[Congressional Record Volume 151, Number 77 (Monday, June 13, 2005)]
[Senate]
[Pages S6410-S6417]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. STABENOW (for herself and Ms. Snowe):
  S. 1227. A bill to improve quality in health care by providing 
incentives for adoption of modern information technology; to the 
Committee on Finance.
  Mrs. STABENOW. Mr. President, I am very pleased to introduce the 
``Health Information Technology Act of 2005'' with my friend and 
colleague from Maine, Senator Snowe. This legislation will reduce costs 
for our businesses, improve systems for our providers, and improve 
quality of care for patients.
  We know we need to reduce health care costs in this country. In 2004, 
United States national health expenditures, known as NHEs, amounted to 
$1.8 trillion, or about $6,300 per person, accounting for 15.8% of our 
GDP. This is almost twice the average among European Union countries.
  And costs are expected to continue to skyrocket. The Center for 
Medicare and Medicaid Services, CMS, estimates that by 2013, NHEs in 
the United States will reach $3.4 trillion and account for 18.8 percent 
of our GDP.
  It is without question that the increasing cost of employer-based 
health insurance hurts the global competitiveness of U.S. companies. 
General Motors now spends more than $1,500 per vehicle on health care 
costs, while their non-U.S. based competitors spend as much as $1,000 
less.
  Our large companies certainly aren't alone in struggling to meet the 
health care needs of their employees--the average member of the Small 
Business Association of Michigan, SBAM spends nearly $8,000 per 
employee per year on health insurance premiums. SBAM explains very 
clearly one of the reasons for these high costs: ``the way in which 
health care information is communicated is expensive, inefficient, and 
many times simply does not happen.''
  The members of the Health Information Technology Leadership Panel, 
convened pursuant to the National Coordinator for Health Information 
Technology's Framework for Strategic Action, recently agreed that 
``increasing health care costs pose a great and growing challenge to 
their industries and the broader U.S. economy..''.
  But it's not just the level of health care spending--at the same time 
that we are spending twice as much as many other countries, 45 million 
of our citizens lack health insurance, and a recent national study by 
RAND suggests that U.S. adults receive only 55 percent of recommended 
care.
  The answer is not to cut payments or to ask patients to take less 
care, but to ensure the right information is where it needs to be at 
the time it needs to be there so that providers can give the best 
possible treatment and care. That will both reduce costs and improve 
quality of care.
  However, most of our Nation's health care providers don't have access 
to information technology and services because it's hard enough just to 
keep up with their daily costs, much less to invest in something new.

  And, there's another reason providers haven't been quick to adopt 
these systems. The nature of our health care system means that in large 
part the value of these technologies--through the lower costs they will 
achieve--accrue to the payers of health care, rather than to the 
providers.
  The costs of necessary information not being available are great. Too 
often, care is duplicated like an x-ray given twice, because an 
emergency room doctor didn't have the results of an earlier x-ray, or 
the best and most appropriate care isn't given. Our health care 
professionals can't possibly provide the best care if they don't have 
complete and accurate information about the patient sitting in front of 
them.
  Multiple studies have found that as much as $300 billion is spent 
each year on health care that does not improve patient outcomes on 
treatment that is unnecessary, inappropriate, inefficient, or 
ineffective.
  A March 2001 Institute of Medicine, IOM, study concluded that in 
order to improve quality, there must be a national commitment to 
building an information infrastructure. An October 2003 Government 
Accountability Office report found that the benefits of an electronic 
healthcare information system included improved quality of care, 
reduced costs associated with medication errors, more accurate and 
complete medical documentation, more accurate capture of codes and 
charges, and improved communication among providers enabling them to 
respond more quickly to patients' needs.
  By providing the most appropriate care at the most appropriate time, 
we can reap huge savings. A January 2005 Report by the Center for 
Information Technology Leadership, CITL, found that moving to 
standardized health information exchange and interoperability would 
save nearly $80 billion annually in the United States.
  The benefits of adoption and use of health care information 
technologies, systems and services will be widespread: employers will 
realize cost savings, clinicians will gain new electronic support tools 
and patient information to help guide medical decisions, and patients 
will benefit from a more efficient health care system and from a safer 
health care system with fewer unnecessary treatments and more attention 
to preventive care. And, taxpayers and our federal programs will 
benefit. Researchers have suggested that up to 30 percent of annual 
Medicare health care spending could be saved by eliminating unnecessary 
and duplicative procedures, and improving quality by eliminating 
errors.
  The benefits of health information technologies and services become 
most compelling on an individual level. I met an extraordinary woman 
just a month ago. Renae Wallace, a small business owner in Kingsley, MI 
told me about her son Randall. Randall is just about to turn 8, but 
because he was born with complex heart and lung defects, he has seen 
the inside of a surgery room more times than most people see in a 
lifetime.

  Renae takes her son to providers in Traverse City, Grand Rapids, and 
Ann Arbor. But because there is no way for these providers to talk to 
each other, she has to carry around a file two inches thick of medical 
records--X-rays, MRI scans, surgical notes--on Randall. Otherwise, the 
health care professionals who are taking care of Randall wouldn't have 
the benefit of the results of the treatment that Randall has gotten 
previously. Because they wouldn't have all the information they need, 
Randall might not get the most appropriate care. Renae has made sure 
that all of the providers taking care of her son have as much of the 
information as possible--but it would make a lot more sense if the 
doctors and hospitals and nurses were able to

[[Page S6411]]

have that information without Renae having to carry it around.
  We need to ensure that our health care professionals have all of the 
relevant clinical information available to them in whatever setting a 
patient needs care, at the time the patient needs the care so that they 
can provide the best and most appropriate treatment possible. We know 
that adoption of health information technology can play a critical role 
in improving patient outcomes and at the same time greatly reduce 
costs. But it can't happen without the federal government playing a 
role.
  The members of the Health Information Technology Leadership Panel 
concurred that without Federal leadership, neither their individual 
companies nor the industrial sector as a whole can achieve the breadth 
of HIT adoption that would be required to realize the needed 
transformation of health care.
  The bill that Senator Snowe and I are introducing recognizes that 
both Federal leadership and Federal investment are necessary and 
appropriate. The focus of the investment provided by the ``Health 
Information Technology Act of 2005'' is on improving health care for 
patients with heart disease, cancer, stroke, diabetes, chronic 
obstructive pulmonary disease, asthma, and other diseases and 
conditions by driving transformation of systems in physician offices 
and other health care settings. Our bill includes a number of funding 
incentive approaches intended to improve health care through adoption 
of information technology.
  First, we create a 5-year, $4 billion competitive grant program for 
hospitals, physicians, skilled nursing facilities, community health 
centers and community mental health centers to offset investments in 
new technologies and information services. Importantly, the grant 
program is funded by a mandatory appropriation from the Medicare trust 
funds. This is critical to ensuring that funds will actually be 
available for the grant program. It also makes sense as the trust funds 
will see savings through lower outlays due to less duplicative and 
unnecessary care.
  The grant program would authorize funding for the: purchase, lease, 
and installment of computer software and hardware and related services; 
upgrade of existing computer technology; purchase communications 
capabilities necessary for clinical data access, storage, and exchange; 
services associated with acquiring, implementing, operating, or 
optimizing the use of new or existing computer software and hardware 
and clinical health care informatics systems; provision of education 
and training for staff on information systems and technology designed 
to improve patient safety; and purchase, lease, subscription, 
integration service of clinical decision support tools that provide 
ongoing continuous quality improvement functions.
  Second, we allow accelerated depreciation of qualified health care 
information system expenditures in 2005-2010.
  Third, we adjust Medicare payments to providers who use HIT that 
improves the quality and accuracy of clinical decision-making. We begin 
by addressing payments for treatment of Medicare beneficiaries with 
heart disease, cancer, stroke, diabetes, and chronic obstructive 
pulmonary disease because we know these conditions consume a large 
portion of our Medicare resources.
  We know that the Medicare program will reap the benefit of providers 
using health information networks. The Office of the National 
Coordinator for Health Information Technology said on March 2 of this 
year that the annual savings attributable to widespread electronic 
health record adoption are likely to lie between 7.5 percent-30 percent 
of annual health care spending.
  It only makes sense to establish new payment codes to account for the 
costs of purchasing and using health information technology and 
services with patient-specific applications.
  Our legislation also will make it much easier for physicians and 
other health care professionals to treat patients by reducing the 
communication barriers that currently exist. The ``Health Information 
Technology Act'' provides that the Secretary shall adopt data standards 
for interoperability between providers and links funding to the 
adoption of those standards.
  We know that electronic health care information systems can reap huge 
benefits. The GAO found these systems improve quality of care, reduce 
costs and improve communication among providers.
  But we also know that we can't expect our health care providers to 
make this investment alone as they struggle to meet their daily needs. 
Our country must have a national commitment to building an information 
infrastructure, and the Federal Government needs to step up to the 
plate and provide much-needed funds to get the ball rolling.
  We could only have dreamed about clinical computerized information 
systems when the Medicare and Medicaid programs began. Today, we have 
them at our disposal. The sooner we get them into our hospitals, 
physician offices, nursing homes, community health centers and 
community mental health centers, the sooner our patients, providers, 
and pocketbooks will see the rewards.
  I am very pleased to announce the support of the following 
organizations: American College of Physicians, Federation of American 
Hospitals, National Council for Community Behavioral Healthcare, the 
National Association of Children's Hospitals, American Heart 
Association, National Rural Health Association, National Business 
Coalition on Health, American Academy of Family Physicians, National 
Association of Community Health Centers, American Health Care 
Association, IBM, Health Vision, Healthcare Information and Management 
Systems Society, eHealth Initiative, AdvaMed, American Health 
Information Management Association, Verizon, Altarum, Michigan Health 
and Hospital Association, Automation Alley, Small Business Association 
of Michigan, Detroit Chamber, Michigan State Medical Society, Detroit 
Medical Center, Marquette General Health System, Oakwood Healthcare 
System, Henry Ford Health System, MPRO, Michigan's Medicare Quality 
Improvement Organization; Microsoft Corporation, Axolotl Corp, Delmarva 
Foundation, Dell Inc, DiagnosisOne, Greenway Medical Technologies, 
HealthInsight, Healthgate, Inland Northwest Health Services, Kyrptiq, 
Lumetra, Medical Review of North Carolina, Misys Healthcare Systems, 
National Alliance for Primary Care Informatics, Partners Healthcare 
System, Siemens Corporation, Philips Medical Systems, WebMD 
Corporation, and the Virgin Islands Medical Institute.
  I am also very pleased to have the support of the AFL-CIO, Trinity 
Health, NextGen, The Society of Thoracic Surgeons, American Association 
of Homes and Services for the Aging, St. John Health, Michigan Primary 
Care Association, the American Health Quality Association, and Comtek 
and look forward to receiving their forthcoming letters.
  I ask unanimous consent to have the text of the bill and additional 
material printed in the Record.
  There being no objection, the material was ordered to by printed in 
the Record, as follows:

                                                  American Academy


                                         of Family Physicians,

                                     Washington, DC, June 9, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: On behalf of It he 94,000 
     members of the American Academy of Family Physicians, 
     congratulations on the introduction of the Health Information 
     Technology Act. The AAFP strongly supports this legislation 
     and we would be pleased to help you in your efforts to have 
     Congress pass it.
       The legislation recognizes that the main obstacles to 
     widespread adoption of electronic health record systems are 
     the significant up-front costs and the lack of general 
     interoperability of many fragmented electronic systems. In 
     the first case. the estimated costs of about $25,000 per 
     physician to purchase an electronic health record system is a 
     serious problem for family physicians in small practices that 
     have very tight financial margins in which to operate. In the 
     second case, even if the financing is available, a family 
     physician will be reluctant to invest in health information 
     technology that cannot communicate with a nearby lab or the 
     specialist across town.
       By helping physicians with the financing of these systems 
     and by facilitating the development of interoperability 
     standards, your legislation would go a long way to improving 
     the quality and efficiency of health care delivery in this 
     county.
       Thank you for your leadership in this effort. We are 
     committed to working with you

[[Page S6412]]

     to secure passage of this important legislation.
           Sincerely,
                                                  Michael Fleming,
     Board Chair.
                                  ____

                                           National Association of


                               Community Health Centers, Inc.,

                                      Bethesda, MD, June 13, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow, On behalf of health centers all 
     across the country and the 15 million Americans who rely on 
     them for health care, I want to express our strong support 
     for the ``Health Information Technology Act of 2005.'' The 
     legislation would help to ensure that health centers have the 
     additional resources they need to further harness the 
     potential of information technology to improve the overall 
     quality of health care delivered to patients in underserved 
     communities.
       Health centers recognize the value of healthcare 
     information technology in facilitating the delivery of cost-
     effective, quality health care services. Indeed, through 
     participation in the Health Resources and Services 
     Administration's Health Disparities Collaboratives, health 
     centers have demonstrated reductions in disparities and 
     improved access to services through the use of electronic 
     patient registries. However, the high cost of establishing 
     these IT. systems throughout the entire health center is a 
     significant barrier for centers with few financial resources.
       With that in mind, NACHC applauds you for including health 
     centers as eligible recipients of competitive grant funding 
     and tax incentives for the design and installation of new 
     healthcare IT systems, the upgrade of existing computer 
     hardware and software, and training and education of health 
     center staff. We also appreciate that your legislation would 
     require the establishment of national healthcare IT standards 
     that promote the interoperability of health care information 
     across all health care settings within 2 years.
       Thank you once again for introducing the ``Health 
     Information Technology Act of 2005.'' We stand ready to work 
     with you to advance this vital legislation in the 109th 
     Congress.
           Sincerely,
     Daniel R. Hawkins, Jr.,
       Vice-President for Federal, State, and Public Affairs.
                                  ____



                             American Health Care Association,

                                    Washington, DC, June 10, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow: On behalf of the American Health 
     Care Association (AHCA) and the National Center for Assisted 
     Living (NCAL), the nation's largest association representing 
     providers of quality long term care, I am writing to 
     acknowledge our support for the ``Health Information 
     Technology Act of 2005.''
       This legislation, which you will soon introduce, has the 
     potential to transform health and long term care by utilizing 
     information technology to allow for the seamless transfer of 
     health data while guaranteeing privacy and security. By 
     creating incentives for providers to acquire health 
     information technology and ensuring interoperability, you are 
     taking critically important steps to improve patient safety 
     and quality. With provisions such as allowing accelerated 
     depreciation of qualified health care information system 
     expenditures, you've clearly fast tracked the potential of 
     this legislation reaching its ultimate goals.''
       Senator Stabenow, AHCA and NCAL fully support and commend 
     you for the leadership you are providing with the 
     introduction of the ``Health Information Technology Act of 
     2005.''
           Sincerely,
                                                         Hal Daub,
     President & CEO.
                                  ____



                                                           IBM

                                   Washington, D.C., June 9, 2005.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, D.C.

     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, D.C.
       Dear Senators Snowe and Stabenow: On behalf of IBM, I would 
     like to congratulate you on the introduction of the ``Health 
     Information Technology Act of 2005, and we support its 
     passage.
       The Act includes number of funding incentive approaches 
     intended to stimulate healthcare improvements enabled by 
     information technology. Most important, the Act would adjust 
     Medicare payments to providers who participate in a health 
     information network that improves the quality and accuracy of 
     clinical decision-making. With so many Americans in this one 
     program, creating rewards for quality in Medicare will have a 
     lifesaving impact for patients throughout the country.
       The Act also authorizes grants for information technology 
     software, hardware, and services to improve quality in health 
     care and patient safety. Eligible grantees would include 
     hospitals, skilled nursing facilities, federally qualified 
     health centers, physicians, and physician group practices. 
     Funding would be authorized for the years 2006 to 2010 as 
     part of the Medicare program as permitted within the Budget 
     Reserve Fund enacted in the 2006 Budget Resolution.
       The legislation would also reduce the communication 
     barriers that make it difficult for physicians to treat 
     patients. The Act provides that the Secretary shall adopt 
     data standards for interoperability between providers and 
     links funding to the adoption of those standards. At the same 
     time, the Act would implement procedures for the Secretary to 
     accept the optional submission of data derived from health 
     care reporting requirements. The funding will allow providers 
     to adopt technology with standards that promote the efficient 
     exchange of data.
       Finally, the Act would amend the Internal Revenue Code to 
     permit the expensing of health care informatics systems that 
     meet standards adopted by the Secretary of HHS.
       We thank you for advancing these important Medicare-related 
     provisions and look forward to supporting the Act's passage 
     this Congress.
           Sincerely,

                                            Christopher Caine,

                                                   Vice President,
     Government Programs.
                                  ____

     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: Healthvision, Inc. is 
     dedicated to providing and supporting connected healthcare 
     communities where information can be securely shared among, 
     physicians, patients, consumers, hospitals and other 
     interested constituents in the healthcare landscape. We 
     congratulate you both for introducing The Health Information 
     Technology Act. This legislation would provide grants to 
     physicians, hospitals and skilled nursing facilities for 
     purposes of improving patient safety and reducing medical 
     errors.
       We understand the positive role that health information 
     technology (HIT) can play in promoting safety and the quality 
     of care. We also are cognizant that financial barriers 
     prevent physicians and patients from receiving and utilizing 
     health information technology that is important to reducing 
     medical errors and creating efficiencies in the healthcare 
     system. The Health Information Technology Act (HIT Act) 
     provides a solution to overcoming the barriers that prevent 
     the use and utilization of HIT to improve healthcare. By 
     providing incentives for providers to adopt HIT, promoting 
     the adoption of national data and health communication 
     standards to facilitate interoperability, leveraging federal 
     investments in Medicare and Medicaid and creating special set 
     asides for certain groups including rural providers and 
     health professional shortage areas, the HIT Act provides 
     considerable leverage to help build momentum in improving 
     healthcare as we know it today.
       Quality and safety challenges, according to the Institute 
     of Medicine, cause an estimated 44,000 to 98,000 deaths 
     yearly due to medical errors. Legislation to adopt HIT is 
     essential to improving healthcare by replacing antiquated 
     paper records with electronic patient records that can be 
     shared across healthcare communities and among the necessary 
     stakeholders in such communities.
       The Healthcare Information Act of 2005 would be an 
     important step toward addressing some of the quality and 
     safety challenges identified by the Institute of Medicine. It 
     is our belief that upfront investment in HIT will improve the 
     quality of care, while returning savings through reductions 
     in clinical and administrative costs over time.
       We applaud your leadership and look forward to working with 
     you to provide incentives for adoption of modern health 
     information technology to improve the quality of healthcare.
           Very truly yours,
     Scott Decker,
       President and Chief Executive Officer.
     Jonathan Teich,
       Sr. Vice President and Chief Medical Officer.
                                  ____



                                           eHealth Initiative,

                                     Washington, DC, June 9, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: The eHealth Initiative 
     and the eHealth Initiative Foundation, a multi-stakeholder 
     consortium dedicated to driving improvement in the quality, 
     safety, and efficiency of healtcare through information and 
     information technology, congratulate you for introducing The 
     Health Information Technology Act of 2005. This legislation 
     would provide grants to physicians, hospitals and skilled 
     nursing facilities for purposes of improving patient safety 
     and reducing medical errors.
       The Health Information Technology Act of 2005 recognizes 
     the key role played by health information technology (HIT) to 
     improve healthcare by providing incentives for providers to 
     adopt HIT, promoting the adoption of national data and health 
     communication standards to facilitate interoperability, 
     leveraging federal investments in Medicare and Medicaid and 
     creating special set asides for certain groups including 
     rural providers and health professional shortage areas.

[[Page S6413]]

       Legislation to encourage the adoption of health information 
     technology to improve healthcare quality is essential, given 
     that 90 percent of the 30 billion U.S. health transactions 
     each year are conducted by phone, fax or mail and only 15 
     percent of US physicians use electronic health records. These 
     quality and safety Challenges according to the Institute of 
     Medicine, cause an estimated 44,000 to 98,000 deaths yearly 
     due to medical errors.
       Various studies have shown the potential of health 
     information technology to make improvements in healthcare 
     quality. For example, a rural community hospital prevented 
     administration of over 1,200 wrong drugs or dosages using 
     automatic identification technology and wireless scanners to 
     verify both the identities of patients and their correct 
     medications (GAO-04-224).
       The Health Information Technology Act of 2005 would be an 
     important step toward addressing some of the quality and 
     safety challenges identified by the Institute of Medicare. It 
     is our belief that upfront investment in HIT will improve the 
     quality of care, while returning savings through reductions 
     in clinical and administrative cots over time.
       On behalf of the undersigned and other members of the 
     eHealth Initiative, we salute your leadership and look 
     forward to working with you to provide incentives for 
     adoption of modern health information technology to improve 
     the quality of healthcare.
       Sincerely,
     AdvaMed.
     American College of Physicians.
     American Health Information Management Association.
     Altarum Institute.
     Axolotl Corp.
     Delmarva Foundation.
     Dell Inc.
     DiagnosisOne.
     Federation of American Hospitals.
     Healthcare Information and Management Systems Society.
     Greenway Medical Technologies.
     HealthInsight.
     Healthgate.
     Healthvision.
     IBM.
     Inland Northwest IHealth Services.
     Kryptiq.
     Lumetra.
     Medical Review of North Carolina.
     Microsoft Corporation.
     Misys Healthcare Systems.
     National Alliance for Primary Care Informatics.
     National Business Coalition on Health.
     Partners Healthcare System.
     Siemens Corporation.
     Philips Medical Systems.
     WebMD Corporation.
                                  ____



                                             HIMSS'

                                        Chicago, IL, June 9, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: On behalf of the 
     Healthcare Information and Management Systems Society and our 
     15,000 individual and over 260 corporate members and 45 
     chapters nationwide, we are pleased to support the Health 
     Information Technology Act of 2005. HIMSS members are very 
     aware of the need for catalyst legislation to improve patient 
     safety and cost effective healthcare in the U.S. Legislation 
     like the Health Information Technology Act of 2005 provides 
     the type of congressional leadership that will improve 
     healthcare delivery for the nation.
       HIMSS supports the concepts of this legislation because it 
     represents a positive step forward in the national agenda to 
     provide a catalyst to encourage substantial investments into 
     information technology and management systems to improve the 
     quality, safety, and efficiency of patient care. Through our 
     members and the Society's advocacy outreach, we will continue 
     to support and work for the bill's passage.
       We are particularly encouraged by the provisions in the 
     legislation to create a grant program to infuse almost $4 
     billion in federal funding into the provider community to 
     encourage adoption of information systems and services, as 
     well as the emphasis on interoperability that address the 
     needs of providers in diverse geographic settings, including 
     setting aside at least 20 percent for rural communities.
       The HIMSS Board of Directors applauds your efforts in 
     realizing and acting on the need for infuse federal funding 
     into the provider community to adopt much needed information 
     technology.
       We look forward to working with you to gain additional 
     healthcare industry support for the legislation. If we can be 
     of any further assistance, please contact Mr. Dave Roberts, 
     HIMSS Director of Public Policy.
           Sincerely,
     H. Stephen Lieber,
       President & CEO.
     Pamela R. Wirth,
       Chairperson of the Board, HIMSS, Vice President, Soarian 
     Medical Solutions, Siemens Medical Systems.
                                  ____



                                                      Verizon,

                                    Washington, DC, June 13, 2005.
     Senator Olympia J. Snowe,
     Senator Debbie A. Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senators Snowe and Stabenow: On behalf of Verizon, I 
     applaud your introduction of the Health Information 
     Technology Act of 2005. This legislation recognizes the vital 
     role of information technology im making a difference in 
     improving quality and reducing the cost of health care, both 
     of which are important to Verizon, as well as the Nation. 
     Verizon has a vital stake in seeing improvements in the 
     health care system, as we provide health care coverage for 
     over 800,000 employees, retirees and their dependents. We 
     hope the health care system can benefit from the technologies 
     that have worked so well in transforming our industry.
       In particular, we appreciate your recognition of 
     telecommunications technology and its significance in 
     improving quality and patient safety. Verizon believes that 
     broadband, wireless and other telecommunications services can 
     also make a real difference in reducing barriers and 
     improving access to quality health care. We look forward to 
     working with you in passing this important piece of 
     legislation to improve the health care system.

                                          Andrew M. Mekelburg,

                                                   Vice President,
     Federal Government Relations.
                                  ____



                                                      Altarum,

                                      Ann Arbor, MI, June 5, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow: I am writing to convey to you 
     Altarum Institute's strong support for the Health Information 
     Technology Act, which you are about to introduce into the 
     United States Senate.
       As you well know, Altarum is now helping the state of 
     Michigan to define, develop and deploy the Michigan Health 
     Information Network--the underlying technical, standards and 
     governance foundation that will ensure that promising health 
     information technology efforts across the state are both 
     interoperable and sustainable.
       While with the MHIN we help to prepare the ``foundation'' 
     upon which these health IT applications will rest, your bill 
     takes a tremendous stride forward in helping healthcare 
     providers actually make these health IT tools a part of how 
     they do their business. We sincerely hope and trust that 
     providers who, due to the grant programs envisioned in your 
     bill, can begin to see their way clear to adopting health IT 
     tools in their practices will be ready to work as part of a 
     broader community to ensure interoperability, common 
     standards and a governing model such as the MHIN will 
     provide.
       Your leadership in this critically important area is both 
     timely and appreciated. We look forward to consideration and 
     passage of the Health Information Technology Act.
           Sincerely,
                                                 Kenneth R. Baker,
     President.
                                  ____

                                                   Michigan Health


                                       & Hospital Association,

                                        Lansing, MI, June 8, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow, The Michigan Health & Hospital 
     Association welcomes your efforts to assist with the capital 
     investment requirements hospitals face for health information 
     technology. The MHA supports your pending legislation, The 
     Health Information Technology Act of 2005, which would 
     provide needed funding for new health IT design, purchase and 
     collaboration, as well as recognition of these costs within 
     the Medicare reimbursement system. This issue will continue 
     to develop in importance for Michigan hospitals and we look 
     forward to working with you to identify how best to provide 
     federal assistance for technology infrastructure, while 
     keeping patient-focused safety and quality improvement as the 
     primary goal for all concerned.
       Thank you for your continued support. I may be reached at 
     517/703-86009 if you would like to discuss this matter in 
     further detail.
           Sincerely,
                                                     Brian Peters,
                                  Senior Vice President, Advocacy.
  Ms. SNOWE. Mr. President, today I join my colleague, Senator Stabenow 
of Michigan, in introducing the ``Health Information Technology Act of 
2005'', which will serve to improve the quality of health care through 
implementation of information technology; IT, in hospitals, health 
centers and physician practices throughout the country. At a time when 
the Institute of Medicine (IOM) has reported that up to 98,000 
Americans die each year due to medical errors, we cannot afford to 
wait. When we also consider the escalating cost of health care in this 
country, we must recognize that this level of growth in spending has 
created a crisis. Information technology is one solution, and this 
legislation will assert the federal government's role in providing 
leadership in this area and provide financial incentives to spur rapid 
adoption of information technology in medicine. Our legislation is 
necessary because as a nation we face two stark problems.

[[Page S6414]]

  The first of these is a serious patient safety problem. The good news 
is that solutions exist: We have the technological ability to 
dramatically reduce medical errors and thus save lives. Many have heard 
about how drug interactions can be avoided by software systems which 
check a patient's prescriptions for hazards. Yet there are so many 
other applications which can improve health. For example, by reviewing 
and analyzing information, a health provider can help a patient better 
manage chronic diseases such as diabetes and heart disease, and avoid 
adverse outcomes.
  Our second major problem is the escalating cost of health care. Costs 
are reduced when tests don't have to be repeated and data isn't 
delayed. In fact, a patient may obtain faster, higher quality care 
when, for example, multiple practitioners can review diagnostic test 
results right at their desktops. In an age where millions of Americans 
share family pictures over the internet in seconds, isn't it long past 
time that a physician should be able to retrieve an x-ray just as 
easily?
  The President certainly recognizes the disparity in technology in 
health versus other parts of our economy. He has declared a goal for 
every American to have an electronic medical record within 10 years. I 
concur--we need this and more. In fact, once that record is in place we 
can do so many things better. From preventing drug interactions, to 
managing chronic diseases, to simply helping providers operate more 
efficiently. Most of us have been told at one time or another, ``we're 
waiting to get the test results mailed'', or ``we're still waiting for 
your chart''. Health care is one of the last bastions of such 
inefficiency.
  The bad news is that high start-up costs and a lack of standards have 
prevented us from reaping the benefits of new technologies. I am 
certainly looking forward to the progress we will make with Dr. David 
Brailer heading the new Office of the National Coordinator for Health 
Information Technology at the Department of Health and Human Services. 
The President has made technology implementation a priority, and there 
is no doubt that a lack of standards has prevented IT adoption by many 
health care providers. One must know that a system purchased will be 
compatible with others, and that--no matter what may happen in the 
future to a vendor--the huge investment one makes in building an 
electronic medical record won't be lost. In other words, your system 
must be able to communicate with other systems, and your investment in 
building electronic medical records must be preserved. So when a 
patient moves, their electronic ``chart'' should be able to move right 
along with them, and their continuity of care shouldn't be interrupted.
  Yet standards alone aren't enough. Today many providers are 
struggling to make these investments, and for those which serve 
beneficiaries of Medicare, Medicaid and SCHIP, it can be exceedingly 
difficult.
  The legislation which we are introducing today will bring the 
solution within our reach. In the last Congress I worked with Senator 
Bob Graham to introduce legislation which provided a grants program to 
give assistance to hospitals and long term care facilities to enable 
investment in IT. As I join today with Senator Stabenow to introduce 
this legislation, we have made several crucial enhancements to the 
previous bill. The legislation now includes both federally-qualified 
health centers and community mental health centers as eligible to 
receive IT grants. In addition, physician practices can also 
participate. All three are key treatment environments where both costs 
and errors must be addressed.
  Our new legislation even provides an alternative to those for-profit 
providers who do not wish to apply for a grant. Under this bill, such 
providers will be able to expense the cost of a qualified system.
  The legislation supports expenditures for a variety of expenses 
required to implement health care information technology. These include 
such components as computer hardware and software, plus installation 
and training costs. In addition, when installed we require that every 
system must meet the HHS Secretary's interoperability standards.
  We know we will realize significant savings through information 
technology. On that there is bipartisan consensus. Yet as providers are 
facing even declining payment rates, they also are told they must 
institute changes in the way they practice, including implementing 
information technology. We know that much of the savings in health care 
IT will accrue to the patient and payer--in such aspects as fewer 
duplicate tests, greater efficiency, and better health management. Thus 
it is appropriate that the Federal Government would assist with the 
often prohibitive start-up costs--particularly for those who serve 
beneficiaries of Medicare, Medicaid and SCHIP.
  I again want to stress the first goal of this legislation: To help 
build a safer medical-delivery system. The great successes of our 
health care system are largely due to our highly committed and talented 
health care professionals. The problem we are addressing today is not 
theirs, but is an endemic weakness of the system they depend upon. 
However, to utilize the solution, the Federal Government must step 
forward and provide the leadership necessary to make system changes a 
reality.
  When the Medicare and Medicaid programs began, we could only have 
dreamed about computerized clinical information systems. Now, today, we 
have this technology at our disposal, and I strongly believe that we 
cannot afford to delay implementation. I hope my colleagues will join 
us in support of this legislation so we may soon achieve the goals of 
improving patient safety and reducing our escalating health care costs.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1227

       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 Information 
     Technology Act of 2005''.

     SEC. 2. INFORMATICS SYSTEMS GRANT PROGRAM.

       (a) Grants.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish a program to award grants to eligible entities that 
     have submitted applications in accordance with subsection (b) 
     for the purpose of assisting such entities in offsetting the 
     costs incurred after December 31, 2004, that are related to 
     clinical health care informatics systems and services 
     designed to improve quality in health care and patient 
     safety.
       (2) Duration.--The authority of the Secretary to make 
     grants under this section shall terminate on September 30, 
     2010.
       (3) Costs defined.--For purposes of this section, the term 
     ``costs'' shall include total expenditures incurred for--
       (A) purchasing, leasing, and installing computer software 
     and hardware, including handheld computer technologies, and 
     related services;
       (B) making improvements to existing computer software and 
     hardware;
       (C) purchasing or leasing communications capabilities 
     necessary for clinical data access, storage, and exchange;
       (D) services associated with acquiring, implementing, 
     operating, or optimizing the use of new or existing computer 
     software and hardware and clinical health care informatics 
     systems;
       (E) providing education and training to eligible entity 
     staff on information systems and technology designed to 
     improve patient safety and quality of care; and
       (F) purchasing, leasing, subscribing, integrating, or 
     servicing clinical decision support tools that--
       (i) integrate patient-specific clinical data with well-
     established national treatment guidelines; and
       (ii) provide ongoing continuous quality improvement 
     functions that allow providers to assess improvement rates 
     over time and against averages for similar providers.
       (4) Eligible entity defined.--For purposes of this section, 
     the term ``eligible entity'' means the following entities:
       (A) Hospital.--A hospital (as defined in section 1861(e) of 
     the Social Security Act (42 U.S.C. 1395x(e))).
       (B) Critical access hospital.--A critical access hospital 
     (as defined in section 1861(mm)(1) of such Act (42 U.S.C. 
     1395x(mm)(1))).
       (C) Skilled nursing facility.--A skilled nursing facility 
     (as defined in section 1819(a) of such Act (42 U.S.C. 1395i-
     3(a))).
       (D) Federally qualified health center.--A Federally 
     qualified health center (as defined in section 1861(aa)(4) of 
     such Act (42 U.S.C. 1395x(aa)(4))).
       (E) Physician.--A physician (as defined in section 1861(r) 
     of such Act (42 U.S.C. 1395x(r))).
       (F) Physician group practice.--A physician group practice.
       (G) Community mental health center.--A community mental 
     health center (as defined

[[Page S6415]]

     in section 1861(ff)(3)(B) of such Act (42 U.S.C. 
     1395x(ff)(3)(B))).
       (b) Application.--
       (1) In general.--An eligible entity seeking a grant under 
     this section shall submit an application to the Secretary at 
     such time, in such form and manner, and containing the 
     information described in paragraph (2).
       (2) Information described.--The information described in 
     this paragraph is the following information:
       (A) A description of--
       (i) the clinical health care informatics system and 
     services that the eligible entity intends to implement with 
     the assistance received under this section; and
       (ii) how the system will improve quality in health care and 
     patient safety, including estimates of the impact on the 
     health of, and the health costs associated with the treatment 
     of, patients with heart disease, cancer, stroke, diabetes, 
     chronic obstructive pulmonary disease, asthma, or any other 
     disease or condition specified by the Secretary.
       (B) Any additional information that the Secretary may 
     specify.
       (c) Priority for Certain Eligible Entities.--In awarding 
     grants under this section, the Secretary shall give 
     priority--
       (1) first, to eligible entities--
       (A) that are exempt from tax under section 501(a) of the 
     Internal Revenue Code of 1986; and
       (B)(i) in which the total of individuals that are eligible 
     for benefits under the medicare program under title XVIII of 
     the Social Security Act, the medicaid program under title XIX 
     of such Act, or under the State children's health insurance 
     program under title XXI of such Act make up a high percentage 
     (as determined appropriate by the Secretary) of the total 
     patient population of the entity; or
       (ii) that provide services to a large number (as determined 
     appropriate by the Secretary) of such individuals;
       (2) then, to eligible entities that meet the requirement 
     under clause (i) or (ii) of paragraph (1)(B); and
       (3) then, to other eligible entities.
       (d) Reserve Funds for Entities in Health Professional 
     Shortage Areas or Rural Areas.--
       (1) In general.--Subject to paragraph (2), the Secretary 
     shall ensure that at least 20 percent of the funds available 
     for making grants under this section to--
       (A) hospitals and critical access hospitals are used for 
     making grants to such hospitals that are located exclusively 
     in an applicable area;
       (B) skilled nursing facilities are used for making grants 
     to such facilities that are located exclusively in an 
     applicable area;
       (C) Federally qualified health centers are used for making 
     grants to such centers that are located exclusively in an 
     applicable area;
       (D) physicians and physician group practices are used for 
     making grants to physicians and such practices that are 
     located exclusively in an applicable area; and
       (E) community mental health centers are used for making 
     grants to such centers that are located exclusively in an 
     applicable area.
       (2) Availability of reserve funds if limited number of 
     entities apply for reserved grants.--If the Secretary 
     estimates that the amount of funds reserved under 
     subparagraph (A), (B), (C), (D), or (E) of paragraph (1) for 
     the type of entity involved exceeds the maximum amount of 
     funds permitted for such entities under subsection (e), the 
     Secretary may reduce the amount reserved for such entities by 
     an amount equal to such excess and use such funds for 
     awarding grants to other eligible entities.
       (3) Applicable area defined.--For purposes of paragraph 
     (1), the term ``applicable area'' means--
       (A) an area that is designated as a health professional 
     shortage area under section 332(a)(1)(A) of the Public Health 
     Service Act;
       (B) a rural area (as such term is defined for purposes of 
     section 1886(d) of the Social Security Act (42 U.S.C. 
     1395ww(d))); or
       (C) a rural census tract of a metropolitan statistical area 
     (as determined under the most recent modification of the 
     Goldsmith Modification, originally published in the Federal 
     Register on February 27, 1992 (57 Fed. Reg. 6725)).
       (e) Amount of Grant.--
       (1) Amount.--
       (A) In general.--Subject to subparagraph (B) and paragraph 
     (2), the Secretary shall determine the amount of a grant 
     awarded under this section.
       (B) Consideration.--In determining the amount of a grant 
     under this section, the Secretary shall take into account the 
     ability to take an expense deduction for health care 
     informatics system expenses under section 179C of the 
     Internal Revenue Code of 1986, as added by section 5.
       (2) Limitation.--
       (A) In general.--A grant awarded under this section may not 
     exceed the lesser of--
       (i) an amount equal to the applicable percentage of the 
     costs incurred by the eligible entity for the project for 
     which the entity is seeking assistance under this section; or
       (ii) in the case of a grant made to--

       (I) a hospital or a critical access hospital, $1,000,000;
       (II) a skilled nursing facility, $200,000;
       (III) a Federally qualified health center, $150,000;
       (IV) a physician, $15,000;
       (V) a physician group practice, an amount equal to $15,000 
     multiplied by the number of physicians in the practice; or
       (VI) a community mental health center, $75,000.

       (B) Applicable percentage.--For purposes of subparagraph 
     (A)(i), the term ``applicable percentage'' means, with 
     respect to an eligible entity for the period involved, the 
     percentage of total revenues (excluding grants and gifts from 
     Federal, State, local government, and private sources) for 
     such period that consists of total revenues from the medicare 
     program, the medicaid program, and the State children's 
     health insurance program under titles XVIII, XIX, and XXI, 
     respectively, of the Social Security Act.
       (f) Requirements.--
       (1) Compliant with standards.--A clinical health care 
     informatics system funded under this section and placed in 
     service on or after the date the standards are adopted under 
     section 4 shall be compliant with such standards.
       (2) Furnishing the secretary with information.--
       (A) In general.--An eligible entity receiving a grant under 
     this section shall furnish the Secretary with such 
     information as the Secretary may require to--
       (i) evaluate the project for which the grant is made; and
       (ii) ensure that assistance provided under the grant is 
     expended for the purposes for which it is made.
       (B) Coordination.--The Secretary shall ensure that the 
     requirements for furnishing information under subparagraph 
     (A) are coordinated with other requirements for furnishing 
     information to the Secretary that the eligible entity is 
     subject to.
       (g) Studies.--The Secretary shall conduct studies to--
       (1) evaluate the use of clinical health care informatics 
     systems and services implemented with assistance under this 
     section to measure and report quality data based on accepted 
     clinical performance measures; and
       (2) assess the impact of such systems and services on 
     improving patient care, reducing costs, and increasing 
     efficiencies.
       (h) Reports.--
       (1) Interim reports.--
       (A) In general.--The Secretary shall submit, at least 
     annually, a report to the appropriate committees of Congress 
     on the grant program established under this section.
       (B) Contents.--A report submitted pursuant to subparagraph 
     (A) shall include information on--
       (i) the number of grants made;
       (ii) the nature of the projects for which assistance is 
     provided under the grant program;
       (iii) the geographic distribution of grant recipients;
       (iv) the impact of the projects on the health of, and the 
     health costs associated with the treatment of, patients with 
     heart disease, cancer, stroke, diabetes, chronic obstructive 
     pulmonary disease, asthma, or any other disease or conditions 
     specified by the Secretary;
       (v) the results of the studies conducted under subsection 
     (g); and
       (vi) such other matters as the Secretary determines 
     appropriate.
       (2) Final report.--Not later than 180 days after the 
     completion of all of the projects for which assistance is 
     provided under this section, the Secretary shall submit a 
     final report to the appropriate committees of Congress on the 
     grant program established under this section, together with 
     such recommendations for legislation and administrative 
     action as the Secretary determines appropriate.
       (i) Funding.--
       (1) Hospitals.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund under section 1817 of the 
     Social Security Act (42 U.S.C. 1395i) $250,000,000, for each 
     of the fiscal years 2006 through 2010, for the purpose of 
     making grants under this section to eligible entities that 
     are hospitals or critical access hospitals.
       (2) Skilled nursing facilities.--There are appropriated 
     from the Federal Hospital Insurance Trust Fund under section 
     1817 of the Social Security Act (42 U.S.C. 1395i) 
     $100,000,000, for each of the fiscal years 2006 through 2010, 
     for the purpose of making grants under this section to 
     eligible entities that are skilled nursing facilities.
       (3) Federally qualified health centers.--There are 
     appropriated from the Federal Supplementary Medical Insurance 
     Trust Fund under section 1841 of the Social Security Act (42 
     U.S.C. 1395t) $40,000,000, for each of the fiscal years 2006 
     through 2010, for the purpose of making grants under this 
     section to eligible entities that are Federally qualified 
     health centers.
       (4) Physicians.--There are appropriated from the Federal 
     Supplementary Medical Insurance Trust Fund under section 1841 
     of the Social Security Act (42 U.S.C. 1395t) $400,000,000, 
     for each of the fiscal years 2006 through 2010, for the 
     purpose of making grants under this section to eligible 
     entities that are physicians or physician group practices.
       (5) Community mental health centers.--There are 
     appropriated from the Federal Supplementary Medical Insurance 
     Trust Fund under section 1841 of the Social Security Act (42 
     U.S.C. 1395t) $20,000,000, for each of the fiscal years 2006 
     through 2010, for the purpose of making grants under this 
     section to eligible entities that are community mental health 
     centers.

[[Page S6416]]

     SEC. 3. ADJUSTMENTS TO MEDICARE PAYMENTS FOR HEALTH 
                   INFORMATION TECHNOLOGY ENABLED QUALITY 
                   SERVICES.

       (a) Adjustments.--The Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall establish a methodology for making adjustments in 
     payment amounts under title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.) made to providers of services and 
     suppliers who--
       (1) furnish items or services for which payment is made 
     under such title; and
       (2) in the course of furnishing such items and services, 
     use health information technology and technology services 
     with patient-specific applications that the Secretary 
     determines improves the quality and accuracy of clinical 
     decision-making, compliance, health care delivery, and 
     efficiency, such as electronic medical records, electronic 
     prescribing, clinical decision support tools integrating 
     well-established national treatment guidelines with 
     continuous quality improvement functions, and computerized 
     physician order entry with clinical decision-support 
     capabilities.
       (b) Requirements.--The methodology established under 
     subsection (a) shall--
       (1) include the establishment of new codes, modification of 
     existing codes, and adjustment of evaluation and management 
     modifiers to such codes, that take into account the costs of 
     acquiring, using, and maintaining health information 
     technology and services with patient-specific applications;
       (2) first address adjustments for payments for items and 
     services related to the diagnosis or treatment of heart 
     disease, cancer, stroke, diabetes, chronic obstructive 
     pulmonary disease (COPD), and other diseases and conditions 
     that result in high expenditures under the medicare program 
     and for which effective health information technology exists; 
     and
       (3) take into account estimated aggregate annual savings in 
     overall payments under such title XVIII attributable to the 
     use of health information technology and services with 
     patient-specific applications.
       (c) Duration.--The Secretary may reduce or eliminate 
     adjustments made to payments pursuant to subsection (a) as 
     payment methodologies under title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.) are adjusted to reflect 
     provider quality and efficiency.
       (d) Rule of Construction.--In making national coverage 
     determinations under section 1862(a) of the Social Security 
     Act (42 U.S.C. 1395y(a)) with respect to maintaining health 
     information technology and services with patient-specific 
     applications, in determining whether the health information 
     technology and services are reasonable and necessary for the 
     diagnosis or treatment of illness or injury or to improve the 
     functioning of a malformed body member, the Secretary shall 
     consider whether the health information technology and 
     services improve the health of medicare beneficiaries, 
     including the improvement of clinical outcomes or cost-
     effectiveness of treatment.
       (e) Definitions.--In this section:
       (1) Provider of services.--The term ``provider of 
     services'' has the meaning given that term under section 
     1861(u) of the Social Security Act (42 U.S.C. 1395x(u)).
       (2) Supplier.--The term ``supplier'' has the meaning given 
     that term under section 1861(d) of such Act (42 U.S.C. 
     1395x(d)).

     SEC. 4. INTEROPERABILITY.

       (a) Development and Adoption of Standards.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall provide for the development and adoption under programs 
     administered by the Secretary of national data and 
     communication health information technology standards that 
     promote the efficient exchange of data between varieties of 
     provider health information technology systems. In carrying 
     out the preceding sentence, the Secretary may adopt existing 
     standards consistent with standards established under 
     subsections (b)(2)(B)(i) and (e)(4) of section 1860D-4 of the 
     Social Security Act (42 U.S.C. 1395w-104).
       (2) Requirements.--The standards developed and adopted 
     under paragraph (1) shall be designed to--
       (A) enable health information technology to be used for the 
     collection and use of clinically specific data;
       (B) promote the interoperability of health care information 
     across health care settings, including reporting to the 
     Secretary and other Federal agencies; and
       (C) facilitate clinical decision support through the use of 
     health information technology.
       (b) Implementation of Procedures for the Secretary to 
     Accept Data Using Standards.--
       (1) Data from new health care reporting requirements.--Not 
     later than January 1, 2008, the Secretary shall implement 
     procedures to enable the Department of Health and Human 
     Services to accept the optional submission of data derived 
     from health care reporting requirements established after the 
     date of enactment of this Act using data standards adopted 
     under this section.
       (2) Data from all requirements.--
       (A) In general.--Not later than January 1, 2010, the 
     Secretary shall implement procedures to enable the Department 
     of Health and Human Services to accept the optional 
     submission of data derived from all health care reporting 
     requirements using data standards adopted under this section.
       (B) Limitation.--
       (i) In general.--On and after January 1, 2010, if an entity 
     or individual elects to submit data to the Secretary using 
     data standards adopted under this section, the Secretary, 
     subject to clause (ii), may not require such entity or 
     individual to also submit such data in an additional format.
       (ii) Exception.--The Secretary may provide for an 
     exception, not to exceed 2 years, to the limitation under 
     clause (i) with respect to certain types of data if the 
     Secretary determines that such an exception is appropriate.

     SEC. 5. ELECTION TO EXPENSE HEALTH CARE INFORMATICS SYSTEMS.

       (a) In General.--Part VI of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to itemized 
     deductions for individuals and corporations) is amended by 
     inserting after section 179B the following new section:

     ``SEC. 179C. HEALTH CARE INFORMATICS SYSTEMS EXPENDITURES.

       ``(a) Treatment of Expenditures.--
       ``(1) In general.--An eligible entity may elect to treat 
     any qualified health care informatics system expenditure 
     which is paid or incurred by the taxpayer as an expense which 
     is not chargeable to capital account. Any expenditure which 
     is so treated shall be allowed as a deduction.
       ``(2) Election.--An election under paragraph (1) shall be 
     made under rules similar to the rules of section 179(c).
       ``(b) Limitations.--
       ``(1) Dollar limitation.--With respect to any eligible 
     entity, the aggregate cost which may be taken into account 
     under subsection (a)(1) for any taxable year shall not 
     exceed, when added to any cost taken into account under this 
     section in any preceding taxable year, the dollar amount 
     specified under section 2(e)(2)(A)(ii) of the Health 
     Information Technology Act of 2005.
       ``(2) Applicable rules.--For purposes of this subsection, 
     rules similar to the rules of paragraphs (3) and (4) of 
     subsection (b) and paragraphs (6), (7), and (8) of subsection 
     (d) of section 179 shall apply.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified health care informatics system 
     expenditures.--
       ``(A) In general.--The term `qualified health care 
     informatics system expenditure' means, with respect to any 
     taxable year, any direct or indirect costs incurred and 
     properly taken into account with respect to the purchase or 
     installation of equipment and facilities relating to any 
     qualified health care informatics system. Such term shall 
     include so much of the purchase price paid by the lessor of 
     equipment and facilities subject to a lease described in 
     subparagraph (B)(ii) as is attributable to expenditures 
     incurred by the lessee which would otherwise be described in 
     the preceding sentence.
       ``(B) When expenditures taken into account.--
       ``(i) In general.--Qualified health care informatics system 
     expenditures shall be taken into account under this section 
     only with respect to equipment and facilities--

       ``(I) the original use of which commences with the 
     taxpayer, and
       ``(II) which are placed in service after December 31, 2004, 
     and before October 1, 2010.

       ``(ii) Sale-leasebacks.--For purposes of clause (i), if 
     property--

       ``(I) is originally placed in service after December 31, 
     2004, and before October 1, 2010, by any person, and
       ``(II) sold and leased back by such person within 3 months 
     after the date such property was originally placed in 
     service,

     such property shall be treated as originally placed in 
     service not earlier than the date on which such property is 
     used under the leaseback referred to in subclause (II).
       ``(C) Grants, etc. excluded.--The term `qualified health 
     care informatics system expenditure' shall not include any 
     amount to the extent such amount is funded by any grant, 
     contract, or otherwise by another person (or any governmental 
     entity).
       ``(2) Qualified health care informatics system.--The term 
     `qualified health care informatics system' means a system 
     which--
       ``(A) has been individually approved by the Secretary of 
     Health and Human Services for purposes of this section,
       ``(B) consists of electronic health record systems and 
     other health information technologies, and
       ``(C) meets the standards adopted by the Secretary of 
     Health and Human Services under section 4 of the Health 
     Information Technology Act of 2005 by not later than the date 
     which is 60 days after the date of the adoption of such 
     standards.
       ``(3) Eligible entity.--The term `eligible entity' has the 
     meaning given such term by section 2(a)(4) of the Health 
     Information Technology Act of 2005.
       ``(4) Property used outside the united states, etc., not 
     qualified.--No expenditures shall be taken into account under 
     subsection (a)(1) with respect to the portion of the cost of 
     any property referred to in section 50(b) or with respect to 
     the portion of the cost of any property specified in an 
     election under section 179.
       ``(5) Ordinary income recapture.--For purposes of section 
     1245, the amount of the deduction allowable under subsection 
     (a)(1) with respect to any property which is of a

[[Page S6417]]

     character subject to the allowance for depreciation shall be 
     treated as a deduction allowed for depreciation under section 
     167.''.
       (b) Conforming Amendments.--
       (1) Section 263(a)(1) of the Internal Revenue Code of 1986 
     (relating to capital expenditures) is amended by striking 
     ``or'' at the end of subparagraph (H), by striking the period 
     at the end of subparagraph (I) and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(J) expenditures for which a deduction is allowed under 
     section 179C.''.
       (2) The table of sections for part VI of subchapter A of 
     chapter 1 of such Code is amended by inserting after the item 
     relating to section 190 the following new item:

``Sec. 179C. Health care informatics system expenditures.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2004.

     SEC. 6. SENSE OF THE SENATE.

       It is the sense of the Senate that the provisions of, and 
     amendments made by, this Act should achieve deficit 
     neutrality over the 5-year period beginning on October 1, 
     2005.
                                 ______