population is made up 
                of racial and ethnic minorities; or
                    (ii) that serves a disproportionate percentage of 
                local, minority racial and ethnic patients, or that has 
                a patient population, at least 50 percent of which is 
                limited English proficient; and
            (2) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require.
    (c) Types of Assistance.--The type of technical assistance that may 
be provided under this section shall be determined by the Centers for 
Medicare & Medicaid Services. Such assistance may include competitively 
awarded grants and other forms of assistance.
    (d) Use of Assistance.--Assistance provided under this section 
shall be used to improve healthcare quality or to reduce healthcare 
disparities.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, such sums as may be necessary 
for each of fiscal years 2005 through 2015.

                   TITLE IV--COMMUNITY HEALTH CENTERS

SEC. 401. AUTHORITY OF BUREAU OF PRIMARY HEALTH CARE TO DEVELOP NEW 
              REPORTING STANDARDS.

    (a) In General.--The Secretary of Health and Human Services, acting 
through the Bureau of Primary Health Care within the Health Resources 
and Services Administration, shall have the authority to--
            (1) incorporate the outpatient measures of the Agency for 
        Healthcare Research and Quality as developed under part C of 
        title IX of the Public Health Service Act (as added by title 
        II) into a supplement to existing demographic or quality 
        reporting instruments or other quality reporting instruments 
        utilized by the Health Resources and Services Administration;
            (2) verify the submission of data under this title (and the 
        amendments made by this title); and
            (3) award Faircare designations in accordance with section 
        339P of the Public Health Service Act (as added by section 
        402).
    (b) Distribution.--Not later than 1 year after the date of 
enactment of this Act, the standards described in subsection (a) shall 
be designed and distributed to health centers under section 339P of the 
Public Health Service Act (as added by section 402).

SEC. 402. FAIRCARE DESIGNATION FOR HEALTH CENTERS.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399P. FAIRCARE DESIGNATION FOR HEALTH CENTERS.

    ``(a) Designation of Faircare Health Centers.--
            ``(1) In general.--For each of fiscal years 2006 through 
        2014, the Secretary shall designate health centers that receive 
        Federal assistance as follows:
                    ``(A) Level iii faircare health center.--The 
                Secretary shall designate a health center as a Level 
                III Faircare health center if the following 
                requirements are met:
                            ``(i) The health center submitted data 
                        described in section 249 and part C of title IX 
                        to the Secretary in such form and manner and at 
                        such time specified by the Secretary under such 
                        section and part and all such data submitted 
                        relating to patient quality includes data on 
                        the race, ethnicity, highest education level 
attained, and primary language of such patients.
                            ``(ii) The Secretary determines that the 
                        health center has improved the rate of delivery 
                        of high quality care during the 24-month period 
                        preceding such determination. A health center 
                        shall be determined to meet the requirement in 
                        the preceding sentence if the Secretary 
                        determines that the health center has increased 
                        the frequency of appropriate care for the 
                        majority of the applicable measures during such 
                        24-month period by at least 5 percentage points 
                        within each such measure.
                    ``(B) Level ii faircare health center.--The 
                Secretary shall designate a health center as a Level II 
                Faircare health center if the following requirements 
                are met:
                            ``(i) The requirements described in clauses 
                        (i) and (ii) of subparagraph (A) are met.
                            ``(ii) The Secretary determines that the 
                        health center, during the 24-month period 
                        preceding such determination, has made a 
                        significant reduction in the disparities in the 
                        treatment of health disparity populations 
                        relative to other patients for--
                                    ``(I) the majority of the 
                                applicable measures; or
                                    ``(II) all of the 25 percent 
                                highest ranked applicable measures, as 
                                ranked for their importance for 
                                healthcare equity by the Agency for 
                                Healthcare Research and Quality under 
                                section 925.
                    ``(C) Level i faircare health center.--The 
                Secretary shall designate a health center as a Level I 
                Faircare health center if the following requirements 
                are met:
                            ``(i) The requirement described 
                        subparagraph (A)(i) is met.
                            ``(ii) Either--
                                    ``(I) the requirement described in 
                                subparagraph (A)(ii) is met; or
                                    ``(II) the Secretary determines 
                                that the frequency of appropriate care 
                                provided by the health center for each 
                                applicable measure is at least 10 
                                percentage points greater than the 
                                national average for the frequency of 
                                appropriate care for each applicable 
                                measure.
                            ``(iii) The Secretary determines that the 
                        health center, during the 24-month period 
                        preceding such determination, has had no 
                        significant disparity in the treatment of 
                        health disparity populations relative to other 
                        patients for all of the 75 percent highest 
                        ranked applicable measures, as ranked for their 
                        importance for healthcare equity by the Agency 
                        for Healthcare Research and Quality under 
                        section 925.
            ``(2) Applicable measures defined.--For purposes of this 
        subsection, the term `applicable measures' means the measures 
        determined applicable under section 401(a) of the Faircare Act.
            ``(3) Health disparity population defined.--For purposes of 
        this subsection, the term `health disparity population' has the 
        meaning given that term in section 485E(d).
    ``(b) Eligibility for Bonuses.--A health center that is designated 
as a Faircare health center under subsection (a) shall be eligible for 
the following annual bonuses in the fiscal year following the year in 
which the health center is designated as a Faircare health center under 
this section, with respect to assistance received under Federal health 
care programs:
            ``(1) With respect to a health center that is designated as 
        a Level III Faircare health center, the Secretary shall 
        determine the amount of such bonus which shall not be less than 
        $200,000.
            ``(2) With respect to a health center that is designated as 
        a Level II Faircare health center, the Secretary shall 
        determine the amount of such bonus which shall not be less than 
        $300,000.
            ``(3) With respect to a health center that is designated as 
        a Level I Faircare health center, the Secretary shall determine 
        the amount of such bonus which shall not be less than $500,000.
    ``(c) Reduction in Financial Incentive Payments if Insufficient 
Funding Available.--If the Secretary estimates that the total amount of 
bonuses under subsection (b) for a fiscal year will exceed the funding 
available under subsection (e) for such bonuses for the fiscal year, 
the Secretary shall proportionately reduce the amount of the bonus 
payments described in paragraphs (1), (2), and (3) of subsection (b) in 
order to eliminate such excess.
    ``(d) Definition.--For purposes of this section, the term `health 
center' means a federally qualified health center as defined in section 
1861(aa)(4) of the Social Security Act.
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, such sums as may be necessary 
for each of fiscal years 2007 through 2015.''.

SEC. 403. GRANTS FOR TECHNICAL ASSISTANCE.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.), as amended by section 402, is further amended by adding 
at the end the following:

``SEC. 399Q. GRANTS FOR TECHNICAL ASSISTANCE IN IMPROVING QUALITY.

    ``(a) In General.--If a health center reporting data described in 
section 399P(a)(1)(A) for 3 or more years has demonstrated no 
improvement or a decrease in healthcare quality on at least 30 percent 
of all quality measures as designated under section 401(a) of the 
Faircare Act, such health center shall be given priority to receive 
technical assistance from the Bureau of Primary Health Care within the 
Health Resources and Services Administration.
    ``(b) Type of Assistance.--The type of technical assistance that 
may be provided under subsection (a) shall be determined by the Bureau 
of Primary Health Care and may include competitively awarded grants and 
other forms of assistance.
    ``(c) Use of Assistance.--Assistance provided under this section 
shall be used by the health center to improve healthcare quality or 
reduce healthcare disparities.
    ``(d) Definition.--For purposes of this section, the term `health 
center' means a federally qualified health center as defined in section 
1861(aa)(4) of the Social Security Act.
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this subsection, such sums as may be 
necessary for each of fiscal years 2007 through 2015.''.

SEC. 404. HEALTH DISPARITY COLLABORATIVES.

    (a) In General.--The Bureau of Primary Health Care within the 
Health Resources and Services Administration shall--
            (1) provide technical assistance and funding to the Health 
        Disparity Collaboratives; and
            (2) expand the provision of technical assistance and 
        funding, at the discretion of the Bureau, to priority areas 
        designated by the Agency for Healthcare Research and Quality in 
        consultation with the Advisory Committee established under 
        section 925 of the Public Health Service Act.
    (b) Funding.--The Bureau of Primary Health Care within the Health 
Resources and Services Administration shall continue to fund 
collaboratives with a goal of adding at least 50 new health centers 
each year.
    (c) Definition.--For purposes of this section, the term `health 
center' means a federally qualified health center as defined in section 
1861(aa)(4) of the Social Security Act.
    (d) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, such sums as may be necessary 
for each of fiscal years 2005 through 2015.

                          TITLE V--REACH 2010

SEC. 501. EXPANSION OF REACH 2010.

    (a) In General.--The Secretary of Health and Human Services, acting 
through the Director of the Centers for Disease Control and Prevention, 
shall award grants and carry out other activities to expand the Racial 
and Ethnic Approaches to Community Health Program (REACH 2010) program 
to support coalitions in all 50 States and territories.
    (b) Eligibility.--To be eligible to receive a grant under this 
section an entity shall--
            (1) be a coalition that is comprised of, at a minimum, a 
        community-based organization and at least 3 other 
        organizations, one of which is either a State or local health 
        department or a university or research organization; and
            (2) prepare and submit to the Secretary of Health and Human 
        Services an application at such time, in such manner, and 
        containing such information as the Secretary may require.
    (c) Use of Grants.--Amounts provided under a grant under this 
section shall be used to support community coalitions in designing, 
implementing, and evaluating community-driven strategies to eliminate 
health disparities, with an emphasis on African Americans, American 
Indians, Alaska Natives, Asian Americans, Hispanic Americans, and 
Pacific Islanders.
    (d) Priority Areas.--In carrying out the Racial and Ethnic 
Approaches to Community Health Program (REACH 2010) program, the 
Director of the Centers for Disease Control and Prevention shall 
include the following priority areas:
            (1) Cardiovascular disease.
            (2) Immunizations.
            (3) Breast and cervical cancer screening and management.
            (4) Diabetes.
            (5) HIV/AIDS.
            (6) Infant mortality.
            (7) Asthma.
            (8) Obesity.
            (9) At the discretion of the Director of the Centers for 
        Disease Control and Prevention, any additional priority areas 
        determined appropriate by the Agency for Healthcare Research 
        and Quality in consultation with the Advisory Committee 
        established under section 925 of the Public Health Service Act.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section and the Racial and Ethnic 
Approaches to Community Health Program (REACH 2010) program, 
$200,000,000 for each of fiscal years 2005 to 2007, and such sums as 
may be necessary for each of fiscal years 2008 through 2015.

                 TITLE VI--MALPRACTICE INSURANCE RELIEF

SEC. 601. REFUNDABLE TAX CREDIT FOR THE COST OF MALPRACTICE INSURANCE 
              FOR CERTAIN PROVIDERS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and by inserting 
after section 35 the following new section:

``SEC. 36. CERTAIN MALPRACTICE INSURANCE COSTS.

    ``(a) In General.--In the case of an eligible health care provider, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the applicable 
percentage of qualified malpractice insurance expenditures paid or 
incurred during the taxable year.
    ``(b) Applicable Percentage.--For purposes of this section--
            ``(1) In general.--The applicable percentage shall be--
                    ``(A) 10 percent for any taxable year for which the 
                person claiming the credit is an eligible health care 
                provider, plus
                    ``(B) 5 percent for each consecutive prior taxable 
                year ending after the date of enactment of this section 
                for which such person was an eligible health care 
                provider.
            ``(2) Limitation.--The applicable percentage shall not 
        exceed 25 percent.
    ``(c) Eligible Health Care Provider.--For purposes of this section, 
the term `eligible health care provider' means--
            ``(1) a public or private nonprofit hospital which is--
                    ``(A) located in a medically underserved area (as 
                defined in section 1302(7) of the Public Health Service 
                Act) or in a health professional shortage area (as 
                designated under section 332 of the Public Health 
                Service Act), and
                    ``(B) designated as a Level I Faircare Hospital 
                under section 339P of the Public Health Service Act or 
                section 1898 of the Social Security Act for the year in 
                which such hospital's taxable year ends, and
            ``(2) a physician for whom not less than 66 percent of the 
        practice for the taxable year is at a facility described in 
        paragraph (1).
    ``(d) Qualified Medical Malpractice Insurance Expenditure.--The 
term `qualified medical malpractice insurance expenditure' means so 
much of any professional insurance premium, surcharge, payment or other 
cost or expense required as a condition of State licensure which is 
incurred by an eligible health care provider in a taxable year for the 
sole purpose of providing or furnishing general medical malpractice 
liability insurance for such eligible health care provider.''.
    (b) Denial of Double Benefit.--Section 280C of the Internal Revenue 
Code of 1986 (relating to certain expenses for which credits are 
allowable) is amended by adding at the end the following new 
subsection:
    ``(d) Credit for Medical Malpractice Liability Insurance 
Premiums.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the qualified medical malpractice insurance 
        expenditures otherwise allowable as a deduction for the taxable 
        year which is equal to the amount of the credit allowable for 
        the taxable year under section 36.
            ``(2) Controlled groups.--In the case of a corporation 
        which is a member of a controlled group of corporations (within 
        the meaning of section 41(f)(5)) or a trade or business which 
        is treated as being under common control with other trades or 
        business (within the meaning of section 41(f)(1)(B)), this 
        subsection shall be applied under rules prescribed by the 
        Secretary similar to the rules applicable under subparagraphs 
        (A) and (B) of section 41(f)(1).''.
    (c) Conforming Amendment.--Paragraph (2) of section 1324(b) of 
title 31, United States Code, is amended by inserting before the period 
``or from section 36 of such Code''.
    (d) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by striking the item related to section 36 and 
inserting the following new items:

                              ``Sec. 36. Certain malpractice insurance 
                                        costs.
                              ``Sec. 37. Overpayments of tax.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to expenditures incurred after December 31, 2005.
    (f) Availability of Credit for Tax Exempt Organizations.--The 
Secretary of the Treasury shall administer the credit allowable under 
section 36 of the Internal Revenue Code of 1986 (as added by this 
section) in such a manner so as to minimize to the largest extent 
possible the administrative burden on tax exempt organizations claiming 
the credit.

SEC. 602. GRANTS TO NON-PROFIT HOSPITALS.

    (a) In General.--The Secretary of Health and Human Services, acting 
through the Administrator of the Health Resources and Services 
Administration, shall award grants to eligible entities to assist such 
entities in defraying qualified medical malpractice insurance 
expenditures.
    (b) Eligibility.--To be eligible to receive a grant under 
subsection (a), an entity shall--
            (1) be a Faircare Level I non-profit hospital (as 
        determined under section 1898(b) of the Social Security Act) in 
        the preceding fiscal year;
            (2) not be eligible to claim the tax credit under section 
        36 of the Internal Revenue Code of 1986;
            (3) prepare and submit to the Secretary of Health and Human 
        Services an application at such time, in such manner, and 
        containing such information as the Secretary may require.
    (c) Amount of Grant.--The amount of a grant awarded to an eligible 
entity under this section shall be--
            (1) with respect to the first year of the grant, an amount 
        equal to 10 percent of the qualified medical malpractice 
        insurance expenditures of the entity for the year;
            (2) with respect to the second year of the grant, an amount 
        equal to 15 percent of the qualified medical malpractice 
        insurance expenditures of the entity for the year;
            (3) with respect to the third year of the grant, an amount 
        equal to 20 percent of the qualified medical malpractice 
        insurance expenditures of the entity for the year; and
            (4) with respect to the fourth and subsequent years of the 
        grant, an amount equal to 25 percent of the qualified medical 
        malpractice insurance expenditures of the entity for the year.
    (d) Definition.--In this section, the term ``qualified medical 
malpractice insurance expenditure'' has the meaning given such term in 
section 36(d) of the Internal Revenue Code of 1986.

SEC. 603. GRANTS FOR RESEARCH INTO QUALITY OF CARE AND MEDICAL ERRORS.

    (a) In General.--The Secretary of Health and Human Services shall 
award grants to eligible entities to study the relationship between 
institutions that are designated as Faircare hospitals under section 
1898(b) of the Social Security Act and medical errors or the rate of 
claims of malpractice.
    (b) Eligibility.--To be eligible to receive a grant under 
subsection (a), an entity shall prepare and submit to the Secretary of 
Health and Human Services an application at such time, in such manner, 
and containing such information as the Secretary may require.

SEC. 604. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this title, 
such sums as may be necessary for each of fiscal years 2005 through 
2015.
                                 <all>