[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1262 Introduced in Senate (IS)]






109th CONGRESS
  1st Session
                                S. 1262

To reduce healthcare costs, improve efficiency, and improve healthcare 
 quality through the development of a nationwide interoperable health 
         information technology system, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 16, 2005

Mr. Frist (for himself, Mrs. Clinton, Mr. Martinez, Mr. Bingaman, Mr. 
        Talent, Ms. Mikulski, Mr. Thune, and Mr. Obama) introduced the 
        following bill; which was read twice and referred to the 
        Committee on Health, Education, Labor, and PensionsYYYYYYYYYYYY

_______________________________________________________________________

                                 A BILL


 
To reduce healthcare costs, improve efficiency, and improve healthcare 
 quality through the development of a nationwide interoperable health 
         information technology system, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Technology to Enhance Quality 
Act of 2005'' or the ``Health TEQ Act of 2005''.

     TITLE I--HEALTH INFORMATION TECHNOLOGY STANDARDS ADOPTION AND 
                       INFRASTRUCTURE DEVELOPMENT

SEC. 101. ESTABLISHMENT OF NATIONAL COORDINATOR; RECOMMENDATION, 
              ADOPTION, AND IMPLEMENTATION OF HEALTH INFORMATION 
              ELECTRONIC EXCHANGE STANDARDS.

    The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by 
adding at the end the following:

              ``TITLE XXIX--HEALTH INFORMATION TECHNOLOGY

``SEC. 2901. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning giving that term in section 2791.
            ``(2) Healthcare provider.--The term `healthcare provider' 
        means a hospital, skilled nursing facility, home health entity, 
        healthcare clinic, community health center, group practice (as 
        defined in section 1877(h)(4) of the Social Security Act), a 
        physician (as defined in section 1861(r)(1) of the Social 
        Security Act), a pharmacist, a pharmacy, a laboratory, and any 
        other category of facility or clinician determined appropriate 
        by the Secretary.
            ``(3) Health information.--The term `health information' 
        means any information, recorded in any form or medium, that 
        relates to the past, present, or future physical or mental 
        health or condition of an individual, the provision of 
        healthcare to an individual, or the past, present, or future 
        payment for the provision of healthcare to an individual.
            ``(4) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given that term in section 2791.
            ``(5) Laboratory.--The term `laboratory' has the meaning 
        given that term in section 353.
            ``(6) Pharmacist.--The term `pharmacist' has the meaning 
        given that term in section 804 of the Federal Food, Drug, and 
        Cosmetic Act.

``SEC. 2902. OFFICE OF THE NATIONAL COORDINATOR OF HEALTH INFORMATION 
              TECHNOLOGY.

    ``(a) Office of National Health Information Technology.--There is 
established within the Office of the Secretary an Office of the 
National Coordinator of Health Information Technology (referred to in 
this section as the `Office'). The Office shall be headed by a National 
Coordinator who shall be appointed by the President in consultation 
with the Secretary and shall report directly to the Secretary.
    ``(b) Purpose.--It shall be the purpose of the Office to carry out 
programs and activities to develop a nationwide interoperable health 
information technology infrastructure that--
            ``(1) improves healthcare quality, reduces medical errors, 
        and advances the delivery of patient-centered medical care;
            ``(2) reduces healthcare costs resulting from inefficiency, 
        medical errors, inappropriate care, and incomplete information;
            ``(3) ensures that appropriate information to help guide 
        medical decisions is available at the time and place of care;
            ``(4) promotes a more effective marketplace, greater 
        competition, and increased choice through the wider 
        availability of accurate information on healthcare costs, 
        quality, and outcomes;
            ``(5) improves the coordination of care and information 
        among hospitals, laboratories, physician offices, and other 
        entities through an effective infrastructure for the secure and 
        authorized exchange of healthcare information;
            ``(6) improves public health reporting and facilitates the 
        early identification and rapid response to public health 
        threats and emergencies, including bioterror events and 
        infectious disease outbreaks;
            ``(7) facilitates health research; and
            ``(8) ensures that patients' health information is secure 
        and protected.
    ``(c) Duties of National Coordinator.--
            ``(1) In general.--The National Coordinator shall--
                    ``(A) facilitate the adoption of a national system 
                for the electronic exchange of health information;
                    ``(B) serve as the principal advisor to the 
                Secretary on the development, application, and use of 
                health information technology, and coordinate and 
                oversee the health information technology programs of 
                the Department;
                    ``(C) ensure the adoption and implementation of 
                standards for the electronic exchange of health 
                information, including coordinating the activities of 
                the Standards Working Group under section 2903;
                    ``(D) carry out activities related to the 
                electronic exchange of health information that reduce 
                cost and improve healthcare quality;
                    ``(E) ensure that health information technology 
                policy and programs of the Department are coordinated 
                with those of relevant executive branch agencies 
                (including Federal commissions) with a goal of avoiding 
                duplication of efforts and of helping to ensure that 
                each agency undertakes health information technology 
                activities primarily within the areas of its greatest 
                expertise and technical capability;
                    ``(F) to the extent permitted by law, coordinate 
                outreach and consultation by the relevant executive 
                branch agencies (including Federal commissions) with 
                public and private parties of interest, including 
                consumers, payers, employers, hospitals and other 
                healthcare providers, physicians, community health 
                centers, laboratories, vendors and other stakeholders;
                    ``(G) advise the President regarding specific 
                Federal health information technology programs; and
                    ``(H) submit the reports described under paragraph 
                (2).
            ``(2) Reports to congress.--The National Coordinator shall 
        submit to Congress, on an annual basis, a report that 
        describes--
                    ``(A) specific steps that have been taken to 
                facilitate the adoption of a nationwide system for the 
                electronic exchange of health information;
                    ``(B) barriers to the adoption of such a nationwide 
                system; and
                    ``(C) recommendations to achieve full 
                implementation of such a nationwide system.
    ``(d) Detail of Federal Employees.--
            ``(1) In general.--Upon the request of the National 
        Coordinator, the head of any Federal agency is authorized to 
        detail, with or without reimbursement from the Office, any of 
        the personnel of such agency to the Office to assist it in 
        carrying out its duties under this section.
            ``(2) Effect of detail.--Any such detail shall--
                    ``(A) not interrupt or otherwise affect the civil 
                service status or privileges of the Federal employee; 
                and
                    ``(B) be in addition to any other staff of the 
                Department employed by the National Coordinator.
            ``(3) Acceptance of Detailees.--Notwithstanding any other 
        provision of law, the Office may accept detailed personnel from 
        other Federal agencies without regard to whether the agency 
        described under paragraph (1) is reimbursed.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out the activities 
of the Office under this section for each of fiscal years 2006 through 
2010.

``SEC. 2903. COLLABORATIVE PROCESS FOR THE RECOMMENDATION, ADOPTION, 
              AND IMPLEMENTATION OF HEALTH INFORMATION STANDARDS.

    ``(a) Establishment of Working Group.--Not later than 60 days after 
the date of enactment of this title, the National Coordinator, in 
consultation with the Director of the National Institute of Standards 
and Technology (referred to in this section as the `Director'), shall 
establish a permanent Electronic Health Information Standards 
Development Working Group (referred to in this title as the `Standards 
Working Group').
    ``(b) Composition.--The Standards Working Group shall be composed 
of--
            ``(1) the National Coordinator, who shall serve as the 
        chairperson of the Standards Working Group;
            ``(2) the Director;
            ``(3) representatives of the relevant Federal agencies and 
        departments, as selected by the Secretary in consultation with 
        the National Coordinator, including representatives of the 
        Department of Veterans Affairs, the Department of Defense, the 
        Office of Management and Budget, the Department of Homeland 
        Security, and the Environmental Protection Agency;
            ``(4) private entities accredited by the American National 
        Standards Institute, as selected by the National Coordinator;
            ``(5) representatives, as selected by the National 
        Coordinator--
                    ``(A) of group health plans or other health 
                insurance issuers;
                    ``(B) of healthcare provider organizations;
                    ``(C) with expertise in health information 
                security;
                    ``(D) with expertise in health information privacy;
                    ``(E) with experience in healthcare quality and 
                patient safety, including those with experience in 
                utilizing health information technology to improve 
                healthcare quality and patient safety;
                    ``(F) of consumer and patient organizations;
                    ``(G) of employers;
                    ``(H) with experience in data exchange; and
                    ``(I) with experience in developing health 
                information technology standards and new health 
                information technology; and
            ``(6) other representatives as determined appropriate by 
        the National Coordinator in consultation with the Secretary.
    ``(c) Standards Deemed Adopted.--On the date of enactment of this 
title, the Secretary and the Standards Working Group shall deem as 
adopted, for use by the Secretary and private entities, the standards 
adopted by the Consolidated Health Informatics Initiative prior to such 
date of enactment.
    ``(d) Duties.--
            ``(1) First year review.--Not later than 1 year after the 
        date of enactment of this title, the Standards Working Group 
        shall--
                    ``(A) review existing standards (including content, 
                communication, and security standards) for the 
                electronic exchange of health information, including 
                such standards deemed adopted under subsection (c);
                    ``(B) identify deficiencies and omissions in such 
                existing standards;
                    ``(C) identity duplications and omissions in 
                existing standards, and recommend modifications to such 
                standards as necessary; and
                    ``(D) submit a report to the Secretary recommending 
                for adoption by such Secretary and private entities--
                            ``(i) modifications to the standards deemed 
                        adopted under subsection (c); and
                            ``(ii) any additional standards reviewed 
                        pursuant to this paragraph.
            ``(2) Ongoing review.--Beginning 1 year after the date of 
        enactment of this title, and on an ongoing basis thereafter, 
        the Standards Working Group shall--
                    ``(A) review existing standards (including content, 
                communication, and security standards) for the 
                electronic exchange of health information, including 
                such standards adopted by the Secretary under 
                subsections (c) and (e);
                    ``(B) identify deficiencies and omissions in such 
                existing standards;
                    ``(C) identity duplications and omissions in 
                existing standards, and recommend modifications to such 
                standards as necessary; and
                    ``(D) submit reports to the Secretary recommending 
                for adoption by such Secretary and private entities--
                            ``(i) modifications to any existing 
                        standards; and
                            ``(ii) any additional standards reviewed 
                        pursuant to this paragraph.
            ``(3) Limitation.--The standards described under this 
        subsection shall not include any standards developed pursuant 
        the Health Insurance Portability and Accountability Act of 
        1996.
    ``(e) Adoption by Secretary.--Not later than 1 year after the 
receipt of a report from the Standards Working Group under paragraph 
(1)(D) or (2)(D) of subsection (d), the Secretary shall review and 
provide for the adoption by the Federal Government of any modification 
or standard recommended in such report.
    ``(f) Voluntary Adoption.--Any standards adopted by the Secretary 
under this section shall be voluntary for private entities.
    ``(g) Application of FACA.--
            ``(1) In general.--The Federal Advisory Committee Act (5 
        U.S.C. App.) shall apply to the Standards Working Group 
        established under this section.
            ``(2) Limitation.--Notwithstanding paragraph (1), the 2-
        year termination date under section 14 of the Federal Advisory 
        Committee Act shall not apply to the Standards Working Group.

``SEC. 2904. IMPLEMENTATION AND CERTIFICATION OF HEALTH INFORMATION 
              STANDARDS.

    ``(a) Implementation.--
            ``(1) In general.--The Secretary, in consultation with the 
        National Coordinator and the Director of the National Institute 
        of Standards and Technology, shall develop criteria to ensure 
        uniform and consistent implementation of any standards for the 
        electronic exchange of health information voluntarily adopted 
        by private entities in technical conformance with such 
        standards adopted under this title.
            ``(2) Implementation assistance.--The Secretary may 
        recognize a private entity or entities to assist private 
        entities in the implementation of the standards adopted under 
        this title.
    ``(b) Certification.--
            ``(1) In general.--The Secretary, in consultation with the 
        National Coordinator and the Director of the National Institute 
        of Standards and Technology shall develop criteria to ensure 
        and certify that hardware, software, and support services that 
        claim to be in compliance with any standard for the electronic 
        exchange of health information adopted under this title have 
        established and maintain such compliance in technical 
        conformance with such standard.
            ``(2) Certification assistance.--The Secretary may 
        recognize a private entity or entities to assist in the 
        certification described under paragraph (1).
    ``(c) Delegation authority.--The Secretary may delegate the 
development of the criteria under subsection (a) and (b) to a private 
entity.

``SEC. 2905. AUTHORITY FOR COORDINATION AND SPENDING.

    ``(a) In General.--The Secretary acting through the National 
Coordinator--
            ``(1) shall direct and coordinate--
                    ``(A) Federal spending related to the development, 
                adoption, and implementation of standards for the 
                electronic exchange of health information; and
                    ``(B) the adoption of the recommendations submitted 
                to such Secretary by the Standards Working Group 
                established under section 2903; and
            ``(2) may utilize the entities recognized under section 
        2904 to assist in implementation and certification related to 
        the implementation by the Federal Government of the standards 
        adopted by the Secretary under this title.
    ``(b) Limitation.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, no Federal agency shall expend Federal funds for the 
        purchase of hardware, software, or support services for the 
        purpose of implementing a standard related to the electronic 
        exchange of health information that is not a standard adopted 
        by the Secretary under section 2903.
            ``(2) Effective date.--The limitation under paragraph (1) 
        shall take effect not later than 1 year after the adoption by 
        the Secretary of such standards under section 2903.''.

SEC. 102. ENCOURAGING SECURE EXCHANGE OF HEALTH INFORMATION.

    (a) Study and Grant Programs Related to State Health Information 
Laws and Practices.--
            (1) Study of state health information laws and practices.--
                    (A) In general.--The Secretary of Health and Human 
                Services (referred to in this Act as the ``Secretary'') 
                shall carry out, or contract with a private entity to 
                carry out, a study that examines--
                            (i) the variation among State laws and 
                        practices that relate to the privacy, 
                        confidentiality, and security of health 
                        information;
                            (ii) how such variation among State laws 
                        and practices may impact the electronic 
                        exchange of health information (as defined in 
                        section 2901 of the Public Health Service Act) 
                        (as added by section 101)--
                                    (I) among the States;
                                    (II) between the States and the 
                                Federal Government; and
                                    (III) among private entities; and
                            (iii) how such laws and practices may be 
                        harmonized to permit the secure electronic 
                        exchange of health information.
                    (B) Report and recommendations.--Not later than 1 
                year after the date of enactment of this Act, the 
                Secretary shall submit to Congress a report that--
                            (i) describes the results of the study 
                        carried out under subparagraph (A); and
                            (ii) makes recommendations based on the 
                        results of such study.
            (2) Secure exchange of health information; incentive 
        grants.--Title XXIX of the Public Health Service Act (as added 
        by section 101) is amended by adding at the end the following:

``SEC. 2906. SECURE EXCHANGE OF HEALTH INFORMATION; INCENTIVE GRANTS.

    ``(a) In General.--The Secretary may make grants to States to carry 
out programs under which such States cooperate with other States to 
develop and implement State policies that will facilitate the secure 
electronic exchange of health information utilizing the standards 
adopted under section 2903--
            ``(1) among the States;
            ``(2) between the States and the Federal Government; and
            ``(3) among private entities.
    ``(b) Priority.--In awarding grants under subsection (a), the 
Secretary shall give priority to States that provide assurance that any 
funding awarded under such a grant shall be used to harmonize privacy 
laws and practices between the States, the States and the Federal 
Government, and among private entities related to the privacy, 
confidentiality, and security of health information.
    ``(c) Dissemination of Information.--The Secretary shall 
disseminate information regarding the efficacy of efforts of a 
recipient of a grant under this section.
    ``(d) Technical Assistance.--The Secretary may provide technical 
assistance to recipients of a grant under this section.
    ``(e) Authorization of Appropriations.--For the purpose of carrying 
out subsection (a), there are authorized to be appropriated such sums 
as may be necessary for each of the fiscal years 2006 through 2010.''.
    (b) Study and Grant Programs Related to State Licensure Laws.--
            (1) Study of state licensure laws.--
                    (A) In general.--The Secretary shall carry out, or 
                contract with a private entity to carry out, a study 
                that examines--
                            (i) the variation among State laws that 
                        relate to the licensure, registration, and 
                        certification of medical professionals; and
                            (ii) how such variation among State laws 
                        impacts the secure electronic exchange of 
                        health information (as defined in section 2901 
                        of the Public Health Service Act) (as added by 
                        section 101)--
                                    (I) among the States; and
                                    (II) between the States and the 
                                Federal Government.
                    (B) Report and recommendations.--Not later than 1 
                year after the date of enactment of this Act, the 
                Secretary shall publish a report that--
                            (i) describes the results of the study 
                        carried out under subparagraph (A); and
                            (ii) makes recommendations to States 
                        regarding the harmonization of State laws based 
                        on the results of such study.
            (2) Reauthorization of incentive grants regarding 
        telemedicine.--Section 330L(b) of the Public Health Service Act 
        (42 U.S.C. 254c-18(b)) is amended by striking ``2002 through 
        2006'' and inserting ``2006 through 2010''.
            (3) HIPAA application to electronic health information.--
        Title XXIX of the Public Health Service Act (as added by 
        section 101 and amended by subsection (a)) is further amended 
        by adding at the end the following:

``SEC. 2907. APPLICABILITY OF PRIVACY AND SECURITY REGULATIONS.

    ``The regulations promulgated by the Secretary under part C of 
title XI of the Social Security Act and sections 261, 262, 263, and 264 
of the Health Insurance Portability and Accountability Act of 1996 with 
respect to the privacy, confidentiality, and security of health 
information shall--
            ``(1) apply to any health information stored or transmitted 
        in an electronic format as of the date of enactment of this 
        title; and
            ``(2) apply to the implementation of standards, programs, 
        and activities under this title.''.
    (c) Study and report.--
            (1) Study.--Not later than 2 years after the date of 
        enactment of this Act, the Secretary shall carry out, or 
        contract with a private entity to carry out, a study that 
        examines the integration of the standards adopted under the 
        amendments made by this Act with the standards adopted under 
        the Health Insurance Portability and Accountability Act of 1996 
        (Public Law 104-191).
            (2) Plan; report.--
                    (A) Plan.--Not later than 3 years after the date of 
                enactment of this Act, the Secretary shall, based on 
                the results of the study carried out under paragraph 
                (1), develop a plan for the integration of the 
                standards described under such paragraph and submit a 
                report to Congress describing such plan.
                    (B) Periodic Reports.--The Secretary shall submit 
                periodic reports to Congress that describe the progress 
                of the integration described under subparagraph (A).

TITLE II--FACILITATING THE ADOPTION AND IMPLEMENTATION OF INTEROPERABLE 
                     ELECTRONIC HEALTH INFORMATION

SEC. 201. GRANTS FOR THE IMPLEMENTATION OF REGIONAL OR LOCAL HEALTH 
              INFORMATION TECHNOLOGY PLANS.

    Title XXIX of the Public Health Service Act (as amended by section 
102) is further amended by adding at the end the following:

``SEC. 2908. GRANTS FOR THE IMPLEMENTATION OF REGIONAL OR LOCAL HEALTH 
              INFORMATION TECHNOLOGY PLANS.

    ``(a) In General.--The Secretary, in consultation with the National 
Coordinator, may award competitive grants to eligible entities to 
implement regional or local health information plans to improve 
healthcare quality and efficiency through the electronic exchange of 
health information pursuant to the standards, protocols, and other 
requirements adopted by the Secretary under sections 2903 and 2910.
    ``(b) Eligibility.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) demonstrate financial need to the Secretary;
            ``(2) demonstrate that one of its principal missions or 
        purposes is to use information technology to improve healthcare 
        quality and efficiency;
            ``(3) adopt bylaws, memoranda of understanding, or other 
        charter documents that demonstrate that the governance 
        structure and decisionmaking processes of such entity allow for 
        participation on an ongoing basis by multiple stakeholders 
        within a community, including--
                    ``(A) physicians (as defined in section 1861(r)(1) 
                of the Social Security Act), including physicians that 
                provide services to low income and underserved 
                populations;
                    ``(B) hospitals (including hospitals that provide 
                services to low income and underserved populations);
                    ``(C) group health plans or other health insurance 
                issuers;
                    ``(D) health centers (as defined in section 330(b)) 
                and Federally qualified health centers (as defined in 
                section 1861(aa)(4) of the Social Security Act);
                    ``(E) rural health clinics (as defined in section 
                1861(aa) of the Social Security Act);
                    ``(F) consumer organizations;
                    ``(G) employers; and
                    ``(H) any other healthcare providers or other 
                entities, as determined appropriate by the Secretary;
            ``(4) adopt nondiscrimination and conflict of interest 
        policies that demonstrate a commitment to open, fair, and 
        nondiscriminatory participation in the health information plan 
        by all stakeholders;
            ``(5) adopt the national health information technology 
        standards adopted by the Secretary under section 2903;
            ``(6) facilitate the electronic exchange of health 
        information within the local or regional area and among local 
        and regional areas;
            ``(7) prepare and submit to the Secretary an application in 
        accordance with subsection (c); and
            ``(8) agree to provide matching funds in accordance with 
        subsection (e).
    ``(c) Application.--
            ``(1) In general.--To be eligible to receive a grant under 
        subsection (a), an entity shall submit to the Secretary an 
        application at such time, in such manner, and containing such 
        information as the Secretary may require.
            ``(2) Required information.--At a minimum, an application 
        submitted under this subsection shall include--
                    ``(A) clearly identified short-term and long-term 
                objectives of the regional or local health information 
                plan;
                    ``(B) a technology plan that complies with the 
                standards adopted under section 2903 and that includes 
                a descriptive and reasoned estimate of costs of the 
                hardware, software, training, and consulting services 
                necessary to implement the regional or local health 
                information plan;
                    ``(C) a strategy that includes initiatives to 
                improve healthcare quality and efficiency, including 
                the use of healthcare quality measures adopted under 
                section 2910;
                    ``(D) a plan that describes provisions to encourage 
                the implementation of the electronic exchange of health 
                information by all physicians, including single 
                physician practices and small physician groups 
                participating in the health information plan;
                    ``(E) a plan to ensure the privacy and security of 
                personal health information that is consistent with 
                Federal and State law;
                    ``(F) a governance plan that defines the manner in 
                which the stakeholders shall jointly make policy and 
                operational decisions on an ongoing basis; and
                    ``(G) a financial or business plan that describes--
                            ``(i) the sustainability of the plan;
                            ``(ii) the financial costs and benefits of 
                        the plan; and
                            ``(iii) the entities to which such costs 
                        and benefits will accrue.
    ``(d) Use of Funds.--Amounts received under a grant under 
subsection (a) shall be used to establish and implement a regional or 
local health information plan in accordance with this section.
    ``(e) Matching Requirement.--
            ``(1) In general.--The Secretary may not make a grant under 
        this section to an entity unless the entity agrees that, with 
        respect to the costs to be incurred by the entity in carrying 
        out the infrastructure program for which the grant was awarded, 
        the entity will make available (directly or through donations 
        from public or private entities) non-Federal contributions 
        toward such costs in an amount equal to not less than 50 
        percent of such costs ($1 for each $2 of Federal funds provided 
        under the grant).
            ``(2) Determination of amount contributed.--Non-Federal 
        contributions required under paragraph (1) may be in cash or in 
        kind, fairly evaluated, including equipment, technology, or 
        services. Amounts provided by the Federal Government, or 
        services assisted or subsidized to any significant extent by 
        the Federal Government, may not be included in determining the 
        amount of such non-Federal contributions.
    ``(f) Authorization of Appropriations.--
            ``(1) In general.--There is authorized to be appropriated 
        to carry out this section, $125,000,000 for each of fiscal 
        years 2006 through 2010.
            ``(2) Availability.--Amounts appropriated under paragraph 
        (1) shall remain available for obligation until expended.

``SEC. 2909. REPORTS.

    ``Not later than 1 year after the date on which the first grant is 
awarded under section 2908, and annually thereafter during the grant 
period, an entity that receives a grant under such section shall submit 
to the Secretary, acting through the National Coordinator, a report on 
the activities carried out under the grant involved. Each such report 
shall include--
            ``(1) a description of the financial costs and benefits of 
        the project involved and of the entities to which such costs 
        and benefits accrue;
            ``(2) an analysis of the impact of the project on 
        healthcare quality and safety;
            ``(3) a description of any reduction in duplicative or 
        unnecessary care as a result of the project involved; and
            ``(4) other information as required by the Secretary.''.

SEC. 202. EXCEPTION FOR THE PROVISION OF PERMITTED SUPPORT.

    (a) Exemption From Criminal Penalties.--Section 1128B(b) of the 
Social Security Act (42 U.S.C. 1320a-7b(b)(3)) is amended--
            (1) in paragraph (3)--
                    (A) in subparagraph (G), by striking ``and'' at the 
                end;
                    (B) in subparagraph (H), as added by section 237(d) 
                of the Medicare Prescription Drug, Improvement, and 
                Modernization Act of 2003 (Public Law 108-173; 117 
                Stat. 2213)--
                            (i) by moving such subparagraph 2 ems to 
                        the left; and
                            (ii) by striking the period at the end and 
                        inserting a semicolon;
                    (C) by redesignating subparagraph (H), as added by 
                section 431(a) of the Medicare Prescription Drug, 
                Improvement, and Modernization Act of 2003 (Public Law 
                108-173; 117 Stat. 2287), as subparagraph (I);
                    (D) in subparagraph (I), as so redesignated--
                            (i) by moving such subparagraph 2 ems to 
                        the left; and
                            (ii) by striking the period at the end and 
                        inserting ``; and''; and
                    (E) by adding at the end the following new:
                    ``(J) subject to paragraph (4), the provision, with 
                or without charge, of any permitted support (as defined 
                in paragraph (4)(A) and subject to the conditions in 
                paragraph (4)(B)) to an entity or individual for 
                developing, implementing, operating, or facilitating 
                the electronic exchange of health information (as 
                defined in section 2901 of the Public Health Service 
                Act), so long as such support is primarily designed to 
                promote the electronic exchange of health 
                information.''; and
            (2) by adding at the end the following:
            ``(4) Permitted support.--
                    ``(A) Definition of permitted support.--In this 
                section, the term `permitted support' means the 
                provision of, or funding used exclusively to provide or 
                pay for, any equipment, item, information, right, 
                license, intellectual property, software, or service, 
                regardless of whether any such support may have utility 
                or value to the recipient for any purpose beyond the 
                exchange of health information (as defined in section 
                2901 of the Public Health Service Act).
                    ``(B) Conditions on permitted support.--Paragraph 
                (3)(J) shall not apply unless the following conditions 
                are met:
                            ``(i) The provision of permitted support is 
                        not conditioned on the recipient of such 
                        support making any referral to, or generating 
                        any business for, any entity or individual for 
                        which any Federal health care program provides 
                        reimbursement.
                            ``(ii) The permitted support complies with 
                        the standards for the electronic exchange of 
                        health information adopted by the Secretary 
                        under section 2903 of the Public Health Service 
                        Act.
                            ``(iii) The entity or network receiving 
                        permitted support is able to document that such 
                        support is used by the entity or the network 
                        for the electronic exchange of health 
                        information in accordance with the standards 
                        adopted by the Secretary under section 2903 of 
                        the Public Health Service Act.''.
    (b) Exemption From Limitation on Certain Physician Referrals.--
Section 1877(e) of the Social Security Act (42 U.S.C. 1395nn(e)) is 
amended by adding at the end the following:
            ``(9) Permitted support.--The provision of permitted 
        support (as described in section 1128B(b)(3)(J)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to permitted support provided on or after the date of enactment 
of this Act.

SEC. 203. GROUP PURCHASING.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall establish a safe harbor for group 
purchasing of hardware, software, and support services for the 
electronic exchange of health information in compliance with section 
2903 of the Public Health Service Act (as added by section 101).
    (b) Conditions.--In establishing the safe harbor under subsection 
(a), the Secretary shall establish conditions on such safe harbor 
consistent with the purposes of--
            (1) improving healthcare quality;
            (2) reducing medical errors;
            (3) reducing healthcare costs;
            (4) improving the coordination of care;
            (5) streamlining administrative processes; and
            (6) promoting transparency and competition.

SEC. 204. PERMISSIBLE ARRANGEMENTS.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act and notwithstanding any other provision of law, the 
Secretary shall establish guidelines in compliance with section 2903 of 
the Public Health Service Act that permit certain arrangements between 
group health plans and health insurance issuers (as defined in section 
2791 of the Public Health Service Act (42 U.S.C. 300gg-91)) and between 
healthcare providers (as defined in section 2901 of such Act, as added 
by section 101) in accordance with subsection (b).
    (b) Conditions.--In establishing the guidelines under subsection 
(a), the Secretary shall establish conditions on such arrangements 
consistent with the purposes of--
            (1) improving healthcare quality;
            (2) reducing medical errors;
            (3) reducing healthcare costs;
            (4) improving the coordination of care;
            (5) streamlining administrative processes; and
            (6) promoting transparency and competition.

  TITLE III--ADOPTION, IMPLEMENTATION, AND USE OF HEALTHCARE QUALITY 
                                MEASURES

SEC. 301. STANDARDIZED MEASURES.

    Title XXIX of the Public Health Service Act (as amended by section 
201) is further amended by adding at the end the following:

``SEC. 2910. COLLABORATIVE PROCESS FOR THE DEVELOPMENT, RECOMMENDATION, 
              AND ADOPTION OF STANDARDIZED MEASURES OF QUALITY 
              HEALTHCARE.

    ``(a) In General.--
            ``(1) Collaboration.--The Secretary, the Secretary of 
        Defense, the Secretary of Veterans Affairs, and any other heads 
        of relevant Federal agencies as determined appropriate by the 
        President, (referred to in this section as the `Secretaries') 
        shall adopt, on an ongoing basis, uniform healthcare quality 
        measures to assess the effectiveness, timeliness, patient self-
        management, patient-centeredness, efficiency, and safety of 
        care delivered by healthcare providers across Federal 
        healthcare programs, including those in titles XVIII, XIX, and 
        XXI of the Social Security Act.
            ``(2) Review of measures adopted.--The Secretaries shall 
        conduct an ongoing review of the measures adopted under 
        paragraph (1).
            ``(3) Existing activities--Notwithstanding any other 
        provision of law, the measures and reporting activities 
        described in this subsection shall replace, to the extent 
        practicable and appropriate, any duplicative or redundant 
        existing measurement and reporting activities currently 
        utilized by Federal healthcare programs, including those in 
        titles XVIII, XIX, and XXI of the Social Security Act.
    ``(b) Priority Measures.--
            ``(1) In general.--In determining the measures to be 
        adopted under subsection (a), and the timing of any such 
        adoption, the Secretaries shall give priority to--
                    ``(A) measures with the greatest potential impact 
                for improving the quality and efficiency of care 
                provided under Federal programs;
                    ``(B) measures that may be rapidly implemented by 
                group health plans, health insurance issuers, 
                physicians, hospitals, nursing homes, long-term care 
                providers, and other providers; and
                    ``(C) measures which may inform healthcare 
                decisions made by consumers and patients.
            ``(2) National Quality Forum Measures; Quality of care 
        indicators.--To the extent determined feasible and appropriate 
        by the Secretaries, the Secretaries shall adopt--
                    ``(A) measures endorsed by the National Quality 
                Forum, subject to compliance with the amendments made 
                by the National Technology Transfer and Advancement Act 
                of 1995; and
                    ``(B) indicators relating to the quality of care 
                data submitted to the Secretary by hospitals under 
                section 1886(b)(3)(B)(vii)(II) of the Social Security 
                Act.
    ``(c) Collaboration With Private Entities.--
            ``(1) In general.--The Secretaries may establish 
        collaborative agreements with private entities, including group 
        health plans and health insurance issuers, providers, 
        purchasers, consumer organizations, and entities receiving a 
        grant under section 2908, to--
                    ``(A) encourage the use of the healthcare quality 
                measures adopted by the Secretary under this section; 
                and
                    ``(B) foster uniformity between the healthcare 
                quality measures utilized in Federal programs and 
                private entities.
            ``(2) Use of measures.--The measures adopted by the 
        Secretaries under this section may apply in one or more disease 
        areas and across delivery settings, in order to improve the 
        quality of care provided or delivered by private entities.
    ``(d) Comparative Quality Reports.--Beginning on January 1, 2008, 
in order to make comparative quality information available to 
healthcare consumers, health professionals, public health officials, 
researchers, and other appropriate individuals and entities, the 
Secretaries and other relevant agencies shall provide for the 
aggregation, analysis, and dissemination of quality measures collected 
under this section. Nothing in this section shall be construed as 
modifying the privacy standards under the Health Insurance Portability 
and Accountability Act of 1996 (Public Law 104-191).
    ``(e) Evaluations.--
            ``(1) Ongoing evaluations of use.--The Secretary shall 
        ensure the ongoing evaluation of the use of the healthcare 
        quality measures adopted under this section.
            ``(2) Evaluation and Report.--
                    ``(A) Evaluation.--The Secretary shall, directly or 
                indirectly through a contract with another entity, 
                conduct an evaluation of the collaborative efforts of 
                the Secretaries to adopt uniform healthcare quality 
                measures and reporting requirements for federally 
                supported healthcare delivery programs as required 
                under this section.
                    ``(B) Report.--Not later than 2 years after the 
                date of enactment of this title, the Secretary shall 
                submit a report to the appropriate committees of 
                Congress concerning the results of the evaluation under 
                subparagraph (A).''.

SEC. 302. VALUE BASED PURCHASING PROGRAMS; SENSE OF THE SENATE.

    (a) Medicare Value Based Purchasing Pilot Program.--
            (1) In general.--The Secretary shall establish under title 
        XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) a 
        value based purchasing pilot program based on the reporting of 
        quality measures pursuant to those adopted in section 2910 of 
        the Public Health Service Act (as added by section 301) and the 
        overall improvement of healthcare quality through the use of 
        the electronic exchange of health information by entities 
        (including Federally qualified health centers, as defined in 
        section 1861(aa)(4) of the Social Security Act (42 U.S.C. 
        1395x(aa)(4))) pursuant to the standards adopted under section 
        2903 of the Public Health Service Act (as added by section 
        101). Such pilot program should be based on experience gained 
        through previous demonstration projects conducted by the 
        Secretary, including demonstration projects conducted under 
        sections 1866A and 1866C of the Social Security Act (42 U.S.C. 
        1395cc-1; 1395cc-3), section 649 of the Medicare Prescription 
        Drug, Improvement, and Modernization Act of 2003 (Public Law 
        108-173; 117 Stat. 2322), and other relevant work conducted by 
        private entities.
            (2) Expansion.--After conducting the pilot program under 
        paragraph (1) for not less than 2 years, the Secretary may 
        transition and implement such program on a national basis.
            (3) Funding.--
                    (A) In general.--Payments for the costs of carrying 
                out the provisions of this subsection shall be made 
                from the Federal Hospital Insurance Trust Fund under 
                section 1817 of the Social Security Act (42 U.S.C. 
                1395i) and the Federal Supplementary Insurance Trust 
                Fund under section 1841 of such Act (42 U.S.C. 1395t) 
                (in this subsection referred to as the ``Trust 
                Funds''), as determined appropriate by the Secretary.
                    (B) Limitation to ensure budget neutrality.--The 
                Secretary shall ensure that the total amount of 
                expenditures from the Trust Funds in a year does not 
                exceed the total amount of expenditures from the Trust 
                Funds that would have been made in such year if this 
                subsection had not been enacted.
                    (C) Monitoring and reports.--
                            (i) Ongoing monitoring by the secretary to 
                        ensure funding limitation is not violated.--The 
                        Secretary shall continually monitor 
                        expenditures made from the Trust Funds by 
                        reason of the provisions of this subsection to 
                        ensure that the limitation described in 
                        subparagraph (B) is not violated.
                            (ii) Reports.--Not later than April 1 of 
                        each year (beginning in the year following the 
                        year in which the pilot program under paragraph 
                        (1) is implemented), the Secretary shall submit 
                        a report to Congress and the Comptroller 
                        General of the United States that includes--
                                    (I) a detailed description of--
                                            (aa) the total amount 
                                        expended from the Trust Funds 
                                        (including all amounts expended 
                                        as a result of the provisions 
                                        of this subsection) during the 
                                        previous year compared to the 
                                        total amount that would have 
                                        been expended from the Trust 
                                        Funds during such year if this 
                                        subsection had not been 
                                        enacted;
                                            (bb) the projections of the 
                                        total amount that will be 
                                        expended from the Trust Funds 
                                        (including all amounts that 
                                        will be expended as a result of 
                                        the provisions of this 
                                        subsection) during the year in 
                                        which the report is submitted 
                                        compared to the total amount 
                                        that would have been expended 
                                        from the Trust Funds during the 
                                        year if this subsection had not 
                                        been enacted; and
                                            (cc) specify the steps (if 
                                        any) that the Secretary will 
                                        take pursuant to subparagraph 
                                        (D) to ensure that the 
                                        limitation described in 
                                        subparagraph (B) will not be 
                                        violated; and
                                    (II) a certification from the Chief 
                                Actuary of the Centers for Medicare & 
                                Medicaid Services that the descriptions 
                                under items (aa), (bb), and (cc) of 
                                subclause (I) are reasonable, accurate, 
                                and based on generally accepted 
                                actuarial principles and methodologies, 
                                including that the steps described in 
                                subclause (I)(cc) will be adequate to 
                                avoid violating the limitation 
                                described in subparagraph (B).
                    (D) Application of Limitation.--If the Secretary 
                determines that the provisions of this subsection will 
                result in the limitation described in subparagraph (B) 
                being violated in any year, the Secretary shall take 
                appropriate steps to reduce spending that is occurring 
                by reason of such provisions, including through 
                reducing the scope, site, and duration of the pilot 
                project.
                    (E) Authority.--The Secretary shall make necessary 
                spending adjustments under the medicare program to 
                recoup amounts so that the limitation described in 
                subparagraph (B) is not violated in any year.
    (b) Sense of the Senate Regarding Physician Payments Under 
Medicare.--It is the sense of the Senate that modifications to the 
medicare fee schedule for physicians' services under section 1848 of 
the Social Security Act (42 U.S.C. 1394w-4) should include provisions 
based on the reporting of quality measures pursuant to those adopted in 
section 2910 of the Public Health Service Act (as added by section 301) 
and the overall improvement of healthcare quality through the use of 
the electronic exchange of health information pursuant to the standards 
adopted under section 2903 of such Act (as added by section 101).
    (c) Medicaid Value Based Purchasing Programs.--
            (1) In general.--The Secretary shall authorize waivers 
        under section 1115 of the Social Security Act (42 U.S.C. 1315) 
        for States to establish value based purchasing programs for 
        State medicaid programs established under title XIX of such Act 
        (42 U.S.C. 1396 et seq.). Such programs shall be based on the 
        reporting of quality measures pursuant to those adopted in 
        section 2910 of the Public Health Service Act (as added by 
        section 301) and the overall improvement of healthcare quality 
        through the use of the electronic exchange of health 
        information pursuant to the standards adopted under section 
        2903 of the Public Health Service Act (as added by section 
        101).
            (2) Waiver.--In authorizing such waivers, the Secretary 
        shall waive any provisions of title XI or XIX of the Social 
        Security Act that would otherwise prevent a State from 
        establishing a value based purchasing program in accordance 
        with paragraph (1).
    (d) Quality Information Sharing.--
            (1) Review of medicare claims data.--
                    (A) Procedures.--In order to improve the quality 
                and efficiency of items and services furnished to 
                medicare beneficiaires under title XVIII of the Social 
                Security Act, the Secretary shall establish procedures 
                to review claims data submitted under such title with 
                respect to items and services furnished or ordered by 
                physicians.
                    (B) Use of most recent medicare claims data.--In 
                conducting the review under subparagraph (A), the 
                Secretary shall use the most recent claims data that is 
                available to the Secretary.
            (2) Sharing of data.--Beginning in 2006, the Secretary 
        shall periodically provide physicians with comparative 
        information on the utilization of items and services under such 
        title XVIII based upon the review of claims data under 
        paragraph (1).

SEC. 303. QUALITY IMPROVEMENT ORGANIZATION ASSISTANCE.

    (a) In General.--Section 1154(a) of the Social Security Act (42 
U.S.C. 1320c-3(a)) is amended by adding at the end the following:
            ``(18) The organization shall assist, at such time and in 
        such manner as the Secretary may require, healthcare providers 
        (as defined in section 2901 of the Public Health Service Act) 
        in implementing the electronic exchange of health information 
        (as defined in such section 2901).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contracts entered into on or after the date of enactment of this 
Act.
                                 <all>