[Congressional Record Volume 151, Number 103 (Tuesday, July 26, 2005)]
[Senate]
[Pages S8963-S8986]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FRIST (for himself, Mr. McConnell, Mr. Gregg, Mr. Enzi, 
        Ms. Murkowski, and Mr. DeMint):
  S. 1503. A bill to reduce healthcare costs, expand access to 
affordable healthcare coverage, and improve healthcare and strengthen 
the health care safety net, and for other purposes; to the Committee on 
Finance.
  Mr. FRIST. Mr. President, wherever I travel, Americans tell me the 
same things about our health care system: it costs too much, leaves too 
many without insurance, and does too little to help those in need.
  America has the world's best hospitals, doctors, nurses, and medical 
research labs. But we do not always provide the best care. And we 
certainly do not provide it at an affordable price. We face real 
problems. And we need to act.
  Two years ago, I appointed a task force to investigate what Congress 
could do. Under the leadership of Senator Judd Gregg, the task force 
reported back with a series of comprehensive recommendations. The 
President has also proposed some very constructive policy initiatives. 
We took all of these proposals into account when we wrote this bill.
  The legislation we propose today will build upon our record of 
accomplishment on health care. The Republican Congress has created a 
Medicare drug benefit for seniors, made tax-free, portable Health 
Savings Accounts available to all Americans, and has begun the process 
of moving our medical system into the information age.
  This week, we will pass and send to the President a long-overdue 
measure to encourage doctors and hospitals to report medical errors 
voluntarily. The measure will save lives, and it will improve health 
care quality.
  But we still have more to do.
  The legislation we are proposing today focuses on three broad areas: 
reducing costs, expanding health coverage, and improving the quality of 
care. In this bill--``The Healthy America Act of 2005''--we provide 
comprehensive solutions that will improve health care for every 
American.
  Let me begin by speaking about cost. Every year, Americans see their 
health care costs soar. Just 15 years ago, less than 1 out of every 10 
dollars Americans spent went for health care. In 10 years, almost one 
out of every five dollars you spend will go towards health care.
  Rising life expectancies and the cost of new technologies, 
treatments, and medical procedures all drive up costs. But we can do 
more to hold them in check. And we must.
  Rapidly rising health costs threaten our Nation's small business 
owners, and our largest corporations. They can harm our economy; cost 
jobs, and hurt Americans from all walks of life. During the past few 
years, for example, health care costs have grown three to four times 
more quickly than wages.

  First, we need to reform our broken medical liability system. Under 
our current medical system, doctors face enormous incentives to order 
unnecessary tests and procedures simply to avoid the risk of lawsuits.
  It's expensive, it's wasteful, and unnecessary, and, most of all, 
it's dangerous. It needs to change and, under this bill, it will.
  Hospitals, doctors, patients, and insurers all shoulder some 
responsibility for rising costs. To keep costs down, we need to put the 
patient at the heart of health care. That's why we propose reforms to 
let patients own and control privacy-protected electronic medical 
records, cut down on fraud in our Medicare and Medicaid programs, 
reduce medical errors, and reduce unnecessary regulations and mandates.
  Lower costs alone will help many Americans get the care they need and 
deserve. But we also have to look at ways to cover more Americans who 
would still find themselves left behind.

[[Page S8964]]

  Through changes to tax laws, we can make it easier for lower-income 
individuals and small businesses to purchase affordable, high quality 
health insurance.
  And we can also provide more options for those who take charge of 
their own health care by making flexible spending accounts more 
flexible and health savings accounts even more affordable for 
individuals and small businesses.
  Finally, the Federal Government can help support State high-risk 
pools that help provide health coverage to individuals who couldn't 
otherwise afford care.
  America is a caring Nation and we must recognize that not everyone 
has equal ability to take care of his or her own health. That's why we 
need to expand our safety net for the truly needy.
  Many of those without health insurance--particularly children--
qualify for benefits under existing programs but do not receive them. 
By providing grants to faith-based and community organizations, we can 
help more families sign up their children for available health 
coverage.
  We also need to expand the availability of health care services to 
individuals in need by expanding Community Health Centers and Rural 
Health Clinics to more rural areas and poor counties.
  We should also act to make prescription drugs more affordable for 
low-income Americans and provide legal protections and loan forbearance 
that will make it easier for health care practitioners who volunteer 
their time and services to provide needed care in community health 
centers and free clinics.
  Every American should have health care that's available, affordable, 
and always there.
  And we must hold fast to this principle: patients should sit at the 
center of the health care system, not the government, not insurance 
companies, and certainly not predatory trial lawyers.
  The system should free providers to focus on caring for their 
patients: not dealing with regulations, bureaucrats, or lawyers.
  Today, we've put forward a plan that will take a major step towards 
centering America's health care system on the patient.
  We have the vision for what American health care should look like. 
Now we only need the courage to make it happen.
  I want to thank Senator Gregg, and all of the members of the Task 
Force who worked so diligently on this legislation. I also want to 
recognize the contributions of the other cosponsors of this 
legislation: Senators Mitch McConnell, Mike Enzi, Lisa Murkowski, and 
Jim DeMint, I urge all of my colleagues to join us in supporting this 
bill. I ask unanimous consent that the text of the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1503

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Healthy 
     America Act of 2005''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.

              TITLE I--MAKING HEALTH CARE MORE AFFORDABLE

                  Subtitle A--Medical Liability Reform

Sec. 101. Short title.
Sec. 102. Findings and purpose.
Sec. 103. Encouraging speedy resolution of claims.
Sec. 104. Compensating patient injury.
Sec. 105. Maximizing patient recovery.
Sec. 106. Additional health benefits.
Sec. 107. Punitive damages.
Sec. 108. Authorization of payment of future damages to claimants in 
              health care lawsuits.
Sec. 109. Definitions.
Sec. 110. Effect on other laws.
Sec. 111. State flexibility and protection of States' rights.
Sec. 112. Applicability; effective date.

               Subtitle B--Health Information Technology

                     Chapter 1--General Provisions

Sec. 121. Improving health care, quality, safety, and efficiency.
Sec. 122. HIPAA report.
Sec. 123. Study of reimbursement incentives.
Sec. 124. Reauthorization of incentive grants regarding telemedicine.
Sec. 125. Sense of the Senate on physician payment.
Sec. 126. Establishment of quality measurement systems for medicare 
              value-based purchasing programs.
Sec. 127. Exception to Federal anti-kickback and physician self 
              referral laws for the provision of permitted support.

                   Chapter 2--Value Based Purchasing

Sec. 131. Value based purchasing programs.

           Subtitle C--Patient Safety and Quality Improvement

Sec. 141. Short title.
Sec. 142. Findings and purposes.
Sec. 143. Amendments to Public Health Service Act.
Sec. 144. Studies and reports.

                      Subtitle D--Fraud and Abuse

Sec. 151. National expansion of the medicare-medicaid data match pilot 
              program.

                  Subtitle E--Miscellaneous Provisions

Sec. 161. Sense of the Senate on establishing a mandated benefits 
              commission.
Sec. 162. Enforcement of reimbursement provisions by fiduciaries.

 TITLE II--EXPANDING ACCESS TO AFFORDABLE HEALTH COVERAGE THROUGH TAX 
                    INCENTIVES AND OTHER INITIATIVES

             Subtitle A--Refundable Health Insurance Credit

Sec. 201. Refundable health insurance costs credit.
Sec. 202. Advance payment of credit to issuers of qualified health 
              insurance.

  Subtitle B--High Deductible Health Plans and Health Savings Accounts

Sec. 211. Deduction of premiums for high deductible health plans.
Sec. 212. Refundable credit for contributions to health savings 
              accounts of small business employees.

       Subtitle C--Improvement of the Health Coverage Tax Credit

Sec. 221. Change in State-based coverage rules related to preexisting 
              conditions.
Sec. 222. Eligibility of spouse of certain individuals entitled to 
              medicare.
Sec. 223. Eligible PBGC pension recipient.
Sec. 224. Application of option to offer State-based coverage to Puerto 
              Rico, Northern Mariana Islands, American Samoa, Guam, and 
              the United States Virgin Islands.
Sec. 225. Clarification of disclosure rules.
Sec. 226. Clarification that State-based COBRA continuation coverage is 
              subject to same rules as Federal COBRA.
Sec. 227. Application of rules for other specified coverage to eligible 
              alternative taa recipients consistent with rules for 
              other eligible individuals.

                  Subtitle D--Long-Term Care Insurance

Sec. 231. Sense of the Senate concerning long-term care.

                      Subtitle E--Other Provisions

Sec. 241. Disposition of unused health benefits in cafeteria plans and 
              flexible spending arrangements.
Sec. 242. Microentrepreneurs.
Sec. 243. Study on access to affordable health insurance for full-time 
              college and university students.
Sec. 244. Extension of funding for operation of State high risk health 
              insurance pools.
Sec. 245. Sense of the senate on affordable health coverage for small 
              employers.

                       Subtitle F--Covering Kids

Sec. 251. Short title.
Sec. 252. Grants to promote innovative outreach and enrollment under 
              medicaid and SCHIP.
Sec. 253. State option to provide for simplified determinations of a 
              child's financial eligibility for medical assistance 
              under medicaid or child health assistance under SCHIP.

       TITLE III--IMPROVING CARE AND STRENGTHENING THE SAFETY NET

                      Subtitle A--High Needs Areas

Sec. 301. Purpose.
Sec. 302. High need community health centers.
Sec. 303. Grant application process.

          Subtitle B--Qualified Integrated Health Care systems

Sec. 321. Grants to qualified integrated health care systems.

                  Subtitle C--Miscellaneous Provisions

Sec. 331. Community health center collaborative access expansion.
Sec. 332. Improvements to section 340B program.
Sec. 333. Forbearance for student loans for physicians providing 
              services in free clinics.
Sec. 334. Amendments to the Public Health Service Act relating to 
              liability.
Sec. 335. Sense of the Senate concerning health disparities.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Health care costs are growing rapidly, putting health 
     insurance and needed care out of reach for too many 
     Americans.

[[Page S8965]]

       (2) Rapidly growing health care costs pose a threat to the 
     United States economy, as they make American businesses less 
     competitive and make it more difficult to create new jobs.
       (3) Growing health care costs are compromising the 
     stability of health care safety net and entitlement programs.
       (4) There are a series of steps Congress can and should 
     take to slow the growth of health care costs, expand access 
     to health coverage, and improve access to quality health care 
     for millions of Americans.

              TITLE I--MAKING HEALTH CARE MORE AFFORDABLE

                  Subtitle A--Medical Liability Reform

     SEC. 101. SHORT TITLE.

       This subtitle may be cited as the ``Patients First Act of 
     2005''.

     SEC. 102. FINDINGS AND PURPOSE.

       (a) Findings.--
       (1) Effect on health care access and costs.--Congress finds 
     that our current civil justice system is adversely affecting 
     patient access to health care services, better patient care, 
     and cost-efficient health care, in that the current health 
     care liability system is a costly and ineffective mechanism 
     for resolving claims of health care liability and 
     compensating injured patients, and is a deterrent to the 
     sharing of information among health care professionals which 
     impedes efforts to improve patient safety and quality of 
     care.
       (2) Effect on interstate commerce.--Congress finds that the 
     health care and insurance industries are industries affecting 
     interstate commerce and the health care liability litigation 
     systems existing throughout the United States are activities 
     that affect interstate commerce by contributing to the high 
     costs of health care and premiums for health care liability 
     insurance purchased by health care system providers.
       (3) Effect on federal spending.--Congress finds that the 
     health care liability litigation systems existing throughout 
     the United States have a significant effect on the amount, 
     distribution, and use of Federal funds because of--
       (A) the large number of individuals who receive health care 
     benefits under programs operated or financed by the Federal 
     Government;
       (B) the large number of individuals who benefit because of 
     the exclusion from Federal taxes of the amounts spent to 
     provide them with health insurance benefits; and
       (C) the large number of health care providers who provide 
     items or services for which the Federal Government makes 
     payments.
       (b) Purpose.--It is the purpose of this subtitle to 
     implement reasonable, comprehensive, and effective health 
     care liability reforms designed to--
       (1) improve the availability of health care services in 
     cases in which health care liability actions have been shown 
     to be a factor in the decreased availability of services;
       (2) reduce the incidence of ``defensive medicine'' and 
     lower the cost of health care liability insurance, all of 
     which contribute to the escalation of health care costs;
       (3) ensure that persons with meritorious health care injury 
     claims receive fair and adequate compensation, including 
     reasonable noneconomic damages;
       (4) improve the fairness and cost-effectiveness of our 
     current health care liability system to resolve disputes 
     over, and provide compensation for, health care liability by 
     reducing uncertainty in the amount of compensation provided 
     to injured individuals;
       (5) provide an increased sharing of information in the 
     health care system which will reduce unintended injury and 
     improve patient care.

     SEC. 103. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

       The time for the commencement of a health care lawsuit 
     shall be 3 years after the date of manifestation of injury or 
     1 year after the claimant discovers, or through the use of 
     reasonable diligence should have discovered, the injury, 
     whichever occurs first. In no event shall the time for 
     commencement of a health care lawsuit exceed 3 years after 
     the date of manifestation of injury unless tolled for any of 
     the following:
       (1) Upon proof of fraud;
       (2) Intentional concealment; or
       (3) The presence of a foreign body, which has no 
     therapeutic or diagnostic purpose or effect, in the person of 
     the injured person.

     Actions by a minor shall be commenced within 3 years from the 
     date of the alleged manifestation of injury except that 
     actions by a minor under the full age of 6 years shall be 
     commenced within 3 years of manifestation of injury or prior 
     to the minor's 8th birthday, whichever provides a longer 
     period. Such time limitation shall be tolled for minors for 
     any period during which a parent or guardian and a health 
     care provider or health care organization have committed 
     fraud or collusion in the failure to bring an action on 
     behalf of the injured minor.

     SEC. 104. COMPENSATING PATIENT INJURY.

       (a) Unlimited Amount of Damages for Actual Economic Losses 
     in Health Care Lawsuits.--In any health care lawsuit, the 
     full amount of a claimant's economic loss may be fully 
     recovered without limitation.
       (b) Additional Noneconomic Damages.--In any health care 
     lawsuit, the amount of noneconomic damages recovered may be 
     as much as $250,000, regardless of the number of parties 
     against whom the action is brought or the number of separate 
     claims or actions brought with respect to the same 
     occurrence.
       (c) No Discount of Award for Noneconomic Damages.--In any 
     health care lawsuit, an award for future noneconomic damages 
     shall not be discounted to present value. The jury shall not 
     be informed about the maximum award for noneconomic damages. 
     An award for noneconomic damages in excess of $250,000 shall 
     be reduced either before the entry of judgment, or by 
     amendment of the judgment after entry of judgment, and such 
     reduction shall be made before accounting for any other 
     reduction in damages required by law. If separate awards are 
     rendered for past and future noneconomic damages and the 
     combined awards exceed $250,000, the future noneconomic 
     damages shall be reduced first.
       (d) Fair Share Rule.--In any health care lawsuit, each 
     party shall be liable for that party's several share of any 
     damages only and not for the share of any other person. Each 
     party shall be liable only for the amount of damages 
     allocated to such party in direct proportion to such party's 
     percentage of responsibility. A separate judgment shall be 
     rendered against each such party for the amount allocated to 
     such party. For purposes of this section, the trier of fact 
     shall determine the proportion of responsibility of each 
     party for the claimant's harm.

     SEC. 105. MAXIMIZING PATIENT RECOVERY.

       (a) Court Supervision of Share of Damages Actually Paid to 
     Claimants.--In any health care lawsuit, the court shall 
     supervise the arrangements for payment of damages to protect 
     against conflicts of interest that may have the effect of 
     reducing the amount of damages awarded that are actually paid 
     to claimants. In particular, in any health care lawsuit in 
     which the attorney for a party claims a financial stake in 
     the outcome by virtue of a contingent fee, the court shall 
     have the power to restrict the payment of a claimant's damage 
     recovery to such attorney, and to redirect such damages to 
     the claimant based upon the interests of justice and 
     principles of equity. In no event shall the total of all 
     contingent fees for representing all claimants in a health 
     care lawsuit exceed the following limits:
       (1) 40 percent of the first $50,000 recovered by the 
     claimant(s).
       (2) 33\1/3\ percent of the next $50,000 recovered by the 
     claimant(s).
       (3) 25 percent of the next $500,000 recovered by the 
     claimant(s).
       (4) 15 percent of any amount by which the recovery by the 
     claimant(s) is in excess of $600,000.
       (b) Applicability.--The limitations in subsection (a) shall 
     apply whether the recovery is by judgment, settlement, 
     mediation, arbitration, or any other form of alternative 
     dispute resolution. In a health care lawsuit involving a 
     minor or incompetent person, a court retains the authority to 
     authorize or approve a fee that is less than the maximum 
     permitted under this section.
       (c) Expert Witnesses.--
       (1) Requirement.--No individual shall be qualified to 
     testify as an expert witness concerning issues of negligence 
     in any health care lawsuit against a defendant unless such 
     individual--
       (A) except as required under paragraph (2), is a health 
     care professional who--
       (i) is appropriately credentialed or licensed in 1 or more 
     States to deliver health care services; and
       (ii) typically treats the diagnosis or condition or 
     provides the type of treatment under review; and
       (B) can demonstrate by competent evidence that, as a result 
     of training, education, knowledge, and experience in the 
     evaluation, diagnosis, and treatment of the disease or injury 
     which is the subject matter of the lawsuit against the 
     defendant, the individual was substantially familiar with 
     applicable standards of care and practice as they relate to 
     the act or omission which is the subject of the lawsuit on 
     the date of the incident.
       (2) Physician review.--In a health care lawsuit, if the 
     claim of the plaintiff involved treatment that is recommended 
     or provided by a physician (allopathic or osteopathic), an 
     individual shall not be qualified to be an expert witness 
     under this subsection with respect to issues of negligence 
     concerning such treatment unless such individual is a 
     physician.
       (3) Specialties and subspecialties.--With respect to a 
     lawsuit described in paragraph (1), a court shall not permit 
     an expert in one medical specialty or subspecialty to testify 
     against a defendant in another medical specialty or 
     subspecialty unless, in addition to a showing of substantial 
     familiarity in accordance with paragraph (1)(B), there is a 
     showing that the standards of care and practice in the two 
     specialty or subspecialty fields are similar.
       (4) Limitation.--The limitations in this subsection shall 
     not apply to expert witnesses testifying as to the degree or 
     permanency of medical or physical impairment.

     SEC. 106. ADDITIONAL HEALTH BENEFITS.

       (a) In General.--The amount of any damages received by a 
     claimant in any health care lawsuit shall be reduced by the 
     court by the amount of any collateral source benefits to 
     which the claimant is entitled, less any insurance premiums 
     or other payments made by the claimant (or by the spouse, 
     parent, child, or legal guardian of the claimant) to obtain 
     or secure such benefits.
       (b) Preservation of Current Law.--Where a payor of 
     collateral source benefits has a right of recovery by 
     reimbursement or subrogation and such right is permitted 
     under Federal or State law, subsection (a) shall not apply.

[[Page S8966]]

       (c) Application of Provision.--This section shall apply to 
     any health care lawsuit that is settled or resolved by a fact 
     finder.

     SEC. 107. PUNITIVE DAMAGES.

       (a) In General.--Punitive damages may, if otherwise 
     permitted by applicable State or Federal law, be awarded 
     against any person in a health care lawsuit only if it is 
     proven by clear and convincing evidence that such person 
     acted with malicious intent to injure the claimant, or that 
     such person deliberately failed to avoid unnecessary injury 
     that such person knew the claimant was substantially certain 
     to suffer. In any health care lawsuit where no judgment for 
     compensatory damages is rendered against such person, no 
     punitive damages may be awarded with respect to the claim in 
     such lawsuit. No demand for punitive damages shall be 
     included in a health care lawsuit as initially filed. A court 
     may allow a claimant to file an amended pleading for punitive 
     damages only upon a motion by the claimant and after a 
     finding by the court, upon review of supporting and opposing 
     affidavits or after a hearing, after weighing the evidence, 
     that the claimant has established by a substantial 
     probability that the claimant will prevail on the claim for 
     punitive damages. At the request of any party in a health 
     care lawsuit, the trier of fact shall consider in a separate 
     proceeding--
       (1) whether punitive damages are to be awarded and the 
     amount of such award; and
       (2) the amount of punitive damages following a 
     determination of punitive liability.

     If a separate proceeding is requested, evidence relevant only 
     to the claim for punitive damages, as determined by 
     applicable State law, shall be inadmissible in any proceeding 
     to determine whether compensatory damages are to be awarded.
       (b) Determining Amount of Punitive Damages.--
       (1) Factors considered.--In determining the amount of 
     punitive damages, if awarded, in a health care lawsuit, the 
     trier of fact shall consider only the following:
       (A) the severity of the harm caused by the conduct of such 
     party;
       (B) the duration of the conduct or any concealment of it by 
     such party;
       (C) the profitability of the conduct to such party;
       (D) the number of products sold or medical procedures 
     rendered for compensation, as the case may be, by such party, 
     of the kind causing the harm complained of by the claimant;
       (E) any criminal penalties imposed on such party, as a 
     result of the conduct complained of by the claimant; and
       (F) the amount of any civil fines assessed against such 
     party as a result of the conduct complained of by the 
     claimant.
       (2) Maximum award.--The amount of punitive damages, if 
     awarded, in a health care lawsuit may be as much as $250,000 
     or as much as two times the amount of economic damages 
     awarded, whichever is greater. The jury shall not be informed 
     of this limitation.
       (c) No Penalties for Providers in Compliance With FDA 
     Standards.--A health care provider who prescribes a medical 
     product approved or cleared by the Food and Drug 
     Administration shall not be named as a party to a product 
     liability lawsuit involving such product and shall not be 
     liable to a claimant in a class action lawsuit against the 
     manufacturer, distributor, or seller of such product.

     SEC. 108. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO 
                   CLAIMANTS IN HEALTH CARE LAWSUITS.

       (a) In General.--In any health care lawsuit, if an award of 
     future damages, without reduction to present value, equaling 
     or exceeding $50,000 is made against a party with sufficient 
     insurance or other assets to fund a periodic payment of such 
     a judgment, the court shall, at the request of any party, 
     enter a judgment ordering that the future damages be paid by 
     periodic payments in accordance with the Uniform Periodic 
     Payment of Judgments Act promulgated by the National 
     Conference of Commissioners on Uniform State Laws.
       (b) Applicability.--This section applies to all actions 
     which have not been first set for trial or retrial before the 
     effective date of this Act.

     SEC. 109. DEFINITIONS.

       In this subtitle:
       (1) Alternative dispute resolution system; adr.--The term 
     ``alternative dispute resolution system'' or ``ADR'' means a 
     system that provides for the resolution of health care 
     lawsuits in a manner other than through a civil action 
     brought in a State or Federal court.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings a health care lawsuit, including a person who asserts 
     or claims a right to legal or equitable contribution, 
     indemnity or subrogation, arising out of a health care 
     liability claim or action, and any person on whose behalf 
     such a claim is asserted or such an action is brought, 
     whether deceased, incompetent, or a minor.
       (3) Collateral source benefits.--The term ``collateral 
     source benefits'' means any amount paid or reasonably likely 
     to be paid in the future to or on behalf of the claimant, or 
     any service, product or other benefit provided or reasonably 
     likely to be provided in the future to or on behalf of the 
     claimant, as a result of the injury or wrongful death, 
     pursuant to--
       (A) any State or Federal health, sickness, income-
     disability, accident, or workers' compensation law;
       (B) any health, sickness, income-disability, or accident 
     insurance that provides health benefits or income-disability 
     coverage;
       (C) any contract or agreement of any group, organization, 
     partnership, or corporation to provide, pay for, or reimburse 
     the cost of medical, hospital, dental, or income disability 
     benefits; and
       (D) any other publicly or privately funded program.
       (4) Compensatory damages.--The term ``compensatory 
     damages'' means objectively verifiable monetary losses 
     incurred as a result of the provision of, use of, or payment 
     for (or failure to provide, use, or pay for) health care 
     services or medical products, such as past and future medical 
     expenses, loss of past and future earnings, cost of obtaining 
     domestic services, loss of employment, and loss of business 
     or employment opportunities, damages for physical and 
     emotional pain, suffering, inconvenience, physical 
     impairment, mental anguish, disfigurement, loss of enjoyment 
     of life, loss of society and companionship, loss of 
     consortium (other than loss of domestic service), hedonic 
     damages, injury to reputation, and all other nonpecuniary 
     losses of any kind or nature. The term ``compensatory 
     damages'' includes economic damages and noneconomic damages, 
     as such terms are defined in this section.
       (5) Contingent fee.--The term ``contingent fee'' includes 
     all compensation to any person or persons which is payable 
     only if a recovery is effected on behalf of one or more 
     claimants.
       (6) Economic damages.--The term ``economic damages'' means 
     objectively verifiable monetary losses incurred as a result 
     of the provision of, use of, or payment for (or failure to 
     provide, use, or pay for) health care services or medical 
     products, such as past and future medical expenses, loss of 
     past and future earnings, cost of obtaining domestic 
     services, loss of employment, and loss of business or 
     employment opportunities.
       (7) Health care lawsuit.--The term ``health care lawsuit'' 
     means any health care liability claim concerning the 
     provision of health care goods or services affecting 
     interstate commerce, or any health care liability action 
     concerning the provision of health care goods or services 
     affecting interstate commerce, brought in a State or Federal 
     court or pursuant to an alternative dispute resolution 
     system, against a health care provider, a health care 
     organization, or the manufacturer, distributor, supplier, 
     marketer, promoter, or seller of a medical product, 
     regardless of the theory of liability on which the claim is 
     based, or the number of claimants, plaintiffs, defendants, or 
     other parties, or the number of claims or causes of action, 
     in which the claimant alleges a health care liability claim.
       (8) Health care liability action.--The term ``health care 
     liability action'' means a civil action brought in a State or 
     Federal Court or pursuant to an alternative dispute 
     resolution system, against a health care provider, a health 
     care organization, or the manufacturer, distributor, 
     supplier, marketer, promoter, or seller of a medical product, 
     regardless of the theory of liability on which the claim is 
     based, or the number of plaintiffs, defendants, or other 
     parties, or the number of causes of action, in which the 
     claimant alleges a health care liability claim.
       (9) Health care liability claim.--The term ``health care 
     liability claim'' means a demand by any person, whether or 
     not pursuant to ADR, against a health care provider, health 
     care organization, or the manufacturer, distributor, 
     supplier, marketer, promoter, or seller of a medical product, 
     including, but not limited to, third-party claims, cross-
     claims, counter-claims, or contribution claims, which are 
     based upon the provision of, use of, or payment for (or the 
     failure to provide, use, or pay for) health care services or 
     medical products, regardless of the theory of liability on 
     which the claim is based, or the number of plaintiffs, 
     defendants, or other parties, or the number of causes of 
     action.
       (10) Health care organization.--The term ``health care 
     organization'' means any person or entity which is obligated 
     to provide or pay for health benefits under any health plan, 
     including any person or entity acting under a contract or 
     arrangement with a health care organization to provide or 
     administer any health benefit.
       (11) Health care provider.--The term ``health care 
     provider'' means any person or entity required by State or 
     Federal laws or regulations to be licensed, registered, or 
     certified to provide health care services, and being either 
     so licensed, registered, or certified, or exempted from such 
     requirement by other statute or regulation.
       (12) Health care goods or services.--The term ``health care 
     goods or services'' means any goods or services provided by a 
     health care organization, provider, or by any individual 
     working under the supervision of a health care provider, that 
     relates to the diagnosis, prevention, or treatment of any 
     human disease or impairment, or the assessment of the health 
     of human beings.
       (13) Malicious intent to injure.--The term ``malicious 
     intent to injure'' means intentionally causing or attempting 
     to cause physical injury other than providing health care 
     goods or services.
       (14) Medical product.--The term ``medical product'' means a 
     drug or device intended for humans, and the terms ``drug'' 
     and ``device'' have the meanings given such terms in sections 
     201(g)(1) and 201(h) of the Federal Food,

[[Page S8967]]

     Drug and Cosmetic Act (21 U.S.C. 321), respectively, 
     including any component or raw material used therein, but 
     excluding health care services.
       (15) Noneconomic damages.--The term ``noneconomic damages'' 
     means damages for physical and emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of society and 
     companionship, loss of consortium (other than loss of 
     domestic service), hedonic damages, injury to reputation, and 
     all other nonpecuniary losses of any kind or nature.
       (16) Punitive damages.--The term ``punitive damages'' means 
     damages awarded, for the purpose of punishment or deterrence, 
     and not solely for compensatory purposes, against a health 
     care provider, health care organization, or a manufacturer, 
     distributor, or supplier of a medical product. Punitive 
     damages are neither economic nor noneconomic damages.
       (17) Recovery.--The term ``recovery'' means the net sum 
     recovered after deducting any disbursements or costs incurred 
     in connection with prosecution or settlement of the claim, 
     including all costs paid or advanced by any person. Costs of 
     health care incurred by the plaintiff and the attorneys' 
     office overhead costs or charges for legal services are not 
     deductible disbursements or costs for such purpose.
       (18) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, the Trust Territory of the Pacific Islands, 
     and any other territory or possession of the United States, 
     or any political subdivision thereof.

     SEC. 110. EFFECT ON OTHER LAWS.

       (a) Vaccine Injury.--
       (1) To the extent that title XXI of the Public Health 
     Service Act establishes a Federal rule of law applicable to a 
     civil action brought for a vaccine-related injury or death--
       (A) this subtitle does not affect the application of the 
     rule of law to such an action; and
       (B) any rule of law prescribed by this subtitle in conflict 
     with a rule of law of such title XXI shall not apply to such 
     action.
       (2) If there is an aspect of a civil action brought for a 
     vaccine-related injury or death to which a Federal rule of 
     law under title XXI of the Public Health Service Act does not 
     apply, then this subtitle or otherwise applicable law (as 
     determined under this subtitle) will apply to such aspect of 
     such action.
       (b) Other Federal Law.--Except as provided in this section, 
     nothing in this subtitle shall be deemed to affect any 
     defense available to a defendant in a health care lawsuit or 
     action under any other provision of Federal law.

     SEC. 111. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

       (a) Health Care Lawsuits.--The provisions governing health 
     care lawsuits set forth in this subtitle preempt, subject to 
     subsections (b) and (c), State law to the extent that State 
     law prevents the application of any provisions of law 
     established by or under this subtitle. The provisions 
     governing health care lawsuits set forth in this subtitle 
     supersede chapter 171 of title 28, United States Code, to the 
     extent that such chapter--
       (1) provides for a greater amount of damages or contingent 
     fees, a longer period in which a health care lawsuit may be 
     commenced, or a reduced applicability or scope of periodic 
     payment of future damages, than provided in this subtitle; or
       (2) prohibits the introduction of evidence regarding 
     collateral source benefits, or mandates or permits 
     subrogation or a lien on collateral source benefits.
       (b) Protection of States' Rights.--Any issue that is not 
     governed by any provision of law established by or under this 
     subtitle (including State standards of negligence) shall be 
     governed by otherwise applicable State or Federal law. This 
     subtitle does not preempt or supersede any law that imposes 
     greater protections (such as a shorter statute of 
     limitations) for health care providers and health care 
     organizations from liability, loss, or damages than those 
     provided by this subtitle.
       (c) State Flexibility.--No provision of this subtitle shall 
     be construed to preempt--
       (1) any State law (whether effective before, on, or after 
     the date of the enactment of this subtitle) that specifies a 
     particular monetary amount of compensatory or punitive 
     damages (or the total amount of damages) that may be awarded 
     in a health care lawsuit, regardless of whether such monetary 
     amount is greater or lesser than is provided for under this 
     subtitle, notwithstanding section 104(a); or
       (2) any defense available to a party in a health care 
     lawsuit under any other provision of State or Federal law.

     SEC. 112. APPLICABILITY; EFFECTIVE DATE.

       This subtitle shall apply to any health care lawsuit 
     brought in a Federal or State court, or subject to an 
     alternative dispute resolution system, that is initiated on 
     or after the date of the enactment of this Act, except that 
     any health care lawsuit arising from an injury occurring 
     prior to the date of the enactment of this Act shall be 
     governed by the applicable statute of limitations provisions 
     in effect at the time the injury occurred.

               Subtitle B--Health Information Technology

                     CHAPTER 1--GENERAL PROVISIONS

      SEC. 121. IMPROVING HEALTH CARE, QUALITY, SAFETY, AND 
                   EFFICIENCY.

       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.

       ``In this title:
       ``(1) Health care provider.--The term `health care 
     provider' means a hospital, skilled nursing facility, home 
     health entity, health care clinic, federally qualified health 
     center, group practice (as defined in section 1877(h)(4) of 
     the Social Security Act), a pharmacist, a pharmacy, a 
     laboratory, a physician (as defined in section 1861(r) of the 
     Social Security Act), a health facility operated by or 
     pursuant to a contract with the Indian Health Service, a 
     rural health clinic, and any other category of facility or 
     clinician determined appropriate by the Secretary.
       ``(2) Health information.--The term `health information' 
     has the meaning given such term in section 1171(4) of the 
     Social Security Act.
       ``(3) Health insurance plan.--The term `health insurance 
     plan' means--
       ``(A) a health insurance issuer (as defined in section 
     2791(b)(2));
       ``(B) a group health plan (as defined in section 
     2791(a)(1)); and
       ``(C) a health maintenance organization (as defined in 
     section 2791(b)(3)).
       ``(4) Laboratory.--The term `laboratory' has the meaning 
     given that term in section 353.
       ``(5) Pharmacist.--The term `pharmacist' has the meaning 
     given that term in section 804 of the Federal Food, Drug, and 
     Cosmetic Act.
       ``(6) State.--The term `State' means each of the several 
     States, the District of Columbia, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, and the Northern Mariana 
     Islands.

     ``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 Secretary, in consultation with the 
     President, and shall report directly to the Secretary.
       ``(b) Purpose.--It shall be the purpose of the Office to 
     coordinate with relevant Federal agencies and oversee 
     programs and activities to develop a nationwide interoperable 
     health information technology infrastructure that--
       ``(1) ensures that patients' individually identifiable 
     health information is secure and protected;
       ``(2) improves health care quality, reduces medical errors, 
     and advances the delivery of patient-centered medical care;
       ``(3) reduces health care costs resulting from 
     inefficiency, medical errors, inappropriate care, and 
     incomplete information;
       ``(4) ensures that appropriate information to help guide 
     medical decisions is available at the time and place of care;
       ``(5) promotes a more effective marketplace, greater 
     competition, and increased choice through the wider 
     availability of accurate information on health care costs, 
     quality, and outcomes; and
       ``(6) 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 health care information.
       ``(c) Duties of the National Coordinator.--The National 
     Coordinator shall--
       ``(1) provide support to the public-private American Health 
     Information Collaborative established under section 2903;
       ``(2) serve as the principal advisor to the Secretary 
     concerning the development, application, and use of health 
     information technology, and coordinate and oversee the health 
     information technology programs of the Department;
       ``(3) facilitate the adoption of a nationwide, 
     interoperable system for the electronic exchange of health 
     information;
       ``(4) ensure the adoption and implementation of standards 
     for the electronic exchange of health information to reduce 
     cost and improve health care quality;
       ``(5) 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;
       ``(6) 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 health care providers, physicians, 
     community health centers, laboratories, vendors and other 
     stakeholders;
       ``(7) advise the President regarding specific Federal 
     health information technology programs; and
       ``(8) submit the reports described under section 2903(i) 
     (excluding paragraph (4) of such section).

[[Page S8968]]

       ``(d) Rule of Construction.--Nothing in this section shall 
     be construed to require the duplication of Federal efforts 
     with respect to the establishment of the Office, regardless 
     of whether such efforts were carried out prior to or after 
     the enactment of this title.

     ``SEC. 2903. AMERICAN HEALTH INFORMATION COLLABORATIVE.

       ``(a) Purpose.--The Secretary shall establish the public-
     private American Health Information Collaborative (referred 
     to in this section as the `Collaborative') to--
       ``(1) advise the Secretary and recommend specific actions 
     to achieve a nationwide interoperable health information 
     technology infrastructure;
       ``(2) serve as a forum for the participation of a broad 
     range of stakeholders to provide input on achieving the 
     interoperability of health information technology; and
       ``(3) recommend standards (including content, 
     communication, and security standards) for the electronic 
     exchange of health information for adoption by the Federal 
     Government and voluntary adoption by private entities.
       ``(b) Composition.--
       ``(1) In general.--The Collaborative shall be composed of--
       ``(A) the Secretary, who shall serve as the chairperson of 
     the Collaborative;
       ``(B) the Secretary of Defense, or his or her designee;
       ``(C) the Secretary of Veterans Affairs, or his or her 
     designee;
       ``(D) the Secretary of Commerce, or his or her designee;
       ``(E) representatives of other relevant Federal agencies, 
     as determined appropriate by the Secretary; and
       ``(F) representatives from among the following categories 
     to be appointed by the Secretary from nominations submitted 
     by the public--
       ``(i) consumer and patient organizations;
       ``(ii) experts in health information privacy and security;
       ``(iii) health care providers;
       ``(iv) health insurance plans or other third party payors;
       ``(v) standards development organizations;
       ``(vi) information technology vendors;
       ``(vii) purchasers or employers; and
       ``(viii) State or local government agencies or Indian tribe 
     or tribal organizations.
       ``(2) Considerations.--In appointing members under 
     paragraph (1)(F), the Secretary shall select individuals with 
     expertise in--
       ``(A) health information privacy;
       ``(B) health information security;
       ``(C) health care quality and patient safety, including 
     those individuals with experience in utilizing health 
     information technology to improve health care quality and 
     patient safety;
       ``(D) data exchange; and
       ``(E) developing health information technology standards 
     and new health information technology.
       ``(3) Terms.--Members appointed under paragraph (1)(G) 
     shall serve for 2 year terms, except that any member 
     appointed to fill a vacancy for an unexpired term shall be 
     appointed for the remainder of such term. A member may serve 
     for not to exceed 180 days after the expiration of such 
     member's term or until a successor has been appointed.
       ``(c) Recommendations and Policies.--The Collaborative 
     shall make recommendations to identify uniform national 
     policies for adoption by the Federal Government and voluntary 
     adoption by private entities to support the widespread 
     adoption of health information technology, including--
       ``(1) protection of individually identifiable health 
     information through privacy and security practices;
       ``(2) measures to prevent unauthorized access to health 
     information;
       ``(3) methods to facilitate secure patient access to health 
     information;
       ``(4) the ongoing harmonization of industry-wide health 
     information technology standards;
       ``(5) recommendations for a nationwide interoperable health 
     information technology infrastructure;
       ``(6) the identification and prioritization of specific use 
     cases for which health information technology is valuable, 
     beneficial, and feasible;
       ``(7) recommendations for the establishment of an entity to 
     ensure the continuation of the functions of the 
     Collaborative; and
       ``(8) other policies determined to be necessary by the 
     Collaborative.
       ``(d) Standards.--
       ``(1) Existing standards.--The standards adopted by the 
     Consolidated Health Informatics Initiative shall be deemed to 
     have been recommended by the Collaborative under this 
     section.
       ``(2) First year review.--Not later than 1 year after the 
     date of enactment of this title, the Collaborative 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 paragraph (2)(A);
       ``(B) identify deficiencies and omissions in such existing 
     standards; and
       ``(C) identify duplication and overlap in such existing 
     standards;

     and recommend modifications to such standards as necessary.
       ``(3) Ongoing review.--Beginning 1 year after the date of 
     enactment of this title, and annually thereafter, the 
     Collaborative 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 paragraph (2)(A);
       ``(B) identify deficiencies and omissions in such existing 
     standards; and
       ``(C) identify duplication and overlap in such existing 
     standards;
     and recommend modifications to such standards as necessary.
       ``(4) Limitation.--The standards described in this section 
     shall be consistent with any standards developed pursuant to 
     the Health Insurance Portability and Accountability Act of 
     1996.
       ``(e) Federal Action.--Not later than 60 days after the 
     issuance of a recommendation from the Collaborative under 
     subsection (d)(2), the Secretary of Health and Human 
     Services, in consultation with the Secretary of Veterans 
     Affairs, the Secretary of Defense, and representatives of 
     other relevant Federal agencies, as determined appropriate by 
     the Secretary, shall review such recommendations. The 
     Secretary shall provide for the adoption by the Federal 
     Government of any standard or standards contained in such 
     recommendation.
       ``(f) Coordination of Federal Spending.--Not later than 1 
     year after the adoption by the Federal Government of a 
     recommendation as provided for in subsection (e), and in 
     compliance with chapter 113 of title 40, United States Code, 
     no Federal agency shall expend Federal funds for the purchase 
     of any form of health information technology or health 
     information technology system for clinical care or for the 
     electronic retrieval, storage, or exchange of health 
     information that is not consistent with applicable standards 
     adopted by the Federal Government under subsection (e).
       ``(g) Coordination of Federal Data Collection.--Not later 
     than 3 years after the adoption by the Federal Government of 
     a recommendation as provided for in subsection (e), all 
     Federal agencies collecting health data for the purposes of 
     surveillance, epidemiology, adverse event reporting, 
     research, or for other purposes determined appropriate by the 
     Secretary shall comply with standards adopted under 
     subsection (e).
       ``(h) Voluntary Adoption.--
       ``(1) In general.--Any standards adopted by the Federal 
     Government under subsection (e) shall be voluntary with 
     respect to private entities.
       ``(2) Rule of construction.--Nothing in this section shall 
     be construed to require that a private entity that enters 
     into a contract with the Federal Government adopt the 
     standards adopted by the Federal Government under section 
     2903 with respect to activities not related to the contract.
       ``(3) Limitation.--Private entities that enter into a 
     contract with the Federal Government shall adopt the 
     standards adopted under section 2903 for the purpose of 
     activities under such Federal contract.
       ``(i) Effect on other provisions.--Nothing in this title 
     shall be construed to effect the scope or substance of--
       ``(1) section 264 of the Health Insurance Portability and 
     Accountability Act of 1996;
       ``(2) sections 1171 through 1179 of the Social Security 
     Act; and
       ``(3) any regulation issued pursuant to any such section;

     and such sections shall remain in effect and shall apply to 
     the implementation of standards, programs and activities 
     under this title.
       ``(j) Reports.--The Secretary shall submit to the Committee 
     on Health, Education, Labor, and Pensions and the Committee 
     on Finance of the Senate and the Committee on Energy and 
     Commerce and the Committee on Ways and Means of the House of 
     Representatives, on an annual basis, a report that--
       ``(1) describes the specific actions that have been taken 
     by the Federal Government and private entities to facilitate 
     the adoption of an interoperable nationwide system for the 
     electronic exchange of health information;
       ``(2) describes barriers to the adoption of such a 
     nationwide system;
       ``(3) contains recommendations to achieve full 
     implementation of such a nationwide system; and
       ``(4) contains a plan and progress toward the establishment 
     of an entity to ensure the continuation of the functions of 
     the Collaborative.
       ``(k) Application of FACA.--The Federal Advisory Committee 
     Act (5 U.S.C. App.) shall apply to the Collaborative, except 
     that the term provided for under section 14(a)(2) shall be 5 
     years.
       ``(l) Rule of Construction.--Nothing in this section shall 
     be construed to require the duplication of Federal efforts 
     with respect to the establishment of the Collaborative, 
     regardless of whether such efforts were carried out prior to 
     or after the enactment of this title.

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

       ``(a) Implementation.--
       ``(1) In general.--The Secretary, based upon the 
     recommendations of the Collaborative, 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

[[Page S8969]]

     this title using the criteria developed by the Secretary 
     under this section.
       ``(b) Certification.--
       ``(1) In general.--The Secretary, based upon the 
     recommendations of the Collaborative, 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 maintained such compliance in 
     technical conformance with such standards.
       ``(2) Certification assistance.--The Secretary may 
     recognize a private entity or entities to assist in the 
     certification described under paragraph (1) using the 
     criteria developed by the Secretary under this section.
       ``(c) Delegation Authority.--The Secretary, through 
     consultation with the Collaborative, may delegate the 
     development of the criteria under subsections (a) and (b) to 
     a private entity.

     ``SEC. 2905. STUDY OF STATE HEALTH INFORMATION LAWS AND 
                   PRACTICES.

       ``(a) In General.--The Secretary shall carry out, or 
     contract with a private entity to carry out, a study that 
     examines--
       ``(1) the variation among State laws and practices that 
     relate to the privacy, confidentiality, and security of 
     health information;
       ``(2) how such variation among State laws and practices may 
     impact the electronic exchange of health information--
       ``(A) among the States;
       ``(B) between the States and the Federal Government; and
       ``(C) among private entities; and
       ``(3) 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 title, the Secretary 
     shall submit to Congress a report that--
       ``(1) describes the results of the study carried out under 
     subsection (a); and
       ``(2) makes recommendations based on the results of such 
     study.

     ``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.

     ``SEC. 2907. LICENSURE AND THE ELECTRONIC EXCHANGE OF HEALTH 
                   INFORMATION.

       ``(a) In General.--The Secretary shall carry out, or 
     contract with a private entity to carry out, a study that 
     examines--
       ``(1) the variation among State laws that relate to the 
     licensure, registration, and certification of medical 
     professionals; and
       ``(2) how such variation among State laws impacts the 
     secure electronic exchange of health information--
       ``(A) among the States; and
       ``(B) between the States and the Federal Government.
       ``(b) Report and Recommendations.--Not later than 1 year 
     after the date of enactment of this title, the Secretary 
     shall publish a report that--
       ``(1) describes the results of the study carried out under 
     subsection (a); and
       ``(2) makes recommendations to States regarding the 
     harmonization of State laws based on the results of such 
     study.

     ``SEC. 2908. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--For the purpose of carrying out this 
     title, there is authorized to be appropriated $125,000,000 
     for fiscal year 2006, and such sums as may be necessary for 
     each of fiscal years 2007 through 2010.
       ``(b) Availability.--Amounts appropriated under subsection 
     (a) shall remain available through fiscal year 2010.''.

     SEC. 122. HIPAA REPORT.

       (a) Study.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services 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 subtitle 
     with the standards adopted under the Health Insurance 
     Portability and Accountability Act of 1996 (Public Law 104-
     191).
       (b) Plan; Report.--
       (1) Plan.--Not later than 3 years after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall, based on the results of the study carried out 
     under subsection (a), develop a plan for the integration of 
     the standards described under such subsection and submit a 
     report to Congress describing such plan.
       (2) Periodic reports.--The Secretary shall submit periodic 
     reports to Congress that describe the progress of the 
     integration described under paragraph (1).

     SEC. 123. STUDY OF REIMBURSEMENT INCENTIVES.

       The Secretary of Health and Human Services shall carry out, 
     or contract with a private entity to carry out, a study that 
     examines methods to create efficient reimbursement incentives 
     for improving health care quality in Federally qualified 
     health centers, rural health clinics, and free clinics.

     SEC. 124. 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''.

     SEC. 125. SENSE OF THE SENATE ON PHYSICIAN PAYMENT.

       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 2909 of the Public 
     Health Service Act (as added by section 121) 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 121).

     SEC. 126. ESTABLISHMENT OF QUALITY MEASUREMENT SYSTEMS FOR 
                   MEDICARE VALUE-BASED PURCHASING PROGRAMS.

       (a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is 
     amended--
       (1) by redesignating part E as part F; and
       (2) by inserting after part D the following new part:

                    ``Part E--Value-Based Purchasing


   ``quality measurement systems for value-based purchasing programs

       ``Sec. 1860E-1. (a) Establishment.--
       ``(1) In general.--The Secretary shall develop quality 
     measurement systems for purposes of providing value-based 
     payments to--
       ``(A) hospitals pursuant to section 1860E-2;
       ``(B) physicians and practitioners pursuant to section 
     1860E-3;
       ``(C) plans pursuant to section 1860E-4;
       ``(D) end stage renal disease providers and facilities 
     pursuant to section 1860E-5; and
       ``(E) home health agencies pursuant to section 1860E-6.
       ``(2) Quality.--The systems developed under paragraph (1) 
     shall measure the quality of the care furnished by the 
     provider involved.
       ``(3) High quality health care defined.--In this part, the 
     term `high quality health care' means health care that is 
     safe, effective, patient-centered, timely, equitable, 
     efficient, necessary, and appropriate.
       ``(b) Requirements for Systems.--Under each quality 
     measurement system described in subsection (a)(1), the 
     Secretary shall do the following:
       ``(1) Measures.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall select measures of quality to be used by the 
     Secretary under each system.
       ``(B) Requirements.--In selecting the measures to be used 
     under each system pursuant to subparagraph (A), the Secretary 
     shall, to the extent feasible, ensure that--
       ``(i) such measures are evidence-based, reliable and valid, 
     and feasible to collect and report;
       ``(ii) measures of process, structure, outcomes, 
     beneficiary experience, efficiency, and equity are included;
       ``(iii) measures of overuse and underuse of health care 
     items and services are included;
       ``(iv)(I) at least 1 measure of health information 
     technology infrastructure that enables the provision of high 
     quality health care and facilitates the exchange of health 
     information, such as the use of one or more elements of a 
     qualified health information system (as defined in 
     subparagraph (E)), is included during the first year each 
     system is implemented; and
       ``(II) additional measures of health information technology 
     infrastructure are included in subsequent years;
       ``(v) in the case of the system that is used to provide 
     value-based payments to hospitals under section 1860E-2, by 
     not later than January 1, 2008, at least 5 measures that take 
     into account the unique characteristics of small hospitals 
     located in rural areas and frontier areas are included; and
       ``(vi) measures that assess the quality of care furnished 
     to frail individuals over the age of 75 and to individuals 
     with multiple complex chronic conditions are included.
       ``(C) Requirement for collection of data on a measure for 1 
     year prior to use under the systems.--Data on any measure 
     selected by the Secretary under subparagraph (A) must be 
     collected by the Secretary for at least a 12-month period 
     before such measure may be used to determine whether a 
     provider receives a value-based payment under a program 
     described in subsection (a)(1).

[[Page S8970]]

       ``(D) Authority to vary measures.--
       ``(i) Under system applicable to hospitals.--In the case of 
     the system applicable to hospitals under section 1860E-2, the 
     Secretary may vary the measures selected under subparagraph 
     (A) by hospital depending on the size of, and the scope of 
     services provided by, the hospital.
       ``(ii) Under system applicable to physicians and 
     practitioners.--In the case of the system applicable to 
     physicians and practitioners under section 1860E-3, the 
     Secretary may vary the measures selected under subparagraph 
     (A) by physician or practitioner depending on the specialty 
     of the physician, the type of practitioner, or the volume of 
     services furnished to beneficiaries by the physician or 
     practitioner.
       ``(iii) Under system applicable to esrd providers and 
     facilities.--In the case of the system applicable to 
     providers of services and renal dialysis facilities under 
     section 1860E-5, the Secretary may vary the measures selected 
     under subparagraph (A) by provider or facility depending on 
     the type of, the size of, and the scope of services provided 
     by, the provider or facility.
       ``(iv) Under system applicable to home health agencies.--In 
     the case of the system applicable to home health agencies 
     under section 1860E-6, the Secretary may vary the measures 
     selected under subparagraph (A) by agency depending on the 
     size of, and the scope of services provided by, the agency.
       ``(E) Qualified health information system defined.--For 
     purposes of subparagraph (B)(iv)(I), the term `qualified 
     health information system' means a computerized system 
     (including hardware, software, and training) that--
       ``(i) protects the privacy and security of health 
     information and properly encrypts such health information;
       ``(ii) maintains and provides access to patients' health 
     records in an electronic format;
       ``(iii) incorporates decision support software to reduce 
     medical errors and enhance health care quality;
       ``(iv) is consistent with data standards and certification 
     processes recommended by the Secretary;
       ``(v) allows for the reporting of quality measures; and
       ``(vi) includes other features determined appropriate by 
     the Secretary.
       ``(2) Weights of measures.--
       ``(A) In general.--The Secretary shall assign weights to 
     the measures used by the Secretary under each system.
       ``(B) Consideration.--If the Secretary determines 
     appropriate, in assigning the weights under subparagraph 
     (A)--
       ``(i) measures of clinical effectiveness shall be weighted 
     more heavily than measures of beneficiary experience; and
       ``(ii) measures of risk adjusted outcomes shall be weighted 
     more heavily than measures of process; and
       ``(3) Risk adjustment.--The Secretary shall establish 
     procedures, as appropriate, to control for differences in 
     beneficiary health status and beneficiary characteristics. To 
     the extent feasible, such procedures may be based on existing 
     models for controlling for such differences.
       ``(4) Maintenance.--
       ``(A) In general.--The Secretary shall, as determined 
     appropriate, but not more often than once each 12-month 
     period, update each system, including through--
       ``(i) the addition of more accurate and precise measures 
     under the systems and the retirement of existing outdated 
     measures under the system;
       ``(ii) the refinement of the weights assigned to measures 
     under the system; and
       ``(iii) the refinement of the risk adjustment procedures 
     established pursuant to paragraph (3) under the system.
       ``(B) Update shall allow for comparison of data.--Each 
     update under subparagraph (A) of a quality measurement system 
     shall allow for the comparison of data from one year to the 
     next for purposes of providing value-based payments under the 
     programs described in subsection (a)(1).
       ``(5) Use of most recent quality data.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the Secretary shall use the most recent quality data with 
     respect to the provider involved that is available to the 
     Secretary.
       ``(B) Insufficient data due to low volume.--If the 
     Secretary determines that there is insufficient data with 
     respect to a measure or measures because of a low number of 
     services provided, the Secretary may aggregate data across 
     more than 1 fiscal or calendar year, as the case may be.
       ``(c) Requirements for Developing and Updating the 
     Systems.--In developing and updating each quality measurement 
     system under this section, the Secretary shall--
       ``(1) take into account the quality measures developed by 
     nationally recognized quality measurement organizations, 
     researchers, health care provider organizations, and other 
     appropriate groups;
       ``(2) consult with, and take into account the 
     recommendations of, the entity that the Secretary has an 
     arrangement with under subsection (e);
       ``(3) consult with provider-based groups and clinical 
     specialty societies;
       ``(4) take into account existing quality measurement 
     systems that have been developed through a rigorous process 
     of validation and with the involvement of entities and 
     persons described in subsection (e)(2)(B); and
       ``(5) take into account--
       ``(A) each of the reports by the Medicare Payment Advisory 
     Commission that are required under the Medicare Value 
     Purchasing Act of 2005;
       ``(B) the results of--
       ``(i) the demonstrations required under such Act;
       ``(ii) the demonstration program under section 1866A;
       ``(iii) the demonstration program under section 1866C; and
       ``(iv) any other demonstration or pilot program conducted 
     by the Secretary relating to measuring and rewarding quality 
     and efficiency of care; and
       ``(C) the report by the Institute of Medicine of the 
     National Academy of Sciences under section 238(b) of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173).
       ``(d) Requirements for Implementing the Systems.--In 
     implementing each quality measurement system under this 
     section, the Secretary shall consult with entities--
       ``(1) that have joined together to develop strategies for 
     quality measurement and reporting, including the feasibility 
     of collecting and reporting meaningful data on quality 
     measures; and
       ``(2) that involve representatives of health care 
     providers, health plans, consumers, employers, purchasers, 
     quality experts, government agencies, and other individuals 
     and groups that are interested in quality of care.
       ``(e) Arrangement With an Entity To Provide Advice and 
     Recommendations.--
       ``(1) Arrangement.--On and after July 1, 2006, the 
     Secretary shall have in place an arrangement with an entity 
     that meets the requirements described in paragraph (2) under 
     which such entity provides the Secretary with advice on, and 
     recommendations with respect to, the development and updating 
     of the quality measurement systems under this section, 
     including the assigning of weights to the measures under 
     subsection (b)(2).
       ``(2) Requirements described.--The requirements described 
     in this paragraph are the following:
       ``(A) The entity is a private nonprofit entity governed by 
     an executive director and a board.
       ``(B) The members of the entity include representatives 
     of--
       ``(i)(I) health plans and providers receiving reimbursement 
     under this title for the provision of items and services, 
     including health plans and providers with experience in the 
     care of the frail elderly and individuals with multiple 
     complex chronic conditions; or
       ``(II) groups representing such health plans and providers;
       ``(ii) groups representing individuals receiving benefits 
     under this title;
       ``(iii) purchasers and employers or groups representing 
     purchasers or employers;
       ``(iv) organizations that focus on quality improvement as 
     well as the measurement and reporting of quality measures;
       ``(v) State government health programs;
       ``(vi) persons skilled in the conduct and interpretation of 
     biomedical, health services, and health economics research 
     and with expertise in outcomes and effectiveness research and 
     technology assessment; and
       ``(vii) persons or entities involved in the development and 
     establishment of standards and certification for health 
     information technology systems and clinical data.
       ``(C) The membership of the entity is representative of 
     individuals with experience with--
       ``(i) urban health care issues;
       ``(ii) safety net health care issues; and
       ``(iii) rural and frontier health care issues.
       ``(D) The entity does not charge a fee for membership for 
     participation in the work of the entity related to the 
     arrangement with the Secretary under paragraph (1). If the 
     entity does require a fee for membership for participation in 
     other functions of the entity, there shall be no linkage 
     between such fee and participation in the work of the entity 
     related to such arrangement with the Secretary.
       ``(E) The entity--
       ``(i) permits any member described in subparagraph (B) to 
     vote on matters of the entity related to the arrangement with 
     the Secretary under paragraph (1); and
       ``(ii) ensures that such members have an equal vote on such 
     matters .
       ``(F) With respect to matters related to the arrangement 
     with the Secretary under paragraph (1), the entity conducts 
     its business in an open and transparent manner and provides 
     the opportunity for public comment.
       ``(G) The entity operates as a voluntary consensus 
     standards setting organization as defined for purposes of 
     section 12(d) of the National Technology Transfer and 
     Advancement Act of 1995 (Public Law 104-113) and Office of 
     Management and Budget Revised Circular A-119 (published in 
     the Federal Register on February 10, 1998).''.
       (b) Conforming References to Previous Part E.--Any 
     reference in law (in effect before the date of the enactment 
     of this Act) to part E of title XVIII of the Social Security 
     Act is deemed a reference to part F of such title (as in 
     effect after such date).

     SEC. 127. EXCEPTION TO FEDERAL ANTI-KICKBACK AND PHYSICIAN 
                   SELF REFERRAL LAWS FOR THE PROVISION OF 
                   PERMITTED SUPPORT.

       (a) Anti-Kickback.--Section 1128B(b) (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

[[Page S8971]]

     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) during the 5-year period beginning on the date the 
     Secretary issues the interim final rule under section 
     801(c)(1) of the Medicare Value Purchasing Act of 2005, the 
     provision, with or without charge, of any permitted support 
     (as defined in paragraph (4)).''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Permitted support.--
       ``(A) Definition of permitted support.--Subject to 
     subparagraph (B), in this section, the term `permitted 
     support' means the provision of any equipment, item, 
     information, right, license, intellectual property, software, 
     training, or service used for developing, implementing, 
     operating, or facilitating the use of systems designed to 
     improve the quality of health care and to promote the 
     electronic exchange of health information.
       ``(B) Exception.--The term `permitted support' shall not 
     include the provision of--
       ``(i) any support that is determined in a manner that is 
     related to the volume or value of any referrals or other 
     business generated between the parties for which payment may 
     be made in whole or in part under a Federal health care 
     program;
       ``(ii) any support that has more than incidental utility or 
     value to the recipient beyond the exchange of health care 
     information; or
       ``(iii) any health information technology system, product, 
     or service that is not capable of exchanging health care 
     information in compliance with data standards consistent with 
     interoperability.
       ``(C) Determination.--In establishing regulations with 
     respect to the requirement under subparagraph (B)(iii), the 
     Secretary shall take in account--
       ``(I) whether the health information technology system, 
     product, or service is widely accepted within the industry 
     and whether there is sufficient industry experience to ensure 
     successful implementation of the system, product, or service; 
     and
       ``(II) whether the health information technology system, 
     product, or service improves quality of care, enhances 
     patient safety, or provides greater administrative 
     efficiencies.''.
       (b) Physician Self-Referral.--Section 1877(e) (42 U.S.C. 
     1395nn(e)) is amended by adding at the end the following new 
     paragraph:
       ``(9) Permitted support.--During the 5-year period 
     beginning on the date the Secretary issues the interim final 
     rule under section 801(c)(1) of the Medicare Value Purchasing 
     Act of 2005, the provision, with or without charge, of any 
     permitted support (as defined in section 1128B(b)(4)).''.
       (c) Regulations.--In order to carry out the amendments made 
     by this section--
       (1) the Secretary shall issue an interim final rule with 
     comment period by not later than the date that is 180 days 
     after the date of enactment of this Act;
       (2) the Secretary shall issue a final rule by not later 
     than the date that is 180 days after the date that the 
     interim final rule under paragraph (1) is issued.

                   CHAPTER 2--VALUE BASED PURCHASING

     SEC. 131. VALUE BASED PURCHASING PROGRAMS; SENSE OF THE 
                   SENATE.

       (a) Medicare Value Based Purchasing Pilot Program.--
       (1) In general.--The Secretary of Health and Human Services 
     (referred to in this section as 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 1860E-1 of the Social Security Act (as 
     added by section 126). 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.--Not later than 2 years after conducting the 
     pilot program under paragraph (1), the Secretary shall 
     transition and implement such program on a national basis.
       (3) Information technology.--Providers reporting quality 
     measurement data electronically under this section shall 
     report such data pursuant to the standards adopted under 
     title XXIX of the Public Health Service Act (as added by 
     section 121).
       (4) Funding.--The Secretary shall ensure that the total 
     amount of expenditures under this Act in a year does not 
     exceed the total amount of expenditures that would have been 
     expended in such year under this Act if this subsection had 
     not been enacted.
       (b) 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 1860E-1 of the Social Security Act (as 
     added by section 126).
       (2) Information technology.--Providers reporting quality 
     measurement data electronically under this section shall 
     report such data pursuant to the standards adopted under 
     title XXIX of the Public Health Service Act (as added by 
     section 121).
       (3) 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).

           Subtitle C--Patient Safety and Quality Improvement

     SEC. 141. SHORT TITLE.

       This subtitle may be cited as the ``Patient Safety and 
     Quality Improvement Act of 2005''.

     SEC. 142. FINDINGS AND PURPOSES.

       (a) Findings.--Congress makes the following findings:
       (1) In 1999, the Institute of Medicine released a report 
     entitled To Err is Human that described medical errors as the 
     eighth leading cause of death in the United States, with as 
     many as 98,000 people dying as a result of medical errors 
     each year.
       (2) To address these deaths and injuries due to medical 
     errors, the health care system must identify and learn from 
     such errors so that systems of care can be improved.
       (3) In their report, the Institute of Medicine called on 
     Congress to provide legal protections with respect to 
     information reported for the purposes of quality improvement 
     and patient safety.
       (4) The Health, Education, Labor, and Pensions Committee of 
     the Senate held 4 hearings in the 106th Congress and 1 
     hearing in the 107th Congress on patient safety where experts 
     in the field supported the recommendation of the Institute of 
     Medicine for congressional action.
       (5) Myriad public and private patient safety initiatives 
     have begun. The Quality Interagency Coordination Taskforce 
     has recommended steps to improve patient safety that may be 
     taken by each Federal agency involved in health care and 
     activities relating to these steps are ongoing.
       (6) The research on patient safety unequivocally calls for 
     a learning environment, rather than a punitive environment, 
     in order to improve patient safety.
       (7) Voluntary data gathering systems are more supportive 
     than mandatory systems in creating the learning environment 
     referred to in paragraph (6) as stated in the Institute of 
     Medicine's report.
       (8) Promising patient safety reporting systems have been 
     established throughout the United States and the best ways to 
     structure and use these systems are currently being 
     determined, largely through projects funded by the Agency for 
     Healthcare Research and Quality.
       (9) Many organizations currently collecting patient safety 
     data have expressed a need for legal protections that will 
     allow them to review protected information and collaborate in 
     the development and implementation of patient safety 
     improvement strategies. Currently, the State peer review 
     protections are inadequate to allow the sharing of 
     information to promote patient safety.
       (b) Purposes.--It is the purpose of this subtitle to--
       (1) encourage a culture of safety and quality in the United 
     States health care system by providing for legal protection 
     of information reported voluntarily for the purposes of 
     quality improvement and patient safety; and
       (2) ensure accountability by raising standards and 
     expectations for continuous quality improvements in patient 
     safety.

     SEC. 143. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.

       Title IX of the Public Health Service Act (42 U.S.C. 299 et 
     seq.) is amended--
       (1) in section 912(c), by inserting ``, in accordance with 
     part C,'' after ``The Director shall'';
       (2) by redesignating part C as part D;
       (3) by redesignating sections 921 through 928, as sections 
     931 through 938, respectively;
       (4) in 934(d) (as so redesignated), by striking the second 
     sentence and inserting the following: ``Penalties provided 
     for under this section shall be imposed and collected by the 
     Secretary using the administrative and procedural processes 
     used to impose and collect civil money penalties under 
     section 1128A of the Social Security Act (other than 
     subsections (a) and (b), the second sentence of subsection 
     (f), and subsections (i), (m), and (n)), unless the Secretary 
     determines that a modification of procedures would be more 
     suitable or reasonable to carry out this subsection and 
     provides for such modification by regulation.'';
       (5) in section 938(1) (as so redesignated), by striking 
     ``921'' and inserting ``931''; and
       (6) by inserting after part B the following:

                  ``PART C--PATIENT SAFETY IMPROVEMENT

     ``SEC. 921. DEFINITIONS.

       ``In this part:

[[Page S8972]]

       ``(1) Non-identifiable information.--
       ``(A) In general.--The term `non-identifiable information' 
     means, with respect to information, that the information is 
     presented in a form and manner that prevents the 
     identification of a provider, a patient, or a reporter of 
     patient safety data.
       ``(B) Identifiability of patient.--For purposes of 
     subparagraph (A), the term `presented in a form and manner 
     that prevents the identification of a patient' means, with 
     respect to information that has been subject to rules 
     promulgated pursuant to section 264(c) of the Health 
     Insurance Portability and Accountability Act of 1996 (42 
     U.S.C. 1320d-2 note), that the information has been de-
     identified so that it is no longer individually identifiable 
     health information as defined in such rules.
       ``(2) Patient safety data.--
       ``(A) In general.--The term `patient safety data' means--
       ``(i) any data, reports, records, memoranda, analyses (such 
     as root cause analyses), or written or oral statements that 
     are--

       ``(I) collected or developed by a provider for reporting to 
     a patient safety organization, provided that they are 
     reported to the patient safety organization within 60 days;
       ``(II) requested by a patient safety organization 
     (including the contents of such request), if they are 
     reported to the patient safety organization within 60 days;
       ``(III) reported to a provider by a patient safety 
     organization; or
       ``(IV) collected by a patient safety organization from 
     another patient safety organization, or developed by a 
     patient safety organization;

     that could result in improved patient safety, health care 
     quality, or health care outcomes; or
       ``(ii) any deliberative work or process with respect to any 
     patient safety data described in clause (i).
       ``(B) Limitation.--
       ``(i) Collection.--If the original material from which any 
     data, reports, records, memoranda, analyses (such as root 
     case analyses), or written or oral statements referred to in 
     subclause (I) or (IV) of subparagraph (A)(i) are collected 
     and is not patient safety data, the act of such collection 
     shall not make such original material patient safety data for 
     purposes of this part.
       ``(ii) Separate data.--The term `patient safety data' shall 
     not include information (including a patient's medical 
     record, billing and discharge information or any other 
     patient or provider record) that is collected or developed 
     separately from and that exists separately from patient 
     safety data. Such separate information or a copy thereof 
     submitted to a patient safety organization shall not itself 
     be considered as patient safety data. Nothing in this part, 
     except for section 922(f)(1), shall be construed to limit--

       ``(I) the discovery of or admissibility of information 
     described in this subparagraph in a criminal, civil, or 
     administrative proceeding;
       ``(II) the reporting of information described in this 
     subparagraph to a Federal, State, or local governmental 
     agency for public health surveillance, investigation, or 
     other public health purposes or health oversight purposes; or
       ``(III) a provider's recordkeeping obligation with respect 
     to information described in this subparagraph under Federal, 
     State, or local law.

       ``(3) Patient safety organization.--The term `patient 
     safety organization' means a private or public entity or 
     component thereof that is currently listed by the Secretary 
     pursuant to section 924(c).
       ``(4) Patient safety organization activities.--The term 
     `patient safety organization activities' means the following 
     activities, which are deemed to be necessary for the proper 
     management and administration of a patient safety 
     organization:
       ``(A) The conduct, as its primary activity, of efforts to 
     improve patient safety and the quality of health care 
     delivery.
       ``(B) The collection and analysis of patient safety data 
     that are submitted by more than one provider.
       ``(C) The development and dissemination of information to 
     providers with respect to improving patient safety, such as 
     recommendations, protocols, or information regarding best 
     practices.
       ``(D) The utilization of patient safety data for the 
     purposes of encouraging a culture of safety and of providing 
     direct feedback and assistance to providers to effectively 
     minimize patient risk.
       ``(E) The maintenance of procedures to preserve 
     confidentiality with respect to patient safety data.
       ``(F) The provision of appropriate security measures with 
     respect to patient safety data.
       ``(G) The utilization of qualified staff.
       ``(5) Person.--The term `person' includes Federal, State, 
     and local government agencies.
       ``(6) Provider.--The term `provider' means--
       ``(A) a person licensed or otherwise authorized under State 
     law to provide health care services, including--
       ``(i) a hospital, nursing facility, comprehensive 
     outpatient rehabilitation facility, home health agency, 
     hospice program, renal dialysis facility, ambulatory surgical 
     center, pharmacy, physician or health care practitioner's 
     office, long term care facility, behavior health residential 
     treatment facility, clinical laboratory, or health center; or
       ``(ii) a physician, physician assistant, nurse 
     practitioner, clinical nurse specialist, certified registered 
     nurse anesthetist, certified nurse midwife, psychologist, 
     certified social worker, registered dietitian or nutrition 
     professional, physical or occupational therapist, pharmacist, 
     or other individual health care practitioner; or
       ``(B) any other person specified in regulations promulgated 
     by the Secretary.

     ``SEC. 922. PRIVILEGE AND CONFIDENTIALITY PROTECTIONS.

       ``(a) Privilege.--Notwithstanding any other provision of 
     Federal, State, or local law, patient safety data shall be 
     privileged and, subject to the provisions of subsection 
     (c)(1), shall not be--
       ``(1) subject to a Federal, State, or local civil, 
     criminal, or administrative subpoena;
       ``(2) subject to discovery in connection with a Federal, 
     State, or local civil, criminal, or administrative 
     proceeding;
       ``(3) disclosed pursuant to section 552 of title 5, United 
     States Code (commonly known as the Freedom of Information 
     Act) or any other similar Federal, State, or local law;
       ``(4) admitted as evidence or otherwise disclosed in any 
     Federal, State, or local civil, criminal, or administrative 
     proceeding; or
       ``(5) utilized in a disciplinary proceeding against a 
     provider.
       ``(b) Confidentiality.--Notwithstanding any other provision 
     of Federal, State, or local law, and subject to the 
     provisions of subsections (c) and (d), patient safety data 
     shall be confidential and shall not be disclosed.
       ``(c) Exceptions to Privilege and Confidentiality.--Nothing 
     in this section shall be construed to prohibit one or more of 
     the following uses or disclosures:
       ``(1) Disclosure by a provider or patient safety 
     organization of relevant patient safety data for use in a 
     criminal proceeding only after a court makes an in camera 
     determination that such patient safety data contains evidence 
     of a wanton and criminal act to directly harm the patient.
       ``(2) Voluntary disclosure of non-identifiable patient 
     safety data by a provider or a patient safety organization.
       ``(d) Protected Disclosure and Use of Information.--Nothing 
     in this section shall be construed to prohibit one or more of 
     the following uses or disclosures:
       ``(1) Disclosure of patient safety data by a person that is 
     a provider, a patient safety organization, or a contractor of 
     a provider or patient safety organization, to another such 
     person, to carry out patient safety organization activities.
       ``(2) Disclosure of patient safety data by a provider or 
     patient safety organization to grantees or contractors 
     carrying out patient safety research, evaluation, or 
     demonstration projects authorized by the Director.
       ``(3) Disclosure of patient safety data by a provider to an 
     accrediting body that accredits that provider.
       ``(4) Voluntary disclosure of patient safety data by a 
     patient safety organization to the Secretary for public 
     health surveillance if the consent of each provider 
     identified in, or providing, such data is obtained prior to 
     such disclosure. Nothing in the preceding sentence shall be 
     construed to prevent the release of patient safety data that 
     is provided by, or that relates solely to, a provider from 
     which the consent described in such sentence is obtained 
     because one or more other providers do not provide such 
     consent with respect to the disclosure of patient safety date 
     that relates to such nonconsenting providers. Consent for the 
     future release of patient safety data for such purposes may 
     be requested by the patient safety organization at the time 
     the data is submitted.
       ``(5) Voluntary disclosure of patient safety data by a 
     patient safety organization to State of local government 
     agencies for public health surveillance if the consent of 
     each provider identified in, or providing, such data is 
     obtained prior to such disclosure. Nothing in the preceding 
     sentence shall be construed to prevent the release of patient 
     safety data that is provided by, or that relates solely to, a 
     provider from which the consent described in such sentence is 
     obtained because one or more other providers do not provide 
     such consent with respect to the disclosure of patient safety 
     date that relates to such nonconsenting providers. Consent 
     for the future release of patient safety data for such 
     purposes may be requested by the patient safety organization 
     at the time the data is submitted.
       ``(e) Continued Protection of Information after 
     Disclosure.--
       ``(1) In general.--Except as provided in paragraph (2), 
     patient safety data that is used or disclosed shall continue 
     to be privileged and confidential as provided for in 
     subsections (a) and (b), and the provisions of such 
     subsections shall apply to such data in the possession or 
     control of--
       ``(A) a provider or patient safety organization that 
     possessed such data before the use or disclosure; or
       ``(B) a person to whom such data was disclosed.
       ``(2) Exception.--Notwithstanding paragraph (1), and 
     subject to paragraph (3)--
       ``(A) if patient safety data is used or disclosed as 
     provided for in subsection (c)(1), and such use or disclosure 
     is in open court, the confidentiality protections provided 
     for in subsection (b) shall no longer apply to such data; and
       ``(B) if patient safety data is used or disclosed as 
     provided for in subsection (c)(2), the privilege and 
     confidentiality protections provided for in subsections (a) 
     and (b) shall no longer apply to such data.

[[Page S8973]]

       ``(3) Construction.--Paragraph (2) shall not be construed 
     as terminating or limiting the privilege or confidentiality 
     protections provided for in subsection (a) or (b) with 
     respect to data other than the specific data used or 
     disclosed as provided for in subsection (c).
       ``(f) Limitation on Actions.--
       ``(1) Patient safety organizations.--Except to enforce 
     disclosures pursuant to subsection (c)(1), no action may be 
     brought or process served against a patient safety 
     organization to compel disclosure of information collected or 
     developed under this part whether or not such information is 
     patient safety data unless such information is specifically 
     identified, is not patient safety data, and cannot otherwise 
     be obtained.
       ``(2) Providers.--An accrediting body shall not take an 
     accrediting action against a provider based on the good faith 
     participation of the provider in the collection, development, 
     reporting, or maintenance of patient safety data in 
     accordance with this part. An accrediting body may not 
     require a provider to reveal its communications with any 
     patient safety organization established in accordance with 
     this part.
       ``(g) Reporter Protection.--
       ``(1) In general.--A provider may not take an adverse 
     employment action, as described in paragraph (2), against an 
     individual based upon the fact that the individual in good 
     faith reported information--
       ``(A) to the provider with the intention of having the 
     information reported to a patient safety organization; or
       ``(B) directly to a patient safety organization.
       ``(2) Adverse employment action.--For purposes of this 
     subsection, an `adverse employment action' includes--
       ``(A) loss of employment, the failure to promote an 
     individual, or the failure to provide any other employment-
     related benefit for which the individual would otherwise be 
     eligible; or
       ``(B) an adverse evaluation or decision made in relation to 
     accreditation, certification, credentialing, or licensing of 
     the individual.
       ``(h) Enforcement.--
       ``(1) Prohibition.--Except as provided in subsections (c) 
     and (d) and as otherwise provided for in this section, it 
     shall be unlawful for any person to negligently or 
     intentionally disclose any patient safety data, and any such 
     person shall, upon adjudication, be assessed in accordance 
     with section 934(d).
       ``(2) Relation to hipaa.--The penalty provided for under 
     paragraph (1) shall not apply if the defendant would 
     otherwise be subject to a penalty under the regulations 
     promulgated under section 264(c) of the Health Insurance 
     Portability and Accountability Act of 1996 (42 U.S.C. 1320d-2 
     note) or under section 1176 of the Social Security Act (42 
     U.S.C. 1320d-5) for the same disclosure.
       ``(3) Equitable relief.--
       ``(A) In general.--Without limiting remedies available to 
     other parties, a civil action may be brought by any aggrieved 
     individual to enjoin any act or practice that violates 
     subsection (g) and to obtain other appropriate equitable 
     relief (including reinstatement, back pay, and restoration of 
     benefits) to redress such violation.
       ``(B) Against state employees.--An entity that is a State 
     or an agency of a State government may not assert the 
     privilege described in subsection (a) unless before the time 
     of the assertion, the entity or, in the case of and with 
     respect to an agency, the State has consented to be subject 
     to an action as described by this paragraph, and that consent 
     has remained in effect.
       ``(i) Rule of Construction.--Nothing in this section shall 
     be construed to--
       ``(1) limit other privileges that are available under 
     Federal, State, or local laws that provide greater 
     confidentiality protections or privileges than the privilege 
     and confidentiality protections provided for in this section;
       ``(2) limit, alter, or affect the requirements of Federal, 
     State, or local law pertaining to information that is not 
     privileged or confidential under this section;
       ``(3) alter or affect the implementation of any provision 
     of section 264(c) of the Health Insurance Portability and 
     Accountability Act of 1996 (Public Law 104-191; 110 Stat. 
     2033), section 1176 of the Social Security Act (42 U.S.C. 
     1320d-5), or any regulation promulgated under such sections;
       ``(4) limit the authority of any provider, patient safety 
     organization, or other person to enter into a contract 
     requiring greater confidentiality or delegating authority to 
     make a disclosure or use in accordance with subsection (c) or 
     (d); and
       ``(5) prohibit a provider from reporting a crime to law 
     enforcement authorities, regardless of whether knowledge of 
     the existence of, or the description of, the crime is based 
     on patient safety data, so long as the provider does not 
     disclose patient safety data in making such report.

     ``SEC. 923. PATIENT SAFETY NETWORK OF DATABASES.

       ``(a) In General.--The Secretary shall maintain a patient 
     safety network of databases that provides an interactive 
     evidence-based management resource for providers, patient 
     safety organizations, and other persons. The network of 
     databases shall have the capacity to accept, aggregate, and 
     analyze nonidentifiable patient safety data voluntarily 
     reported by patient safety organizations, providers, or other 
     persons.
       ``(b) Network of Database Standards.--The Secretary may 
     determine common formats for the reporting to the patient 
     safety network of databases maintained under subsection (a) 
     of nonidentifiable patient safety data, including necessary 
     data elements, common and consistent definitions, and a 
     standardized computer interface for the processing of such 
     data. To the extent practicable, such standards shall be 
     consistent with the administrative simplification provisions 
     of Part C of title XI of the Social Security Act.

     ``SEC. 924. PATIENT SAFETY ORGANIZATION CERTIFICATION AND 
                   LISTING.

       ``(a) Certification.--
       ``(1) Initial certification.--Except as provided in 
     paragraph (2), an entity that seeks to be a patient safety 
     organization shall submit an initial certification to the 
     Secretary that the entity intends to perform the patient 
     safety organization activities.
       ``(2) Delayed certification of collection from more than 
     one provider.--An entity that seeks to be a patient safety 
     organization may--
       ``(A) submit an initial certification that it intends to 
     perform patient safety organization activities other than the 
     activities described in subparagraph (B) of section 921(4); 
     and
       ``(B) within 2 years of submitting the initial 
     certification under subparagraph (A), submit a supplemental 
     certification that it performs the patient safety 
     organization activities described in subparagraphs (A) 
     through (F) of section 921(4).
       ``(3) Expiration and renewal.--
       ``(A) Expiration.--An initial certification under paragraph 
     (1) or (2)(A) shall expire on the date that is 3 years after 
     it is submitted.
       ``(B) Renewal.--
       ``(i) In general.--An entity that seeks to remain a patient 
     safety organization after the expiration of an initial 
     certification under paragraph (1) or (2)(A) shall, within the 
     3-year period described in subparagraph (A), submit a renewal 
     certification to the Secretary that the entity performs the 
     patient safety organization activities described in section 
     921(4).
       ``(ii) Term of renewal.--A renewal certification under 
     clause (i) shall expire on the date that is 3 years after the 
     date on which it is submitted, and may be renewed in the same 
     manner as an initial certification.
       ``(b) Acceptance of Certification.--Upon the submission by 
     an organization of an initial certification pursuant to 
     subsection (a)(1) or (a)(2)(A), a supplemental certification 
     pursuant to subsection (a)(2)(B), or a renewal certification 
     pursuant to subsection (a)(3)(B), the Secretary shall review 
     such certification and--
       ``(1) if such certification meets the requirements of 
     subsection (a)(1), (a)(2)(A), (a)(2)(B), or (a)(3)(B), as 
     applicable, the Secretary shall notify the organization that 
     such certification is accepted; or
       ``(2) if such certification does not meet such 
     requirements, as applicable, the Secretary shall notify the 
     organization that such certification is not accepted and the 
     reasons therefor.
       ``(c) Listing.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the Secretary shall compile and maintain a 
     current listing of patient safety organizations with respect 
     to which the Secretary has accepted a certification pursuant 
     to subsection (b).
       ``(2) Removal from listing.--The Secretary shall remove 
     from the listing under paragraph (1)--
       ``(A) an entity with respect to which the Secretary has 
     accepted an initial certification pursuant to subsection 
     (a)(2)(A) and which does not submit a supplemental 
     certification pursuant to subsection (a)(2)(B) that is 
     accepted by the Secretary;
       ``(B) an entity whose certification expires and which does 
     not submit a renewal application that is accepted by the 
     Secretary; and
       ``(C) an entity with respect to which the Secretary revokes 
     the Secretary's acceptance of the entity's certification, 
     pursuant to subsection (d).
       ``(d) Revocation of Acceptance.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     the Secretary determines (through a review of patient safety 
     organization activities) that a patient safety organization 
     does not perform one of the patient safety organization 
     activities described in subparagraph (A) through (F) of 
     section 921(4), the Secretary may, after notice and an 
     opportunity for a hearing, revoke the Secretary's acceptance 
     of the certification of such organization.
       ``(2) Delayed certification of collection from more than 
     one provider.--A revocation under paragraph (1) may not be 
     based on a determination that the organization does not 
     perform the activity described in section 921(4)(B) if--
       ``(A) the listing of the organization is based on its 
     submittal of an initial certification under subsection 
     (a)(2)(A);
       ``(B) the organization has not submitted a supplemental 
     certification under subsection (a)(2)(B); and
       ``(C) the 2-year period described in subsection (a)(2)(B) 
     has not expired.
       ``(e) Notification of Revocation or Removal from Listing.--
       ``(1) Supplying confirmation of notification to 
     providers.--Within 15 days of a revocation under subsection 
     (d)(1), a patient safety organization shall submit to the 
     Secretary a confirmation that the organization has taken all 
     reasonable actions to notify each provider whose patient 
     safety data is

[[Page S8974]]

     collected or analyzed by the organization of such revocation.
       ``(2) Publication.--Upon the revocation of an acceptance of 
     an organization's certification under subsection (d)(1), or 
     upon the removal of an organization from the listing under 
     subsection (c)(2), the Secretary shall publish notice of the 
     revocation or removal in the Federal Register.
       ``(f) Status of Data After Removal from Listing.--
       ``(1) New data.--With respect to the privilege and 
     confidentiality protections described in section 922, data 
     submitted to an organization within 30 days after the 
     organization is removed from the listing under subsection 
     (c)(2) shall have the same status as data submitted while the 
     organization was still listed.
       ``(2) Protection to continue to apply.--If the privilege 
     and confidentiality protections described in section 922 
     applied to data while an organization was listed, or during 
     the 30-day period described in paragraph (1), such 
     protections shall continue to apply to such data after the 
     organization is removed from the listing under subsection 
     (c)(2).
       ``(g) Disposition of Data.--If the Secretary removes an 
     organization from the listing as provided for in subsection 
     (c)(2), with respect to the patient safety data that the 
     organization received from providers, the organization 
     shall--
       ``(1) with the approval of the provider and another patient 
     safety organization, transfer such data to such other 
     organization;
       ``(2) return such data to the person that submitted the 
     data; or
       ``(3) if returning such data to such person is not 
     practicable, destroy such data.

     ``SEC. 925. TECHNICAL ASSISTANCE.

       ``The Secretary, acting through the Director, may provide 
     technical assistance to patient safety organizations, 
     including convening annual meetings for patient safety 
     organizations to discuss methodology, communication, data 
     collection, or privacy concerns.

     ``SEC. 926. PROMOTING THE INTEROPERABILITY OF HEALTH CARE 
                   INFORMATION TECHNOLOGY SYSTEMS.

       ``(a) Development.--Not later than 36 months after the date 
     of enactment of the Patient Safety and Quality Improvement 
     Act of 2005, the Secretary shall develop or adopt voluntary 
     standards that promote the electronic exchange of health care 
     information.
       ``(b) Updates.--The Secretary shall provide for the ongoing 
     review and periodic updating of the standards developed under 
     subsection (a).
       ``(c) Dissemination.--The Secretary shall provide for the 
     dissemination of the standards developed and updated under 
     this section.

     ``SEC. 927. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated such sums as may 
     be necessary to carry out this part.''.

     SEC. 144. STUDIES AND REPORTS.

       (a) In General.--The Secretary of Health and Human Services 
     shall enter into a contract (based upon a competitive 
     contracting process) with an appropriate research 
     organization for the conduct of a study to assess the impact 
     of medical technologies and therapies on patient safety, 
     patient benefit, health care quality, and the costs of care 
     as well as productivity growth. Such study shall examine--
       (1) the extent to which factors, such as the use of labor 
     and technological advances, have contributed to increases in 
     the share of the gross domestic product that is devoted to 
     health care and the impact of medical technologies and 
     therapies on such increases;
       (2) the extent to which early and appropriate introduction 
     and integration of innovative medical technologies and 
     therapies may affect the overall productivity and quality of 
     the health care delivery systems of the United States; and
       (3) the relationship of such medical technologies and 
     therapies to patient safety, patient benefit, health care 
     quality, and cost of care.
       (b) Report.--Not later than 18 months after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall prepare and submit to the appropriate 
     committees of Congress a report containing the results of the 
     study conducted under subsection (a).

                      Subtitle D--Fraud and Abuse

     SEC. 151. NATIONAL EXPANSION OF THE MEDICARE-MEDICAID DATA 
                   MATCH PILOT PROGRAM.

       (a) Requirement of the Medicare Integrity Program.--Section 
     1893 of the Social Security Act (42 U.S.C. 1395ddd) is 
     amended--
       (1) in subsection (b), by adding at the end the following:
       ``(6) The Medicare-Medicaid data match program in 
     accordance with subsection (g).''; and
       (2) by adding at the end the following:
       ``(g) Medicare-Medicaid Data Match Program.--
       ``(1) Expansion of program.--
       ``(A) In general.--The Secretary shall enter into contracts 
     with eligible entities for the purpose of ensuring that, 
     beginning with 2006, the Medicare-Medicaid data match program 
     (commonly referred to as the `Medi-Medi Program') is 
     conducted with respect to the program established under this 
     title and the applicable number of State Medicaid programs 
     under title XIX for the purpose of--
       ``(i) identifying vulnerabilities in both such programs;
       ``(ii) assisting States, as appropriate, to take action to 
     protect the Federal share of expenditures under the Medicaid 
     program; and
       ``(iii) increasing the effectiveness and efficiency of both 
     such programs through cost avoidance, savings, and 
     recoupments of fraudulent, wasteful, or abusive expenditures.
       ``(B) Applicable number.--For purposes of subparagraph (A), 
     the term `applicable number' means--
       ``(i) in the case of fiscal year 2006, 10 State Medicaid 
     programs;
       ``(ii) in the case of fiscal year 2007, 12 State Medicaid 
     programs; and
       ``(iii) in the case of fiscal year 2008, 15 State Medicaid 
     programs.
       ``(2) Limited waiver authority.--The Secretary shall waive 
     only such requirements of this section and of titles XI and 
     XIX as are necessary to carry out paragraph (1).''.
       (b) Funding.--Section 1817(k)(4) of the Social Security Act 
     (42 U.S.C. 1395i(k)(4)) is amended--
       (1) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (C)''; and
       (2) by adding at the end the following:
       ``(C) Expansion of the medicare-medicaid data match 
     program.--Of the amount appropriated under subparagraph (A) 
     for a fiscal year, the following amounts shall be used to 
     carry out section 1893(b)(6) for that year:
       ``(i) $10,000,000 of the amount appropriated for fiscal 
     year 2006.
       ``(ii) $12,200,000 of the amount appropriated for fiscal 
     year 2007.
       ``(iii) $15,800,000 of the amount appropriated for fiscal 
     year 2008.''.

                  Subtitle E--Miscellaneous Provisions

     SEC. 161. SENSE OF THE SENATE ON ESTABLISHING A MANDATED 
                   BENEFITS COMMISSION.

       It is the Sense of the Senate that--
       (1) there should be established an independent Federal 
     entity to study and provide advice to Congress on existing 
     and proposed federally mandated health insurance benefits 
     offered by employer-sponsored health plans and insurance 
     issuers; and
       (2) advice provided under paragraph (1) should be evidence- 
     and actuarially-based, and take into consideration the 
     population costs and benefits, including the health, 
     financial, and social impact on affected populations, safety 
     and medical efficacy, the impact on costs and access to 
     insurance generally, and to different types of insurance 
     products, the impact on labor costs and jobs, and any other 
     relevant factors.

     SEC. 162. ENFORCEMENT OF REIMBURSEMENT PROVISIONS BY 
                   FIDUCIARIES.

       Section 502(a)(3) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1132(a)(3)) is amended by 
     inserting before the semicolon the following: ``(which may 
     include the recovery of amounts on behalf of the plan by a 
     fiduciary enforcing the terms of the plan that provide a 
     right of recovery by reimbursement or subrogation with 
     respect to benefits provided to a participant or 
     beneficiary)''.

 TITLE II--EXPANDING ACCESS TO AFFORDABLE HEALTH COVERAGE THROUGH TAX 
                    INCENTIVES AND OTHER INITIATIVES

             Subtitle A--Refundable Health Insurance Credit

     SEC. 201. REFUNDABLE HEALTH INSURANCE COSTS CREDIT.

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

     ``SEC. 36. HEALTH INSURANCE COSTS FOR UNINSURED INDIVIDUALS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle for the taxable year an amount equal to the 
     amount paid by the taxpayer during such taxable year for 
     qualified health insurance for the taxpayer and the 
     taxpayer's spouse and dependents.
       ``(b) Limitations.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the amount allowed as a credit under subsection (a) to 
     the taxpayer for the taxable year shall not exceed the lesser 
     of--
       ``(A) 90 percent of the sum of the amounts paid by the 
     taxpayer for qualified health insurance for each individual 
     referred to in subsection (a) for coverage months of the 
     individual during the taxable year, or
       ``(B) $3,000.
       ``(2) Monthly limitation.--
       ``(A) In general.--For purposes of paragraph (1), amounts 
     paid by the taxpayer for qualified health insurance for an 
     individual for any coverage month of such individual during 
     the taxable year shall not be taken into account to the 
     extent such amounts exceed the amount equal to \1/12\ of--
       ``(i) $1,111 if such individual is the taxpayer,
       ``(ii) $1,111 if--

       ``(I) such individual is the spouse of the taxpayer,
       ``(II) the taxpayer and such spouse are married as of the 
     first day of such month, and

[[Page S8975]]

       ``(III) the taxpayer files a joint return for the taxable 
     year,

       ``(iii) $1,111 if such individual has attained the age of 
     24 as of the close of the taxable year and is a dependent of 
     the taxpayer for such taxable year, and
       ``(iv) one-half of the amount described in clause (i) if 
     such individual has not attained the age of 24 as of the 
     close of the taxable year and is a dependent of the taxpayer 
     for such taxable year.
       ``(B) Limitation to 2 young dependents.--If there are more 
     than 2 individuals described in subparagraph (A)(iv) with 
     respect to the taxpayer for any coverage month, the aggregate 
     amounts paid by the taxpayer for qualified health insurance 
     for such individuals which may be taken into account under 
     paragraph (1) shall not exceed 1/12 of the dollar amount in 
     effect under subparagraph (A)(i) for the coverage month.
       ``(C) Special rule for married individuals.--In the case of 
     a taxpayer--
       ``(i) who is married (within the meaning of section 7703) 
     as of the close of the taxable year but does not file a joint 
     return for such year, and
       ``(ii) who does not live apart from such taxpayer's spouse 
     at all times during the taxable year,
     any dollar limitation imposed under this paragraph on amounts 
     paid for qualified health insurance for individuals described 
     in subparagraph (A)(iv) shall be divided equally between the 
     taxpayer and the taxpayer's spouse unless they agree on a 
     different division.
       ``(3) Income phaseout of credit percentage for one-person 
     coverage.--
       ``(A) Phaseout for unmarried individuals (other than 
     surviving spouses and heads of households).--In the case of 
     an individual (other than a surviving spouse, the head of a 
     household, or a married individual) with one-person coverage, 
     if such individual has modified adjusted gross income--
       ``(i) in excess of $15,000 for a taxable year but not in 
     excess of $20,000, the 90 percent under paragraph (1)(B) 
     shall be reduced by the number of percentage points which 
     bears the same ratio to 40 percentage points as--

       ``(I) the excess of modified adjusted gross income in 
     excess of $15,000, bears to
       ``(II) $5,000, or

       ``(ii) in excess of $20,000 for a taxable year, the 90 
     percent under paragraph (1)(B) shall be reduced by the sum of 
     40 percentage points plus the number of percentage points 
     which bears the same ratio to 50 percentage points as--

       ``(I) the excess of modified adjusted gross income in 
     excess of $20,000, bears to
       ``(II) $10,000.

       ``(B) Phaseout for other individuals.--In the case of a 
     taxpayer (other than an individual described in subparagraph 
     (A) or (C)) with one-person coverage, if the taxpayer has 
     modified adjusted gross income in excess of $25,000 for a 
     taxable year, the 90 percent under paragraph (1)(B) shall be 
     reduced by the number of percentage points which bears the 
     same ratio to 90 percentage points as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $25,000, bears to
       ``(ii) $15,000.
       ``(C) Married filing separate return.--In the case of a 
     taxpayer who is married filing a separate return for the 
     taxable year and who has one-person coverage, if the taxpayer 
     has modified adjusted gross income in excess of $12,500 for 
     the taxable year, the 90 percent under paragraph (1)(B) shall 
     be reduced by the number of percentage points which bears the 
     same ratio to 90 percentage points as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $12,500, bears to
       ``(ii) $7,500.
       ``(4) Income phaseout of credit percentage for coverage of 
     more than one person.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in the case of a taxpayer with coverage of more than one 
     person, if the taxpayer has modified adjusted gross income in 
     excess of $25,000 for a taxable year, the 90 percent under 
     paragraph (1)(B) shall be reduced by the number of percentage 
     points which bears the same ratio to 90 percentage points 
     as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $25,000, bears to
       ``(ii) $35,000.
       ``(B) Married filing separate return.--In the case of a 
     taxpayer who is married filing a separate return for the 
     taxable year and who has coverage of more than one person, if 
     the taxpayer has modified adjusted gross income in excess of 
     $12,500 for the taxable year, the 90 percent under paragraph 
     (1)(B) shall be reduced by the number of percentage points 
     which bears the same ratio to 90 percentage points as--
       ``(i) the excess of modified adjusted gross income in 
     excess of $12,500, bears to
       ``(ii) $17,500.
       ``(5) Rounding.--Any percentage resulting from a reduction 
     under paragraphs (3) and (4) shall be rounded to the nearest 
     one-tenth of a percent.
       ``(6) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income 
     determined--
       ``(A) without regard to this section and sections 911, 931, 
     and 933, and
       ``(B) after application of sections 86, 135, 137, 219, 221, 
     and 469.
       ``(c) Coverage Month.--For purposes of this section--
       ``(1) In general.--The term `coverage month' means, with 
     respect to an individual, any month if--
       ``(A) as of the first day of such month such individual is 
     covered by qualified health insurance, and
       ``(B) the premium for coverage under such insurance for 
     such month is paid by the taxpayer.
       ``(2) Group health plan coverage.--
       ``(A) In general.--The term `coverage month' shall not 
     include any month for which if, as of the first day of the 
     month, the individual participates in any group health plan 
     (within the meaning of section 5000 without regard to section 
     5000(d)).
       ``(B) Exception for certain permitted coverage.--
     Subparagraph (A) shall not apply to an individual if the 
     individual's only coverage for a month is coverage described 
     in clause (i) or (ii) of section 223(c)(1)(B).
       ``(3) Employer-provided coverage.--The term `coverage 
     month' shall not include any month during a taxable year if 
     any amount is not includible in the gross income of the 
     taxpayer for such year under section 106 (other than coverage 
     described in clause (i) or (ii) of section 223(c)(1)(B)).
       ``(4) Medicare, medicaid, and schip.--The term `coverage 
     month' shall not include any month with respect to an 
     individual if, as of the first day of such month, such 
     individual--
       ``(A) is entitled to any benefits under part A of title 
     XVIII of the Social Security Act or is enrolled under part B 
     of such title, or
       ``(B) is enrolled in the program under title XIX or XXI of 
     such Act (other than under section 1928 of such Act).
       ``(5) Certain other coverage.--The term `coverage month' 
     shall not include any month during a taxable year with 
     respect to an individual if, as of the first day of such 
     month at any time during such month, such individual is 
     enrolled in a program under--
       ``(A) chapter 89 of title 5, United States Code, or
       ``(B) chapter 55 of title 10, United States Code.
       ``(6) Prisoners.--The term `coverage month' shall not 
     include any month with respect to an individual if, as of the 
     first day of such month, such individual is imprisoned under 
     Federal, State, or local authority.
       ``(7) Insufficient presence in united states.--The term 
     `coverage month' shall not include any month during a taxable 
     year with respect to an individual if such individual is 
     present in the United States on fewer than 183 days during 
     such year (determined in accordance with section 7701(b)(7)).
       ``(d) Qualified Health Insurance.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified health insurance' 
     means health insurance coverage (as defined in section 
     9832(b)(1)) which--
       ``(A) is coverage described in paragraph (2), and
       ``(B) meets the requirements of paragraph (3).
       ``(2) Eligible coverage.--Coverage described in this 
     paragraph is the following:
       ``(A) Coverage under individual health insurance.
       ``(B) Coverage through a private sector health care 
     coverage purchasing pool.
       ``(C) Coverage through a State care coverage purchasing 
     pool.
       ``(D) Coverage under a State high-risk pool described in 
     subparagraph (C) of section 35(e)(1).
       ``(E) Coverage after December 31, 2006, under an eligible 
     State buy in program.
       ``(3) Requirements.--The requirements of this paragraph are 
     as follows:
       ``(A) Cost limits.--The coverage meets the requirements of 
     section 223(c)(2)(A)(ii).
       ``(B) Maximum benefits.--Under the coverage, the annual and 
     lifetime maximum benefits are not less than $700,000.
       ``(C) Broad coverage.--The coverage includes inpatient and 
     outpatient care, emergency benefits, and physician care.
       ``(D) Guaranteed renewability.--Such coverage is guaranteed 
     renewable by the provider.
       ``(4) Eligible state buy in program.--For purposes of 
     paragraph (2)(E)--
       ``(A) In general.--The term `eligible State buy in program' 
     means a State program under which an individual who--
       ``(i) is not eligible for assistance under the State 
     medicaid program under title XIX of the Social Security Act,
       ``(ii) is not eligible for assistance under the State 
     children's health insurance program under title XXI of such 
     Act, or
       ``(iii) is not a State employee,

     is able to buy health insurance coverage through a purchasing 
     arrangement entered into between the State and a private 
     sector health care purchasing group or health plan.
       ``(B) Requirements.--Subparagraph (A) shall only apply to a 
     State program if--
       ``(i) the program uses private sector health care 
     purchasing groups or health plans, and
       ``(ii) the State maintains separate risk pools for 
     participants under the State buy in program and other 
     participants.
       ``(C) Subsidies.--
       ``(i) In general.--A State program shall not fail to be 
     treated as an eligible State buy in program merely because 
     the State subsidizes the costs of an individual in buying 
     health insurance coverage under the program.
       ``(ii) Exception.--Clause (i) shall not apply if the State 
     subsidy under the program for any adult for any consecutive 
     12-month period exceeds the applicable dollar amount.
       ``(iii) Applicable dollar amount.--

[[Page S8976]]

       ``(I) In general.--For purposes of clause (ii), the 
     applicable dollar amount is $2,000.
       ``(II) Reduction.--In the case of a family with annual 
     income in excess of 133 percent of the applicable poverty 
     line (as determined in accordance with criteria established 
     by the Director of the Office of Management and Budget) but 
     not in excess of 200 percent of such line, the dollar amount 
     under clause (i) shall be ratably reduced (but not below 
     zero) for each dollar of such excess. In the case of a family 
     with annual income in excess of 200 percent of such line, the 
     applicable dollar amount shall be zero.

       ``(e) Arrangements Under Which Insurers Contribute to 
     HSA.--
       ``(1) In general.--For purposes of this section, health 
     insurance shall not be treated as qualified health insurance 
     if the insurer makes contributions to a health savings 
     account of the taxpayer unless such insurance is provided 
     under an arrangement described in paragraph (2).
       ``(2) Arrangements described.--
       ``(A) Amounts paid for coverage exceed monthly 
     limitation.--In the case of amounts paid under an arrangement 
     for health insurance for a coverage month in excess of the 
     amount in effect under subsection (b)(2)(A) for such month, 
     an arrangement is described in this subparagraph if under the 
     arrangement--
       ``(i) the aggregate amount contributed by the insurer to 
     any health savings account of the taxpayer does not exceed 90 
     percent of the excess of--

       ``(I) the amount paid by the taxpayer for qualified health 
     insurance under such arrangement for such month, over
       ``(II) the amount in effect under subsection (b)(2)(A) for 
     such month, and

       ``(ii) the amount contributed by the insurer to a qualified 
     health savings account of the taxpayer, reduced by the amount 
     of the excess under clause (i), does not exceed 27 percent of 
     the amount in effect under subsection (b)(2)(A) for such 
     month.
       ``(B) Amounts paid for coverage less than monthly 
     limitation.--In the case of an arrangement under which the 
     amount paid for qualified health insurance for a coverage 
     month does not exceed the amount in effect under subsection 
     (b)(2)(A) for such month, an arrangement is described in this 
     subparagraph if--
       ``(i) under the arrangement the value of the insured 
     benefits (excluding overhead) exceeds 65 percent of the 
     amount paid for qualified health insurance for such month, 
     and
       ``(ii) the amount contributed by the insurer to a qualified 
     health savings account of the taxpayer does not exceed 27 
     percent of the amount in effect under subsection (b)(2)(A) 
     for such month.
       ``(3) Qualified health savings account.--
       ``(A) In general.--The term `qualified health savings 
     account' means a health savings account (as defined in 
     section 223(d))--
       ``(i) which is designated (in such form as the Secretary 
     may prescribe) as a qualified account for purposes of this 
     section,
       ``(ii) which may not include any amount other than 
     contributions described in this subsection and earnings on 
     such contributions, and
       ``(iii) with respect to which section 223(f)(4)(A) is 
     applied by substituting `100 percent' for `10 percent'.
       ``(B) Subaccounts and separate accounting.--The Secretary 
     may prescribe rules under which a subaccount within a health 
     savings account, or separate accounting with respect to 
     contributions and earnings described in subparagraph (A)(ii), 
     may be treated in the same manner as a qualified health 
     savings account.
       ``(C) Rollovers.--A contribution of a distribution from a 
     qualified health savings account to another health savings 
     account shall be treated as a rollover contribution for 
     purposes of section 223(f)(5) only if the other account is a 
     qualified health savings account.
       ``(f) Dependents.--For purposes of this section--
       ``(1) Dependent defined.--The term `dependent' has the 
     meaning given such term by section 152 (determined without 
     regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof).
       ``(2) Special rule for dependent child of divorced 
     parents.--An individual who is a child to whom section 152(e) 
     applies shall be treated as a dependent of the custodial 
     parent for a coverage month unless the custodial and 
     noncustodial parent provide otherwise.
       ``(3) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151(c) is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(g) Inflation Adjustments.--
       ``(1) Credit and health insurance amounts.--In the case of 
     any taxable year beginning after 2006, each dollar amount 
     referred to in subsections (b)(1)(B), (b)(2)(A), (d)(3)(B), 
     and (d)(4)(C)(iii)(I) shall be increased by an amount equal 
     to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 213(d)(10)(B)(ii) for the calendar year in which the 
     taxable year begins, determined by substituting `2005' for 
     `1996' in subclause (II) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $10, such amount shall be rounded to the 
     nearest multiple of $10.
       ``(2) Income phaseout amounts.--In the case of any taxable 
     year beginning after 2006, each dollar amount referred to in 
     paragraph (3) and (4) of subsection (b) shall be increased by 
     an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2005' 
     for `calendar year 1992' in subparagraph (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $50, such amount shall be rounded to the next 
     lowest multiple of $50.
       ``(h) Archer MSA Contributions; HSA Contributions.--If a 
     deduction would be allowed under section 220 to the taxpayer 
     for a payment for the taxable year to the Archer MSA of an 
     individual or under section 223 to the taxpayer for a payment 
     for the taxable year to the Health Savings Account of such 
     individual, subsection (a) shall not apply to the taxpayer 
     for any month during such taxable year for which the 
     taxpayer, spouse, or dependent is an eligible individual for 
     purposes of either such section.
       ``(i) Other Rules.--For purposes of this section--
       ``(1) Coordination with medical expense and premium 
     deductions for high deductible health plans.--The amount 
     which would (but for this paragraph) be taken into account by 
     the taxpayer under section 213 or 224 for the taxable year 
     shall be reduced by the credit (if any) allowed by this 
     section to the taxpayer for such year.
       ``(2) Coordination with deduction for health insurance 
     costs of self-employed individuals.--No credit shall be 
     allowable under this section for a taxable year if a 
     deduction is allowed under section 162(l) for the taxable 
     year.
       ``(3) Coordination with advance payment.--Rules similar to 
     the rules of section 35(g)(1) shall apply to any credit to 
     which this section applies.
       ``(4) Coordination with section 35.--If a taxpayer is 
     eligible for the credit allowed under this section and 
     section 35 for any taxable year, the taxpayer shall elect 
     which credit is to be allowed.
       ``(j) Expenses Must Be Substantiated.--A payment for 
     insurance to which subsection (a) applies may be taken into 
     account under this section only if the taxpayer substantiates 
     such payment in such form as the Secretary may prescribe.
       ``(k) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 (relating to 
     information concerning transactions with other persons) is 
     amended by inserting after section 6050T the following:

     ``SEC. 6050U. RETURNS RELATING TO PAYMENTS FOR QUALIFIED 
                   HEALTH INSURANCE.

       ``(a) In General.--Any person who, in connection with a 
     trade or business conducted by such person, receives payments 
     during any calendar year from any individual for coverage of 
     such individual or any other individual under creditable 
     health insurance, shall make the return described in 
     subsection (b) (at such time as the Secretary may by 
     regulations prescribe) with respect to each individual from 
     whom such payments were received.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom payments described in subsection (a) were received,
       ``(B) the name, address, and TIN of each individual who was 
     provided by such person with coverage under creditable health 
     insurance by reason of such payments and the period of such 
     coverage,
       ``(C) the aggregate amount of payments described in 
     subsection (a), and
       ``(D) such other information as the Secretary may 
     reasonably prescribe.
       ``(c) Creditable Health Insurance.--For purposes of this 
     section, the term `creditable health insurance' means 
     qualified health insurance (as defined in section 36(d)).
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required under subsection 
     (b)(2)(A) to be set forth in such return a written statement 
     showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person,
       ``(2) the aggregate amount of payments described in 
     subsection (a) received by the person required to make such 
     return from the individual to whom the statement is required 
     to be furnished, and
       ``(3) the information required under subsection (b)(2)(B) 
     with respect to such payments.

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the

[[Page S8977]]

     calendar year for which the return under subsection (a) is 
     required to be made.
       ``(e) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of any amount 
     received by any person on behalf of another person, only the 
     person first receiving such amount shall be required to make 
     the return under subsection (a).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (relating to definitions) is amended by redesignating clauses 
     (xiii) through (xviii) as clauses (xiv) through (xix), 
     respectively, and by inserting after clause (xii) the 
     following:
       ``(xiii) section 6050U (relating to returns relating to 
     payments for qualified health insurance),''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of subparagraph (AA), 
     by striking the period at the end of the subparagraph (BB) 
     and inserting ``, or'', and by adding at the end the 
     following:
       ``(CC) section 6050U(d) (relating to returns relating to 
     payments for qualified health insurance).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 of such Code is 
     amended by inserting after the item relating to section 6050T 
     the following:

``Sec. 6050U. Returns relating to payments for qualified health 
              insurance.''.

       (c) Criminal Penalty for Fraud.--Subchapter B of chapter 75 
     of the Internal Revenue Code of 1986 (relating to other 
     offenses) is amended by adding at the end the following:

     ``SEC. 7276. PENALTIES FOR OFFENSES RELATING TO HEALTH 
                   INSURANCE TAX CREDIT.

       ``Any person who knowingly misuses Department of the 
     Treasury names, symbols, titles, or initials to convey the 
     false impression of association with, or approval or 
     endorsement by, the Department of the Treasury of any 
     insurance products or group health coverage in connection 
     with the credit for health insurance costs under section 36 
     shall on conviction thereof be fined not more than $10,000, 
     or imprisoned not more than 1 year, or both.''.
       (d) Conforming Amendments.--
       (1) Section 162(l) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following:
       ``(6) Election to have subsection apply.--No deduction 
     shall be allowed under paragraph (1) for a taxable year 
     unless the taxpayer elects to have this subsection apply for 
     such year.''.
       (2) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 36 of such Code''.
       (3) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking ``35'' and inserting ``36'' and 
     by inserting after the item relating to section 35 the 
     following:

``Sec. 36. Health insurance costs for uninsured individuals.''.

       (4) The table of sections for subchapter B of chapter 75 of 
     such Code is amended by adding at the end the following:

``Sec. 7276. Penalties for offenses relating to health insurance tax 
              credit.''.

       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2005.
       (2) Penalties.--The amendments made by subsections (c) and 
     (d)(4) shall take effect on the date of the enactment of this 
     Act.

     SEC. 202. ADVANCE PAYMENT OF CREDIT TO ISSUERS OF QUALIFIED 
                   HEALTH INSURANCE.

       (a) In General.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following:

     ``SEC. 7529. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE 
                   COSTS OF ELIGIBLE INDIVIDUALS.

       ``Not later than July 1, 2007, the Secretary shall 
     establish a program for making payments to providers of 
     qualified health insurance (as defined in section 36(d)) on 
     behalf of individuals eligible for the credit under section 
     36. Such payments shall be made on the basis of modified 
     adjusted gross income of eligible individuals for the 
     preceding taxable year.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 of the Internal Revenue Code of 1986 is amended by adding 
     at the end the following:

``Sec. 7529. Advance payment of health insurance credit for purchasers 
              of qualified health insurance.''.

  Subtitle B--High Deductible Health Plans and Health Savings Accounts

     SEC. 211. DEDUCTION OF PREMIUMS FOR HIGH DEDUCTIBLE HEALTH 
                   PLANS.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 224 as section 225 and by inserting 
     after section 223 the following new section:

     ``SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.

       ``(a) Deduction Allowed.--In the case of an individual, 
     there shall be allowed as a deduction for the taxable year 
     the aggregate amount paid by or on behalf of such individual 
     as premiums under a high deductible health plan with respect 
     to months during such year for which such individual is an 
     eligible individual with respect to such health plan.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Eligible individual.--The term `eligible individual' 
     has the meaning given such term by section 223(c)(1).
       ``(2) High deductible health plan.--The term `high 
     deductible health plan' has the meaning given such term by 
     section 223(c)(2).
       ``(c) Special Rules.--
       ``(1) Deduction allowable for only 1 plan.--For purposes of 
     this section, in the case of an individual covered by more 
     than 1 high deductible health plan for any month, the 
     individual may only take into account amounts paid for 1 of 
     such plans for such month.
       ``(2) Group health plan coverage.--
       ``(A) In general.--No deduction shall be allowed to an 
     individual under subsection (a) for any amount paid for 
     coverage under a high deductible health plan for a month if, 
     as of the first day of that month, that individual 
     participates in any coverage under a group health plan 
     (within the meaning of section 5000 without regard to section 
     5000(d)).
       ``(B) Exception for certain permitted coverage.--
     Subparagraph (A) shall not apply to an individual if the 
     individual's only coverage under a group health plan for a 
     month is coverage described in clause (i) or (ii) of section 
     223(c)(1)(B).
       ``(3) Medicare eligible individuals.--No deduction shall be 
     allowed under subsection (a) with respect to any individual 
     for any month if the individual is entitled to benefits under 
     title XVIII of the Social Security Act for the month.
       ``(4) Health savings account required.--A deduction shall 
     not be allowed under subsection (a) for a taxable year with 
     respect to an individual unless the individual is an account 
     beneficiary of a health savings account during a portion of 
     the taxable year.
       ``(5) Medical and health savings accounts.--Subsection (a) 
     shall not apply with respect to any amount which is paid or 
     distributed out of an Archer MSA or a health savings account 
     which is not included in gross income under section 220(f) or 
     223(f), as the case may be.
       ``(6) Coordination with deduction for health insurance of 
     self-employed individuals.--The amount taken into account by 
     the taxpayer in computing the deduction under section 162(l) 
     shall not be taken into account under this section.
       ``(7) Coordination with medical expense deduction.--The 
     amount taken into account by the taxpayer in computing the 
     deduction under this section shall not be taken into account 
     under section 213.''.
       (b) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--Subsection (a) of section 62 of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by inserting before the last sentence at 
     the end the following new paragraph:
       ``(21) Premiums for high deductible health plans.--The 
     deduction allowed by section 224.''.
       (c) Coordination With Health Insurance Costs Credit.--
     Section 35(g)(2) of the Internal Revenue Code of 1986 is 
     amended by striking ``or 213'' and inserting ``,213, or 
     224''.
       (d) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 of the Internal Revenue Code of 
     1986 is amended by redesignating section 224 as section 225 
     and by inserting before such item the following new item:

``Sec. 224. Premiums for high deductible health plans.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 212. REFUNDABLE CREDIT FOR CONTRIBUTIONS TO HEALTH 
                   SAVINGS ACCOUNTS OF SMALL BUSINESS EMPLOYEES.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986, as amended by 
     subtitle A, is amended by inserting after section 36 the 
     following new section:

     ``SEC. 36A. SMALL EMPLOYER CONTRIBUTIONS TO HEALTH SAVINGS 
                   ACCOUNTS.

       ``(a) General Rule.--In the case of an eligible employer, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle an amount equal to the lesser of--
       ``(1) the amount contributed by such employer to any 
     qualified health savings account of any employee who is an 
     eligible individual (as defined in section 223(c)(1)) during 
     the taxable year, or
       ``(2) an amount equal to the product of--
       ``(A) $200 ($500 if coverage for all months described in 
     subparagraph (B)(i) is family coverage), and
       ``(B) a fraction--
       ``(i) the numerator of which is the number of months that 
     the employee was covered under a high deductible health plan 
     maintained by the employer, and
       ``(ii) the denominator of which is the number of months in 
     the taxable year.
       ``(b) Eligible Employer.--For purposes of this section--
       ``(1) In general.--The term `eligible employer' means, with 
     respect to any taxable year, an employer which--

[[Page S8978]]

       ``(A) is a small employer, and
       ``(B) maintains a high deductible health plan under which 
     all employees of the employer reasonably expected to receive 
     at least $5,000 of compensation during the taxable year are 
     eligible to participate.

     An employer may exclude from consideration under subparagraph 
     (B) employees who are covered by an agreement described in 
     section 410(b)(3)(A) if there is evidence that health 
     benefits were the subject of good faith bargaining.
       ``(2) Exception for governmental and tax-exempt 
     employers.--The term `eligible employer' shall not include 
     the Federal Government or any employer described in section 
     457(e)(1).
       ``(3) Small employer.--
       ``(A) In general.--The term `small employer' means, with 
     respect to any calendar year, any employer if such employer 
     employed an average of 100 or fewer employees on business 
     days during either of the 2 preceding calendar years. For 
     purposes of the preceding sentence, a preceding calendar year 
     may be taken into account only if the employer was in 
     existence throughout such year.
       ``(B) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     1st preceding calendar year, the determination under 
     subparagraph (A) shall be based on the average number of 
     employees that it is reasonably expected such employer will 
     employ on business days in the current calendar year.
       ``(C) Special rule.--Any reference in this paragraph to an 
     employer shall include a reference to any predecessor of such 
     employer.
       ``(c) Definitions.--For purposes of this section--
       ``(1) High deductible health plan.--The term `high 
     deductible health plan' has the meaning given such term by 
     section 223(c)(2).
       ``(2) Qualified health savings account.--
       ``(A) In general.--The term `qualified health savings 
     account' means a health savings account (as defined in 
     section 223(d))--
       ``(i) which is designated (in such form as the Secretary 
     may prescribe) as a qualified account for purposes of this 
     section,
       ``(ii) which may not include any amount other than 
     contributions described in subsection (a) and earnings on 
     such contributions, and
       ``(iii) with respect to which section 223(f)(4)(A) is 
     applied by substituting `100 percent' for `10 percent'.
       ``(B) Subaccounts and separate accounting.--The Secretary 
     may prescribe rules under which a subaccount within a health 
     savings account, or separate accounting with respect to 
     contributions and earnings described in subparagraph (A)(ii), 
     may be treated in the same manner as a qualified health 
     savings account.
       ``(C) Rollovers.--A contribution of a distribution from a 
     qualified health savings account to another health savings 
     account shall be treated as a rollover contribution for 
     purposes of section 223(f)(5) only if the other account is a 
     qualified health savings account.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52, or 
     subsection (n) or (o) of section 414, shall be treated as one 
     person.
       ``(2) Disallowance of deduction.--No deduction shall be 
     allowed for that portion of contributions to any health 
     savings accounts for the taxable year which is equal to the 
     credit determined under subsection (a).
       ``(3) Election not to claim credit.--This section shall not 
     apply to a taxpayer for any taxable year if such taxpayer 
     elects to have this section not apply for such taxable 
     year.''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 36A of such Code''.
       (2) The table of sections for subpart C of part IV of 
     chapter 1 of the Internal Revenue Code of 1986, as amended by 
     subtitle A, is amended by inserting after the item relating 
     to section 36 the following new item:

``Sec. 36A. Small employer contributions to health savings accounts.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2005.

       Subtitle C--Improvement of the Health Coverage Tax Credit

     SEC. 221. CHANGE IN STATE-BASED COVERAGE RULES RELATED TO 
                   PREEXISTING CONDITIONS.

       (a) In General.--Section 35(e)(2) of the Internal Revenue 
     Code of 1986 (relating to requirements for State-based 
     coverage) is amended by adding at the end the following:
       ``(C) Limitation on preexisting condition exclusion 
     period.--The term `qualified health insurance' does not 
     include any coverage described in subparagraphs (C) through 
     (H) of paragraph (1) that imposes a pre-existing condition 
     exclusion with respect to any individual unless--
       ``(i) such exclusion relates to a physical or mental 
     condition, regardless of the cause of the condition, for 
     which medical advice, diagnosis, care, or treatment was 
     recommended or received within the 6-month period ending on 
     the date the individual seeks to enroll in the coverage,
       ``(ii) such exclusion extends for a period of not more than 
     12 months after the individual seeks to enroll in the 
     coverage,
       ``(iii) the period of any such preexisting condition 
     exclusion is reduced by the length of the aggregate of the 
     periods of creditable coverage (as defined in section 
     9801(c)) applicable to the individual as of the enrollment 
     date, and
       ``(iv) such exclusion is not an exclusion described in 
     section 9801(d).''.
       (b) Conforming Amendments.--
       (1) Internal revenue code of 1986.--Subparagraph (A) of 
     section 35(e)(2) of such Code is amended--
       (A) by striking clause (ii); and
       (B) by redesignating clauses (iii) and (iv) as clauses (ii) 
     and (iii), respectively.
       (2) Workforce investment act of 1998 amendments.--Section 
     173(f)(2)(B) of the Workforce Investment Act of 1998 (29 
     U.S.C. 2918(f)(2)(B)) is amended--
       (A) in clause (i)--
       (i) by striking subclause (II); and
       (ii) by redesignating subclauses (III) and (IV) as 
     subclauses (II) and (III), respectively; and
       (B) by adding at the end the following:
       ``(iii) Limitation on preexisting condition exclusion 
     period.--The term `qualified health insurance' does not 
     include any coverage described in clauses (iii) through (ix) 
     of subparagraph (A) that imposes a pre-existing condition 
     exclusion with respect to any individual unless--

       ``(I) such exclusion relates to a physical or mental 
     condition, regardless of the cause of the condition, for 
     which medical advice, diagnosis, care, or treatment was 
     recommended or received within the 6-month period ending on 
     the date the individual seeks to enroll in the coverage;
       ``(II) such exclusion extends for a period of not more than 
     12 months after the individual seeks to enroll in the 
     coverage;
       ``(III) the period of any such preexisting condition 
     exclusion is reduced by the length of the aggregate of the 
     periods of creditable coverage (as defined in section 9801(c) 
     of the Internal Revenue Code of 1986) applicable to the 
     individual as of the enrollment date; and
       ``(IV) such exclusion is not an exclusion described in 
     section 9801(d) of such Code.''.

       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2005.

     SEC. 222. ELIGIBILITY OF SPOUSE OF CERTAIN INDIVIDUALS 
                   ENTITLED TO MEDICARE.

       (a) In General.--Subsection (b) of section 35 of such Code 
     (defining eligible coverage month) is amended by adding at 
     the end the following:
       ``(3) Special rule for spouse of individual entitled to 
     medicare.--Any month which would be an eligible coverage 
     month with respect to a taxpayer (determined without regard 
     to subsection (f)(2)(A)) shall be an eligible coverage month 
     for any spouse of such taxpayer, provided the spouse has 
     attained age 55 and meets the requirements of clauses (ii), 
     (iii), and (iv) of paragraph (1)(A).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to taxable years beginning after December 31, 2005.

     SEC. 223. ELIGIBLE PBGC PENSION RECIPIENT.

       (a) In General.--Subparagraph (B) of section 35(c)(4) of 
     such Code (relating to eligible PBGC pension recipients) is 
     amended by inserting before the period the following ``, or, 
     after August 6, 2002, received from such Corporation a one-
     time single-sum pension payment in lieu of an annuity''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of section 
     201 of the Trade Act of 2002 (Public Law 107-210, 116 Stat. 
     954).

     SEC. 224. APPLICATION OF OPTION TO OFFER STATE-BASED COVERAGE 
                   TO PUERTO RICO, NORTHERN MARIANA ISLANDS, 
                   AMERICAN SAMOA, GUAM, AND THE UNITED STATES 
                   VIRGIN ISLANDS.

       (a) In General.--Section 35(e) of such Code (relating to 
     requirements for qualified health insurance) is amended by 
     adding at the end the following:
       ``(4) Application to puerto rico, northern mariana islands, 
     american samoa, guam, and the united states virgin islands.--
     For purposes of this section, Puerto Rico, Northern Mariana 
     Islands, American Samoa, Guam, and the United States Virgin 
     Islands shall be considered States.''.
       (b) Conforming Amendment.--Section 173(f)(2) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(2)) is 
     amended by adding at the end the following:
       ``(D) Application to northern mariana islands, american 
     samoa, guam, and the united states virgin islands.--For 
     purposes of subsection (a)(4)(A) and this subsection, the 
     term `State' shall include the Northern Mariana Islands, 
     American Samoa, Guam, and the United States Virgin 
     Islands.''.
       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2005.

     SEC. 225. CLARIFICATION OF DISCLOSURE RULES.

       (a) In General.--Subsection (k) of section 6103 of such 
     Code (relating to disclosure of certain returns and return 
     information for tax administration purposes) is amended by 
     adding at the end the following:
       ``(10) Disclosure of certain return information for 
     purposes of carrying out a program for advance payment of 
     credit for health insurance costs of eligible individuals.--
     The Secretary may disclose to providers of health insurance, 
     administrators of health plans, or contractors of such

[[Page S8979]]

     providers or administrators, for any certified individual (as 
     defined in section 7527(c)) the taxpayer identity and health 
     insurance member and group numbers of the certified 
     individual (and any qualifying family member as defined in 
     section 35(d), if applicable) and the amount and period of 
     the payment, to the extent the Secretary deems necessary for 
     the administration of the program established by section 7527 
     (relating to advance payment of credit for health insurance 
     costs of eligible individuals).''.
       (b) Conforming Amendments.--
       (1) Section 6103 of such Code (relating to confidentiality 
     and disclosure of returns and return information) is 
     amended--
       (A) in subsection (a)(3), by inserting ``(k)(10),'' after 
     ``(e)(1)(D)(iii),'';
       (B) in subsection (l), by striking paragraph (18); and
       (C) in subsection (p)--
       (i) in paragraph (3)(A)--

       (I) by striking ``or (9)'' and inserting ``(9), or (10)''; 
     and
       (II) by striking ``(17), or (18)'' and inserting ``or 
     (17)''; and

       (ii) in paragraph (4), by striking ``(18)'' after 
     ``(l)(16)'' each place it appears.
       (2) Section 7213(a)(2) of such Code (relating to 
     unauthorized disclosure of information) is amended by 
     inserting ``(k)(10)'' before ``(l)(6)''.
       (3) Section 7213A(a)(1)(B) of such Code (relating to 
     unauthorized inspection of returns or return information) is 
     amended by striking ``subsection (l)(18) or (n) of section 
     6103'' and inserting ``section 6103(n)''.
       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2005.

     SEC. 226. CLARIFICATION THAT STATE-BASED COBRA CONTINUATION 
                   COVERAGE IS SUBJECT TO SAME RULES AS FEDERAL 
                   COBRA.

       (a) In General.--Section 35(e)(2) of such Code (relating to 
     state-based coverage requirements) is amended--
       (1) in subparagraph (A), in the matter preceding clause 
     (i), by striking ``(B)'' and inserting ``(C)''; and
       (2) in subparagraph(B)(i), by striking ``(B)'' and 
     inserting ``(C)''.
       (b) Conforming Amendments.--Section 173(f)(2)(B) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(2)(B)) is 
     amended--
       (1) in clause (i), in the matter preceding subclause (I), 
     by striking ``(ii)'' and inserting ``(iii)''; and
       (2) in clause (ii)(I), by striking ``(ii)'' and inserting 
     ``(iii)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of sections 
     201 and 203, respectively, of the Trade Act of 2002 (Public 
     Law 107-210, 116 Stat. 954).

     SEC. 227. APPLICATION OF RULES FOR OTHER SPECIFIED COVERAGE 
                   TO ELIGIBLE ALTERNATIVE TAA RECIPIENTS 
                   CONSISTENT WITH RULES FOR OTHER ELIGIBLE 
                   INDIVIDUALS.

       (a) In General.--Section 35(f)(1) of such Code (relating to 
     subsidized coverage) is amended by striking subparagraph (B) 
     and redesignating subparagraph (C) as subparagraph (B).
       (b) Conforming Amendments.--Section 173(f)(7)(A) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(7)(A)) is 
     amended by striking clause (ii) and redesignating clause 
     (iii) as clause (ii).

                  Subtitle D--Long-Term Care Insurance

     SEC. 231. SENSE OF THE SENATE CONCERNING LONG-TERM CARE.

       It is the sense of the Senate that Congress should take 
     steps to make long-term care more affordable by providing tax 
     incentives for the purchase of long-term care insurance, 
     support for family caregivers, and making necessary public 
     program reforms.

                      Subtitle E--Other Provisions

     SEC. 241. DISPOSITION OF UNUSED HEALTH BENEFITS IN CAFETERIA 
                   PLANS AND FLEXIBLE SPENDING ARRANGEMENTS.

       (a) In General.--Section 125 of the Internal Revenue Code 
     of 1986 (relating to cafeteria plans) is amended by 
     redesignating subsections (h) and (i) as subsections (i) and 
     (j), respectively, and by inserting after subsection (g) the 
     following:
       ``(h) Contributions of Certain Unused Health Benefits.--
       ``(1) In general.--For purposes of this title, a plan or 
     other arrangement shall not fail to be treated as a cafeteria 
     plan solely because qualified benefits under such plan 
     include a health flexible spending arrangement under which 
     not more than $500 of unused health benefits may be--
       ``(A) carried forward to the succeeding plan year of such 
     health flexible spending arrangement, or
       ``(B) to the extent permitted by section 106(c), 
     contributed by the employer to a health savings account (as 
     defined in section 223(d)) maintained for the benefit of the 
     employee.
       ``(2) Health flexible spending arrangement.--
       ``(A) In general.--For purposes of this subsection, the 
     term `health flexible spending arrangement' means a flexible 
     spending arrangement (as defined in section 106(c)) that is a 
     qualified benefit and only permits reimbursement for expenses 
     for medical care (as defined in section 213(d)(1), without 
     regard to subparagraphs (C) and (D) thereof).
       ``(B) Flexible spending arrangement.--A flexible spending 
     arrangement is a benefit program which provides employees 
     with coverage under which--
       ``(i) specified incurred expenses may be reimbursed 
     (subject to reimbursement maximums and other reasonable 
     conditions), and
       ``(ii) the maximum amount of reimbursement which is 
     reasonably available to a participant for such coverage is 
     less than 500 percent of the value of such coverage.

     In the case of an insured plan, the maximum amount reasonably 
     available shall be determined on the basis of the underlying 
     coverage.
       ``(3) Unused health benefits.--For purposes of this 
     subsection, with respect to an employee, the term `unused 
     health benefits' means the excess of--
       ``(A) the maximum amount of reimbursement allowable to the 
     employee for a plan year under a health flexible spending 
     arrangement, over
       ``(B) the actual amount of reimbursement for such year 
     under such arrangement.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 242. MICROENTREPRENEURS.

       Section 404(8) of the Assets for Independence Act (42 
     U.S.C. 604 note) is amended by adding at the end the 
     following:
       ``(F) High deductible health insurance.--
       ``(i) In general.--The eligible individual's contribution 
     (as an employer or employee) for coverage under a high 
     deductible health plan (as defined in section 223(c)(2) of 
     the Internal Revenue Code of 1986).
       ``(ii) Definition of employee.--For purposes of clause (i), 
     the term `employee' includes an individual described in 
     section 401(c)(1) of the Internal Revenue Code of 1986.''.

     SEC. 243. STUDY ON ACCESS TO AFFORDABLE HEALTH INSURANCE FOR 
                   FULL-TIME COLLEGE AND UNIVERSITY STUDENTS.

       (a) Sense of the Senate.--It is the sense of the Senate 
     that, because a considerable number of the United States' 
     uninsured population are young adults who are enrolled full-
     time at an institution of higher education, Congress should 
     determine whether health care coverage proposals targeting 
     this population would be effective.
       (b) Study Required.--The Government Accountability Office 
     shall provide for the conduct of a study to evaluate existing 
     and potential sources of affordable health insurance coverage 
     for graduate and undergraduate students enrolled at an 
     institution of higher education (as defined in section 1201 
     of the Higher Education Act of 1965 (20 U.S.C. 1141)).
       (c) Required Elements of Study.--In conducting the study 
     under subsection (b), the Government Accountability Office 
     shall, at a minimum, examine the following:
       (1) Student demographics.--
       (A) In general.--The size and characteristics of the 
     insured and uninsured population of undergraduate and 
     graduate students enrolled at institutions of higher 
     education. Such data shall be differentiated as provided for 
     in subparagraphs (B) and (C).
       (B) Statistical breakdown.--The data concerning the 
     uninsured student population collected under subparagraph (A) 
     shall be differentiated by--
       (i) the full-time, full-time equivalent, and part-time 
     enrollment status of the students involved;
       (ii) the type of institution involved (such as a public, 
     private, non-profit, or community institution);
       (iii) the length and type of educational program involved 
     (such as a certificate or diploma program, a 2-year or 4-year 
     degree program, a masters degree program, or a doctoral 
     degree program); and
       (iv) the undergraduate and graduate student populations 
     involved.
       (C) Coverage.--The data concerning the insured student 
     population collected under subparagraph (A) shall be 
     differentiated by the sources of coverage for such students, 
     including the number and percentage of such insured students 
     who lose parental (or other) coverage during the course of 
     their enrollment at such institutions and the age at which 
     such coverage is lost.
       (2) Impact analysis.--The financial and other impact of 
     uninsured students at such institutions, as compared to 
     insured students, on--
       (A) the health of students;
       (B) the student's family;
       (C) the student's educational progress; and
       (D) education and health care institutions and facilities.
       (3) Assessment of existing programs.--The effect of 
     mandatory and voluntary programs on the access of students to 
     health insurance coverage, including--
       (A) the level and type of coverage provided through 
     mandatory and voluntary State and institutionally-sponsored 
     health care programs currently providing health care 
     insurance coverage to students;
       (B) the average premium paid with respect to students 
     covered under such plans;
       (C) the extent to which any State or institutional health 
     insurance plan may serve as a model for the expansion of 
     access to health insurance for all full-time undergraduate 
     and graduate students attending an institution of higher 
     education; and
       (D) whether such programs targeted to the student 
     population would be more effective in reducing the overall 
     rate of uninsured relative to proposals targeted to broader 
     populations.
       (4) Incentives and disincentives.--The existence of 
     incentives and disincentives offered to institutions of 
     higher education to expand access to health care coverage for 
     students, including--

[[Page S8980]]

       (A) an assessment of the types of incentives and 
     disincentives that may be used to encourage or require an 
     institution of higher education to include health care 
     coverage for all of its students on a mandatory basis, 
     including financial, regulatory, administrative, and other 
     incentives or disincentives;
       (B) a list of burdensome regulatory or administrative 
     reporting and other requirements (from the Department of 
     Education or other governmental agencies) that could be 
     waived without compromising program integrity as a means of 
     encouraging institutions of higher education to provide 
     uninsured students with access to health care coverage;
       (C) other incentives or disincentives that would increase 
     the level of institutional participation in health care 
     coverage programs; and
       (D) an analysis of the costs and effectiveness (to reduce 
     the number of uninsured students) of including the cost of 
     health insurance as an allowable cost of attendance under the 
     Higher Education Act of 1965, and the impact of such 
     inclusion on the student's financial aid package.
       (e) Consultation with Congress.--In carrying out the study 
     under subsection (b), the Government Accountability Office 
     shall consult on a regular basis with the Secretary of 
     Education, the Secretary of Health and Human Services, the 
     Committee on the Budget of the Senate, the Committee on 
     Health, Education, Labor, and Pensions of the Senate, and the 
     Committee on Education and the Workforce of the House of 
     Representatives.
       (f) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Government Accountability Office 
     shall prepare and submit to the Committee on the Budget and 
     the Committee on Health, Education, Labor, and Pensions of 
     the Senate, and the Committee on Education and the Workforce 
     of the House of Representatives, a report concerning the 
     results of the study conducted under this section.

     SEC. 244. EXTENSION OF FUNDING FOR OPERATION OF STATE HIGH 
                   RISK HEALTH INSURANCE POOLS.

       Section 2745 of the Public Health Service Act (42 U.S.C. 
     300gg-45) is amended to read as follows:

     ``SEC. 2745. PROMOTION OF QUALIFIED HIGH RISK POOLS.

       ``(a) Extension of Seed Grants to States.--The Secretary 
     shall provide from the funds appropriated under subsection 
     (d)(1)(A) a grant of up to $1,000,000 to each State that has 
     not created a qualified high risk pool as of the date of 
     enactment of this section for the State's costs of creation 
     and initial operation of such a pool.
       ``(b) Grants for Operational Losses.--
       ``(1) In general.--In the case of a State that has 
     established a qualified high risk pool that--
       ``(A) restricts premiums charged under the pool to no more 
     than 150 percent of the premium for applicable standard risk 
     rates;
       ``(B) offers a choice of two or more coverage options 
     through the pool; and
       ``(C) has in effect a mechanism reasonably designed to 
     ensure continued funding of losses incurred by the State 
     after the end of fiscal year 2004 in connection with 
     operation of the pool;

     the Secretary shall provide, from the funds appropriated 
     under subsection (d)(1)(B)(i) and allotted to the State under 
     paragraph (2), a grant for the losses incurred by the State 
     in connection with the operation of the pool.
       ``(2) Allotment.--The amounts appropriated under subsection 
     (d)(1)(B)(i) for a fiscal year shall be made available to the 
     States (or the entities that operate the high risk pool under 
     applicable State law) as follows:
       ``(A) An amount equal to 50 percent of the appropriated 
     amount for the fiscal year shall be allocated in equal 
     amounts among each eligible State that applies for assistance 
     under this subsection.
       ``(B) An amount equal to 25 percent of the appropriated 
     amount for the fiscal year shall be allocated among the 
     States so that the amount provided to a State bears the same 
     ratio to such available amount as the number of uninsured 
     individuals in the State bears to the total number of 
     uninsured individuals in all States (as determined by the 
     Secretary).
       ``(C) An amount equal to 25 percent of the appropriated 
     amount for the fiscal year shall be allocated among the 
     States so that the amount provided to a State bears the same 
     ratio to such available amount as the number of individuals 
     enrolled in health care coverage through the qualified high 
     risk pool of the State bears to the total number of 
     individuals so enrolled through qualified high risk pools in 
     all States (as determined by the Secretary).
       ``(c) Bonus Grants for Supplemental Consumer Benefits.--
       ``(1) In general.--In the case of a State that has 
     established a qualified high risk pool, the Secretary shall 
     provide, from the funds appropriated under subsection 
     (d)(1)(B)(ii) and allotted to the State under paragraph (3), 
     a grant to be used to provide supplemental consumer benefits 
     to enrollees or potential enrollees (or defined subsets of 
     such enrollees or potential enrollees) in qualified high risk 
     pools.
       ``(2) Benefits.--A State shall use amounts received under a 
     grant under this subsection to provide one or more of the 
     following benefits:
       ``(A) Low-income premium subsidies.
       ``(B) A reduction in premium trends, actual premiums, or 
     other cost-sharing requirements.
       ``(C) An expansion or broadening of the pool of individuals 
     eligible for coverage, including eliminating waiting lists, 
     increasing enrollment caps, or providing flexibility in 
     enrollment rules.
       ``(D) Less stringent rules, or additional waiver authority, 
     with respect to coverage of pre-existing conditions.
       ``(E) Increased benefits.
       ``(F) The establishment of disease management programs.
       ``(3) Limitation.--In allotting amounts under this 
     subsection, the Secretary shall ensure that no State receives 
     an amount that exceeds 10 percent of the amount appropriated 
     for the fiscal year involved under subsection (d)(1)(B)(ii).
       ``(4) Rule of construction.--Nothing in this subsection 
     shall be construed to prohibit States that, on the date of 
     enactment of the State High Risk Pool Funding Extension Act 
     of 2005, are in the process of implementing programs to 
     provide benefits of the type described in paragraph (2), from 
     being eligible for a grant under this subsection.
       ``(d) Funding.--
       ``(1) In general.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     authorized and appropriated--
       ``(A) $15,000,000 for the period of fiscal years 2005 and 
     2006 to carry out subsection (a); and
       ``(B) $75,000,000 for each of fiscal years 2005 through 
     2009, of which--
       ``(i) two-thirds of the amount appropriated for a fiscal 
     year shall be made available for allotments under subsection 
     (b)(2); and
       ``(ii) one-third of the amount appropriated for a fiscal 
     year shall be made available for allotments under subsection 
     (c)(2).
       ``(2) Availability.--Funds appropriated under this 
     subsection for a fiscal year shall remain available for 
     obligation through the end of the following fiscal year.
       ``(3) Reallotment.--If, on June 30 of each fiscal year, the 
     Secretary determines that all amounts appropriated under 
     paragraph (1)(B)(ii) for the fiscal year are not allotted, 
     such remaining amounts shall be allotted among States 
     receiving grants under subsection (b) for the fiscal year in 
     amounts determined appropriate by the Secretary.
       ``(4) No entitlement.--Nothing in this section shall be 
     construed as providing a State with an entitlement to a grant 
     under this section.
       ``(e) Applications.--To be eligible for a grant under this 
     section, a State shall submit to the Secretary an application 
     at such time, in such manner, and containing such information 
     as the Secretary may require.
       ``(f) Definitions.--In this section:
       ``(1) Qualified high risk pool.--
       ``(A) In general.--The term `qualified high risk pool' has 
     the meaning given such term in section 2744(c)(2), except 
     that with respect to subparagraph (A) of such section a State 
     may elect to provide for the enrollment of eligible 
     individuals through--
       ``(i) a combination of a qualified high risk pool and an 
     acceptable alternative mechanism; or
       ``(ii) other health insurance coverage described in 
     subparagraph (B).
       ``(B) Health insurance coverage.--Health insurance coverage 
     described in this subparagraph is individual health insurance 
     coverage--
       ``(i) that meets the requirements of section 2741;
       ``(ii) that is subject to limits on the rates charged to 
     individuals;
       ``(iii) that is available to all individuals eligible for 
     health insurance coverage under this title who are not able 
     to participate in a qualified high risk pool; and
       ``(iv) the defined rate limit of which does not exceed the 
     limit allowed for a qualified risk pool that is otherwise 
     eligible to receive assistance under a grant under this 
     section.
       ``(C) Other coverage.--In addition to coverage described in 
     subparagraph (B), a State may provide for the offering of 
     health insurance coverage that provides first dollar 
     coverage, limits on cost-sharing, and comprehensive medical, 
     hospital and surgical coverage, if the limits on rates for 
     such coverage do not exceed 125 percent of the limit 
     described in subparagraph (B)(iv).
       ``(2) Standard risk rate.--The term `standard risk rate' 
     means a rate--
       ``(A) determined under the State high risk pool by 
     considering the premium rates charged by other health 
     insurers offering health insurance coverage to individuals in 
     the insurance market served;
       ``(B) that is established using reasonable actuarial 
     techniques; and
       ``(C) that reflects anticipated claims experience and 
     expenses for the coverage involved.
       ``(3) State.--The term `State' means any of the 50 States 
     and the District of Columbia.''.

     SEC. 245. SENSE OF THE SENATE ON AFFORDABLE HEALTH COVERAGE 
                   FOR SMALL EMPLOYERS.

       It is the sense of the Senate that Congress should pass 
     legislation to support expanded, affordable health coverage 
     options for individuals, particularly those who work for 
     small businesses, by streamlining and reducing regulations 
     and expanding the role of associations and other group 
     purchasing arrangements.

[[Page S8981]]

                       Subtitle F--Covering Kids

     SEC. 251. SHORT TITLE.

       This subtitle may be cited as the ``Covering Kids Act of 
     2005''.

     SEC. 252. GRANTS TO PROMOTE INNOVATIVE OUTREACH AND 
                   ENROLLMENT UNDER MEDICAID AND SCHIP.

       (a) Grants for Expanded Outreach Activities.--Title XXI of 
     the Social Security Act (42 U.S.C. 1397aa et seq.) is amended 
     by adding at the end the following:

     ``SEC. 2111. EXPANDED OUTREACH ACTIVITIES.

       ``(a) Grants To Conduct Innovative Outreach and Enrollment 
     Efforts.--
       ``(1) In general.--The Secretary shall award grants to 
     eligible entities to--
       ``(A) conduct innovative outreach and enrollment efforts 
     that are designed to increase the enrollment and 
     participation of eligible children under this title and title 
     XIX; and
       ``(B) promote understanding of the importance of health 
     insurance coverage for prenatal care and children.
       ``(2) Performance bonuses.--The Secretary may reserve a 
     portion of the funds appropriated under subsection (g) for a 
     fiscal year for the purpose of awarding performance bonuses 
     during the succeeding fiscal year to eligible entities that 
     meet enrollment goals or other criteria established by the 
     Secretary.
       ``(b) Priority for Award of Grants.--
       ``(1) In general.--In making grants under subsection 
     (a)(1), the Secretary shall give priority to--
       ``(A) eligible entities that propose to target geographic 
     areas with high rates of--
       ``(i) eligible but unenrolled children, including such 
     children who reside in rural areas; or
       ``(ii) racial and ethnic minorities and health disparity 
     populations, including those proposals that address cultural 
     and linguistic barriers to enrollment; and
       ``(B) eligible entities that plan to engage in outreach 
     efforts with respect to individuals described in subparagraph 
     (A) and that are--
       ``(i) Federal health safety net organizations; or
       ``(ii) faith-based organizations or consortia.
       ``(2) 10 percent set aside for outreach to indian 
     children.--An amount equal to 10 percent of the funds 
     appropriated under subsection (g) for a fiscal year shall be 
     used by the Secretary to award grants to Indian Health 
     Service providers and urban Indian organizations receiving 
     funds under title V of the Indian Health Care Improvement Act 
     (25 U.S.C. 1651 et seq.) for outreach to, and enrollment of, 
     children who are Indians.
       ``(c) Application.--An eligible entity that desires to 
     receive a grant under subsection (a)(1) shall submit an 
     application to the Secretary in such form and manner, and 
     containing such information, as the Secretary may decide. 
     Such application shall include--
       ``(1) quality and outcomes performance measures to evaluate 
     the effectiveness of activities funded by a grant awarded 
     under this section to ensure that the activities are meeting 
     their goals; and
       ``(2) an assurance that the entity shall--
       ``(A) conduct an assessment of the effectiveness of such 
     activities against such performance measures; and
       ``(B) cooperate with the collection and reporting of 
     enrollment data and other information determined as a result 
     of conducting such assessments to the Secretary, in such form 
     and manner as the Secretary shall require.
       ``(d) Dissemination of Enrollment Data and Information 
     Determined From Effectiveness Assessments; Annual Report.--
     The Secretary shall--
       ``(1) disseminate to eligible entities and make publicly 
     available the enrollment data and information collected and 
     reported in accordance with subsection (c)(2)(B); and
       ``(2) submit an annual report to Congress on the outreach 
     activities funded by grants awarded under this section.
       ``(e) Supplement, Not Supplant.--Federal funds awarded 
     under this section shall be used to supplement, not supplant, 
     non-Federal funds that are otherwise available for activities 
     funded under this section.
       ``(f) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means 
     any of the following:
       ``(A) A State or local government.
       ``(B) A Federal health safety net organization.
       ``(C) A national, local, or community-based public or 
     nonprofit private organization.
       ``(D) A faith-based organization or consortia, to the 
     extent that a grant awarded to such an entity is consistent 
     with the requirements of section 1955 of the Public Health 
     Service Act (42 U.S.C. 300x-65) relating to a grant award to 
     non-governmental entities.
       ``(E) An elementary or secondary school.
       ``(2) Federal health safety net organization.--The term 
     `Federal health safety net organization' means--
       ``(A) an Indian tribe, tribal organization, or an urban 
     Indian organization receiving funds under title V of the 
     Indian Health Care Improvement Act (25 U.S.C. 1651 et seq.), 
     or an Indian Health Service provider;
       ``(B) a Federally-qualified health center (as defined in 
     section 1905(l)(2)(B));
       ``(C) a hospital defined as a disproportionate share 
     hospital for purposes of section 1923;
       ``(D) a covered entity described in section 340B(a)(4) of 
     the Public Health Service Act (42 U.S.C. 256b(a)(4)); and
       ``(E) any other entity or a consortium that serves children 
     under a federally-funded program, including the special 
     supplemental nutrition program for women, infants, and 
     children (WIC) established under section 17 of the Child 
     Nutrition Act of 1966 (42 U.S.C. 1786), the head start and 
     early head start programs under the Head Start Act (42 U.S.C. 
     9801 et seq.), the school lunch program established under the 
     Richard B. Russell National School Lunch Act, and an 
     elementary or secondary school.
       ``(3) Indians; indian tribe; tribal organization; urban 
     indian organization.--The terms `Indian', `Indian tribe', 
     `tribal organization', and `urban Indian organization' have 
     the meanings given such terms in section 4 of the Indian 
     Health Care Improvement Act (25 U.S.C. 1603).
       ``(g) Appropriation.--There is appropriated, out of any 
     money in the Treasury not otherwise appropriated, $50,000,000 
     for each of fiscal years 2006 and 2007 for the purpose of 
     awarding grants under this section. Amounts appropriated and 
     paid under the authority of this section shall be in addition 
     to amounts appropriated under section 2104 and paid to States 
     in accordance with section 2105, including with respect to 
     expenditures for outreach activities in accordance with 
     subsection (a)(1)(D)(iii) of that section.''.
       (b) Extending Use of Outstationed Workers To Accept Title 
     XXI Applications.--Section 1902(a)(55) of the Social Security 
     Act (42 U.S.C. 1396a(a)(55)) is amended by striking ``or 
     (a)(10)(A)(ii)(IX)'' and inserting ``(a)(10)(A)(ii)(IX), or 
     (a)(10)(A)(ii)(XIV), and applications for child health 
     assistance under title XXI''.

     SEC. 253. STATE OPTION TO PROVIDE FOR SIMPLIFIED 
                   DETERMINATIONS OF A CHILD'S FINANCIAL 
                   ELIGIBILITY FOR MEDICAL ASSISTANCE UNDER 
                   MEDICAID OR CHILD HEALTH ASSISTANCE UNDER 
                   SCHIP.

       (a) Medicaid.--Section 1902(e) of the Social Security Act 
     (42 U.S.C. 1396a(e)) is amended by adding at the end the 
     following:
       ``(13)(A) At the option of the State, the plan may provide 
     that financial eligibility requirements for medical 
     assistance are met for a child who is under an age specified 
     by the State (not to exceed 21 years of age) by using a 
     determination made within a reasonable period (as determined 
     by the State) before its use for this purpose, of the child's 
     family or household income, or if applicable for purposes of 
     determining eligibility under this title or title XXI, assets 
     or resources, by a Federal or State agency, or a public or 
     private entity making such determination on behalf of such 
     agency, specified by the plan, including (but not limited to) 
     an agency administering the State program funded under part A 
     of title IV, the Food Stamp Act of 1977, the Richard B. 
     Russell National School Lunch Act, or the Child Nutrition Act 
     of 1966, notwithstanding any differences in budget unit, 
     disregard, deeming, or other methodology, but only if--
       ``(i) the agency has fiscal liabilities or responsibilities 
     affected or potentially affected by such determination; and
       ``(ii) any information furnished by the agency pursuant to 
     this subparagraph is used solely for purposes of determining 
     financial eligibility for medical assistance under this title 
     or for child health assistance under title XXI.
       ``(B) Nothing in subparagraph (A) shall be construed--
       ``(i) to authorize the denial of medical assistance under 
     this title or of child health assistance under title XXI to a 
     child who, without the application of this paragraph, would 
     qualify for such assistance;
       ``(ii) to relieve a State of the obligation under 
     subsection (a)(8) to furnish medical assistance with 
     reasonable promptness after the submission of an initial 
     application that is evaluated or for which evaluation is 
     requested pursuant to this paragraph;
       ``(iii) to relieve a State of the obligation to determine 
     eligibility for medical assistance under this title or for 
     child health assistance under title XXI on a basis other than 
     family or household income (or, if applicable, assets or 
     resources) if a child is determined ineligible for such 
     assistance on the basis of information furnished pursuant to 
     this paragraph; or
       ``(iv) as affecting the applicability of any non-financial 
     requirements for eligibility for medical assistance under 
     this title or child health assistance under title XXI.''.
       (b) SCHIP.--Section 2107(e)(1) of the Social Security Act 
     (42 U.S.C. 1397gg(e)(1)) is amended by adding at the end the 
     following:
       ``(E) Section 1902(e)(13) (relating to the State option to 
     base a determination of child's financial eligibility for 
     assistance on financial determinations made by a program 
     providing nutrition or other public assistance).''.
       (c) Effective Date.--The amendments made by this section 
     take effect on October 1, 2005.

       TITLE III--IMPROVING CARE AND STRENGTHENING THE SAFETY NET

                      Subtitle A--High Needs Areas

     SEC. 301. PURPOSE.

       It is the purpose of this subtitle to enhance the quality 
     of life of residents of high need areas by increasing their 
     access to the preventive and primary healthcare services 
     provided by community health centers and rural health 
     centers.

[[Page S8982]]

     SEC. 302. HIGH NEED COMMUNITY HEALTH CENTERS.

       Section 330 of the Public Health Service Act (42 U.S.C. 
     254b) is amended--
       (1) by redesignating subsections (k) through (r) as 
     subsections (l) through (s), respectively;
       (2) by inserting after subsection (j), the following:
       ``(k) Priority for Residents of High Need Areas.--
       ``(1) In general.--In awarding grants under this section, 
     the Secretary shall give priority to eligible health centers 
     in high need areas.
       ``(2) Eligible health centers.--A health center is 
     described in this paragraph if such health center--
       ``(A) is a health center as defined under subsection (a) or 
     a rural health clinic that receives funds under section 330A;
       ``(B) agrees to use grant funds to provide preventive and 
     primary healthcare services to residents of high need areas;
       ``(C) specifically requests such priority in the grant 
     application;
       ``(D) describes how the community to be served meets the 
     definition of high need area; and
       ``(E) otherwise meets all other grant requirements.
       ``(3) High need area.--
       ``(A) In general.--In this subsection, the term `high need 
     area' means a county or a regional area identified by the 
     Secretary pursuant to the regulations promulgated under 
     subparagraph (B).
       ``(B) Regulations.--The Secretary shall promulgate 
     regulations that define the term `high need area' for 
     purposes of this subsection. Such regulations shall specify 
     procedures that the Department shall follow in determining 
     estimates on a periodic basis in the United States of the 
     number of medically uninsured persons and the national 
     percentage of medically uninsured persons served by health 
     centers (referred to in this subsection as the `ENP') and for 
     the designation of an area as a `high need area' if the 
     estimated percentage of medically uninsured individuals in 
     the area is higher than the national average and the 
     estimated percentage of medically uninsured individuals in 
     the area served by health centers in the area is below the 
     ENP.
       ``(C) Medically underserved area.--The Secretary shall 
     designate residents of high need areas as medically 
     underserved for purposes of this section.
       ``(4) Funding preference.--The Secretary may limit the 
     amount of grants awarded to applicants from high need areas 
     as provided for in this subsection to not less than 25 
     percent of the total amount of grants awarded under this 
     subsection for each grant category for each grant period.'';
       (3) in subsection (e)(1)(B), by striking ``subsection 
     (k)(3)'' and inserting ``subsection (l)(3)'';
       (4) in subsection (l)(3)(H)(iii) (as so redesignated), by 
     striking ``or (p)'' and inserting ``or (q)'';
       (5) in subsection (m) (as so redesignated), by striking 
     ``subsection (k)(3)'' and inserting ``subsection (l)(3)'';
       (6) in subsection (q) (as so redesignated), by striking 
     ``subsection (k)(3)(G)'' and inserting ``subsection 
     (l)(3)(G)''; and
       (7) in subsection (s)(2)(A) (as so redesignated), by 
     striking ``subsection (k)'' each place that such appears and 
     inserting ``subsection (l)''.

     SEC. 303. GRANT APPLICATION PROCESS.

       Section 330(k) of the Public Health Service Act (42 U.S.C. 
     254b(k)) is amended by adding at the end the following:
       ``(5) Economic viability of applicants.--
       ``(A) In general.--In considering applications under this 
     section, the Secretary shall ensure that an application that 
     demonstrates economic viability, consistent with funding 
     guidelines established by the Secretary for purposes of this 
     section, is not disadvantaged in the evaluation process on 
     the basis that it relies solely on Federal funding.
       ``(B) Qualification of individuals reviewing 
     applications.--The Secretary shall require verification that 
     all individuals who are evaluating community health center 
     grant applications have completed within the 3-year period 
     ending on the date on which the application is being 
     evaluated a training course on the community health center 
     program which addresses the purposes served by community 
     health centers, the critical role of community health centers 
     in the safety net, expectations for the evaluation of 
     applications, and the criteria for awarding grant funding.
       ``(C) Medically underserved designations.--Not later than 6 
     months after the date of enactment of this paragraph, the 
     Administrator of the Health Resources and Services 
     Administration shall submit to the appropriate committees of 
     Congress a report concerning the process for designating an 
     area or population as medically underserved. Such report 
     shall contain recommendations for ensuring that such 
     designations are current within the last 3 years. The report 
     shall also detail plans for ensuring subsequent review to 
     maintain an accurate reflection of community needs in areas 
     and populations designated as medically underserved. Not 
     later than 1 year after such date of enactment, the Secretary 
     shall promulgate regulations based on the recommendations 
     contained in the report.''.

          Subtitle B--Qualified Integrated Health Care systems

     SEC. 321. GRANTS TO QUALIFIED INTEGRATED HEALTH CARE SYSTEMS.

       (a) Eligibility for Grants Under PHSA.--Part D of title III 
     of the Public Health Service Act (42 U.S.C. 254b et seq.) is 
     amended by adding at the end the following new subpart:

   ``Subpart XI--Promotion of Integrated Health Care Systems Serving 
                   Medically Underserved Populations

     ``SEC. 340H. GRANTS TO QUALIFIED INTEGRATED HEALTH CARE 
                   SYSTEMS.

       ``(a) Definitions.--For purposes of this section:
       ``(1) Qualified integrated health care system.--The term 
     `qualified integrated health care system' means an integrated 
     health care system that--
       ``(A) has a demonstrated capacity and commitment to provide 
     a full range of primary, specialty, and hospital care to a 
     medically underserved population in both inpatient and 
     outpatient settings, as appropriate;
       ``(B) is organized to provide such care in a coordinated 
     fashion;
       ``(C) operates one or more integrated health centers 
     meeting the requirements of section 340I;
       ``(D) meets the requirements of subsection (c)(3); and
       ``(E) agrees to use any funds received under this section 
     to supplement and not to supplant amounts received from other 
     sources for the provision of such care.
       ``(2) Medically underserved population.--The term 
     `medically underserved population' has the meaning given such 
     term in section 330(b)(3).
       ``(b) Operating Grants.--
       ``(1) Authority.--The Secretary may make grants to private 
     nonprofit entities for the costs of the operation of 
     qualified integrated health care systems that provide 
     primary, specialty, and hospital care to medically 
     underserved populations.
       ``(2) Amount.--
       ``(A) In general.--The amount of any grant made in any 
     fiscal year under paragraph (1) to an integrated health care 
     system shall be determined by the Secretary (taking into 
     account the full range of care, including specialty services, 
     provided by the system), but may not exceed the amount by 
     which the costs of operation of the system in such fiscal 
     year exceed the total of--
       ``(i) State, local, and other operational funding provided 
     to the system; and
       ``(ii) the fees, premiums, and third-party reimbursements 
     which the system may reasonably be expected to receive for 
     its operations in such fiscal year.
       ``(B) Payments.--Payments under grants under paragraph (1) 
     shall be made in advance or by way of reimbursement and in 
     such installments as the Secretary finds necessary and 
     adjustments may be made for overpayments or underpayments.
       ``(C) Use of nongrant funds.--Nongrant funds described in 
     clauses (i) and (ii) of subparagraph (A), including any such 
     funds in excess of those originally expected, shall be used 
     as permitted under this section, and may be used for such 
     other purposes as are not specifically prohibited under this 
     section if such use furthers the objectives of the project.
       ``(c) Applications.--
       ``(1) Submission.--No grant may be made under this section 
     unless an application therefore is submitted to, and approved 
     by, the Secretary. Such an application shall be submitted in 
     such form and manner and shall contain such information as 
     the Secretary shall prescribe.
       ``(2) Description of need.--
       ``(A) In general.--An application for a grant under 
     subsection (b)(1) for an integrated health care system shall 
     include--
       ``(i) a description of the need for health care services in 
     the area served by the integrated health care system;
       ``(ii) a demonstration by the applicant that the area or 
     the population group to be served by the applicant has a 
     shortage of personal health services; and
       ``(iii) a demonstration that the health care system will be 
     located so that it will provide services to the greatest 
     number of individuals residing in such area or included in 
     such population group.
       ``(B) Demonstrations.--A demonstration shall be made under 
     clauses (ii) or (iii) of subparagraph (A) on the basis of the 
     criteria prescribed by the Secretary under section 330(b)(3) 
     or on the basis of any other criteria which the Secretary may 
     prescribe to determine if the area or population group to be 
     served by the applicant has a shortage of personal health 
     services.
       ``(C) Condition of approval.--In considering an application 
     for a grant under subsection (b)(1), the Secretary may 
     require as a condition to the approval of such application an 
     assurance that any integrated health center operated by the 
     applicant will provide any required primary health services 
     and any additional health services (as defined in section 
     340I) that the Secretary finds are needed to meet specific 
     health needs of the area to be served by the applicant. Such 
     a finding shall be made in writing and a copy shall be 
     provided to the applicant.
       ``(3) Requirements.--The Secretary shall approve an 
     application for a grant under subsection (b)(1) if the 
     Secretary determines that the entity for which the 
     application is submitted is an integrated health care system 
     (within the meaning of subsection (a)) and that--
       ``(A) the primary, specialty, and hospital care provided by 
     the system will be available

[[Page S8983]]

     and accessible in the service area of the system promptly, as 
     appropriate, and in a manner which assures continuity;
       ``(B) the system is participating (or will participate) in 
     a community consortium of safety net providers serving such 
     area (unless other such safety net providers do not exist in 
     a community, decline or refuse to participate, or place 
     unreasonable conditions on their participation);
       ``(C) all of the centers operated by the system are 
     accredited by a national accreditation body recognized by the 
     Secretary;
       ``(D) the system will demonstrate its financial 
     responsibility by the use of such accounting procedures and 
     other requirements as may be prescribed by the Secretary;
       ``(E) the system provides or will provide services to 
     individuals who are eligible for medical assistance under 
     title XIX of the Social Security Act and to individuals who 
     are eligible for assistance under title XXI of such Act;
       ``(F) the system--
       ``(i) has prepared a schedule of fees or payments for the 
     provision of its services consistent with locally prevailing 
     rates or charges and designed to cover its reasonable costs 
     of operation and has prepared a corresponding schedule of 
     discounts to be applied to the payment of such fees or 
     payments, and which discounts are adjusted on the basis of 
     the patient's ability to pay;
       ``(ii)(I) will assure that no patient will be denied health 
     care services due to an individual's inability to pay for 
     such services; and
       ``(II) will assure that any fees or payments required by 
     the system for such services will be reduced or waived to 
     enable the system to fulfill the assurance described in 
     subclause (I); and
       ``(iii) has submitted to the Secretary such reports as the 
     Secretary may require to determine compliance with this 
     subparagraph;
       ``(G) the system has established a governing board that 
     selects the services to be provided by the center, approves 
     the center's annual budget, approves the selection of a 
     director for the center, and establishes general policies for 
     the center;
       ``(H) the system has developed--
       ``(i) an overall plan and budget that meets the 
     requirements of the Secretary; and
       ``(ii) an effective procedure for compiling and reporting 
     to the Secretary such statistics and other information as the 
     Secretary may require relating to--

       ``(I) the costs of its operations;
       ``(II) the patterns of use of its services;
       ``(III) the availability, accessibility, and acceptability 
     of its services; and
       ``(IV) such other matters relating to operations of the 
     applicant as the Secretary may require;

       ``(I) the system will review periodically its service area 
     to--
       ``(i) ensure that the size of such area is such that the 
     services to be provided through the system (including any 
     satellite) are available and accessible to the residents of 
     the area promptly and as appropriate;
       ``(ii) ensure that the boundaries of such area conform, to 
     the extent practicable, to relevant boundaries of political 
     subdivisions, school districts, and Federal and State health 
     and social service programs; and
       ``(iii) ensure that the boundaries of such area eliminate, 
     to the extent possible, barriers to access to the services of 
     the system, including barriers resulting from the area's 
     physical characteristics, its residential patterns, its 
     economic and social grouping, and available transportation;
       ``(J) in the case of a system which serves a substantial 
     proportion of individuals of limited English-speaking 
     ability, the system has--
       ``(i) developed a plan and made arrangements for providing 
     services, to the extent practicable, in the predominant 
     language or languages of such individuals and in the cultural 
     context most appropriate to such individuals; and
       ``(ii) identified one or more individuals on its staff who 
     are fluent in such predominant language or languages and in 
     English and whose responsibilities shall include providing 
     guidance to such individuals and to other appropriate staff 
     members with respect to cultural sensitivities and bridging 
     linguistic and cultural differences;
       ``(K) the system maintains appropriate referral 
     relationships between its hospitals, its physicians with 
     hospital privileges, and any integrated health center 
     operated by the system so that primary, specialty care, and 
     hospital care is provided in a continuous and coordinated 
     way; and
       ``(L) the system encourages persons receiving or seeking 
     health services from the system to participate in any public 
     or private (including employer-offered) health programs or 
     plans for which the persons are eligible, so long as the 
     center, in complying with this paragraph, does not violate 
     the requirements of subparagraph (F)(ii)(I).
       ``(d) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this section such sums as may be necessary for 
     each of fiscal years 2006 through 2010.
       ``(2) Funding report.--The Secretary shall annually prepare 
     and submit to the appropriate committees of Congress a report 
     concerning the distribution of funds under this section that 
     are provided to meet the health care needs of medically 
     underserved populations, and the appropriateness of the 
     delivery systems involved in responding to the needs of the 
     particular populations. Such report shall include an 
     assessment of the relative health care access needs of the 
     targeted populations and the rationale for any substantial 
     changes in the distribution of funds.
       ``(e) Records.--
       ``(1) In general.--Each entity which receives a grant under 
     subsection (b)(1) shall establish and maintain such records 
     as the Secretary shall require.
       ``(2) Availability.--Each entity which is required to 
     establish and maintain records under this subsection shall 
     make such books, documents, papers, and records available to 
     the Secretary or the Comptroller General of the United 
     States, or any of their duly authorized representatives, for 
     examination, copying, or mechanical reproduction on or off 
     the premises of such entity upon a reasonable request 
     therefore. The Secretary and the Comptroller General of the 
     United States, or any of their duly authorized 
     representatives, shall have the authority to conduct such 
     examination, copying, and reproduction.
       ``(f) Audits.--
       ``(1) In general.--Each entity which receives a grant under 
     this section shall provide for an independent annual 
     financial audit of any books, accounts, financial records, 
     files, and other papers and property which relate to the 
     disposition or use of the funds received under such grant and 
     such other funds received by or allocated to the project for 
     which such grant was made. For purposes of assuring accurate, 
     current, and complete disclosure of the disposition or use of 
     the funds received, each such audit shall be conducted in 
     accordance with generally accepted accounting principles. 
     Each audit shall evaluate--
       ``(A) the entity's implementation of the guidelines 
     established by the Secretary respecting cost accounting;
       ``(B) the processes used by the entity to meet the 
     financial and program reporting requirements of the 
     Secretary; and
       ``(C) the billing and collection procedures of the entity 
     and the relation of the procedures to its fee schedule and 
     schedule of discounts and to the availability of health 
     insurance and public programs to pay for the health services 
     it provides.

     A report of each such audit shall be filed with the Secretary 
     at such time and in such manner as the Secretary may require.
       ``(2) Records.--Each entity which receives a grant under 
     this section shall establish and maintain such records as the 
     Secretary shall by regulation require to facilitate the audit 
     required by paragraph (1). The Secretary may specify by 
     regulation the form and manner in which such records shall be 
     established and maintained.
       ``(3) Availability of records.--Each entity which is 
     required to establish and maintain records or to provide for 
     an audit under this subsection shall make such books, 
     documents, papers, and records available to the Secretary or 
     the Comptroller General of the United States, or any of their 
     duly authorized representatives, for examination, copying, or 
     mechanical reproduction on or off the premises of such entity 
     upon a reasonable request therefore. The Secretary and the 
     Comptroller General of the United States, or any of their 
     duly authorized representatives, shall have the authority to 
     conduct such examination, copying, and reproduction.
       ``(4) Waiver.--The Secretary may, under appropriate 
     circumstances, waive the application of all or part of the 
     requirements of this subsection with respect to an entity.

     ``SEC. 340I. INTEGRATED HEALTH CENTER.

       ``(a) Integrated Health Center .--The term `integrated 
     health center' means an health center that is operated by an 
     integrated health care system and that serves a medically 
     underserved population (as defined for purposes of section 
     330(b)(3)) by providing, either through the staff and 
     supporting resources of the center or through contracts or 
     cooperative arrangements--
       ``(1) required primary health services (as defined in 
     subsection (b)(1)); and
       ``(2) as may be appropriate for particular centers 
     additional health services (as defined in subsection (b)(2)) 
     necessary for the adequate support of the primary health 
     services required under paragraph (1);

     for all residents of the area served by the center.
       ``(b) Definitions.--For purposes of this section:
       ``(1) Required primary health services.--The term `required 
     primary health services' means--
       ``(A) basic health services which, for purposes of this 
     section, shall consist of--
       ``(i) health services related to family medicine, internal 
     medicine, pediatrics, obstetrics, or gynecology that are 
     furnished by physicians and where appropriate, physician 
     assistants, nurse practitioners, and nurse midwives;
       ``(ii) diagnostic laboratory and radiologic services;
       ``(iii) preventive health services, including--

       ``(I) prenatal and perinatal services;
       ``(II) appropriate cancer screening;
       ``(III) well-child services;
       ``(IV) immunizations against vaccine-preventable diseases;
       ``(V) screenings for elevated blood lead levels, 
     communicable diseases, and cholesterol;
       ``(VI) pediatric eye, ear, and dental screenings to 
     determine the need for vision and hearing correction and 
     dental care;
       ``(VII) voluntary family planning services; and

[[Page S8984]]

       ``(VIII) preventive dental services;

       ``(iv) emergency medical services; and
       ``(v) pharmaceutical services and medication therapy 
     management services as may be appropriate for particular 
     centers;
       ``(B) referrals to providers of medical services (including 
     specialty and hospital care referrals when medically 
     indicated) and other health-related services (including 
     substance abuse and mental health services);
       ``(C) patient case management services (including 
     counseling, referral, and follow-up services) and other 
     services designed to assist health center patients in 
     establishing eligibility for and gaining access to Federal, 
     State, and local programs that provide or financially support 
     the provision of medical, social, housing, educational, or 
     other related services;
       ``(D) services that enable individuals to use the services 
     of the center (including outreach and transportation services 
     and, if a substantial number of the individuals in the 
     population served by a center are of limited English-speaking 
     ability, the services of appropriate personnel fluent in the 
     languages spoken by a predominant number of such 
     individuals); and
       ``(E) education of patients and the general population 
     served by the center regarding the availability and proper 
     use of health services.
       ``(2) Additional health services.--The term `additional 
     health services' means services that are not included as 
     required primary health services and that are appropriate to 
     meet the health needs of the population served by the center 
     involved. Such term may include--
       ``(A) behavioral and mental health and substance abuse 
     services;
       ``(B) recuperative care services; and
       ``(C) environmental health services.
       (b) Coverage Under the Medicare Program.--
       (1) Part b benefit.--Section 1861(s)(2)(E) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)(E)) is amended--
       (A) by striking ``services and'' and inserting 
     ``services,''; and
       (B) by striking ``services'' the second place it appears 
     and inserting ``services, and integrated health center 
     services''.
       (2) Definitions.--Section 1861(aa) of the Social Security 
     Act (42 U.S.C. 1395x(aa)) is amended--
       (A) in the heading--
       (i) by striking ``Services and'' and inserting 
     ``Services,''; and
       (ii) by striking ``Services'' the second place it appears 
     and inserting ``Services, and Integrated Health Center 
     Services'';
       (B) in paragraph (1)(B), by striking ``paragraph (5))'' and 
     inserting ``paragraph (7));
       (C) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (7), (8), and (9), respectively; and
       (D) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) The term `integrated health center services' means--
       ``(A) services of the type described in subparagraphs (A) 
     through (C) of paragraph (1); and
       ``(B) preventive primary health services that a center is 
     required to provide under section 340I of the Public Health 
     Service Act,

     when furnished to an individual as an outpatient of an 
     integrated health center, and for this purpose, any reference 
     to a rural health clinic or a physician described in 
     paragraph (2)(B) is deemed a reference to an integrated 
     health center or a physician at the center, respectively.
       ``(6) The term `integrated health center' means a center 
     that is operated by a qualified integrated health care system 
     (as defined in section 340H(a)(1) of the Public Health 
     Service Act that--
       ``(A) is receiving a grant under section 340H of such Act; 
     or
       ``(B) is determined by the Secretary to meet the 
     requirements for receiving such a grant.''.
       (3) Payment.--
       (A) In general.--Section 1832(a)(2)(D) of the Social 
     Security Act (42 U.S.C. 1395k(a)(2)(D)) is amended--
       (i) by striking ``and (ii)'' and inserting ``, (ii)''; and
       (ii) by striking ``services'' the second place it appears 
     and inserting ``services, and (iii) integrated health center 
     services.''.
       (B) Part b deductible does not apply.--Section 1833(b)(4) 
     of the Social Security Act (42 U.S.C. 13951(b)(4)) is amended 
     by inserting ``or integrated health center services'' after 
     ``Federally qualified health center services''.
       (C) Exclusion from payment removed.--The second sentence of 
     section 1862(a) of the Social Security Act (42 U.S.C. 
     1395y(a)) is amended by inserting ``or integrated health 
     center services described in section 1861 (aa)(5)(B)'' after 
     ``section 1861(aa)(3)(B)''.
       (D) Waiver of anti-kickback restriction.--Section 
     1128B(b)(3)(D) of the Social Security Act (42 U.S.C. 1320a-
     7b(b)(3)(D)) is amended by inserting ``or by an integrated 
     health center'' after ``Federally qualified health center''.
       (4) Conforming amendments.--(A) Clauses (ii) and (iv) of 
     section 1834(a)(1)(E) of the Social Security Act (42 U.S.C. 
     1395m(a)(1)(E)) are each amended by striking ``section 
     1861(aa)(5)'' and inserting ``section 1861(aa)(7)''.
       (B) Section 1842(b)(18)(C)(i) of the Social Security Act 
     (42 U.S.C. 1395u(b)(18)(C)(i)) is amended by striking 
     ``section 1861(aa)(5)'' and inserting ``section 
     1861(aa)(7)''.
       (C) Section 1861(s)(2) of the Social Security Act (42 
     U.S.C. 1395x(s)(2)) is amended--
       (i) in subparagraph (H)(i), by striking ``subsection 
     (aa)(5)'' and inserting ``subsection (aa)(7)''; and
       (ii) in subparagraph (K)--
       (I) by striking ``subsection (aa)(5)'' each place it 
     appears and inserting ``subsection (aa)(7)''; and
       (II) by striking ``subsection (aa)(6)'' and inserting 
     ``subsection (aa)(8)''.
       (D) Section 1861(dd)(3)(B) of the Social Security Act (42 
     U.S.C. 1395x(dd)(3)(B)) is amended by striking ``subsection 
     (aa)(5)'' and inserting ``subsection (aa)(7)''.
       (c) Recognition Under Medicaid.--
       (1) Coverage.--Section 1905(a)(2) of the Social Security 
     Act (42 U.S.C. 1396d(a)(2)) is amended--
       (A) by striking ``and (C)'' and inserting ``, (C)''; and
       (B) by inserting ``, and
       ``(D) integrated health center services (as defined in 
     subsection (1)(3)(A)) and any other ambulatory services 
     offered by the integrated health center and which are 
     otherwise included in the plan.'' after ``included in the 
     plan'' the second place it appears.
       (2) Definitions.--Section 1905(l) of such Act (42 U.S.C. 
     1396d(l)) is amended by adding at the end the following:
       ``(3)(A) The term `integrated health center services' means 
     services of the type described in subparagraphs (A) through 
     (C) of section 1861(aa) when furnished to an individual as a 
     patient of an integrated health center and, for this purpose, 
     any reference to a rural health clinic or a physician 
     described in section 1861(aa)(2)(B) is deemed a reference to 
     an integrated health center or a physician at the center, 
     respectively.
       ``(B) The term `integrated health center' means a center 
     that is operated by a qualified integrated health care system 
     that--
       ``(i) is receiving a grant under section 340H of the Public 
     Health Service Act; or
       ``(ii) is determined by the Secretary, based on the 
     recommendations of the Administrator of the Centers for 
     Medicare & Medicaid Services, to meet the requirements for 
     receiving such a grant.''.
       (3) Payment.--Section 1902(a) of such Act (42 U.S.C. 
     1396a(a)) is amended--
       (A) in paragraph (15), by inserting ``and for services 
     described in clause (D) of section 1905(a)(2) in accordance 
     with the provisions of subsection (cc)'' after ``subsection 
     (bb)''; and
       (B) by adding at the end the following:
       ``(cc) Payment for Services Provided by Integrated Health 
     Centers.--
       ``(1) In general.--Beginning with fiscal year 2006 with 
     respect to services furnished on or after January 1, 2006, 
     and each succeeding fiscal year, the State plan shall provide 
     for payment for services described in section 1905(a)(2)(D) 
     furnished by an integrated health center in accordance with 
     the provisions of this subsection.
       ``(2) Fiscal year 2006.--Subject to paragraph (4), for 
     services furnished on and after January 1, 2006, during 
     fiscal year 2006, the State plan shall provide for payment 
     for such services in an amount (calculated on a per visit 
     basis) that is equal to 100 percent of the average of the 
     costs of the center of furnishing such services during fiscal 
     years 2004 and 2005 which are reasonable and related to the 
     cost of furnishing such services, or based on such other 
     tests of reasonableness as the Secretary prescribes in 
     regulations under section 1833(a)(3), or, in the case of 
     services to which such regulations do not apply, the same 
     methodology used under section 1833(a)(3), adjusted to take 
     into account any increase or decrease in the scope of such 
     services furnished by the center during fiscal years 2004 and 
     2005.
       ``(3) Fiscal year 2007 and succeeding fiscal years.--
     Subject to paragraph (4), for services furnished during 
     fiscal year 2007 or a succeeding fiscal year, the State plan 
     shall provide for payment for such services in an amount 
     (calculated on a per visit basis) that is equal to the amount 
     calculated for such services under this subsection for the 
     preceding fiscal year--
       ``(A) increased by the percentage increase in the MEI (as 
     defined in section 1842(i)(3)) for that fiscal year; and
       ``(B) adjusted to take into account any increase or 
     decrease in the scope of such services furnished by the 
     center during that fiscal year.
       ``(4) Establishment of initial year payment amount for new 
     centers.--In any case in which an entity first qualifies as 
     an integrated health center after fiscal year 2006, the State 
     plan shall provide for payment for services described in 
     section 1905(a)(2)(D) furnished by the center in the first 
     fiscal year in which the center so qualifies in an amount 
     (calculated on a per visit basis) that is equal to 100 
     percent of the costs of furnishing such services during such 
     fiscal year based on the rates established under this 
     subsection for the fiscal year for other such centers located 
     in the same or adjacent area with a similar case load or, in 
     the absence of such a center, in accordance with the 
     regulations and methodology referred to in paragraph (2) or 
     based on such other tests of reasonableness as the Secretary 
     may specify. For each fiscal year following the fiscal year 
     in which the entity first qualifies as an integrated health 
     center, the State plan shall provide for the payment amount 
     to be calculated in accordance with paragraph (3).
       ``(5) Administration in the case of managed care.--

[[Page S8985]]

       ``(A) In general.--In the case of services furnished by an 
     integrated health center pursuant to a contract between the 
     center and a managed care entity (as defined in section 
     1932(a)(1)(B)), the State plan shall provide for payment to 
     the center by the State of a supplemental payment equal to 
     the amount (if any) by which the amount determined under 
     paragraphs (2), (3), and (4) exceeds the amount of the 
     payments provided under the contract.
       ``(B) Payment schedule.--The supplemental payment required 
     under subparagraph (A) shall be made pursuant to a payment 
     schedule agreed to by the State and the integrated health 
     center, but in no case less frequently than every 4 months.
       ``(6) Alternative payment methodologies.--Notwithstanding 
     any other provision of this section, the State plan may 
     provide for payment in any fiscal year to an integrated 
     health center for services described in section 1905(a)(2)(D) 
     in an amount which is determined under an alternative payment 
     methodology that--
       ``(A) is agreed to by the State and the center; and
       ``(B) results in payment to the center of an amount which 
     is at least equal to the amount otherwise required to be paid 
     to the center under this section.''.
       (4) Waiver prohibited.--Section 1915(b) of the Social 
     Security Act (42 U.S.C.1396n(b)) is amended in the matter 
     preceding paragraph (1), by inserting ``1902(cc),'' after 
     ``1902(bb),''.
       (d) Protection Against Liability.--Section 224(g) of the 
     Public Health Service Act (42 U.S.C. 233(g)) is amended--
       (1) In paragraph (4), by striking ``An entity'' and 
     inserting ``Subject to paragraph (6), an entity''; and
       (2) by adding at the end the following:
       ``(6) For purposes of this section--
       ``(A) a qualified integrated health care system receiving a 
     grant under section 340H and any integrated health center 
     operated by such system shall be considered to be an entity 
     described in paragraph (4); and
       ``(B) the provisions of this section shall apply to such 
     system and centers in the same manner as such provisions 
     apply to an entity described in such paragraph (4), except 
     that--
       ``(i) notwithstanding paragraph (1)(B), the deeming of any 
     system or center, or of an officer, governing board member, 
     employee, or contractor of such system or center, to be an 
     employee of the Public Health Service for purposes of this 
     section shall apply only with respect to items and services 
     that are furnished to a member of the underserved population 
     served by the entity;
       ``(ii) notwithstanding paragraph (3), this paragraph shall 
     apply only with respect to causes of action arising from acts 
     or omissions that occur on or after January 1, 2006; and
       ``(iii) the Secretary shall make separate estimates under 
     subsection (k)(1) with respect to such systems and centers 
     and entities described in paragraph (4) (other than such 
     systems and centers), establish separate funds under 
     subsection (k)(2) with respect to such groups of entities, 
     and any appropriations under this subsection for such systems 
     and centers shall be separate from the amounts authorized by 
     subsection (k)(2).''.
       (e) Effective Date.--The amendments made subsections (b) 
     and (c) shall apply to items and services furnished on or 
     after October 1, 2005.

                  Subtitle C--Miscellaneous Provisions

     SEC. 331. COMMUNITY HEALTH CENTER COLLABORATIVE ACCESS 
                   EXPANSION.

       Section 330 of the Public Health Service Act (42 U.S.C. 
     254b) is amended by adding at the end the following:
       ``(s) Miscellaneous Provisions.--
       ``(1) Rule of construction with respect to rural health 
     clinics.--
       ``(A) In general.--Nothing in this section shall be 
     construed to prevent a community health center from 
     contracting with a federally certified rural health clinic 
     (as defined by section 1861(aa)(2) of the Social Security 
     Act) for the delivery of primary health care services that 
     are available at the rural health clinic to individuals who 
     would otherwise be eligible for free or reduced cost care if 
     that individual were able to obtain that care at the 
     community health center. Such services may be limited in 
     scope to those primary health care services available in that 
     rural health clinic.
       ``(B) Assurances.--In order for a rural health clinic to 
     receive funds under this section through a contract with a 
     community health center under paragraph (1), such rural 
     health clinic shall establish policies to ensure--
       ``(i) nondiscrimination based upon the ability of a patient 
     to pay; and
       ``(ii) the establishment of a sliding fee scale for low-
     income patients.''.

     SEC. 332. IMPROVEMENTS TO SECTION 340B PROGRAM.

       (a) Elimination of Group Purchasing Prohibition for Certain 
     Hospitals.--Section 340B(a)(4)(L) of the Public Health 
     Service Act (42 U.S.C. 256b(a)(4)(L)) is amended--
       (1) in clause (i), by adding ``and'' at the end;
       (2) in clause (ii), by striking ``; and'' and inserting a 
     period; and
       (3) by striking clause (iii).
       (b) Permitting Use of Multiple Contract Pharmacies.--
     Section 340B f the Public Health Service Act (42 U.S.C. 256b) 
     is amended by adding at the end the following:
       ``(e) Permitting Use of Multiple Contract Pharmacies.--
     Nothing in this section shall be construed as prohibiting a 
     covered entity from entering into contracts with more than 
     one pharmacy for the provision of covered drugs, including a 
     contract that--
       ``(1) supplements the use of an in-house pharmacy 
     arrangement; or
       ``(2) requires the approval of the Secretary.''.
       (c) Improvements in Program Administration.--Section 340B 
     of the Public Health Service Act (42 U.S.C. 256b), as amended 
     by subsection (b), is further amended by adding at the end 
     the following:
       ``(f) Improvements in Program Administration.--
       ``(1) In general.--The Secretary shall provide, from funds 
     appropriated under paragraph (2), for improvements in the 
     integrity and administration of the program under this 
     section in order to prevent abuse and misuse of discounted 
     prices made available under this section. Such improvements 
     shall include the following:
       ``(A) The development of a system to verify the accuracy of 
     information regarding covered entities that is listed on the 
     Internet website of the Department of Health and Human 
     Services relating to this section.
       ``(B) The establishment of a third-party auditing system by 
     which covered entities and manufacturers are regularly 
     audited to ensure compliance with the requirements of this 
     section.
       ``(C) The conduct of such audits under subsection (a)(5)(C) 
     that supplement the audits conducted under subparagraph (B) 
     as the Secretary determines appropriate and the 
     implementation of dispute resolution guidelines and other 
     compliance programs.
       ``(D) The development of more detailed guidance regarding 
     the definition of section 340B patients and describing 
     options for billing under the medicaid program under title 
     XIX of the Social Security Act in order to avoid duplicative 
     discounts.
       ``(E) The issuance of advisory opinions within defined time 
     periods in response to questions from manufacturers or 
     covered entities regarding the application of the 
     requirements of this section in specific factual 
     circumstances.
       ``(F) Insofar as the Secretary determines feasible, 
     providing access through the Internet website of the 
     Department of Health and Human Services on the prices for 
     covered drugs made available under this section, but only in 
     a manner (such as through the use of password protection) 
     that limits such access to covered entities.
       ``(G) The improved dissemination of educational materials 
     regarding the program under this section to covered entities 
     that are not currently participating in such programs 
     including regional educational sessions.
       ``(2) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection, 
     such sums as may be necessary for fiscal year 2006 and each 
     succeeding fiscal year.''.

     SEC. 333. FORBEARANCE FOR STUDENT LOANS FOR PHYSICIANS 
                   PROVIDING SERVICES IN FREE CLINICS.

       (a) In General.--Section 428(c)(3)(A) of the Higher 
     Education Act of 1965 (20 U.S.C. 1078(c)(3)(A)) is amended--
       (1) in clause (i)--
       (A) in subclause (III), by striking ``or'' at the end;
       (B) in subclause (V), by adding ``or'' at the end; and
       (C) by adding at the end the following:

       ``(V) is volunteering without pay for at least 80 hours per 
     month at a free clinic as defined under section 224 of the 
     Public Health Service Act;''; and

       (2) in clause (ii)(III), by inserting ``or (i)(V)'' after 
     ``clause (i)(III)''.
       (b) Perkins Program.--Section 464(e) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087dd(e)) is amended--
       (1) in paragraph (1), by striking ``or'' at the end;
       (2) in paragraph (2), by striking the period and inserting 
     ``; or''; and
       (3) by adding at the end the following:
       ``(3) the borrower is volunteering without pay for at least 
     80 hours per month at a free clinic as defined under section 
     224 of the Public Health Service Act.''.

     SEC. 334. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT 
                   RELATING TO LIABILITY.

       Section 224 of the Public Health Service Act (42 U.S.C. 
     233) is amended--
       (1) in subsection (g)(1)--
       (A) in subparagraph (A)--
       (i) in the first sentence, by striking ``or employee'' and 
     inserting ``employee, or (subject to subsection (k)(4)) 
     volunteer practitioner''; and
       (ii) in the second sentence, by inserting ``and subsection 
     (k)(4)'' after ``subject to paragraph (5)''; and
       (B) by adding at the end the following:
       ``(I) For purposes of this subsection, the term `employee' 
     shall include a health professional who volunteers to provide 
     health-related services for an entity described in paragraph 
     (4).'';
       (2) in subsection (k), by adding at the end the following:
       ``(4)(A) Subsections (g) through (m) apply with respect to 
     volunteer practitioners beginning with the first fiscal year 
     for which an appropriations Act provides that amounts in the 
     fund under paragraph (2) are available with respect to such 
     practitioners.

[[Page S8986]]

       ``(B) For purposes of subsections (g) through (m), the term 
     `volunteer practitioner' means a practitioner who, with 
     respect to an entity described in subsection (g)(4), meets 
     the following conditions:
       ``(i) The practitioner is a licensed physician or a 
     licensed clinical psychologist.
       ``(ii) At the request of such entity, the practitioner 
     provides services to patients of the entity, at a site at 
     which the entity operates or at a site designated by the 
     entity. The weekly number of hours of services provided to 
     the patients by the practitioner is not a factor with respect 
     to meeting conditions under this subparagraph.
       ``(iii) The practitioner does not for the provision of such 
     services receive any compensation from such patients, from 
     the entity, or from third-party payors (including 
     reimbursement under any insurance policy or health plan, or 
     under any Federal or State health benefits program).'';
       (3) in subsection (o)(2)--
       (A) in subparagraph (D), by striking clause (i) and 
     inserting the following:
       ``(i) The health care practitioner may provide the services 
     involved as an employee of the free clinic, or may receive 
     repayment from the free clinic only for reasonable expenses 
     incurred by the health care practitioner in the provision of 
     the services to the individual.''; and
       (B) by adding at the end the following:
       ``(G) The health care practitioner is providing the 
     services involved as a paid employee of the free clinic.''; 
     and
       (4) in each of subsections (g), (i), (j), (k), (l), and 
     (m), by striking ``employee, or contractor'' each place such 
     term appears and inserting ``employee, volunteer 
     practitioner, or contractor'';

     SEC. 335. SENSE OF THE SENATE CONCERNING HEALTH DISPARITIES.

       It is the sense of the Senate that additional measures are 
     needed to reduce or eliminate disparities in health care 
     related to race, ethnicity, socioeconomic status, and 
     geography that affect access to quality health care.
                                 ______