[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4845 Introduced in House (IH)]


109th CONGRESS
  2d Session
                                H. R. 4845

   To better prepare and develop the United States workforce for the 
      global economy, and remove barriers that stifle innovation.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 2, 2006

    Mr. Goodlatte (for himself, Mr. Smith of Texas, Mrs. Johnson of 
 Connecticut, Mr. Putnam, Mr. Sweeney, and Mr. Tiahrt) introduced the 
 following bill; which was referred to the Committee on the Judiciary, 
and in addition to the Committees on Ways and Means, Science, Education 
    and the Workforce, and Energy and Commerce, 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 better prepare and develop the United States workforce for the 
      global economy, and remove barriers that stifle innovation.

    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 ``Innovation and 
Competitiveness Act''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
 TITLE I--REDUCE RED TAPE AND CREATE OPPORTUNITIES FOR ECONOMIC GROWTH

            Subtitle A--Business Activity Tax Simplification

Sec. 101. Short title.
Sec. 102. Removal of certain limitations on the application of Public 
                            Law 86-272.
        ``Sec. 105. Removal of certain limitations on the application 
                            of Public Law 86-272.
Sec. 103. Jurisdictional standard for State and local net income taxes 
                            and other business activity taxes.
Sec. 104. Definitions.
Sec. 105. Effective date.
                  Subtitle B--Attorney Accountability

Sec. 121. Short title.
Sec. 122. Attorney accountability.
Sec. 123. Applicability of Rule 11 to State cases affecting interstate 
                            commerce.
Sec. 124. Prevention of forum-shopping.
Sec. 125. Rule of construction.
Sec. 126. Three-strikes Rule for suspending attorneys who commit 
                            multiple Rule 11 violations.
Sec. 127. Presumption of Rule 11 violation for repeatedly relitigating 
                            same issue.
Sec. 128. Enhanced sanctions for document destruction in pending 
                            Federal court proceedings.
Sec. 129. Ban on concealment of unlawful conduct.
                TITLE II--INCREASE AMERICA'S TALENT POOL

Sec. 201. Inno``subpart 6--innovation scholarship program
        ``Sec. 419A. Innovation mathematics and science honors 
                            scholarship program.
        ``Sec. 419B. Mathematics and science incentive program.
        ``Sec. 419C. Mathematics and science education coordinating 
                            council grants.
        ``Sec. 419D. Authorization of appropriations.
            TITLE III--PROMOTION OF RESEARCH AND DEVELOPMENT

Sec. 301. Short title.
Sec. 302. Findings.
Sec. 303. Permanent extension of research credit.
Sec. 304. Increase in rates of alternative incremental credit.
Sec. 305. Alternative simplified credit for qualified research 
                            expenses.
       TITLE IV--INCREASE ACCESS TO AND EFFICIENCY OF HEALTH CARE

                     Subtitle A--Health Care Choice

Sec. 401. Short title of subtitle.
Sec. 402. Specification of constitutional authority for enactment of 
                            law.
Sec. 403. Findings.
Sec. 404. Cooperative governing of individual health insurance 
                            coverage.
``Part D--Cooperative Governing of Individual Health Insurance Coverage

        ``Sec. 2795. Definitions.
        ``Sec. 2796. Application of law.
        ``Sec. 2797. Primary State must meet Federal floor before 
                            issuer may sell into secondary States.
        ``Sec. 2798. Enforcement.
Sec. 405. Severability.
          Subtitle B--Health Information Technology Promotion

Sec. 411. Short title of subtitle.
Sec. 412. Office of the National Coordinator for Health Information 
                            Technology.
                ``Part D--Health Information Technology

        ``Sec. 271. Office of the National Coordinator for Health 
                            Information Technology.
Sec. 413. Safe harbors for provision of health information technology 
                            and training services to health care 
                            professionals.
Sec. 414. Uniform health information laws and regulations.
Sec. 415. Rulemaking to upgrade ASC X12 and NCPDP standards and ICD 
                            codes.
Sec. 416. Report on the American Health Information Community.
Sec. 417. Strategic plan for coordinating implementation of health 
                            information technology.
                       TITLE V--SEAMLESS MOBILITY

Sec. 501. Prohibition on impeding.

 TITLE I--REDUCE RED TAPE AND CREATE OPPORTUNITIES FOR ECONOMIC GROWTH

            Subtitle A--Business Activity Tax Simplification

SEC. 101. SHORT TITLE.

    This subtitle may be cited as the ``Business Activity Tax 
Simplification Act of 2006''.

SEC. 102. REMOVAL OF CERTAIN LIMITATIONS ON THE APPLICATION OF PUBLIC 
              LAW 86-272.

    (a) Solicitations With Respect to Sales and Transactions of Other 
Than Tangible Personal Property.--Section 101 of the Act entitled ``An 
Act relating to the power of the States to impose net income taxes on 
income derived from interstate commerce, and authorizing studies by 
congressional committees of matters pertaining thereto'', approved 
September 14, 1959 (15 U.S.C. 381 et seq.), is amended--
            (1) in subsection (a)(1) by striking ``of tangible'' and 
        all that follows through ``State; and'' and inserting the 
        following: ``or transactions, which orders are sent outside the 
        State for approval or rejection and, if approved, are--
                    ``(A) in the case of tangible personal property, 
                filled by shipment or delivery from a point outside the 
                State; and
                    ``(B) in the case of all other forms of property, 
                services, and other transactions, fulfilled from a 
                point outside the State;
        and'';
            (2) in subsection (c)--
                    (A) by inserting ``or fulfilling transactions'' 
                after ``making sales'';
                    (B) by inserting ``or transactions'' after 
                ``sales'' the other places it appears; and
                    (C) by striking ``of tangible personal property'' 
                each place it appears; and
            (3) in subsection (d)(1) by striking ``the sale of, 
        tangible personal property'' and inserting ``a sale or 
        transaction,''.
    (b) Application of Prohibitions to Other Business Activity Taxes.--
Title I of the Act entitled ``An Act relating to the power of the 
States to impose net income taxes on income derived from interstate 
commerce, and authorizing studies by congressional committees of 
matters pertaining thereto'', approved September 14, 1959 (15 U.S.C. 
381 et seq.), is amended by adding at the end the following:
    ``Sec. 105. Beginning with taxable periods beginning on or after 
the first day of the first calendar year that begins after the date of 
the enactment of the Business Activity Tax Simplification Act of 2006, 
the prohibitions of section 101 that apply with respect to net income 
taxes shall also apply with respect to each other business activity 
tax, as defined in section 104 of the Business Activity Tax 
Simplification Act of 2006. A State or political subdivision thereof 
may not assess or collect any tax which by reason of this section the 
State or political subdivision may not impose.''.
    (c) Effective Date of Subsection (a) Amendments.--The amendments 
made by subsection (a) shall apply with respect to the imposition, 
assessment, and collection of taxes for taxable periods beginning on or 
after the first day of the first calendar year that begins after the 
date of the enactment of the Business Activity Tax Simplification Act 
of 2006.

SEC. 103. JURISDICTIONAL STANDARD FOR STATE AND LOCAL NET INCOME TAXES 
              AND OTHER BUSINESS ACTIVITY TAXES.

    (a) In General.--No taxing authority of a State shall have power to 
impose, assess, or collect a net income tax or other business activity 
tax on any person relating to such person's activities in interstate 
commerce unless such person has a physical presence in the State during 
the taxable period with respect to which the tax is imposed.
    (b) Requirements for Physical Presence.--For the purposes of 
subsection (a), a person has a physical presence in a State only if 
such person's business activities in the State include any of the 
following, collectively and on more than 21 days in the aggregate, 
during such person's taxable year:
            (1) Being an individual physically in the State, or 
        assigning one or more employees to be in the State, except that 
        the following shall be excluded in determining whether such 21-
        day limit has been exceeded:
                    (A) Activities in connection with a possible or an 
                actual purchase of goods or services, for consumption 
                by the person's business.
                    (B) Gathering news and covering events for print, 
                broadcast, or other distribution through the media.
                    (C) Meeting government officials for purposes other 
                than selling goods or services, for consumption by such 
                government.
                    (D) Merely attending educational or training 
                conferences, seminars or other similar functions.
                    (E) Participating in charitable activities.
            (2) Using the services of an agent (excluding an employee) 
        to establish or maintain the market in the State, if such agent 
        does not perform business services in the State for any other 
        person during such taxable year.
            (3) The leasing or owning of tangible personal property or 
        of real property in the State, except that the following shall 
        be excluded in determining whether such 21-day limit has been 
        exceeded:
                    (A) Tangible personal property located in the State 
                for purposes of being assembled, manufactured, 
                processed, or tested by another person for the benefit 
                of the owner or lessee, or used to furnish a service to 
                the owner or lessee by another person.
                    (B) Marketing or promotional materials distributed 
                in the State.
                    (C) Any property to the extent used ancillary to an 
                activity excluded from the computation of the 21-day 
                period based on paragraph (1) or (2).
    (c) Taxable Periods Not Consisting of a Year.--If the taxable 
period for which the tax is imposed is not a year, then any 
requirements expressed in days for establishing physical presence under 
this subtitle shall be adjusted pro rata accordingly.
    (d) Exceptions.--
            (1) Domestic business entities and individuals domiciled 
        in, or residents of, the state.--Subsection (a) does not apply 
        with respect to--
                    (A) a person (other than an individual) that is 
                incorporated or formed under the laws of the State (or 
                domiciled in the State) in which the tax is imposed; or
                    (B) an individual who is domiciled in, or a 
                resident of, the State in which the tax is imposed.
            (2) Taxation of partners and similar persons.--This section 
        shall not be construed to modify or affect any State business 
        activity tax liability of an owner or beneficiary of an entity 
        that is a partnership, an S corporation (as defined in section 
        1361 of the Internal Revenue Code of 1986 (26 U.S.C. 1361)), a 
        limited liability company, a trust, an estate, or any other 
        similar entity, if the entity has a physical presence in the 
        State in which the tax is imposed.
            (3) Preservation of authority.--This section shall not be 
        construed to modify, affect, or supersede the authority of a 
        State to bring an enforcement action against a person or entity 
        that may be engaged in an illegal activity, a sham transaction, 
        or any perceived or actual abuse in its business activities if 
        such enforcement action--
                    (A) is of a kind customarily used by the State; and
                    (B) does not modify, affect, or supersede the 
                operation of any provision of this subtitle or of any 
                other Federal law.
            (4) Certain activities.--With respect to the following, 
        subsection (b) shall be read by substituting ``at least one 
        day'' for ``more than 21 days in the aggregate'':
                    (A) The sale within a State of tangible personal 
                property, if delivery of the property originates and is 
                completed within the State.
                    (B) The performance of services that physically 
                affect real property within a State.
            (5) Exception relating to certain performances and sporting 
        events.--With respect to the taxation of the following, 
        subsection (b) shall be read by substituting ``at least one 
        day'' for ``more than 21 days in the aggregate'':
                    (A) A live performance in a State, before a live 
                audience of more than 100 individuals.
                    (B) A live sporting event in a State before more 
                than 100 spectators present at the event.
    (e) Rule of Construction.--This section shall not be construed to 
modify, affect, or supersede the operation of title I of the Act 
entitled ``An Act relating to the power of the States to impose net 
income taxes on income derived from interstate commerce, and 
authorizing studies by congressional committees of matters pertaining 
thereto'', approved September 14, 1959 (15 U.S.C. 381 et seq.).

SEC. 104. DEFINITIONS.

    The following definitions apply in this subtitle:
            (1) Net income tax.--The term ``net income tax'' has the 
        meaning given that term for the purposes of the Act entitled 
        ``An Act relating to the power of the States to impose net 
        income taxes on income derived from interstate commerce, and 
        authorizing studies by congressional committees of matters 
        pertaining thereto'', approved September 14, 1959 (15 U.S.C. 
        381 et seq.).
            (2) Other business activity tax.--
                    (A) The term ``other business activity tax'' 
                means--
                            (i) a tax imposed on or measured by gross 
                        receipts, gross income, or gross profits;
                            (ii) a business license tax;
                            (iii) a business and occupation tax;
                            (iv) a franchise tax;
                            (v) a single business tax or a capital 
                        stock tax; or
                            (vi) any other tax imposed by a State on a 
                        business for the right to do business in the 
                        State or measured by the amount of, or economic 
                        results of, business or related activity 
                        conducted in the State.
                    (B) The term ``other business activity tax'' does 
                not include a sales tax, a use tax, or a similar tax, 
                imposed as the result of the sale or acquisition of 
                goods or services, whether or not denominated a tax 
                imposed on the privilege of doing business.
            (3) State.--The term ``State'' means any of the several 
        States, the District of Columbia, or any territory or 
        possession of the United States, or any political subdivision 
        of any of the foregoing.
            (4) Tangible personal property.--The term ``tangible 
        personal property'' does not include computer software that is 
        owned and licensed by the owner to another person.

SEC. 105. EFFECTIVE DATE.

    Except as provided otherwise in this subtitle, this subtitle 
applies with respect to taxable periods beginning on and after the 
first day of the first year that begins after the date of enactment of 
this Act.

                  Subtitle B--Attorney Accountability

SEC. 121. SHORT TITLE.

    This subtitle may be cited as the ``Lawsuit Abuse Reduction Act of 
2006''.

SEC. 122. ATTORNEY ACCOUNTABILITY.

    Rule 11(c) of the Federal Rules of Civil Procedure is amended--
            (1) by amending the first sentence to read as follows: ``If 
        a pleading, motion, or other paper is signed in violation of 
        this rule, the court, upon motion or upon its own initiative, 
        shall impose upon the attorney, law firm, or parties that have 
        violated this subdivision or are responsible for the violation, 
        an appropriate sanction, which may include an order to pay the 
        other party or parties for the reasonable expenses incurred as 
        a direct result of the filing of the pleading, motion, or other 
        paper, that is the subject of the violation, including a 
        reasonable attorney's fee.'';
            (2) in paragraph (1)(A)--
                    (A) by striking ``Rule 5'' and all that follows 
                through ``corrected.'' and inserting ``Rule 5.''; and
                    (B) by striking ``the court may award'' and 
                inserting ``the court shall award''; and
            (3) in paragraph (2), by striking ``shall be limited to 
        what is sufficient'' and all that follows through the end of 
        the paragraph (including subparagraphs (A) and (B)) and 
        inserting ``shall be sufficient to deter repetition of such 
        conduct or comparable conduct by others similarly situated, and 
        to compensate the parties that were injured by such conduct. 
        The sanction may consist of an order to pay to the party or 
        parties the amount of the reasonable expenses incurred as a 
        direct result of the filing of the pleading, motion, or other 
        paper that is the subject of the violation, including a 
        reasonable attorney's fee.''.

SEC. 123. APPLICABILITY OF RULE 11 TO STATE CASES AFFECTING INTERSTATE 
              COMMERCE.

    In any civil action in State court, the court, upon motion, shall 
determine within 30 days after the filing of such motion whether the 
action substantially affects interstate commerce. Such court shall make 
such determination based on an assessment of the costs to the 
interstate economy, including the loss of jobs, were the relief 
requested granted. If the court determines such action substantially 
affects interstate commerce, the provisions of Rule 11 of the Federal 
Rules of Civil Procedure shall apply to such action.

SEC. 124. PREVENTION OF FORUM-SHOPPING.

    (a) In General.--Subject to subsection (b), a personal injury claim 
filed in State or Federal court may be filed only in the State and, 
within that State, in the county (or if there is no State court in the 
county, the nearest county where a court of general jurisdiction is 
located) or Federal district in which--
            (1) the person bringing the claim, including an estate in 
        the case of a decedent and a parent or guardian in the case of 
        a minor or incompetent--
                    (A) resides at the time of filing; or
                    (B) resided at the time of the alleged injury;
            (2) the alleged injury or circumstances giving rise to the 
        personal injury claim allegedly occurred;
            (3) the defendant's principal place of business is located, 
        if the defendant is a corporation; or
            (4) the defendant resides, if the defendant is an 
        individual.
    (b) Determination of Most Appropriate Forum.--If a person alleges 
that the injury or circumstances giving rise to the personal injury 
claim occurred in more than one county (or Federal district), the trial 
court shall determine which State and county (or Federal district) is 
the most appropriate forum for the claim. If the court determines that 
another forum would be the most appropriate forum for a claim, the 
court shall dismiss the claim. Any otherwise applicable statute of 
limitations shall be tolled beginning on the date the claim was filed 
and ending on the date the claim is dismissed under this subsection.
    (c) Definitions.--In this section:
            (1) The term ``personal injury claim''--
                    (A) means a civil action brought under State law by 
                any person to recover for a person's personal injury, 
                illness, disease, death, mental or emotional injury, 
                risk of disease, or other injury, or the costs of 
                medical monitoring or surveillance (to the extent such 
                claims are recognized under State law), including any 
                derivative action brought on behalf of any person on 
                whose injury or risk of injury the action is based by 
                any representative party, including a spouse, parent, 
                child, or other relative of such person, a guardian, or 
                an estate;
                    (B) does not include a claim brought as a class 
                action; and
                    (C) does not include a claim against a debtor in a 
                case pending under title 11 of the United States Code 
                that is a personal injury tort or wrongful death claim 
                within the meaning of section 157(b)(5) of title 28, 
                United States Code.
            (2) The term ``person'' means any individual, corporation, 
        company, association, firm, partnership, society, joint stock 
        company, or any other entity, but not any governmental entity.
            (3) The term ``State'' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, the United States Virgin 
        Islands, Guam, and any other territory or possession of the 
        United States.
    (d) Applicability.--This section applies to any personal injury 
claim filed in Federal or State court on or after the date of the 
enactment of this subtitle.

SEC. 125. RULE OF CONSTRUCTION.

    Nothing in section 123 or in the amendments made by section 122 
shall be construed to bar or impede the assertion or development of new 
claims or remedies under Federal, State, or local civil rights law.

SEC. 126. THREE-STRIKES RULE FOR SUSPENDING ATTORNEYS WHO COMMIT 
              MULTIPLE RULE 11 VIOLATIONS.

    (a) Mandatory Suspension.--Whenever a Federal district court 
determines that an attorney has violated Rule 11 of the Federal Rules 
of Civil Procedure, the court shall determine the number of times that 
the attorney has violated that rule in that Federal district court 
during that attorney's career. If the court determines that the number 
is 3 or more, the Federal district court--
            (1) shall suspend that attorney from the practice of law in 
        that Federal district court for 1 year; and
            (2) may suspend that attorney from the practice of law in 
        that Federal district court for any additional period that the 
        court considers appropriate.
    (b) Appeal; Stay.--An attorney has the right to appeal a suspension 
under subsection (a). While such an appeal is pending, the suspension 
shall be stayed.
    (c) Reinstatement.--To be reinstated to the practice of law in a 
Federal district court after completion of a suspension under 
subsection (a), the attorney must first petition the court for 
reinstatement under such procedures and conditions as the court may 
prescribe.

SEC. 127. PRESUMPTION OF RULE 11 VIOLATION FOR REPEATEDLY RELITIGATING 
              SAME ISSUE.

    Whenever a party presents to a Federal court a pleading, written 
motion, or other paper, that includes a claim or defense that the party 
has already litigated and lost on the merits in any forum in final 
decisions not subject to appeal on 3 consecutive occasions, and the 
claim or defense involves the same plaintiff and the same defendant, 
there shall be a rebuttable presumption that the presentation of such 
paper is in violation of Rule 11 of the Federal Rules of Civil 
Procedure.

SEC. 128. ENHANCED SANCTIONS FOR DOCUMENT DESTRUCTION IN PENDING 
              FEDERAL COURT PROCEEDINGS.

    Whoever willfully and intentionally influences, obstructs, or 
impedes, or attempts to influence, or obstruct, or impede, a pending 
Federal court proceeding through the willful and intentional 
destruction of documents sought pursuant to the rules of such Federal 
court proceeding and highly relevant to that proceeding--
            (1) shall be punished with mandatory civil sanctions of a 
        degree commensurate with the civil sanctions available under 
        Rule 11 of the Federal Rules of Civil Procedure, in addition to 
        any other civil sanctions that otherwise apply; and
            (2) shall be held in contempt of court and, if an attorney, 
        referred to one or more appropriate State bar associations for 
        disciplinary proceedings.

SEC. 129. BAN ON CONCEALMENT OF UNLAWFUL CONDUCT.

    (a) In General.--In any Rule 11 of the Federal Rules of Civil 
Procedure proceeding, a court may not order that a court record not be 
disclosed unless the court makes a finding of fact that identifies the 
interest that justifies the order and determines that that interest 
outweighs any interest in the public health and safety that the court 
determines would be served by disclosing the court record.
    (b) Applicability.--This section applies to any record formally 
filed with the court, but shall not include any records subject to--
            (1) the attorney-client privilege or any other privilege 
        recognized under Federal or State law that grants the right to 
        prevent disclosure of certain information unless the privilege 
        has been waived; or
            (2) applicable State or Federal laws that protect the 
        confidentiality of crime victims, including victims of sexual 
        abuse.

                TITLE II--INCREASE AMERICA'S TALENT POOL

SEC. 201. INNOVATION SCHOLARSHIP PROGRAM.

    Subpart 6 of part A of title IV is amended to read as follows:

              ``Subpart 6--Innovation Scholarship Program

``SEC. 419A. INNOVATION MATHEMATICS AND SCIENCE HONORS SCHOLARSHIP 
              PROGRAM.

    ``(a) Purpose.--The purpose of this section is to award 
scholarships to students who are enrolled in studies leading to 
baccalaureate and advanced degrees in physical, life, or computer 
sciences, mathematics, and engineering.
    ``(b) Definitions.--As used in this section--
            ``(1) the term `computer science' means the branch of 
        knowledge or study of computers, including such fields of 
        knowledge or study as computer hardware, computer software, 
        computer engineering, information systems, and robotics;
            ``(2) the term `eligible student' means a student who--
                    ``(A) is a citizen of the United States;
                    ``(B) is selected by the managing agent to receive 
                a scholarship;
                    ``(C) is enrolled full-time in an institution of 
                higher education, other than a United States service 
                academy; and
                    ``(D) has shown a commitment to and is pursuing a 
                major in studies leading to a baccalaureate, masters, 
                or doctoral degree (or a combination thereof) in 
                physical, life, or computer sciences, mathematics, or 
                engineering;
            ``(3) the term `engineering' means the science by which the 
        properties of matter and the sources of energy in nature are 
        made useful to humanity in structures, machines, and products, 
        as in the construction of engines, bridges, buildings, mines, 
        and chemical plants, including such fields of knowledge or 
        study as aeronautical engineering, chemical engineering, civil 
        engineering, electrical engineering, industrial engineering, 
        materials engineering, manufacturing engineering, and 
        mechanical engineering;
            ``(4) the term `life sciences' means the branch of 
        knowledge or study of living things, including such fields of 
        knowledge or study as biology, biochemistry, biophysics, 
        microbiology, genetics, physiology, botany, zoology, ecology, 
        and behavioral biology, except that the term does not encompass 
        social psychology or the health professions;
            ``(5) the term `managing agent' means an entity to which an 
        award is made under subsection (c) to manage a program of 
        Mathematics and Science Honors Scholarships;
            ``(6) the term `mathematics' means the branch of knowledge 
        or study of numbers and the systematic treatment of magnitude, 
        relationships between figures and forms, and relations between 
        quantities expressed symbolically, including such fields of 
        knowledge or study as statistics, applied mathematics, and 
        operations research; and
            ``(7) the term `physical sciences' means the branch of 
        knowledge or study of the material universe, including such 
        fields of knowledge or study as astronomy, atmospheric 
        sciences, chemistry, earth sciences, ocean sciences, physics, 
        and planetary sciences.
    ``(c) Award.--
            ``(1)(A) From funds authorized under section 419D to carry 
        out this section, the Secretary is authorized, through a grant 
        or cooperative agreement, to make an award to a private, non-
        profit organization, other than an institution of higher 
        education or system of institutions of higher education, to 
        manage, through a public and private partnership, a program of 
        Mathematics and Science Honors Scholarships under this section.
            ``(B) The award under subparagraph (A) shall be for a five-
        year period.
            ``(2)(A) One hundred percent of the funds awarded under 
        paragraph (1)(A) for any fiscal year shall be obligated and 
        expended solely on scholarships to eligible students.
            ``(B) No Federal funds shall be used to provide more than 
        50 percent of the cost of any scholarship to an eligible 
        student.
            ``(C) The maximum scholarship award shall be the difference 
        between an eligible student's cost of attendance minus any non-
        loan based aid such student receives.
            ``(3)(A) The secretary may establish--
                    ``(i) eligibility criteria for applicants for 
                managing agent, including criteria regarding financial 
                and administrative capability; and
                    ``(ii) operational standards for the managing 
                agent, including management and performance 
                requirements, such as audit, recordkeeping, record 
                retention, and reporting procedures and requirements.
            ``(B) The Secretary, as necessary, may review and revise 
        any criteria, standards, and rules established under this 
        paragraph and, through the agreement with the managing agent, 
        see that any revisions are implemented.
            ``(4) If the managing agent fails to meet the requirements 
        of this section the Secretary may terminate the award to the 
        managing agent.
            ``(5) The Secretary shall conduct outreach efforts to help 
        raise awareness of the Mathematics and Science Honors 
        Scholarships.
    ``(d) Duties of the Managing Agent.--The managing agent shall--
            ``(1) develop criteria to award Mathematics and Science 
        Honors Scholarships based on established measurements available 
        to secondary students who wish to pursue degrees in physical, 
        life, or computer sciences, mathematics, and engineering;
            ``(2) establish a Mathematics and Science Honors 
        Scholarship Fund in a separate, named account that clearly 
        discloses the amount of Federal and non-Federal funds deposited 
        in the account and used for scholarships under this section;
            ``(3) solicit funds for scholarships and for the 
        administration of the program from non-Federal sources;
            ``(4) solicit applicants for scholarships;
            ``(5) from the amounts in the Fund, award scholarships to 
        eligible students and transfer such funds to the institutions 
        of higher education that they attend; and
            ``(6) annually submit to the Secretary a financial audit 
        and a report on the progress of the program, and such other 
        documents as the Secretary may require to determine the 
        effective management of the program.
    ``(e) Applications.--
            ``(1) Any eligible entity that desires to be the managing 
        agent under this section shall submit an application to the 
        Secretary, in such form and containing such information, as the 
        Secretary may require.
            ``(2) Each application shall include a description of--
                    ``(A) how the applicant meets or will meet 
                requirements established under subsections (c)(3)(A) 
                and (d);
                    ``(B) how the applicant will solicit funds for 
                scholarships and for the administration of the program 
                from non-Federal sources;
                    ``(C) how the applicant will provide nationwide 
                outreach to inform students about the program and to 
                encourage students to pursue degrees in physical, life, 
                or computer sciences, mathematics, and engineering;
                    ``(D) how the applicant will solicit applications 
                for scholarships, including how the applicant will 
                balance efforts in urban and rural areas;
                    ``(E) the selection criteria based on established 
                measurements available to secondary students the 
                applicant will use to award scholarships and to renew 
                those awards;
                    ``(F) how the applicant will inform the institution 
                of higher education chosen by the recipient of the name 
                and scholarship amount of the recipient;
                    ``(G) what procedures and assurances the applicant 
                and the institution of higher education that the 
                recipient attends will use to verify student 
                eligibility, attendance, degree progress, and academic 
                performance and to deliver and account for payments to 
                such institution;
                    ``(H) the management (including audit and 
                accounting) procedures the applicant will use for the 
                program;
                    ``(I) the human, financial, and other resources 
                that the applicant will need and use to manage the 
                program;
                    ``(J) how the applicant will evaluate the program 
                and report to the Secretary annually; and
                    ``(K) a description of how the entity will 
                coordinate with, complement, and build on similar 
                public and private mathematics and science programs.
    ``(f) Scholarship Recipients.--
            ``(1) A student receiving a scholarship under this section 
        shall be known as a `Innovation Mathematics and Science Honors 
        Scholar'.
            ``(2) Any student desiring to receive a scholarship under 
        this section shall submit an application to the managing agent 
        in such form, and containing such information, as the managing 
        agent may require.
            ``(3) Any student that receives a scholarship under this 
        section shall enter into an agreement with the managing agent 
        to complete 5 consecutive years of service to begin no later 
        than 12 months following completion of the final degree in a 
        position related to physical, life, or computer sciences, 
        mathematics, or engineering as defined under this section.
            ``(4) If any student that receives a scholarship under this 
        section fails to earn at least a baccalaureate degree in 
        physical, life, or computer sciences, mathematics, or 
        engineering as defined under this section, the student shall 
        repay to the managing agent the amount of any financial 
        assistance paid to such student.
            ``(5) If any student that receives a scholarship under this 
        section fails to meet the requirements of paragraph (3), the 
        student shall repay to the managing agent the amount of any 
        financial assistance paid to such student.
            ``(6)(A) Scholarships shall be awarded for only one 
        academic year of study at a time.
            ``(B)(i) A scholarship shall be renewable on an annual 
        basis for the established length of the academic program if the 
        student awarded the scholarship remains eligible.
            ``(ii) The managing agent may condition renewal of a 
        scholarship on measures of academic progress and achievement, 
        with the approval of the Secretary.
            ``(C)(i) If a student fails to either remain eligible or 
        meet established measures of academic progress and achievement, 
        the managing agent shall instruct the student's institution of 
        higher education to suspend payment of the student's 
        scholarship.
            ``(ii) A suspension of payment shall remain in effect until 
        the student is able to demonstrate to the satisfaction of the 
        managing agent that he or she is again eligible and meets the 
        established measures of academic progress and achievement.
            ``(iii) A student's eligibility for a scholarship shall be 
        terminated if a suspension period exceeds 12 months.
            ``(D)(i)(I) A student awarded a scholarship may, in a 
        manner and under the terms established by, and with the 
        approval of, the managing agent, postpone or interrupt his or 
        her enrollment at an institution of higher education for up to 
        12 months.
            ``(II) Such a postponement or interruption shall not be 
        considered a suspension for purposes of subparagraph (C).
            ``(ii) Neither a student nor the student's institution of 
        higher education shall receive the student's scholarship 
        payments during the period of postponement or interruption, but 
        such payments shall resume upon enrollment or reenrollment.
            ``(iii) In exceptional circumstances, such as serious 
        injury or illness or the necessity to care for family members, 
        the student's postponement or interruption may, upon 
        notification and approval of the managing agent, be extended 
        beyond the 12 month period described in clause (i)(I).
    ``(g) Responsibilities of Institution of Higher Education.--
            ``(1) The managing agent shall require any institution of 
        higher education that enrolls a student who receives a 
        scholarship under this section to annually provide an 
        assurance, prior to making any payment, that the student--
                    ``(A) is eligible in accordance with subsection 
                (b)(2); and
                    ``(B) has provided the institution with a written 
                commitment to attend, or is attending, classes and is 
                satisfactorily meeting the institution's academic 
                criteria for enrollment in its program of study.
            ``(2)(A) The managing agent shall provide the institution 
        of higher education with payments from the Fund for selected 
        recipients in at least two installments.
            ``(B) An institution of higher education shall return 
        prorated amounts of any scholarship payment to the managing 
        agent, who shall deposit it in to the Fund, if a recipient 
        declines a scholarship, does not attend courses, transfers to 
        another institution of higher education, or becomes ineligible 
        for a scholarship.

``SEC. 419B. MATHEMATICS AND SCIENCE INCENTIVE PROGRAM.

    ``(a) Program.--
            ``(1) In general.--The Secretary is authorized to carry out 
        a program of assuming the obligation to pay, pursuant to the 
        provisions of this section, the interest on a loan made, 
        insured, or guaranteed under part B or D of this title.
            ``(2) Eligibility.--The Secretary may assume interest 
        payments under paragraph (1) only for a borrower who--
                    ``(A) has submitted an application in compliance 
                with subsection (d);
                    ``(B) obtained one or more loans described in 
                paragraph (1) as an undergraduate student;
                    ``(C) is a new borrower (within the meaning of 
                section 103(7) of this Act) on or after the date of 
                enactment of the College Access and Opportunity Act of 
                2005;
                    ``(D) is a highly qualified teacher of science, 
                technology, engineering or mathematics at an elementary 
                or secondary school in a high need local educational 
                agency, or is a mathematics, science, or engineering 
                professional; and
                    ``(E) enters into an agreement with the Secretary 
                to complete 5 consecutive years of service in a 
                position described in subparagraph (D), starting on the 
                date of the agreement.
            ``(3) Prior interest limitations.--The Secretary shall not 
        make any payments for interest that--
                    ``(A) accrues prior to the beginning of the 
                repayment period on a loan in the case of a loan made 
                under section 428H or a Federal Direct Unsubsidized 
                Stafford Loan; or
                    ``(B) has accrued prior to the signing of an 
                agreement under paragraph (2)(E).
            ``(4) Initial selection.--In selecting participants for the 
        program under this section, the Secretary--
                    ``(A) shall choose among eligible applicants on the 
                basis of--
                            ``(i) the national security, homeland 
                        security, and economic security needs of the 
                        United States, as determined by the Secretary, 
                        in consultation with other Federal agencies, 
                        including the Departments of Labor, Defense, 
                        Homeland Security, Commerce, and Energy, the 
                        Central Intelligence Agency, and the National 
                        Science Foundation; and
                            ``(ii) the academic record or job 
                        performance of the applicant; and
                    ``(B) may choose among eligible applicants on the 
                basis of--
                            ``(i) the likelihood of the applicant to 
                        complete the 5-year service obligation;
                            ``(ii) the likelihood of the applicant to 
                        remain in science, mathematics, or engineering 
                        after the completion of the service 
                        requirement; or
                            ``(iii) other relevant criteria determined 
                        by the Secretary.
            ``(5) Availability subject to appropriations.--Loan 
        interest payments under this section shall be subject to the 
        availability of appropriations. If the amount appropriated for 
        any fiscal year is not sufficient to provide interest payments 
        on behalf of all qualified applicants, the Secretary shall give 
        priority to those individuals on whose behalf interest payments 
        were made during the preceding fiscal year.
            ``(6) Regulations.--The Secretary is authorized to 
        prescribe such regulations as may be necessary to carry out the 
        provisions of this section.
    ``(b) Duration and Amount of Interest Payments.--The period during 
which the Secretary shall pay interest on behalf of a student borrower 
who is selected under subsection (a) is the period that begins on the 
effective date of the agreement under subsection (a)(2)(E), continues 
after successful completion of the service obligation, and ends on the 
earlier of--
            ``(1) the completion of the repayment period of the loan;
            ``(2) payment by the Secretary of a total of $5,000 on 
        behalf of the borrower;
            ``(3) if the borrower ceases to fulfill the service 
        obligation under such agreement prior to the end of the 5-year 
        period, as soon as the borrower is determined to have ceased to 
        fulfill such obligation in accordance with regulations of the 
        Secretary; or
            ``(4) 6 months after the end of any calendar year in which 
        the borrower's gross income equals or exceeds 4 times the 
        national per capita disposable personal income (current 
        dollars) for such calendar year, as determined on the basis of 
        the National Income and Product Accounts Tables of the Bureau 
        of Economic Analysis of the Department of Commerce, as 
        determined in accordance with regulations prescribed by the 
        Secretary.
    ``(c) Repayment to Eligible Lenders.--Subject to the regulations 
prescribed by the Secretary by regulation under subsection (a)(6), the 
Secretary shall pay to each eligible lender or holder for each payment 
period the amount of the interest that accrues on a loan of a student 
borrower who is selected under subsection (a).
    ``(d) Application for Repayment.--
            ``(1) In general.--Each eligible individual desiring loan 
        interest payment under this section shall submit a complete and 
        accurate application to the Secretary at such time, in such 
        manner, and containing such information as the Secretary may 
        require.
            ``(2) Failure to complete service agreement.--Such 
        application shall contain an agreement by the individual that, 
        if the individual fails to complete the 5 consecutive years of 
        service required by subsection (a)(2)(E), the individual agrees 
        to repay the Secretary the amount of any interest paid by the 
        Secretary on behalf of the individual.
    ``(e) Treatment of Consolidation Loans.--A consolidation loan made 
under section 428C of this Act, or a Federal Direct Consolidation Loan 
made under part D of title IV of this Act, may be a qualified loan for 
the purpose of this section only to the extent that such loan amount 
was used by a borrower who otherwise meets the requirements of this 
section to repay--
            ``(1) a loan made under section 428 or 428H of this Act; or
            ``(2) a Federal Direct Stafford Loan, or a Federal Direct 
        Unsubsidized Stafford Loan, made under part D of title IV of 
        this Act.
    ``(f) Prevention of Double Benefits.--No borrower may, for the same 
service, receive a benefit under both this section and--
            ``(1) any loan forgiveness program under title IV of this 
        Act; or
            ``(2) subtitle D of title I of the National and Community 
        Service Act of 1990 (42 U.S.C. 12601 et seq.).
    ``(g) Definitions.--As used in this section--
            ``(1) the term `high need local educational agency' has the 
        same meaning given such term in section 201(b)(4); and
            ``(2) the term `mathematics, science, or engineering 
        professional' means a person who--
                    ``(A) holds a baccalaureate, masters, or doctoral 
                degree (or a combination thereof) in science, 
                mathematics, or engineering; and
                    ``(B) works in a field the Secretary determines is 
                closely related to that degree, which shall include 
                working as a professor at a two- or four-year 
                institution of higher education.

``SEC. 419C. MATHEMATICS AND SCIENCE EDUCATION COORDINATING COUNCIL 
              GRANTS.

    ``(a) Purposes.--The purposes of this section include--
            ``(1) supporting programs that encourage students to enroll 
        in and successfully complete baccalaureate and advanced degrees 
        in science, technology, engineering, and mathematics;
            ``(2) achieving the common objective of organizing, 
        leading, and implementing State-based reform agendas that 
        support the continuing improvement of mathematics and science 
        education; and
            ``(3) improving collaboration in a State among the State 
        educational agency, 2-year and 4-year institutions of higher 
        education, and the business community through the development 
        or improvement of a coordinating council.
    ``(b) Definitions.--For the purposes of this section:
            ``(1) the term `eligible State' means--
                    ``(A) the Governor of a State; or
                    ``(B) in the case of a State for which the 
                constitution or laws of the State designate an 
                individual, entity, or agency in the State, other than 
                the Governor, to be responsible for coordination among 
                segments of the State's educational systems, such 
                individual, entity, or agency.
            ``(2) the term `mathematics and science education 
        coordinating council' means an organization that is charged by 
        a State with coordinating mathematics and science education in 
        the State. Such a council shall be composed of education, 
        business, and community leaders working together to increase 
        student participation and academic achievement in mathematics 
        and science.
    ``(c) State Grants.--From amounts made available under section 419D 
for this section, the Secretary is authorized to use not more than 
$5,000,000 to award grants on a competitive basis to eligible States 
for the purpose of carrying out activities described in subsection (d).
    ``(d) Uses of Funds.--An eligible State that receives a grant under 
this section is authorized to use grant funds to carry out one or more 
of the following activities:
            ``(1) In a State in which a mathematics and science 
        education coordinating council does not exist, planning and 
        establishing such a council.
            ``(2) In a State in which such a council exists, reforming 
        or expanding the activities of the council, including 
        implementing State-based reform agendas that support the 
        continuing improvement of mathematics and science education, 
        and support services that lead to better teacher recruitment 
        and training, increased student academic achievement, and 
        increased student enrollment and degree attainment in science, 
        technology, engineering, and mathematics.
            ``(3) Coordinating with activities under part B of title II 
        of the Elementary and Secondary Education Act of 1965 and with 
        title II of this Act, especially as it pertains to the 
        recruitment and preparation of highly qualified mathematics and 
        science teachers.
    ``(e) Application.--To be eligible to receive a grant under this 
section, an eligible State shall submit an application to the Secretary 
that--
            ``(1) describes the activities the State will carry out 
        with the funds;
            ``(2) contains a plan for continuing such activities once 
        Federal funding ceases; and
            ``(3) contains such other information and assurances as the 
        Secretary may require.
    ``(f) Consultation.--The Governor of a State, or the individual, 
entity, or agency in the State described in subsection (b)(1)(B), shall 
consult with the State board of education, State educational agency, 
and the State agency for higher education, as appropriate, with respect 
to the activities assisted under this section. In the case of an 
individual, entity, or agency described in subsection (b)(1)(B), such 
consultation shall also include the Governor.
    ``(g) Construction.--Nothing in this section shall be construed to 
negate or supersede the legal authority under State law of any State 
agency, State entity, or State public official over programs that are 
under the jurisdiction of the agency, entity, or official.
    ``(h) Administrative Provisions.--
            ``(1) In general.--
                    ``(A) Grants awarded under this section shall be 
                awarded for a period not to exceed 5 years.
                    ``(B) A grantee may receive a grant under this part 
                only once.
                    ``(C) Payments of grant funds under this section 
                shall be annual.
            ``(2) Secretarial selections.--The Secretary shall 
        determine which applications receive funds under this section, 
        and the amount of the grant. In determining grant amounts, the 
        Secretary shall take into account the total amount of funds 
        available for all grants under this section and the nature of 
        each grant proposal, including whether funds are being sought 
        to assist in the creation of a new State mathematics and 
        science education coordinating council or to extend the work of 
        an existing council. The Secretary shall also take into account 
        the equitable geographic distribution of grants throughout the 
        United States.
            ``(3) Matching requirement.--Each eligible State receiving 
        a grant under this section shall provide, from non-Federal 
        sources, an amount equal to 50 percent of the amount of the 
        grant (in cash or in kind) to carry out the activities 
        supported by the grant.
    ``(i) Accountability and Evaluation.--
            ``(1) State grant accountability report.--An eligible State 
        that receives a grant under this section shall submit an annual 
        accountability report to the Secretary. Such report shall 
        include a description of the degree to which the eligible 
        State, in using grant funds, has made substantial progress in 
        meeting its objectives.
            ``(2) Evaluation and dissemination.--The Secretary shall 
        evaluate the activities funded under this section and report 
        the Secretary's findings regarding such activities to the 
        authorizing committees. The Secretary shall broadly disseminate 
        successful practices developed by eligible States under this 
        section, and shall broadly disseminate information regarding 
        such practices that were found to be ineffective.
            ``(3) Revocation.--If the Secretary determines that an 
        eligible State is not making substantial progress in meeting 
        the purposes, objectives, and measures, as appropriate, 
        required under this section by the end of the second year of a 
        grant, then the grant payment shall not be made for the third 
        year and subsequent years of the grant.

``SEC. 419D. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $41,000,000 for fiscal 
year 2006 and such sums as may be necessary for each of the 5 
succeeding fiscal years to carry out this subpart.''.

            TITLE III--PROMOTION OF RESEARCH AND DEVELOPMENT

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Investment in America Act of 
2006''.

SEC. 302. FINDINGS.

    The Congress finds as follows:
            (1) Research and development performed in the United States 
        results in quality jobs, better and safer products, increased 
        ownership of technology-based intellectual property, and higher 
        productivity in the United States.
            (2) The extent to which companies perform and increase 
        research and development activities in the United States is in 
        part dependent on Federal tax policy.
            (3) The Congress should make permanent a research and 
        development credit that provides a meaningful incentive to all 
        types of taxpayers.

SEC. 303. PERMANENT EXTENSION OF RESEARCH CREDIT.

    (a) In General.--Section 41 of the Internal Revenue Code of 1986 
(relating to credit for increasing research activities) is amended by 
striking subsection (h).
    (b) Conforming Amendment.--Paragraph (1) of section 45C(b) of such 
Code is amended by striking subparagraph (D).
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.

SEC. 304. INCREASE IN RATES OF ALTERNATIVE INCREMENTAL CREDIT.

    (a) In General.--Subparagraph (A) of section 41(c)(4) of the 
Internal Revenue Code of 1986 (relating to election of alternative 
incremental credit) is amended--
            (1) by striking ``2.65 percent'' and inserting ``3 
        percent'',
            (2) by striking ``3.2 percent'' and inserting ``4 
        percent'', and
            (3) by striking ``3.75 percent'' and inserting ``5 
        percent''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after the date of the enactment of this Act.

SEC. 305. ALTERNATIVE SIMPLIFIED CREDIT FOR QUALIFIED RESEARCH 
              EXPENSES.

    (a) In General.--Subsection (c) of section 41 of the Internal 
Revenue Code of 1986 (relating to base amount) is amended by 
redesignating paragraphs (5) and (6) as paragraphs (6) and (7), 
respectively, and by inserting after paragraph (4) the following new 
paragraph:
            ``(5) Election of alternative simplified credit.--
                    ``(A) In general.--At the election of the taxpayer, 
                the credit determined under subsection (a)(1) shall be 
                equal to 12 percent of so much of the qualified 
                research expenses for the taxable year as exceeds 50 
                percent of the average qualified research expenses for 
                the 3 taxable years preceding the taxable year for 
                which the credit is being determined.
                    ``(B) Special rule in case of no qualified research 
                expenses in any of 3 preceding taxable years.--
                            ``(i) Taxpayers to which subparagraph 
                        applies.--The credit under this paragraph shall 
                        be determined under this subparagraph if the 
                        taxpayer has no qualified research expenses in 
                        any one of the 3 taxable years preceding the 
                        taxable year for which the credit is being 
                        determined.
                            ``(ii) Credit rate.--The credit determined 
                        under this subparagraph shall be equal to 6 
                        percent of the qualified research expenses for 
                        the taxable year.
                    ``(C) Election.--An election under this paragraph 
                shall apply to the taxable year for which made and all 
                succeeding taxable years unless revoked with the 
                consent of the Secretary. An election under this 
                paragraph may not be made for any taxable year to which 
                an election under paragraph (4) applies.''.
    (b) Coordination With Election of Alternative Incremental Credit.--
            (1) In general.--Section 41(c)(4)(B) of such Code (relating 
        to election) is amended by adding at the end the following: 
        ``An election under this paragraph may not be made for any 
        taxable year to which an election under paragraph (5) 
        applies.''.
            (2) Transition rule.--In the case of an election under 
        section 41(c)(4) of the Internal Revenue Code of 1986 which 
        applies to the taxable year which includes the date of the 
        enactment of this Act, such election shall be treated as 
        revoked with the consent of the Secretary of the Treasury if 
        the taxpayer makes an election under section 41(c)(5) of such 
        Code (as added by subsection (a)) for such year.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

       TITLE IV--INCREASE ACCESS TO AND EFFICIENCY OF HEALTH CARE

                     Subtitle A--Health Care Choice

SEC. 401. SHORT TITLE OF SUBTITLE.

    This subtitle may be cited as ``Health Care Choice Act of 2006''.

SEC. 402. SPECIFICATION OF CONSTITUTIONAL AUTHORITY FOR ENACTMENT OF 
              LAW.

    This subtitle is enacted pursuant to the power granted Congress 
under article I, section 8, clause 3, of the United States 
Constitution.

SEC. 403. FINDINGS.

    Congress finds the following:
            (1) The application of numerous and significant variations 
        in State law impacts the ability of insurers to offer, and 
        individuals to obtain, affordable individual health insurance 
        coverage, thereby impeding commerce in individual health 
        insurance coverage.
            (2) Individual health insurance coverage is increasingly 
        offered through the Internet, other electronic means, and by 
        mail, all of which are inherently part of interstate commerce.
            (3) In response to these issues, it is appropriate to 
        encourage increased efficiency in the offering of individual 
        health insurance coverage through a collaborative approach by 
        the States in regulating this coverage.
            (4) The establishment of risk-retention groups has provided 
        a successful model for the sale of insurance across State 
        lines, as the acts establishing those groups allow insurance to 
        be sold in multiple States but regulated by a single State.

SEC. 404. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE 
              COVERAGE.

    (a) In General.--Title XXVII of the Public Health Service Act (42 
U.S.C. 300gg et seq.) is amended by adding at the end the following new 
part:

``Part D--Cooperative Governing of Individual Health Insurance Coverage

                             ``definitions

    ``Sec. 2795. In this part:
            ``(1) Primary state.--The term `primary State' means, with 
        respect to individual health insurance coverage offered by a 
        health insurance issuer, the State designated by the issuer as 
        the State whose covered laws shall govern the health insurance 
        issuer in the sale of such coverage under this part. An issuer, 
        with respect to a particular policy, may only designate one 
        such State as its primary State with respect to all such 
        coverage it offers. Such an issuer may not change the 
        designated primary State with respect to individual health 
        insurance coverage once the policy is issued, except that such 
        a change may be made upon renewal of the policy. With respect 
        to such designated State, the issuer is deemed to be doing 
        business in that State.
            ``(2) Secondary state.--The term `secondary State' means, 
        with respect to individual health insurance coverage offered by 
        a health insurance issuer, any State that is not the primary 
        State. In the case of a health insurance issuer that is selling 
        a policy in, or to a resident of, a secondary State, the issuer 
        is deemed to be doing business in that secondary State.
            ``(3) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 2791(b)(2), 
        except that such an issuer must be licensed in the primary 
        State and be qualified to sell individual health insurance 
        coverage in that State.
            ``(4) Individual health insurance coverage.--The term 
        `individual health insurance coverage' means health insurance 
        coverage offered in the individual market, as defined in 
        section 2791(e)(1).
            ``(5) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of this title for the State with respect to the 
        issuer.
            ``(6) Hazardous financial condition.--The term `hazardous 
        financial condition' means that, based on its present or 
        reasonably anticipated financial condition, a health insurance 
        issuer is unlikely to be able--
                    ``(A) to meet obligations to policyholders with 
                respect to known claims and reasonably anticipated 
                claims; or
                    ``(B) to pay other obligations in the normal course 
                of business.
            ``(7) Covered laws.--The term `covered laws' means the 
        laws, rules, regulations, agreements, and orders governing the 
        insurance business pertaining to--
                    ``(A) individual health insurance coverage issued 
                by a health insurance issuer;
                    ``(B) the offer, sale, and issuance of individual 
                health insurance coverage to an individual; and
                    ``(C) the provision to an individual in relation to 
                individual health insurance coverage of--
                            ``(i) health care and insurance related 
                        services;
                            ``(ii) management, operations, and 
                        investment activities of a health insurance 
                        issuer; and
                            ``(iii) loss control and claims 
                        administration for a health insurance issuer 
                        with respect to liability for which the issuer 
                        provides insurance.
            ``(8) State.--The term `State' means only the 50 States and 
        the District of Columbia.
            ``(9) Unfair claims settlement practices.--The term `unfair 
        claims settlement practices' means only the following 
        practices:
                    ``(A) Knowingly misrepresenting to claimants and 
                insured individuals relevant facts or policy provisions 
                relating to coverage at issue.
                    ``(B) Failing to acknowledge with reasonable 
                promptness pertinent communications with respect to 
                claims arising under policies.
                    ``(C) Failing to adopt and implement reasonable 
                standards for the prompt investigation and settlement 
                of claims arising under policies.
                    ``(D) Failing to effectuate prompt, fair, and 
                equitable settlement of claims submitted in which 
                liability has become reasonably clear.
                    ``(E) Refusing to pay claims without conducting a 
                reasonable investigation.
                    ``(F) Failing to affirm or deny coverage of claims 
                within a reasonable period of time after having 
                completed an investigation related to those claims.
            ``(10) Fraud and abuse.--The term `fraud and abuse' means 
        an act or omission committed by a person who, knowingly and 
        with intent to defraud, commits, or conceals any material 
        information concerning, one or more of the following:
                    ``(A) Presenting, causing to be presented or 
                preparing with knowledge or belief that it will be 
                presented to or by an insurer, a reinsurer, broker or 
                its agent, false information as part of, in support of 
                or concerning a fact material to one or more of the 
                following:
                            ``(i) An application for the issuance or 
                        renewal of an insurance policy or reinsurance 
                        contract.
                            ``(ii) The rating of an insurance policy or 
                        reinsurance contract.
                            ``(iii) A claim for payment or benefit 
                        pursuant to an insurance policy or reinsurance 
                        contract.
                            ``(iv) Premiums paid on an insurance policy 
                        or reinsurance contract.
                            ``(v) Payments made in accordance with the 
                        terms of an insurance policy or reinsurance 
                        contract.
                            ``(vi) A document filed with the 
                        commissioner or the chief insurance regulatory 
                        official of another jurisdiction.
                            ``(vii) The financial condition of an 
                        insurer or reinsurer.
                            ``(viii) The formation, acquisition, 
                        merger, reconsolidation, dissolution or 
                        withdrawal from one or more lines of insurance 
                        or reinsurance in all or part of a State by an 
                        insurer or reinsurer.
                            ``(ix) The issuance of written evidence of 
                        insurance.
                            ``(x) The reinstatement of an insurance 
                        policy.
                    ``(B) Solicitation or acceptance of new or renewal 
                insurance risks on behalf of an insurer reinsurer or 
                other person engaged in the business of insurance by a 
                person who knows or should know that the insurer or 
                other person responsible for the risk is insolvent at 
                the time of the transaction.
                    ``(C) Transaction of the business of insurance in 
                violation of laws requiring a license, certificate of 
                authority or other legal authority for the transaction 
                of the business of insurance.
                    ``(D) Attempt to commit, aiding or abetting in the 
                commission of, or conspiracy to commit the acts or 
                omissions specified in this paragraph.

                          ``application of law

    ``Sec. 2796. (a) In General.--The covered laws of the primary State 
shall apply to individual health insurance coverage offered by a health 
insurance issuer in the primary State and in any secondary State, but 
only if the coverage and issuer comply with the conditions of this 
section with respect to the offering of coverage in any secondary 
State.
    ``(b) Exemptions From Covered Laws in a Secondary State.--Except as 
provided in this section, a health insurance issuer with respect to its 
offer, sale, renewal, and issuance of individual health insurance 
coverage in any secondary State is exempt from any covered laws of the 
secondary State (and any rules, regulations, agreements, or orders 
sought or issued by such State under or related to such covered laws) 
to the extent that such laws would--
            ``(1) make unlawful, or regulate, directly or indirectly, 
        the operation of the health insurance issuer operating in the 
        secondary State, except that any secondary State may require 
        such an issuer--
                    ``(A) to pay, on a nondiscriminatory basis, 
                applicable premium and other taxes (including high risk 
                pool assessments) which are levied on insurers and 
                surplus lines insurers, brokers, or policyholders under 
                the laws of the State;
                    ``(B) to register with and designate the State 
                insurance commissioner as its agent solely for the 
                purpose of receiving service of legal documents or 
                process;
                    ``(C) to submit to an examination of its financial 
                condition by the State insurance commissioner in any 
                State in which the issuer is doing business to 
                determine the issuer's financial condition, if--
                            ``(i) the State insurance commissioner of 
                        the primary State has not done an examination 
                        within the period recommended by the National 
                        Association of Insurance Commissioners; and
                            ``(ii) any such examination is conducted in 
                        accordance with the examiners' handbook of the 
                        National Association of Insurance Commissioners 
                        and is coordinated to avoid unjustified 
                        duplication and unjustified repetition;
                    ``(D) to comply with a lawful order issued--
                            ``(i) in a delinquency proceeding commenced 
                        by the State insurance commissioner if there 
                        has been a finding of financial impairment 
                        under subparagraph (C); or
                            ``(ii) in a voluntary dissolution 
                        proceeding;
                    ``(E) to comply with an injunction issued by a 
                court of competent jurisdiction, upon a petition by the 
                State insurance commissioner alleging that the issuer 
                is in hazardous financial condition;
                    ``(F) to participate, on a nondiscriminatory basis, 
                in any insurance insolvency guaranty association or 
                similar association to which a health insurance issuer 
                in the State is required to belong;
                    ``(G) to comply with any State law regarding fraud 
                and abuse (as defined in section 2795(10)), except that 
                if the State seeks an injunction regarding the conduct 
                described in this subparagraph, such injunction must be 
                obtained from a court of competent jurisdiction; or
                    ``(H) to comply with any State law regarding unfair 
                claims settlement practices (as defined in section 
                2795(9));
            ``(2) require any individual health insurance coverage 
        issued by the issuer to be countersigned by an insurance agent 
        or broker residing in that Secondary State; or
            ``(3) otherwise discriminate against the issuer issuing 
        insurance in both the primary State and in any secondary State.
    ``(c) Clear and Conspicuous Disclosure.--A health insurance issuer 
shall provide the following, in 12-point bold type, in any insurance 
coverage offered in a secondary State under this part by such a health 
insurance issuer and at renewal of the policy, with the 5 blank spaces 
therein being appropriately filled with the name of the health 
insurance issuer, the name of primary State, the name of the secondary 
State, the name of the secondary State, and the name of the secondary 
State, respectively, for the coverage concerned:

                                `Notice

    `This policy is issued by _____ and is governed by the laws and 
regulations of the State of _____, and it has met all the laws of that 
State as determined by that State's Department of Insurance. This 
policy may be less expensive than others because it is not subject to 
all of the insurance laws and regulations of the State of _____, 
including coverage of some services or benefits mandated by the law of 
the State of _____. Additionally, this policy is not subject to all of 
the consumer protection laws or restrictions on rate changes of the 
State of _____. As with all insurance products, before purchasing this 
policy, you should carefully review the policy and determine what 
health care services the policy covers and what benefits it provides, 
including any exclusions, limitations, or conditions for such services 
or benefits.'.
    ``(d) Prohibition on Certain Reclassifications and Premium 
Increases.--
            ``(1) In general.--For purposes of this section, a health 
        insurance issuer that provides individual health insurance 
        coverage to an individual under this part in a primary or 
        secondary State may not upon renewal--
                    ``(A) move or reclassify the individual insured 
                under the health insurance coverage from the class such 
                individual is in at the time of issue of the contract 
                based on the health-status related factors of the 
                individual; or
                    ``(B) increase the premiums assessed the individual 
                for such coverage based on a health status-related 
                factor or change of a health status-related factor or 
                the past or prospective claim experience of the insured 
                individual.
            ``(2) Construction.--Nothing in paragraph (1) shall be 
        construed to prohibit a health insurance issuer--
                    ``(A) from terminating or discontinuing coverage or 
                a class of coverage in accordance with subsections (b) 
                and (c) of section 2742;
                    ``(B) from raising premium rates for all policy 
                holders within a class based on claims experience;
                    ``(C) from changing premiums or offering discounted 
                premiums to individuals who engage in wellness 
                activities at intervals prescribed by the issuer, if 
                such premium changes or incentives--
                            ``(i) are disclosed to the consumer in the 
                        insurance contract;
                            ``(ii) are based on specific wellness 
                        activities that are not applicable to all 
                        individuals; and
                            ``(iii) are not obtainable by all 
                        individuals to whom coverage is offered;
                    ``(D) from reinstating lapsed coverage; or
                    ``(E) from retroactively adjusting the rates 
                charged an individual insured individual if the initial 
                rates were set based on material misrepresentation by 
                the individual at the time of issue.
    ``(e) Prior Offering of Policy in Primary State.--A health 
insurance issuer may not offer for sale individual health insurance 
coverage in a secondary State unless that coverage is currently offered 
for sale in the primary State.
    ``(f) Licensing of Agents or Brokers for Health Insurance 
Issuers.--Any State may require that a person acting, or offering to 
act, as an agent or broker for a health insurance issuer with respect 
to the offering of individual health insurance coverage obtain a 
license from that State, except that a State many not impose any 
qualification or requirement which discriminates against a nonresident 
agent or broker.
    ``(g) Documents for Submission to State Insurance Commissioner.--
Each health insurance issuer issuing individual health insurance 
coverage in both primary and secondary States shall submit--
            ``(1) to the insurance commissioner of each State in which 
        it intends to offer such coverage, before it may offer 
        individual health insurance coverage in such State--
                    ``(A) a copy of the plan of operation or 
                feasibility study or any similar statement of the 
                policy being offered and its coverage (which shall 
                include the name of its primary State and its principal 
                place of business);
                    ``(B) written notice of any change in its 
                designation of its primary State; and
                    ``(C) written notice from the issuer of the 
                issuer's compliance with all the laws of the primary 
                State; and
            ``(2) to the insurance commissioner of each secondary State 
        in which it offers individual health insurance coverage, a copy 
        of the issuer's quarterly financial statement submitted to the 
        primary State, which statement shall be certified by an 
        independent public accountant and contain a statement of 
        opinion on loss and loss adjustment expense reserves made by--
                    ``(A) a member of the American Academy of 
                Actuaries; or
                    ``(B) a qualified loss reserve specialist.
    ``(h) Power of Courts To Enjoin Conduct.--Nothing in this section 
shall be construed to affect the authority of any Federal or State 
court to enjoin--
            ``(1) the solicitation or sale of individual health 
        insurance coverage by a health insurance issuer to any person 
        or group who is not eligible for such insurance; or
            ``(2) the solicitation or sale of individual health 
        insurance coverage by, or operation of, a health insurance 
        issuer that is in hazardous financial condition.
    ``(i) State Powers To Enforce State Laws.--
            ``(1) In general.--Subject to the provisions of subsection 
        (b)(1)(G) (relating to injunctions) and paragraph (2), nothing 
        in this section shall be construed to affect the authority of 
        any State to make use of any of its powers to enforce the laws 
        of such State with respect to which a health insurance issuer 
        is not exempt under subsection (b).
            ``(2) Courts of competent jurisdiction.--If a State seeks 
        an injunction regarding the conduct described in paragraphs (1) 
        and (2) of subsection (h), such injunction must be obtained 
        from a Federal or State court of competent jurisdiction.
    ``(j) States' Authority To Sue.--Nothing in this section shall 
affect the authority of any State to bring action in any Federal or 
State court.
    ``(k) Generally Applicable Laws.--Nothing in this section shall be 
construed to affect the applicability of State laws generally 
applicable to persons or corporations.

  ``primary state must meet federal floor before issuer may sell into 
                            secondary states

    ``Sec. 2797. A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary State if the 
primary State does not meet the following requirements:
            ``(1) The State insurance commissioner must use a risk-
        based capital formula for the determination of capital and 
        surplus requirements for all health insurance issuers.
            ``(2) The State must have legislation or regulations in 
        place establishing an independent review process for 
        individuals who are covered by individual health insurance 
        coverage unless the issuer provides an independent review 
        mechanism functionally equivalent (as determined by the primary 
        State insurance commissioner or official) to that prescribed in 
        the `Health Carrier External Review Model Act' of the National 
        Association of Insurance Commissioners for all individuals who 
        purchase insurance coverage under the terms of this part.

                             ``enforcement

    ``Sec. 2798. (a) In General.--Subject to subsection (b), with 
respect to specific individual health insurance coverage the primary 
State for such coverage has sole jurisdiction to enforce the primary 
State's covered laws in the primary State and any secondary State.
    ``(b) Secondary State's Authority.--Nothing in subsection (a) shall 
be construed to affect the authority of a secondary State to enforce 
its laws as set forth in the exception specified in section 2796(b)(1).
    ``(c) Court Interpretation.--In reviewing action initiated by the 
applicable secondary State authority, the court of competent 
jurisdiction shall apply the covered laws of the primary State.
    ``(d) Notice of Compliance Failure.--In the case of individual 
health insurance coverage offered in a secondary State that fails to 
comply with the covered laws of the primary State, the applicable State 
authority of the secondary State may notify the applicable State 
authority of the primary State.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individual health insurance coverage offered, issued, or sold 
after the date of the enactment of this Act.

SEC. 405. SEVERABILITY.

    If any provision of this subtitle or the application of such 
provision to any person or circumstance is held to be unconstitutional, 
the remainder of this subtitle and the application of the provisions of 
such to any other person or circumstance shall not be affected.

          Subtitle B--Health Information Technology Promotion

SEC. 411. SHORT TITLE OF SUBTITLE.

    This subtitle may be cited as the ``Health Information Technology 
Promotion Act of 2006''.

SEC. 412. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION 
              TECHNOLOGY.

    (a) In General.--Title II of the Public Health Service Act is 
amended by adding at the end the following new part:

                ``Part D--Health Information Technology

 ``office of the national coordinator for health information technology

    ``Sec. 271. (a) Establishment.--There is established within the 
Department of Health and Human Services an Office of the National 
Coordinator for Health Information Technology that shall be headed by 
the National Coordinator for Health Information Technology (referred to 
in this section as the `National Coordinator'). The National 
Coordinator shall be appointed by the President and shall report 
directly to the Secretary. The National Coordinator shall be paid at a 
rate equal to the rate of basic pay for level IV of the Executive 
Schedule.
    ``(b) Goals of Nationwide Interoperable Health Information 
Technology Infrastructure.--The National Coordinator shall perform the 
duties under subsection (c) in a manner consistent with the development 
of a nationwide interoperable health information technology 
infrastructure that--
            ``(1) improves health care quality, reduces medical errors, 
        increases the efficiency of care, and advances the delivery of 
        appropriate, evidence-based health care services;
            ``(2) promotes wellness, disease prevention, and management 
        of chronic illnesses by increasing the availability and 
        transparency of information related to the health care needs of 
        an individual for such individual;
            ``(3) ensures that appropriate information necessary to 
        make medical decisions is available in a usable form at the 
        time and in the location that the medical service involved is 
        provided;
            ``(4) produces greater value for health care expenditures 
        by reducing health care costs that result from inefficiency, 
        medical errors, inappropriate care, and incomplete information;
            ``(5) promotes a more effective marketplace, greater 
        competition, greater systems analysis, increased choice, 
        enhanced quality, and improved outcomes in health care 
        services;
            ``(6) improves the coordination of information and the 
        provision of such services through an effective infrastructure 
        for the secure and authorized exchange and use of health care 
        information; and
            ``(7) ensures that the confidentiality of individually 
        identifiable health information of a patient is secure and 
        protected.
    ``(c) Duties of National Coordinator.--
            ``(1) Strategic planner for interoperable health 
        information technology.--The National Coordinator shall 
        maintain, direct, and oversee the continuous improvement of a 
        strategic plan to guide the nationwide implementation of 
        interoperable health information technology in both the public 
        and private health care sectors consistent with subsection (b).
            ``(2) Principal advisor to hhs.--The National Coordinator 
        shall serve as the principal advisor of the Secretary on the 
        development, application, and use of health information 
        technology, and coordinate the health information technology 
        programs of the Department of Health and Human Services.
            ``(3) Coordinator of federal government activities.--
                    ``(A) In general.--The National Coordinator shall 
                serve as the coordinator of Federal Government 
                activities relating to health information technology.
                    ``(B) Specific coordination functions.--In carrying 
                out subparagraph (A), the National Coordinator shall 
                provide for--
                            ``(i) the development and approval of 
                        standards used in the electronic creation, 
                        maintenance, or exchange of health information; 
                        and
                            ``(ii) the certification and inspection of 
                        health information technology products, 
                        exchanges, and architectures to ensure that 
                        such products, exchanges, and architectures 
                        conform to the applicable standards approved 
                        under clause (i).
                    ``(C) Use of private entities.--The National 
                Coordinator shall, to the maximum extent possible, 
                contract with or recognize private entities in carrying 
                out subparagraph (B).
                    ``(D) Uniform application of standards.--A standard 
                approved under subparagraph (B)(i) for use in the 
                electronic creation, maintenance, or exchange of health 
                information shall preempt a standard adopted under 
                State law, regulation, or rule for such a use.
            ``(4) Intragovernmental coordinator.--The National 
        Coordinator shall ensure that health information technology 
        policies and programs of the Department of Health and Human 
        Services are coordinated with those of relevant executive 
        branch agencies and departments with a goal to avoid 
        duplication of effort and to ensure that each agency or 
        department conducts programs within the areas of its greatest 
        expertise and its mission in order to create a national 
        interoperable health information system capable of meeting 
        national public health needs effectively and efficiently.
            ``(5) Advisor to omb.--The National Coordinator shall 
        provide to the Director of the Office of Management and Budget 
        comments and advice with respect to specific Federal health 
        information technology programs.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section 
for each of fiscal years 2007 through 2011.''.
    (b) Treatment of Executive Order 13335.--Executive Order 13335 
shall not have any force or effect after the date of the enactment of 
this Act.
    (c) Transition From ONCHIT Under Executive Order.--
            (1) In general.--All functions, personnel, assets, 
        liabilities, administrative actions, and statutory reporting 
        requirements applicable to the old National Coordinator or the 
        Office of the old National Coordinator on the date before the 
        date of the enactment of this Act shall be transferred, and 
        applied in the same manner and under the same terms and 
        conditions, to the new National Coordinator and the Office of 
        the new National Coordinator as of the date of the enactment of 
        this Act.
            (2) Acting national coordinator.--Before the appointment of 
        the new National Coordinator, the old National Coordinator 
        shall act as the National Coordinator for Health Information 
        Technology until the office is filled as provided in section 
        271(a) of the Public Health Service Act, as added by subsection 
        (a). The President may appoint the old National Coordinator as 
        the new National Coordinator.
            (3) Definitions.--For purposes of this subsection:
                    (A) New national coordinator.--The term ``new 
                National Coordinator'' means the National Coordinator 
                for Health Information Technology appointed under 
                section 271(a) of the Public Health Service Act, as 
                added by subsection (a).
                    (B) Old national coordinator.--The term ``old 
                National Coordinator'' means the National Coordinator 
                for Health Information Technology appointed under 
                Executive Order 13335.

SEC. 413. SAFE HARBORS FOR PROVISION OF HEALTH INFORMATION TECHNOLOGY 
              AND TRAINING SERVICES TO HEALTH CARE PROFESSIONALS.

    (a) For Civil Penalties.--Section 1128A(b) of the Social Security 
Act (42 U.S.C. 1320a-7a(b)) is amended by adding at the end the 
following new paragraph:
    ``(4)(A) For purposes of this subsection, a payment described in 
paragraph (1) does not include any nonmonetary remuneration (in the 
form of health information technology and related training services) 
made by an entity to a physician if--
            ``(i) such remuneration is made without a condition that--
                    ``(I) limits or restricts the use of the health 
                information technology to services provided by the 
                physician to individuals receiving services at the 
                entity;
                    ``(II) limits or restricts the use of the health 
                information technology in conjunction with other health 
                information technology; or
                    ``(III) takes into account the volume or value of 
                referrals (or other business generated) by the 
                physician to the entity;
            ``(ii) in the case of such remuneration made on a date that 
        is on or after the date described in section 413(d)(2) of the 
        Health Information Technology Promotion Act of 2006, to the 
        extent the National Coordinator of Health Information 
        Technology has approved a standard under section 
        271(c)(3)(B)(i) of the Public Health Service Act, the health 
        information technology provided conforms to such standard;
            ``(iii) in the case of such remuneration made on or after 
        the date that is three years after the date described in 
        section 413(d)(2) of the Health Information Technology 
        Promotion Act of 2006, if the Secretary establishes criteria 
        under section 413(e)(3) of such Act, such remuneration is made 
        in accordance with such criteria; and
            ``(iv) such remuneration is arranged for in a written 
        agreement that is signed by a representative of the entity and 
        by the physician and that specifies the remuneration made.
    ``(B) For purposes of subparagraph (A) and sections 1128B(b)(3)(J) 
and 1877(e)(9), the term `health information technology' means 
hardware, software, license, right, intellectual property, equipment, 
or other information technology used primarily for the electronic 
creation, maintenance, and exchange of clinical health information to 
improve health care quality or efficiency.''.
    (b) For Criminal Penalties.--Section 1128B(b)(3) of such Act (42 
U.S.C. 1320a-7b(b)(3)) is amended--
            (1) in subparagraph (G), by striking ``and'' at the end;
            (2) in the subparagraph (H) added by section 237(d) of the 
        Medicare Prescription Drug, Improvement, and Modernization Act 
        of 2003 (Public Law 108-173; 117 Stat. 2213)--
                    (A) by moving such subparagraph 2 ems to the left; 
                and
                    (B) by striking the period at the end and inserting 
                a semicolon;
            (3) in the subparagraph (H) added by section 431(a) of such 
        Act (117 Stat. 2287)--
                    (A) by redesignating such subparagraph as 
                subparagraph (I);
                    (B) by moving such subparagraph 2 ems to the left; 
                and
                    (C) by striking the period at the end and inserting 
                ``; and''; and
            (4) by adding at the end the following new subparagraph:
            ``(J) any nonmonetary remuneration (in the form of health 
        information technology, as defined in section 1128A(b)(4)(B), 
        and related training services) made to a person if--
                    ``(i) such remuneration is solicited or received 
                (or offered or paid) without a condition that--
                            ``(I) limits or restricts the use of the 
                        health information technology to services 
                        provided by the person to individuals receiving 
                        services at the location of the entity 
                        providing such technology;
                            ``(II) limits or restricts the use of the 
                        health information technology in conjunction 
                        with other health information technology; or
                            ``(III) takes into account the volume or 
                        value of referrals (or other business 
                        generated) by the person to the entity 
                        providing such technology;
                    ``(ii) in the case of such remuneration made on a 
                date that is on or after the date described in section 
                413(d)(2) of the Health Information Technology 
                Promotion Act of 2006, to the extent the National 
                Coordinator of Health Information Technology has 
                approved a standard under section 271(c)(3)(B)(i) of 
                the Public Health Service Act, the health information 
                technology provided conforms to such standard;
                    ``(iii) in the case of such remuneration made on or 
                after the date that is three years after the date 
                described in section 413(d)(2) of the Health 
                Information Technology Promotion Act of 2006, if the 
                Secretary establishes criteria under section 413(e)(3) 
                of such Act, such remuneration is made in accordance 
                with such criteria; and
                    ``(iv) such remuneration is arranged for in a 
                written agreement that is signed by the parties 
                involved and that specifies the remuneration solicited 
                or received (or offered or paid).''.
    (c) For Limitation on Certain Physician Referrals.--Section 1877(e) 
of such Act (42 U.S.C. 1395nn(e)) is amended by adding at the end the 
following new paragraph:
            ``(9) Information technology and training services.--Any 
        nonmonetary remuneration (in the form of health information 
        technology, as defined in section 1128A(b)(4)(B), and related 
        training services) made by an entity to a physician if--
                    ``(A) such remuneration is made without a condition 
                that--
                            ``(i) limits or restricts the use of the 
                        health information technology to services 
                        provided by the physician to individuals 
                        receiving services at the location of the 
                        entity providing such technology;
                            ``(ii) limits or restricts the use of the 
                        health information technology in conjunction 
                        with other health information technology; or
                            ``(iii) takes into account the volume or 
                        value of referrals (or other business 
                        generated) by the physician to the entity 
                        providing such technology;
                    ``(B) in the case of such remuneration made on a 
                date that is on or after the date described in section 
                413(d)(2) of the Health Information Technology 
                Promotion Act of 2006, to the extent the National 
                Coordinator of Health Information Technology has 
                approved a standard under section 271(c)(3)(B)(i) of 
                the Public Health Service Act, the health information 
                technology provided conforms to such standard;
                    ``(C) in the case of such remuneration made on or 
                after the date that is three years after the date 
                described in section 413(d)(2) of the Health 
                Information Technology Promotion Act of 2006, if the 
                Secretary establishes criteria under section 413(e)(3) 
                of such Act, such remuneration is made in accordance 
                with such criteria; and
                    ``(D) such remuneration is arranged for in a 
                written agreement that is signed by a representative of 
                the entity and by the physician and that specifies the 
                remuneration made.''.
    (d) Regulation, Effective Date, and Effect on State Laws.--
            (1) Regulations.--Not later than 180 days after the date of 
        the enactment of this Act, the Secretary of Health and Human 
        Services shall promulgate such regulations as may be necessary 
        to carry out the provisions of this section.
            (2) Effective date.--The amendments made by this section 
        shall take effect on the date that is 180 days after the date 
        of the enactment of this Act.
            (3) Preemption of state laws.--No State (as defined in 
        section 414(a)(3)) shall have in effect a State law that 
        imposes a criminal or civil penalty for a transaction described 
        in section 1128A(b)(4); 1128B(b)(3)(J); or 1877(e)(9) of the 
        Social Security Act, as added by this section, if the 
        conditions described in the respective section, with respect to 
        such transaction, are met.
    (e) Study and Report To Assess Effect of Safe Harbors on Health 
System.--
            (1) In general.--The Secretary of Health and Human Services 
        shall conduct a study to determine the impact of each of the 
        safe harbors described in paragraph (4). In particular, the 
        study shall examine the following:
                    (A) The effectiveness of each safe harbor in 
                increasing the adoption of health information 
                technology.
                    (B) The types of health information technology 
                provided under each safe harbor.
                    (C) The extent to which the financial or other 
                business relationships between providers under each 
                safe harbor have changed as a result of the safe harbor 
                in a way that adversely affects the health care system 
                or choices available to consumers.
            (2) Report.--Not later than three years after the effective 
        date described in subsection (d)(2), the Secretary of Health 
        and Human Services shall submit to Congress a report on the 
        study under paragraph (1) and shall include such 
        recommendations for changes in the safe harbors as the 
        Secretary determines may be appropriate.
            (3) Updated criteria for permissible health information 
        technology remuneration under safe harbors.--Not later than 
        three years after the effective date described in subsection 
        (d)(2), the Secretary of Health and Human Services may issue 
        regulations that establish updated criteria for nonmonetary 
        remuneration (in the form of health information technology and 
        related training services) for purposes of the safe harbors 
        described in paragraph (4). Such criteria may be based on the 
        extent to which the health information technology conforms to a 
        standard developed under section 271(c)(3)(B)(i) of the Public 
        Health Service Act, as added by section 412, only to the extent 
        that such standard is recognized by the National Coordinator of 
        Health Information Technology under such section 
        271(c)(3)(B)(i).
            (4) Safe harbors described.--For purposes of paragraphs (1) 
        and (3), the safe harbors described in this paragraph are--
                    (A) the safe harbor under section 1128A(b)(4) of 
                the Social Security Act (42 U.S.C. 1320a-7a(b)(4)), as 
                added by subsection (a);
                    (B) the safe harbor under section 1128B(b)(3)(J) of 
                such Act (42 U.S.C. 1320a-7b(b)(3)(J)), as added by 
                subsection (b); and
                    (C) the safe harbor under section 1877(e)(9) of 
                such Act (42 U.S.C. 1395nn(e)(9)), as added by 
                subsection (c).

SEC. 414. UNIFORM HEALTH INFORMATION LAWS AND REGULATIONS.

    (a) Study to Determine Extent of Variation in State Health 
Information Laws and Regulations.--
            (1) In general.--The Secretary of Health and Human Services 
        shall conduct a study of State security and confidentiality 
        laws and current Federal security and confidentiality standards 
        to determine--
                    (A) the degree to which such State laws vary among 
                States, and between the States and such current Federal 
                standards;
                    (B) how any such variation may adversely impact the 
                security and confidentiality of individually 
                identifiable health information and the electronic 
                exchange of clinical health information among States, 
                the Federal government, and private entities; and
                    (C) the strengths and weaknesses of such State laws 
                and of such current Federal standards for purposes of 
                protecting the security and confidentiality of 
                individually identifiable health information while also 
                taking into account the need for timely and efficient 
                exchanges of health information to improve quality of 
                care and ensure the availability of health information 
                necessary to make medical decisions at the the location 
                in which the medical care involved is provided.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary of Health and Human 
        Services shall submit to Congress a report on the study under 
        paragraph (1) and shall include in such report--
                    (A) a determination by the Secretary whether State 
                security and confidentiality laws and current Federal 
                security and confidentiality standards should be 
                conformed to create a single set of national standards 
                to preserve and protect the security and 
                confidentiality of patient health information in order 
                to improve health care quality and efficiency; and
                    (B) if the Secretary determines such State laws and 
                such current Federal standards should be conformed to 
                create such a single set of national standards, what 
                the single set of standards should be.
            (3) Definitions.--For purposes of this subsection:
                    (A) State security and confidentiality laws.--The 
                term ``State security and confidentiality laws'' means 
                State laws and regulations relating to the privacy and 
                confidentiality of individually identifiable health 
                information or to the security of such information.
                    (B) Current federal security and confidentiality 
                standards.--The term ``current Federal security and 
                confidentiality standards'' means the Federal privacy 
                standards established pursuant to section 264(c) of the 
                Health Insurance Portability and Accountability Act of 
                1996 (42 U.S.C. 1320d-2 note) and security standards 
                established under section 1173(d) of the Social 
                Security Act.
                    (C) State.--The term ``State'' has the meaning 
                given such term when used in title XI of the Social 
                Security Act, as provided under section 1101(a) of such 
                Act (42 U.S.C. 1301(a)).
    (b) Establishment of Uniform Confidentiality and Security 
Standards.--
            (1) In general.--Section 1178(a) of the Social Security Act 
        (42 U.S.C. 1320d-7(a)), is amended--
                    (A) in paragraph (1), by inserting after ``Except 
                as provided in paragraph (2)'' the following: ``and 
                subject to paragraph (3)'';
                    (B) in paragraph (2), by striking ``A provision'' 
                and inserting ``Subject to paragraph (3)(B), a 
                provision''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(3) Uniform national standards.--
                    ``(A) In general.--
                            ``(i) Creating uniform national 
                        standards.--If the conditions under clause (ii) 
                        are met, then the regulation and standards 
                        described in subparagraph (C) shall become the 
                        single set of national standards to preserve 
                        and protect the security and confidentiality of 
                        individually identifiable patient health 
                        information in order to improve health care 
                        quality and efficiency and supersede the 
                        current Federal security and confidentiality 
                        standards and State security and 
                        confidentiality laws, as defined in section 
                        414(a)(3) of the Health Information Technology 
                        Promotion Act of 2006.
                            ``(ii) Conditions.--For purposes of clause 
                        (i), the conditions under this clause are the 
                        following:
                                    ``(I) Determination of need for 
                                single set of standards.--The Secretary 
                                determines under section 414(a)(2)(A) 
                                of the Health Information Technology 
                                Promotion Act of 2006 that State 
                                security and confidentiality laws and 
                                current Federal security and 
                                confidentiality standards should be 
                                conformed to create a single set of 
                                national standards to preserve and 
                                protect the security and 
                                confidentiality of individually 
                                identifiable patient health information 
                                in order to improve health care quality 
                                and efficiency.
                                    ``(II) Secretary specifies 
                                standards.--The Secretary specifies 
                                that the regulation and standards 
                                described in subparagraph (C) should be 
                                the single set of national standards.
                                    ``(III) No legislation establishing 
                                standards.--Legislation creating a 
                                single set of national standards and 
                                preempting State security and 
                                confidentiality laws is not enacted by 
                                the date that is 36 months after the 
                                date of the enactment of the Health 
                                Information Technology Promotion Act of 
                                2006.
                    ``(B) Narrowing of preemption exceptions.--
                            ``(i) Subsequent legislation.--If 
                        legislation described in subparagraph (A) is 
                        enacted by the date described in such 
                        subparagraph, as of the date of enactment of 
                        such legislation paragraph (2) shall be 
                        superseded by such exceptions as may be 
                        provided for in such legislation. It is the 
                        intent of Congress that such exceptions be as 
                        narrow as possible to maximize the uniform 
                        application of the regulation and standards 
                        described in subparagraph (C).
                            ``(ii) No legislation.--If legislation 
                        described in subparagraph (A) is not enacted by 
                        the date described in such subparagraph, 
                        paragraph (2) shall be superseded by such 
                        exceptions as may be provided for by the 
                        Secretary by regulation issued in connection 
                        with the regulation and standards described in 
                        subparagraph (C). It is the intent of Congress 
                        that such exceptions be as narrow as possible 
                        to maximize the uniform application of the 
                        regulation and standards described in 
                        subparagraph (C).
                    ``(C) Application of uniform standards.--The 
                regulation and standards described in this subparagraph 
                are the regulation promulgated under section 264(c)(1) 
                of the Health Insurance Portability and Accountability 
                Act of 1996 (42 U.S.C. 1320d-2 note) and standards 
                under section 1173(d), as modified by the Secretary to 
                the extent the Secretary determines, after 
                consideration of the results of the study conducted 
                under section 414(a) of the Health Information 
                Technology Promotion Act of 2006, necessary to promote 
                uniformity and efficiency in the application of 
                confidentiality and security standards with respect to 
                individually identifiable health information.''.
            (2) HIPAA conforming amendment.--Section 264(c)(2) of the 
        Health Insurance Portability and Accountability Act of 1996 (42 
        U.S.C. 1320d-2 note) is amended by striking ``A regulation'' 
        and inserting ``(A) Subject to section 1178(a)(3) of the Social 
        Security Act, a regulation''.

SEC. 415. RULEMAKING TO UPGRADE ASC X12 AND NCPDP STANDARDS AND ICD 
              CODES.

    (a) In General.--Not later than April 1, 2007, the Secretary of 
Health and Human Services shall promulgate a final rule under section 
1174(b) of the Social Security Act (42 U.S.C. 1320d-3(b)) to provide 
for the following modification of standards:
            (1) Accredited standards committee x12 (asc x12) 
        standard.--The replacement of the Accredited Standards 
        Committee X12 (ASC X12) version 4010 adopted under section 
        1173(a) of such Act (42 U.S.C. 1320d-2(a)), including for 
        purposes of part A of title XVIII of such Act, with the ASC X12 
        version 5010, as reviewed by the National Committee on Vital 
        Health Statistics.
            (2) National council for prescription drug programs (ncpdp) 
        telecommunications standards.--The replacement of the National 
        Council for Prescription Drug Programs (NCPDP) 
        Telecommunications Standards version 5.1 adopted under section 
        1173(a) of such Act (42 U.S.C. 1320d-2(a)), including for 
        purposes of part A of title XVIII of such Act, with NCPDP 
        Telecommunications Standards version C.3, as approved by such 
        Council and reviewed by the National Committee on Vital Health 
        Statistics.
            (3) ICD codes.--The replacement of the International 
        Statistical Classification of Diseases and Related Health 
        Problems, 9th revision, Clinical Modification (ICD-9-CM) under 
        the regulation promulgated under section 1173(c) of such Act 
        (42 U.S.C. 1320d-2(c)), including for purposes of part A of 
        title XVIII of such Act, with both of the following:
                    (A) The International Statistical Classification of 
                Diseases and Related Health Problems, 10th revision, 
                Clinical Modification (ICD-10-CM).
                    (B) The International Statistical Classification of 
                Diseases and Related Health Problems, 10th revision, 
                Procedure Coding System (ICD-10-PCS).
    (b) Rule of Construction.--Nothing in subsection (a)(3) shall be 
construed as affecting the application of classification methodologies 
or codes, such as CPT or HCPCS codes, other than under the 
International Statistical Classification of Diseases and Related Health 
Problems (ICD).
    (c) Notice.--Not later than 30 days after the date of the enactment 
of this Act, the Secretary of Health and Human Services shall publish 
in the Federal Register a notice of the requirements to promulgate 
final rules under subsection (a). Such notice shall include--
            (1) the respective date by which each such rule must be 
        promulgated under such subsection;
            (2) the respective compliance date described in subsection 
        (e) for each such rule; and
            (3) a statement that entities covered under the Health 
        Insurance Portability and Accountability Act of 1996 and health 
        information technology vendors should plan for the 
        implementation of upgraded ASC X12, NCPDP, and ICD codes under 
        such subsection.
    (d) No Judicial Review.--The final rules promulgated under 
subsections (a) shall not be subject to judicial review.
    (e) Compliance With Upgraded Standards.--For purposes of section 
1175(b)(2) of the Social Security Act (42 U.S.C. 1320d-4(b)(2))--
            (1) ASC x12 and ncpdp standards.--The final rules 
        promulgated under paragraphs (1) and (2) of subsection (a) 
        shall apply to transactions occurring on or after April 1, 
        2009.
            (2) ICD codes.--The final rule promulgated under paragraph 
        (3) of subsection (a) shall apply to transactions occurring on 
        or after October 1, 2009.

SEC. 416. REPORT ON THE AMERICAN HEALTH INFORMATION COMMUNITY.

    Not later than two years after the date of the enactment of this 
Act, the Secretary of Health and Human Services shall submit to 
Congress a report on the work conducted by the American Health 
Information Community (in this section referred to as ``AHIC''), as 
established by the Secretary. Such report shall include the following:
            (1) A description of the accomplishments of AHIC, with 
        respect to the promotion of the development of a nationwide 
        health information network and the increased adoption of health 
        information technology.
            (2) Information identifying the practices that are used to 
        protect health information and to guarantee confidentiality and 
        security of such information.
            (3) Information on the progress in--
                    (A) establishing uniform industry-wide health 
                information technology standards;
                    (B) achieving an internet-based nationwide health 
                information network; and
                    (C) achieving interoperable electronic health 
                record adoption across health care providers.
            (4) Recommendations for the transition of the AHIC to a 
        permanent advisory entity, including--
                    (A) a schedule for such transition;
                    (B) options for structuring the entity as either a 
                public-private or private sector entity;
                    (C) the role of the Federal Government in the 
                entity; and
                    (D) the ongoing responsibilities of the entity, 
                such as in establishing standards, certifying health 
                information technology, and providing long-term 
                governance for health care transformation.

SEC. 417. STRATEGIC PLAN FOR COORDINATING IMPLEMENTATION OF HEALTH 
              INFORMATION TECHNOLOGY.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Health and Human Services, in 
consultation with entities involved in the area of health information 
technology, shall develop a strategic plan related to the need for 
coordination in such area.
    (b) Coordination of Specific Implementation Processes.--The 
strategic plan under subsection (a) shall address the need for 
coordination in the implementation of the following:
            (1) Health information technology standards.--Health 
        information technology standards approved under section 
        271(c)(3)(B)(i) of the Public Health Service Act, as added by 
        section 412.
            (2) HIPAA transaction standards.--Transaction standards 
        under section 1173(a) of the Social Security Act (42 U.S.C. 
        1320d-2(d)).
            (3) Updated icd codes.--The International Statistical 
        Classification of Diseases and Related Health Problems, 10th 
        revision, Clinical Modification (ICD-10-CM) and the 
        International Statistical Classification of Diseases and 
        Related Health Problems, 10th revision, Procedure Coding System 
        (ICD-10-PCS) described in section 415.
    (c) Coordination Among Specific Federal Entities.--The strategic 
plan under subsection (a) shall address any methods to coordinate, with 
respect to the electronic exchange of health information, actions taken 
by the following entities:
            (1) The Office of the National Coordinator for Health 
        Information Technology.
            (2) The American Health Information Community.
            (3) The Office of Electronic Standards and Security of the 
        Centers for Medicare and Medicaid Services.
            (4) The National Committee on Vital Health Statistics.
            (5) Any other entity involved in the electronic exchange of 
        health information that the Secretary determines appropriate.

                       TITLE V--SEAMLESS MOBILITY

SEC. 501. PROHIBITION ON IMPEDING.

    (a) Prohibition.--The Federal Communications Commission shall not, 
in this or any other proceeding, take any action to impede the 
development of seamless mobility.
    (b) Definition.--For purposes of this section, the term ``seamless 
mobility'' means the ability of a user and a user's connecting devices 
to move easily and smoothly between and among Internet-protocol enabled 
technology platforms, facilities, and networks.
                                 <all>