[Congressional Record Volume 154, Number 129 (Thursday, July 31, 2008)]
[Senate]
[Pages S7960-S7968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself and Mr. Conrad):
  S. 3408. A bill to amend title XI of the Social Security Act to 
provide for the conduct of comparative effectiveness research and to 
amend the Internal Revenue Code of 1986 to establish a Comparative 
Effectiveness Research Trust Fund, and for other purposes; to the 
Committee on Finance.
  Mr. BAUCUS. Mr. President, in 2006, America spent more than $2 
trillion on health care. By any standard, $2 trillion is an enormous 
figure. Health care accounts for 16 percent of our Nation's economy. 
That means that for every $100 in goods and services produced and 
consumed in America in 2006, $16 were for health care. And the health 
care share of the economy is expected to reach 20 percent in just 10 
years.
  These projections are cause for concern. If so much of our Nation's 
resources are devoted to heath care, we need to ask ourselves what we 
are--or are not--getting for it.
  The answer is that we are getting a mixed bag of goods. Some patients 
receive medical treatments that work well. Some patients receive 
treatments that don't work well. In many cases, doctors and patients 
don't have enough reliable evidence to know whether treatments work or 
don't.
  Of the $2 trillion spent on health in 2006, only \1/10\ of 1 percent 
was spent to assess what works and what doesn't. At the Federal level, 
only $15 million was directly appropriated to compare the effectiveness 
of health interventions and services. People who purchase other goods--
anything from cars to computers--use information to compare the value 
of the different products before they purchase. Physicians and patients 
deserve better. We should devote more than \1/10\ of 1 percent of 
health spending to study how well health goods and services actually 
work.
  Rapid innovation has led to an ever-changing array of new and 
sometimes expensive technologies. The age of personalized medicine and 
genetic engineering will provide even more choices for patients and 
their physicians. Indeed, patients and physicians can face great 
difficulty in choosing among treatment options.
  But much of the information about those options is biased. Much 
information about those options is of poor quality. And for many 
treatments, there are large gaps in what is known to be most effective.
  With a paucity of sound evidence, clinical guidelines and treatment 
protocols can vary widely. If there has ever been a need for better 
information--on what works, for which patients, under which 
circumstances--it is in this age of rapid innovation of technology.
  Several august bodies--including the Institute of Medicine, the 
Medicare Payment Advisory Commission, and the Congressional Budget 
Office--have called on Congress to create a national entity charged 
with conducting research to determine what works in health care.
  Today, I am proud to introduce the Comparative Effectiveness Research 
Act of 2008. I am joined by the Chairman of the Budget Committee, 
Senator Conrad. He and I share a deep concern about rising health care 
costs. And we share a deep commitment to finding ways to address it.
  This bill does what the experts suggest. It would create a new entity 
responsible for generating better information on the effectiveness of 
health care treatments.
  Specifically, the bill would create a nonprofit corporation 
responsible for setting national priorities for comparative 
effectiveness research. The corporation, which would be called the 
Health Care Comparative Effectiveness Research Institute, would be a 
private entity. But it would be governed by a public-private sector 
Board of Governors. It would not be an agency of the Federal 
Government.
  In addition to setting national priorities, the Institute would 
provide for the conduct of research studies that answer the most 
pressing questions about what works in health care. The Institute would 
have the authority to contract with experienced Federal agencies, such 
as the Agency for Healthcare Research and Quality, or AHRQ, and the 
National Institutes for Health, or NIH, or with private researchers if 
appropriate, for the conduct of the actual research. The Institute 
would also be charged with disseminating the findings of the research 
in ways that patients and providers can understand.
  The Institute would be required to assess the full spectrum of health 
interventions, including pharmaceuticals, medical devices, medical 
procedures, medical services, and other therapies. This type of 
research is often called ``comparative effectiveness research,'' 
because it evaluates and compares the clinical effect of alternative 
medical treatments. This type of research provides better quality 
evidence concerning the best treatment, prevention, and management of 
the health conditions. Most importantly, this type of research helps 
patients, providers, and payers of health care to make more informed 
decisions.
  While many experts have called for creation of a new entity, they do 
not specify how the entity should be structured. This bill would create 
a private, nonprofit institute rather than a new entity within the 
executive branch or legislative. Keeping it private would remove the 
potential for political influence on the development of national 
research priorities. Comparative effectiveness research will be more 
credible, and more useful, if it is done independently of political 
influence and with broad stakeholder input.
  This bill includes stringent requirements for public input, 
transparency of process and findings, and integrity of the research. 
For example, the Institute would be required to publish its rules, 
proceedings, and reports on a public Internet site. Its meetings would 
be open to the public. It would be required to provide public comment 
periods at key stages, in addition to open forums to solicit and obtain 
public input on the Institute's activities.
  This bill would also require accountability and government oversight 
of finances and the mission. The Institute would be subject to annual 
financial audits. And the Comptroller General would perform periodic 
audits of the activities of the Institute to ensure that the Institute 
would meet its statutory mission and would do so in a fair, open, and 
credible way.
  Finally, this bill would provide a stable source of funding for the 
Institute. For the first 3 years, general revenues would be used to 
start up the Institute. In the 4th year, funding would move to an all-
payer system--from both public and private sources. Annual 
contributions would be made from the Medicare Trust Funds, from 
revenues generated by a fee on private health insurance policies, and 
from general revenues. The work of the new Institute would benefit 
Americans who receive health care through the public and private 
sources. Therefore, public and private sources should contribute to 
this type of research. The private insurance fee would be $1 per 
insured person per year. Funding from Medicare would also be $1 per 
beneficiary per year.
  All sources of funding for the Institute would sunset after 10 years. 
That

[[Page S7961]]

way, Congress could review a report from the Comptroller General on the 
value of the research to the public and private insurance sectors. 
Total funding for the first year would be $5 million, and funding would 
increase to $300 million a year by the year 2013.
  It is high time that America invested more than a fraction of a 
percent to generate knowledge about what works in health care, to 
improve the efficiency and the quality of our health care system, and 
to give patients and doctors better information to make treatment 
decisions. It is high time that we built a foundation of evidence for 
the trillions of dollars spent on health in America each year.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3408

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Comparative Effectiveness 
     Research Act of 2008''.

     SEC. 2. COMPARATIVE EFFECTIVENESS RESEARCH.

       (a) In General.--Title XI of the Social Security Act (42 
     U.S.C. 1301 et seq.) is amended by adding at the end the 
     following new part:

              ``Part D--Comparative Effectiveness Research


                  ``comparative effectiveness research

       ``Sec. 1181.  (a) Definitions.--In this section:
       ``(1) Board.--The term `Board' means the Board of Governors 
     established under subsection (f).
       ``(2) Comparative clinical effectiveness research.--
       ``(A) In general.--The term `comparative clinical 
     effectiveness research' means research evaluating and 
     comparing the clinical effectiveness, risks, and benefits of 
     2 or more medical treatments, services, and items described 
     in subparagraph (B).
       ``(B) Medical treatments, services, and items described.--
     The medical treatments, services, and items described in this 
     subparagraph are health care interventions, protocols for 
     treatment, procedures, medical devices, diagnostic tools, 
     pharmaceuticals (including drugs and biologicals), and any 
     other processes or items being used in the treatment and 
     diagnosis of, or prevention of illness or injury in, 
     patients.
       ``(3) Comparative effectiveness research.--The term 
     `comparative effectiveness research' means research 
     evaluating and comparing the implications and outcomes of 2 
     or more health care strategies to address a particular 
     medical condition.
       ``(4) Conflicts of interest.--The term `conflicts of 
     interest' means associations, including financial and 
     personal, that may be reasonably assumed to have the 
     potential to bias an individual's decisions in matters 
     related to the Institute or the conduct of activities under 
     this section.
       ``(5) Institute.--The term `Institute' means the `Health 
     Care Comparative Effectiveness Research Institute' 
     established under subsection (b)(1).
       ``(b) Health Care Comparative Effectiveness Research 
     Institute.--
       ``(1) Establishment.--There is authorized to be established 
     a nonprofit corporation, to be known as the ``Health Care 
     Comparative Effectiveness Research Institute'' which is 
     neither an agency nor establishment of the United States 
     Government.
       ``(2) Application of provisions.--The Institute shall be 
     subject to the provisions of this section, and, to the extent 
     consistent with this section, to the District of Columbia 
     Nonprofit Corporation Act.
       ``(3) Funding of comparative effectiveness research.--For 
     fiscal year 2009 and each subsequent fiscal year, amounts in 
     the Comparative Effectiveness Research Trust Fund (referred 
     to in this section as the `CERTF') under section 9511 of the 
     Internal Revenue Code of 1986 shall be available, without 
     further appropriation, to the Institute to carry out this 
     section.
       ``(c) Purpose.--The purpose of the Institute is to improve 
     health care delivered to individuals in the United States by 
     advancing the quality and thoroughness of evidence concerning 
     the manner in which diseases, disorders, and other health 
     conditions can effectively and appropriately be prevented, 
     diagnosed, treated, and managed clinically through research 
     and evidence synthesis, and the dissemination of research 
     findings with respect to the relative outcomes, 
     effectiveness, and appropriateness of the medical treatments, 
     services, and items described in subsection (a)(2)(B).
       ``(d) Duties.--
       ``(1) Identifying research priorities and establishing 
     research project agenda.--
       ``(A) Identifying research priorities.--The Institute shall 
     identify national priorities for comparative clinical 
     effectiveness research, taking into account factors, 
     including--
       ``(i) disease incidence, prevalence, and burden in the 
     United States;
       ``(ii) evidence gaps in terms of clinical outcomes;
       ``(iii) practice variations, including variations in 
     delivery and outcomes by geography, treatment site, provider 
     type, and patient subgroup;
       ``(iv) the potential for new evidence concerning certain 
     categories of health care services or treatments to improve 
     patient health and well-being, and the quality of care; and
       ``(v) the effect or potential for an effect on health 
     expenditures associated with a health condition or the use of 
     a particular medical treatment, service, or item.
       ``(B) Establishing research project agenda.--
       ``(i) In general.--The Institute shall establish and update 
     a research project agenda to address the priorities 
     identified under subparagraph (A), taking into consideration 
     the types of research that might address each priority and 
     the relative value (determined based on the cost of 
     conducting such research compared to the potential usefulness 
     of the information produced by such research) associated with 
     such different types of research, and such other factors as 
     the Institute determines appropriate.
       ``(ii) Consideration of need to conduct a systematic 
     review.--In establishing and updating the research project 
     agenda under clause (i), the Institute shall consider the 
     need to conduct a systematic review of existing research 
     before providing for the conduct of new research under 
     paragraph (2)(A).
       ``(2) Carrying out research project agenda.--
       ``(A) Comparative clinical effectiveness research.--In 
     carrying out the research project agenda established under 
     paragraph (1)(B), the Institute shall provide for the conduct 
     of appropriate research and the synthesis of evidence, in 
     accordance with the methodological standards adopted under 
     paragraph (9), using methods, including the following:
       ``(i) Systematic reviews and assessments of existing 
     research and evidence.
       ``(ii) Clinical research, such as randomized controlled 
     trials and observational studies.
       ``(iii) Any other methodologies recommended by the 
     methodology committee established under paragraph (6) that 
     are adopted by the Board under paragraph (9).
       ``(B)(i) Contracts with federal agencies and 
     instrumentalities.--The Institute shall give preference to 
     agencies and instrumentalities of the Federal Government that 
     have experience in conducting comparative clinical 
     effectiveness research, such as the Agency for Healthcare 
     Research and Quality, when entering into contracts for the 
     management and conduct of research in accordance with the 
     research project agenda established under paragraph (1)(B), 
     to the extent that such contracts are authorized under the 
     governing statutes of such agencies and instrumentalities.
       ``(ii) Contracts with other entities.--The Institute may 
     enter into contracts with appropriate private sector research 
     or study-conducting entities for the conduct of research 
     described in clause (i).
       ``(iii) Conditions for contracts.--A contract entered into 
     under this subparagraph shall require that the agency, 
     instrumentality, or other entity--
       ``(I) abide by the transparency and conflicts of interest 
     requirements that apply to the Institute with respect to the 
     research managed or conducted under such contract;
       ``(II) comply with the methodological standards adopted 
     under paragraph (9) with respect to such research; and
       ``(III) take into consideration public comments on the 
     study design that are transmitted by the Institute to the 
     agency, instrumentality, or other entity under subsection 
     (i)(1)(B) during the finalization of the study design and 
     transmit responses to such comments to the Institute, which 
     will publish such comments, responses, and finalized study 
     design in accordance with subsection (i)(3)(A)(iii) prior to 
     the conduct of such research.
       ``(iv) Coverage of copayments or coinsurance.--A contract 
     entered into under this subparagraph may allow for the 
     coverage of copayments or co-insurance, or allow for other 
     appropriate measures, to the extent that such coverage or 
     other measures are necessary to preserve the validity of a 
     research project, such as in the case where the research 
     project must be blinded.
       ``(C) Review and update of evidence.--The Institute shall 
     review and update evidence on a periodic basis, in order to 
     take into account new research and evolving evidence as they 
     become available, as appropriate.
       ``(D) Taking into account potential differences.--Research 
     shall--
       ``(i) be designed, as appropriate, to take into account the 
     potential for differences in the effectiveness of health care 
     treatments, services, and items as used with various 
     subpopulations, such as racial and ethnic minorities, women, 
     different age groups, and individuals with different 
     comorbidities; and
       ``(ii) seek to include members of such subpopulations as 
     subjects in the research as feasible and appropriate.
       ``(3) Study and report on feasibility of conducting 
     research in-house.--
       ``(A) Study.--The Institute shall conduct a study on the 
     feasibility of conducting research in-house.
       ``(B) Report.--Not later than 5 years after the date of 
     enactment of this section, the Institute shall submit a 
     report to Congress containing the results of the study 
     conducted under subparagraph (A).

[[Page S7962]]

       ``(4) Data collection.--
       ``(A) In general.--The Secretary shall, with appropriate 
     safeguards for privacy, make available to the Institute such 
     data collected by the Centers for Medicare & Medicaid 
     Services under the programs under titles XVIII, XIX, and XXI 
     as the Institute may require to carry out this section. The 
     Institute may also request and, if such request is granted, 
     obtain data from Federal, State, or private entities.
       ``(B) Use of data.--The Institute shall only use data 
     provided to the Institute under subparagraph (A) in 
     accordance with laws and regulations governing the release 
     and use of such data, including applicable confidentiality 
     and privacy standards.
       ``(5) Appointing advisory panels.--
       ``(A) In general.--The Institute may appoint permanent or 
     ad hoc advisory panels as determined appropriate by the 
     Institute to assist in the establishment and carrying out of 
     the research project agenda under paragraphs (1) and (2), 
     respectively. Panels may advise or guide the Institute in 
     matters such as identifying gaps in and updating medical 
     evidence and identifying research priorities and potential 
     study designs in order to ensure that the information 
     produced from such research is clinically relevant to 
     decisions made by clinicians and patients at the point of 
     care and may provide advice throughout the conduct of 
     research.
       ``(B) Composition.--An advisory panel appointed under 
     subparagraph (A) shall include representatives of clinicians 
     and patients and may include experts in scientific and health 
     services research, health services delivery, and the 
     manufacture of health items who have experience in the 
     relevant topic, project, or category for which the panel is 
     established.
       ``(6) Establishing methodology committee.--
       ``(A) In general.--The Institute shall establish a standing 
     methodology committee to carry out the functions described in 
     subparagraph (C).
       ``(B) Appointment and composition.--Members shall be 
     appointed to the methodology committee established under 
     subparagraph (A) by the Comptroller General of the United 
     States. Members appointed to the methodology committee shall 
     be experts in their scientific field, such as health services 
     research, clinical research, comparative effectiveness 
     research, biostatistics, and research methodologies. 
     Stakeholders with such expertise may be appointed to the 
     methodology committee.
       ``(C) Functions.--Subject to subparagraph (D), the 
     methodology committee shall work to develop and improve the 
     science of comparative effectiveness research by undertaking 
     the following activities:
       ``(i) Not later than 1 year after the date on which the 
     members of the methodology committee are appointed under 
     subparagraph (B), developing and periodically updating 
     methodological standards regarding outcomes measures, risk 
     adjustment, statistical protocols, evaluation of evidence, 
     conduct of research, and other aspects of research and 
     assessment to be used when conducting research on comparative 
     clinical effectiveness (and procedures for the use of such 
     standards) in order to help ensure accurate and effective 
     comparisons. Such standards shall also include methods by 
     which new information, data, or advances in technology are 
     considered and incorporated into ongoing research projects by 
     the Institute, as appropriate. In developing and updating 
     methodological standards under this clause, the methodology 
     committee shall ensure that such standards are scientifically 
     based.
       ``(ii) Not later than 5 years after such date, examining 
     the following:

       ``(I) Methods by which various aspects of the health care 
     delivery system (such as benefit design and performance, and 
     health services organization, management, and delivery) could 
     be assessed and compared for their relative effectiveness, 
     benefits, risks, advantages, and disadvantages in a 
     scientifically valid and standardized way.
       ``(II) Methods by which cost-effectiveness and value could 
     be assessed in a scientifically valid and standardized way.

       ``(D) Consultation and conduct of examinations.--
       ``(i) In general.--Subject to clause (iii), in undertaking 
     the activities described in subparagraph (C), the methodology 
     committee shall--

       ``(I) consult or contract with 1 or more of the entities 
     described in clause (ii); and
       ``(II) consult with stakeholders and other entities 
     knowledgeable in relevant fields, as appropriate.

       ``(ii) Entities described.--The following entities are 
     described in this clause:

       ``(I) The Institute of Medicine of the National Academies.
       ``(II) The Agency for Healthcare Research and Quality.
       ``(III) The National Institutes of Health.

       ``(iii) Conduct of examinations.--The methodology committee 
     shall contract with the Institute of Medicine of the National 
     Academies for the conduct of the examinations described in 
     subclauses (I) and (II) of subparagraph (C)(ii).
       ``(E) Reports.--The methodology committee shall submit 
     reports to the Board on the committee's performance of the 
     functions described in subparagraph (C). Reports submitted 
     under the preceding sentence with respect to the functions 
     described in clause (i) of such subparagraph shall contain 
     recommendations--
       ``(i) for the Institute to adopt methodological standards 
     developed and updated by the methodology committee under such 
     subparagraph; and
       ``(ii) for such other action as the methodology committee 
     determines is necessary to comply with such methodological 
     standards.
       ``(7) Providing for a peer-review process.--
       ``(A) In general.--The Institute shall ensure that there is 
     a process for peer review of the research conducted under 
     this section. Under such process--
       ``(i) evidence from research conducted under this section 
     shall be reviewed to assess scientific integrity and 
     adherence to methodological standards adopted under paragraph 
     (9); and
       ``(ii) a list of the names of individuals contributing to 
     any peer-review process during the preceding year or years 
     shall be made public and included in annual reports in 
     accordance with paragraph (11)(D).
       ``(B) Composition.--Such peer-review process shall have 
     been designed in a manner so as to avoid bias and conflicts 
     of interest on the part of the reviewers and shall be 
     composed of experts in the scientific field relevant to the 
     research under review.
       ``(C) Use of existing processes.--In the case where the 
     Institute enters into a contract or other agreement with 
     another entity for the conduct or management of research 
     under this section, the Institute may utilize the peer-review 
     process of such entity if such process meets the requirements 
     under subparagraphs (A) and (B).
       ``(8) Dissemination of research findings.--
       ``(A) In general.--The Institute shall disseminate research 
     findings to clinicians, patients, and the general public in 
     accordance with the dissemination protocols and strategies 
     adopted under paragraph (9). Research findings disseminated--
       ``(i) shall convey findings of research so that they are 
     comprehensible and useful to patients and providers in making 
     health care decisions;
       ``(ii) shall discuss findings and other considerations 
     specific to certain subpopulations, risk factors, and 
     comorbidities, as appropriate;
       ``(iii) shall include considerations such as limitations of 
     research and what further research may be needed, as 
     appropriate;
       ``(iv) shall not include practice guidelines or policy 
     recommendations; and
       ``(v) shall not include any data the dissemination of which 
     would violate the privacy of research participants or violate 
     any confidentiality agreements made with respect to the use 
     of data under this section.
       ``(B) Dissemination protocols and strategies.--The 
     Institute shall develop protocols and strategies for the 
     appropriate dissemination of research findings in order to 
     ensure effective communication of such findings and the use 
     and incorporation of such findings into relevant activities 
     for the purpose of informing higher quality and more 
     effective and efficient decisions regarding medical 
     treatments, services, and items. In developing and adopting 
     such protocols and strategies, the Institute shall consult 
     with stakeholders concerning the types of dissemination that 
     will be most useful to the end users of the information and 
     may provide for the utilization of multiple formats for 
     conveying findings to different audiences.
       ``(C) Definition of research findings.--In this paragraph, 
     the term `research findings' means the results of a study, 
     appraisal, or assessment.
       ``(9) Adoption.--Subject to subsection (i)(1)(A)(i), the 
     Institute shall adopt the national priorities identified 
     under paragraph (1)(A), the research project agenda 
     established under paragraph (1)(B), the methodological 
     standards developed and updated by the methodology committee 
     under paragraph (6)(C)(i), any peer-review process provided 
     under paragraph (7), and dissemination protocols and 
     strategies developed under paragraph (8)(B) by majority vote. 
     In the case where the Institute does not adopt such national 
     priorities, research project agenda, methodological 
     standards, peer-review process, or dissemination protocols 
     and strategies in accordance with the preceding sentence, the 
     national priorities, research project agenda, methodological 
     standards, peer-review process, or dissemination protocols 
     and strategies shall be referred to the appropriate staff or 
     entity within the Institute (or, in the case of the 
     methodological standards, the methodology committee) for 
     further review.
       ``(10) Coordination of research and resources and building 
     capacity for research.--
       ``(A) Coordination of research and resources.--The 
     Institute shall coordinate research conducted, commissioned, 
     or otherwise funded under this section with comparative 
     clinical effectiveness and other relevant research and 
     related efforts conducted by public and private agencies and 
     organizations in order to ensure the most efficient use of 
     the Institute's resources and that research is not duplicated 
     unnecessarily.
       ``(B) Building capacity for research.--The Institute may 
     build capacity for comparative clinical effectiveness 
     research and other relevant research and related efforts 
     through appropriate activities, such as making payments, up 
     to 5 percent of the amounts appropriated or credited to the 
     CERTF under section 9511(b) of the Internal Revenue Code of 
     1986 with respect to the fiscal year, to The Cochrane 
     Collaboration (or a successor organization) to support the 
     infrastructure of The Cochrane Collaboration (or a successor

[[Page S7963]]

     organization) or to provide for sets of reviews related to a 
     particular topic or associated with a particular review 
     group.
       ``(C) Inclusion in annual reports.--The Institute shall 
     report on any coordination and capacity building conducted 
     under this paragraph in annual reports in accordance with 
     paragraph (11)(E).
       ``(11) Annual reports.--The Institute shall submit an 
     annual report to Congress and the President, and shall make 
     the annual report available to the public. Such report shall 
     contain--
       ``(A) a description of the activities conducted under this 
     section during the preceding year, including the use of 
     amounts appropriated or credited to the CERTF under section 
     9511(b) of the Internal Revenue Code of 1986 to carry out 
     this section, research projects completed and underway, and a 
     summary of the findings of such projects;
       ``(B) the research project agenda and budget of the 
     Institute for the following year;
       ``(C) a description of research priorities identified under 
     paragraph (1)(A), dissemination protocols and strategies 
     developed by the Institute under paragraph (8)(B), and 
     methodological standards developed and updated by the 
     methodology committee under paragraph (6)(C)(i) that are 
     adopted under paragraph (9) during the preceding year;
       ``(D) the names of individuals contributing to any peer-
     review process provided under paragraph (7) during the 
     preceding year or years, in a manner such that those 
     individuals cannot be identified with a particular research 
     project; and
       ``(E) a description of efforts by the Institute under 
     paragraph (10) to--
       ``(i) coordinate the research conducted, commissioned, or 
     otherwise funded under this section and the resources of the 
     Institute with research and related efforts conducted by 
     other private and public entities; and
       ``(ii) build capacity for comparative clinical 
     effectiveness research and other relevant research and 
     related efforts through appropriate activities.
       ``(F) any other relevant information (including information 
     on the membership of the Board, advisory panels appointed 
     under paragraph (5), the methodology committee established 
     under paragraph (6), and the executive staff of the 
     Institute, any conflicts of interest with respect to the 
     members of such Board, advisory panels, and methodology 
     committee, or with respect to any individuals selected for 
     employment as executive staff of the Institute, and any 
     bylaws adopted by the Board during the preceding year).
       ``(e) Administration.--
       ``(1) In general.--Subject to paragraph (2), the Board 
     shall carry out the duties of the Institute.
       ``(2) Nondelegable duties.--The activities described in 
     subsections (b)(3)(D), (d)(1), and (d)(9) are nondelegable.
       ``(f) Board of Governors.--
       ``(1) In general.--The Institute shall have a Board of 
     Governors, which shall consist of the following members:
       ``(A) The Secretary of Health and Human Services (or the 
     Secretary's designee).
       ``(B) The Director of the Agency for Healthcare Research 
     and Quality (or the Director's designee).
       ``(C) The Director of the National Institutes of Health (or 
     the Director's designee).
       ``(D) 18 members appointed by the Comptroller General of 
     the United States not later than 6 months after the date of 
     enactment of this section, as follows:
       ``(i) 3 members representing patients and health care 
     consumers.
       ``(ii) 3 members representing practicing physicians, 
     including surgeons.
       ``(iii) 3 members representing agencies that administer 
     public programs, as follows:

       ``(I) 1 member representing the Centers for Medicare & 
     Medicaid Services who has experience in administering the 
     program under title XVIII.
       ``(II) 1 member representing agencies that administer State 
     health programs (who may represent the Centers for Medicare & 
     Medicaid Services and have experience in administering the 
     program under title XIX or the program under title XXI or be 
     a governor of a State).
       ``(III) 1 member representing agencies that administer 
     other Federal health programs (such as a health program of 
     the Department of Defense under chapter 55 of title 10, 
     United States Code, the Federal employees health benefits 
     program under chapter 89 of title 5 of such Code, a health 
     program of the Department of Veterans Affairs under chapter 
     17 of title 38 of such Code, or a medical care program of the 
     Indian Health Service or of a tribal organization).

       ``(iv) 3 members representing private payers, of whom at 
     least 1 member shall represent health insurance issuers and 
     at least 1 member shall represent employers who self-insure 
     employee benefits.
       ``(v) 3 members representing pharmaceutical, device, and 
     technology manufacturers or developers.
       ``(vi) 1 member representing nonprofit organizations 
     involved in health services research.
       ``(vii) 1 member representing organizations that focus on 
     quality measurement and improvement or decision support.
       ``(viii) 1 member representing independent health services 
     researchers.
       ``(2) Qualifications.--
       ``(A) Diverse representation of perspectives.--The Board 
     shall represent a broad range of perspectives and 
     collectively have scientific expertise in clinical health 
     sciences research, including epidemiology, decisions 
     sciences, health economics, and statistics.
       ``(B) Conflicts of interest.--
       ``(i) In general.--In appointing members of the Board under 
     paragraph (1)(D), the Comptroller General of the United 
     States shall take into consideration any conflicts of 
     interest of potential appointees. Any conflicts of interest 
     of members appointed to the Board under paragraph (1) shall 
     be disclosed in accordance with subsection (i)(4)(B).
       ``(ii) Recusal.--A member of the Board shall be recused 
     from participating with respect to a particular research 
     project or other matter considered by the Board in carrying 
     out its research project agenda under subsection (d)(2) in 
     the case where the member (or an immediate family member of 
     such member) has a financial or personal interest directly 
     related to the research project or the matter that could 
     affect or be affected by such participation.
       ``(3) Terms.--
       ``(A) In general.--A member of the Board appointed under 
     paragraph (1)(D) shall be appointed for a term of 6 years, 
     except with respect to the members first appointed under such 
     paragraph--
       ``(i) 6 shall be appointed for a term of 6 years;
       ``(ii) 6 shall be appointed for a term of 4 years; and
       ``(iii) 6 shall be appointed for a term of 2 years.
       ``(B) Limitation.--No individual shall be appointed to the 
     Board under paragraph (1)(D) for more than 2 terms.
       ``(C) Expiration of term.--Any member of the Board whose 
     term has expired may serve until such member's successor has 
     taken office, or until the end of the calendar year in which 
     such member's term has expired, whichever is earlier.
       ``(D) Vacancies.--
       ``(i) In general.--Any member appointed to fill a vacancy 
     prior to the expiration of the term for which such member's 
     predecessor was appointed shall be appointed for the 
     remainder of such term.
       ``(ii) Vacancies not to affect power of board.--A vacancy 
     on the Board shall not affect its powers, but shall be filled 
     in the same manner as the original appointment was made.
       ``(4) Chairperson and vice-chairperson.--
       ``(A) In general.--The Comptroller General of the United 
     States shall designate a Chairperson and Vice-Chairperson of 
     the Board from among the members of the Board appointed under 
     paragraph (1)(D).
       ``(B) Term.--The members so designated shall serve as 
     Chairperson and Vice-Chairperson of the Board for a period of 
     3 years.
       ``(5) Compensation.--
       ``(A) In general.--A member of the Board shall be entitled 
     to compensation at the per diem equivalent of the rate 
     provided for level IV of the Executive Schedule under section 
     5315 of title 5, United States Code.
       ``(B) Travel expenses.--While away from home or regular 
     place of business in the performance of duties for the Board, 
     each member of the Board may receive reasonable travel, 
     subsistence, and other necessary expenses.
       ``(6) Director and staff; experts and consultants.--The 
     Board may--
       ``(A) employ and fix the compensation of an executive 
     director and such other personnel as may be necessary to 
     carry out the duties of the Institute;
       ``(B) seek such assistance and support as may be required 
     in the performance of the duties of the Institute from 
     appropriate departments and agencies of the Federal 
     Government;
       ``(C) enter into contracts or make other arrangements and 
     make such payments as may be necessary for performance of the 
     duties of the Institute;
       ``(D) provide travel, subsistence, and per diem 
     compensation for individuals performing the duties of the 
     Institute, including members of any advisory panel appointed 
     under subsection (d)(5), members of the methodology committee 
     established under subsection (d)(6), and individuals selected 
     to contribute to any peer-review process under subsection 
     (d)(7); and
       ``(E) prescribe such rules, regulations, and bylaws as the 
     Board determines necessary with respect to the internal 
     organization and operation of the Institute.
       ``(7) Meetings and hearings.--The Board shall meet and hold 
     hearings at the call of the Chairperson or a majority of its 
     members. In the case where the Board is meeting on matters 
     not related to personnel, Board meetings shall be open to the 
     public and advertised.
       ``(8) Quorum.--A majority of the members of the Board shall 
     constitute a quorum for purposes of conducting the duties of 
     the Institute, but a lesser number of members may meet and 
     hold hearings.
       ``(g) Financial Oversight.--
       ``(1) Contract for audit.--The Institute shall provide for 
     the conduct of financial audits of the Institute on an annual 
     basis by a private entity with expertise in conducting 
     financial audits.
       ``(2) Review of audit and report to congress.--The 
     Comptroller General of the United States shall--
       ``(A) review the results of the audits conducted under 
     paragraph (1); and
       ``(B) submit a report to Congress containing the results of 
     such audits and review.
       ``(h) Governmental Oversight.--

[[Page S7964]]

       ``(1) Review and reports.--
       ``(A) In general.--The Comptroller General of the United 
     States shall review the following:
       ``(i) Processes established by the Institute, including 
     those with respect to the identification of research 
     priorities under subsection (d)(1)(A) and the conduct of 
     research projects under this section. Such review shall 
     determine whether information produced by such research 
     projects--

       ``(I) is objective and credible;
       ``(II) is produced in a manner consistent with the 
     requirements under this section; and
       ``(III) is developed through a transparent process.

       ``(ii) The overall effect of the Institute and the 
     effectiveness of activities conducted under this section, 
     including an assessment of--

       ``(I) the utilization of the findings of research conducted 
     under this section by health care decision makers; and
       ``(II) the effect of the Institute and such activities on 
     innovation and on the health economy of the United States.

       ``(B) Reports.--Not later than 5 years after the date of 
     enactment of this section, and not less frequently than every 
     5 years thereafter, the Comptroller General of the United 
     States shall submit a report to Congress containing the 
     results of the review conducted under subparagraph (A), 
     together with recommendations for such legislation and 
     administrative action as the Comptroller General determines 
     appropriate.
       ``(2) Funding assessment.--
       ``(A) In general.--The Comptroller General of the United 
     States shall assess the adequacy and use of funding for the 
     Institute and activities conducted under this section under 
     the CERTF under section 9511 of the Internal Revenue Code of 
     1986. Such assessment shall include a determination as to 
     whether, based on the utilization of findings by public and 
     private payers, each of the following are appropriate sources 
     of funding for the Institute, including a determination of 
     whether such sources of funding should be continued or 
     adjusted:
       ``(i) The transfer of funds from the Federal Hospital 
     Insurance Trust Fund under section 1817 and the Federal 
     Supplementary Medical Insurance Trust Fund under section 1841 
     to the CERTF under section 1182.
       ``(ii) The amounts appropriated under subparagraphs (A), 
     (B), (C), (D)(ii), and (E)(ii) of subsection (b)(1) of such 
     section 9511.
       ``(iii) Private sector contributions under subparagraphs 
     (D)(i) and (E)(i) of such subsection (b)(1).
       ``(B) Report.--Not later than 8 years after the date of 
     enactment of this section, the Comptroller General of the 
     United States shall submit a report to Congress containing 
     the results of the assessment conducted under subparagraph 
     (A), together with recommendations for such legislation and 
     administrative action as the Comptroller General determines 
     appropriate.
       ``(i) Ensuring Transparency, Credibility, and Access.--The 
     Institute shall establish procedures to ensure that the 
     following requirements for ensuring transparency, 
     credibility, and access are met:
       ``(1) Public comment periods.--
       ``(A) In general.--The Institute shall provide for a public 
     comment period of not less than 30 and not more than 60 days 
     at the following times:
       ``(i) Prior to the adoption of the national priorities 
     identified under subsection (d)(1)(A), the research project 
     agenda established under subsection (d)(1)(B), the 
     methodological standards developed and updated by the 
     methodology committee under subsection (d)(6)(C)(i), the 
     peer-review process generally provided under subsection 
     (d)(7), and dissemination protocols and strategies developed 
     by the Institute under subsection (d)(8)(B) in accordance 
     with subsection (d)(9).
       ``(ii) Prior to the finalization of individual study 
     designs.
       ``(B) Transmission of public comments on study design.--The 
     Institute shall transmit public comments submitted during the 
     public comment period described in subparagraph (A)(ii) to 
     the entity conducting research with respect to which the 
     individual study design is being finalized.
       ``(2) Additional forums.--The Institute shall, in addition 
     to the public comment periods described in paragraph (1)(A), 
     support forums to increase public awareness and obtain and 
     incorporate public feedback through media (such as an 
     Internet website) on the following:
       ``(A) The identification of research priorities and the 
     establishment of the research project agenda under 
     subparagraphs (A) and (B), respectively, of subsection 
     (d)(1).
       ``(B) Research findings.
       ``(C) Any other duties, activities, or processes the 
     Institute determines appropriate.
       ``(3) Public availability.--The Institute shall make 
     available to the public and disclose through the official 
     public Internet website of the Institute, and through other 
     forums and media the Institute determines appropriate, the 
     following:
       ``(A) The process and methods for the conduct of research 
     under this section, including--
       ``(i) the identity of the entity conducting such research;
       ``(ii) any links the entity has to industry (including such 
     links that are not directly tied to the particular research 
     being conducted under this section);
       ``(iii) draft study designs (including research questions 
     and the finalized study design, together with public comments 
     on such study design and responses to such comments);
       ``(iv) research protocols (including measures taken, 
     methods of research, methods of analysis, research results, 
     and such other information as the Institute determines 
     appropriate);
       ``(v) the identity of investigators conducting such 
     research and any conflicts of interest of such investigators; 
     and
       ``(vi) any progress reports the Institute determines 
     appropriate.
       ``(B) Public comments submitted during each of the public 
     comment periods under paragraph (1)(A).
       ``(C) Bylaws, processes, and proceedings of the Institute, 
     to the extent practicable and as the Institute determines 
     appropriate.
       ``(D) Not later than 90 days after receipt by the Institute 
     of a relevant report or research findings, appropriate 
     information contained in such report or findings.
       ``(4) Conflicts of interest.--The Institute shall--
       ``(A) in appointing members to an advisory panel under 
     subsection (d)(5) and the methodology committee under 
     subsection (d)(6), and in selecting individuals to contribute 
     to any peer-review process under subsection (d)(7) and for 
     employment as executive staff of the Institute, take into 
     consideration any conflicts of interest of potential 
     appointees, participants, and staff; and
       ``(B) include a description of any such conflicts of 
     interest and conflicts of interest of Board members in the 
     annual report under subsection (d)(11), except that, in the 
     case of individuals contributing to any such peer review 
     process, such description shall be in a manner such that 
     those individuals cannot be identified with a particular 
     research project.
       ``(j) Rules.--
       ``(1) Gifts.--The Institute, or the Board and staff of the 
     Institute acting on behalf of the Institute, may not accept 
     gifts, bequeaths, or donations of services or property.
       ``(2) Establishment and prohibition on accepting outside 
     funding or contributions.--The Institute may not--
       ``(A) establish a corporation other than as provided under 
     this section; or
       ``(B) accept any funds or contributions other than as 
     provided under this part.
       ``(k) Rules of Construction.--
       ``(1) Coverage.--Nothing in this section shall be 
     construed--
       ``(A) to permit the Institute to mandate coverage, 
     reimbursement, or other policies for any public or private 
     payer; or
       ``(B) as preventing the Secretary from covering the routine 
     costs of clinical care received by an individual entitled to, 
     or enrolled for, benefits under title XVIII, XIX, or XXI in 
     the case where such individual is participating in a clinical 
     trial and such costs would otherwise be covered under such 
     title with respect to the beneficiary.
       ``(2) Reports and findings.--None of the reports submitted 
     under this section or research findings disseminated by the 
     Institute shall be construed as mandates, guidelines, or 
     recommendations for payment, coverage, or treatment.


``trust fund transfers to comparative effectiveness research trust fund

       ``Sec. 1182.  (a) In General.--The Secretary shall provide 
     for the transfer, from the Federal Hospital Insurance Trust 
     Fund under section 1817 and the Federal Supplementary Medical 
     Insurance Trust Fund under section 1841, in proportion (as 
     estimated by the Secretary) to the total expenditures during 
     such fiscal year that are made under title XVIII from the 
     respective trust fund, to the Comparative Effectiveness 
     Research Trust Fund (referred to in this section as the 
     `CERTF') under section 9511 of the Internal Revenue Code of 
     1986, the following:
       ``(1) For fiscal year 2012, an amount equal to 50 cents 
     multiplied by the average number of individuals entitled to 
     benefits under part A, or enrolled under part B, of title 
     XVIII during such fiscal year.
       ``(2) For each of fiscal years 2013, 2014, 2015, 2016, 
     2017, and 2018, an amount equal to $1 multiplied by the 
     average number of individuals entitled to benefits under part 
     A, or enrolled under part B, of title XVIII during such 
     fiscal year.
       ``(b) Adjustments for Increases in Health Care Spending.--
     In the case of any fiscal year beginning after September 30, 
     2013, the dollar amount in effect under subsection (a)(2) for 
     such fiscal year shall be equal to the sum of such dollar 
     amount for the previous fiscal year (determined after the 
     application of this subsection), plus an amount equal to the 
     product of--
       ``(1) such dollar amount for the previous fiscal year, 
     multiplied by
       ``(2) the percentage increase in the projected per capita 
     amount of National Health Expenditures from the calendar year 
     in which the previous fiscal year ends to the calendar year 
     in which the fiscal year involved ends, as most recently 
     published by the Secretary before the beginning of the fiscal 
     year.''.
       (b) Coordination With Provider Education and Technical 
     Assistance.--Section 1889(a) of the Social Security Act (42 
     U.S.C. 1395zz(a)) is amended by inserting ``and to enhance 
     the understanding of and utilization by providers of services 
     and suppliers of research findings disseminated by the Health 
     Care Comparative Effectiveness Research Institute established 
     under section 1181'' before the period at the end.
       (c) Comparative Effectiveness Research Trust Fund; 
     Financing for Trust Fund.--

[[Page S7965]]

       (1) Establishment of trust fund.--
       (A) In general.--Subchapter A of chapter 98 of the Internal 
     Revenue Code of 1986 (relating to establishment of trust 
     funds) is amended by adding at the end the following new 
     section:

     ``SEC. 9511. COMPARATIVE EFFECTIVENESS RESEARCH TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Comparative Effectiveness Research Trust Fund' (hereafter in 
     this section referred to as the `CERTF'), consisting of such 
     amounts as may be appropriated or credited to such Trust Fund 
     as provided in this section and section 9602(b).
       ``(b) Transfers to Fund.--
       ``(1) Appropriation.--There are hereby appropriated to the 
     Trust Fund the following:
       ``(A) For fiscal year 2009, $5,000,000.
       ``(B) For fiscal year 2010, $25,000,000.
       ``(C) For fiscal year 2011, $75,000,000.
       ``(D) For fiscal year 2012--
       ``(i) an amount equivalent to the net revenues received in 
     the Treasury from the fees imposed under subchapter B of 
     chapter 34 (relating to fees on health insurance and self-
     insured plans) for such fiscal year; and
       ``(ii) $75,000,000.
       ``(E) For each of fiscal years 2013, 2014, 2015, 2016, 
     2017, and 2018--
       ``(i) an amount equivalent to the net revenues received in 
     the Treasury from the fees imposed under subchapter B of 
     chapter 34 (relating to fees on health insurance and self-
     insured plans) for such fiscal year; and
       ``(ii) $75,000,000.
     The amounts appropriated under subparagraphs (A), (B), (C), 
     (D)(ii), and (E)(ii) shall be transferred from the general 
     fund of the Treasury, from funds not otherwise appropriated.
       ``(2) Trust fund transfers.--In addition to the amounts 
     appropriated under paragraph (1), there shall be credited to 
     the CERTF the amounts transferred under section 1182 of the 
     Social Security Act.
       ``(3) Limitation on transfers to certf.--No amount may be 
     appropriated or transferred to the CERTF on and after the 
     date of any expenditure from the CERTF which is not an 
     expenditure permitted under this section. The determination 
     of whether an expenditure is so permitted shall be made 
     without regard to--
       ``(A) any provision of law which is not contained or 
     referenced in this chapter or in a revenue Act, and
       ``(B) whether such provision of law is a subsequently 
     enacted provision or directly or indirectly seeks to waive 
     the application of this paragraph.
       ``(c) Trustee.--The Secretary of Health and Human Services 
     shall be a trustee of the CERTF.
       ``(d) Expenditures From Fund.--Amounts in the CERTF are 
     available, without further appropriation, to the Health Care 
     Comparative Effectiveness Research Institute established by 
     section 2(a) of the Comparative Effectiveness Research Act of 
     2008 for carrying out part D of title XI of the Social 
     Security Act (as in effect on the date of enactment of the 
     Comparative Effectiveness Research Act of 2008).
       ``(e) Net Revenues.--For purposes of this section, the term 
     `net revenues' means the amount estimated by the Secretary of 
     the Treasury based on the excess of--
       ``(1) the fees received in the Treasury under subchapter B 
     of chapter 34, over
       ``(2) the decrease in the tax imposed by chapter 1 
     resulting from the fees imposed by such subchapter.
       ``(f) Termination.--No amounts shall be available for 
     expenditure from the CERTF after September 30, 2018, and any 
     amounts in such Trust Fund after such date shall be 
     transferred to the general fund of the Treasury.''.
       (B) Clerical amendment.--The table of sections for 
     subchapter A of chapter 98 of such Code is amended by adding 
     at the end the following new item:

``Sec. 9511. Comparative Effectiveness Research Trust Fund.''.
       (2) Financing for fund from fees on insured and self-
     insured health plans.--
       (A) General rule.--Chapter 34 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subchapter:

         ``Subchapter B--Insured and Self-Insured Health Plans

``Sec. 4375. Health insurance.
``Sec. 4376. Self-insured health plans.
``Sec. 4377. Definitions and special rules.

     ``SEC. 4375. HEALTH INSURANCE.

       ``(a) Imposition of Fee.--There is hereby imposed on each 
     specified health insurance policy for each policy year ending 
     after September 30, 2011, a fee equal to the product of $1 
     (50 cents in the case of policy years ending during fiscal 
     year 2012) multiplied by the average number of lives covered 
     under the policy.
       ``(b) Liability for Fee.--The fee imposed by subsection (a) 
     shall be paid by the issuer of the policy.
       ``(c) Specified Health Insurance Policy.--For purposes of 
     this section:
       ``(1) In general.--Except as otherwise provided in this 
     section, the term `specified health insurance policy' means 
     any accident or health insurance policy (including a policy 
     under a group health plan) issued with respect to individuals 
     residing in the United States.
       ``(2) Exemption for certain policies.--The term `specified 
     health insurance policy' does not include any insurance if 
     substantially all of its coverage is of excepted benefits 
     described in section 9832(c).
       ``(3) Treatment of prepaid health coverage arrangements.--
       ``(A) In general.--In the case of any arrangement described 
     in subparagraph (B)--
       ``(i) such arrangement shall be treated as a specified 
     health insurance policy, and
       ``(ii) the person referred to in such subparagraph shall be 
     treated as the issuer.
       ``(B) Description of arrangements.--An arrangement is 
     described in this subparagraph if under such arrangement 
     fixed payments or premiums are received as consideration for 
     any person's agreement to provide or arrange for the 
     provision of accident or health coverage to residents of the 
     United States, regardless of how such coverage is provided or 
     arranged to be provided.
       ``(d) Adjustments for Increases in Health Care Spending.--
     In the case of any policy year ending in any fiscal year 
     beginning after September 30, 2013, the dollar amount in 
     effect under subsection (a) for such policy year shall be 
     equal to the sum of such dollar amount for policy years 
     ending in the previous fiscal year (determined after the 
     application of this subsection), plus an amount equal to the 
     product of--
       ``(1) such dollar amount for policy years ending in the 
     previous fiscal year, multiplied by
       ``(2) the percentage increase in the projected per capita 
     amount of National Health Expenditures from the calendar year 
     in which the previous fiscal year ends to the calendar year 
     in which the fiscal year involved ends, as most recently 
     published by the Secretary of Health and Human Services 
     before the beginning of the fiscal year.
       ``(e) Termination.--This section shall not apply to policy 
     years ending after September 30, 2018.

     ``SEC. 4376. SELF-INSURED HEALTH PLANS.

       ``(a) Imposition of Fee.--In the case of any applicable 
     self-insured health plan for each plan year ending after 
     September 30, 2011, there is hereby imposed a fee equal to $1 
     (50 cents in the case of plan years ending during fiscal year 
     2012) multiplied by the average number of lives covered under 
     the plan.
       ``(b) Liability for Fee.--
       ``(1) In general.--The fee imposed by subsection (a) shall 
     be paid by the plan sponsor.
       ``(2) Plan sponsor.--For purposes of paragraph (1) the term 
     `plan sponsor' means--
       ``(A) the employer in the case of a plan established or 
     maintained by a single employer,
       ``(B) the employee organization in the case of a plan 
     established or maintained by an employee organization,
       ``(C) in the case of--
       ``(i) a plan established or maintained by 2 or more 
     employers or jointly by 1 or more employers and 1 or more 
     employee organizations,
       ``(ii) a multiple employer welfare arrangement, or
       ``(iii) a voluntary employees' beneficiary association 
     described in section 501(c)(9),
     the association, committee, joint board of trustees, or other 
     similar group of representatives of the parties who establish 
     or maintain the plan, or
       ``(D) the cooperative or association described in 
     subsection (c)(2)(F) in the case of a plan established or 
     maintained by such a cooperative or association.
       ``(c) Applicable Self-Insured Health Plan.--For purposes of 
     this section, the term `applicable self-insured health plan' 
     means any plan for providing accident or health coverage if--
       ``(1) any portion of such coverage is provided other than 
     through an insurance policy, and
       ``(2) such plan is established or maintained--
       ``(A) by one or more employers for the benefit of their 
     employees or former employees,
       ``(B) by one or more employee organizations for the benefit 
     of their members or former members,
       ``(C) jointly by 1 or more employers and 1 or more employee 
     organizations for the benefit of employees or former 
     employees,
       ``(D) by a voluntary employees' beneficiary association 
     described in section 501(c)(9),
       ``(E) by any organization described in section 501(c)(6), 
     or
       ``(F) in the case of a plan not described in the preceding 
     subparagraphs, by a multiple employer welfare arrangement (as 
     defined in section 3(40) of Employee Retirement Income 
     Security Act of 1974), a rural electric cooperative (as 
     defined in section 3(40)(B)(iv) of such Act), or a rural 
     telephone cooperative association (as defined in section 
     3(40)(B)(v) of such Act).
       ``(d) Adjustments for Increases in Health Care Spending.--
     In the case of any plan year ending in any fiscal year 
     beginning after September 30, 2013, the dollar amount in 
     effect under subsection (a) for such plan year shall be equal 
     to the sum of such dollar amount for plan years ending in the 
     previous fiscal year (determined after the application of 
     this subsection), plus an amount equal to the product of--
       ``(1) such dollar amount for plan years ending in the 
     previous fiscal year, multiplied by
       ``(2) the percentage increase in the projected per capita 
     amount of National Health Expenditures from the calendar year 
     in which the previous fiscal year ends to the calendar year 
     in which the fiscal year involved ends, as most recently 
     published by the Secretary of Health and Human Services 
     before the beginning of the fiscal year.

[[Page S7966]]

       ``(e) Termination.--This section shall not apply to plan 
     years ending after September 30, 2018.

     ``SEC. 4377. DEFINITIONS AND SPECIAL RULES.

       ``(a) Definitions.--For purposes of this subchapter--
       ``(1) Accident and health coverage.--The term `accident and 
     health coverage' means any coverage which, if provided by an 
     insurance policy, would cause such policy to be a specified 
     health insurance policy (as defined in section 4375(c)).
       ``(2) Insurance policy.--The term `insurance policy' means 
     any policy or other instrument whereby a contract of 
     insurance is issued, renewed, or extended.
       ``(3) United states.--The term `United States' includes any 
     possession of the United States.
       ``(b) Treatment of Governmental Entities.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) the term `person' includes any governmental entity, 
     and
       ``(B) notwithstanding any other law or rule of law, 
     governmental entities shall not be exempt from the fees 
     imposed by this subchapter except as provided in paragraph 
     (2).
       ``(2) Treatment of exempt governmental programs.--In the 
     case of an exempt governmental program, no fee shall be 
     imposed under section 4375 or section 4376 on any covered 
     life under such program.
       ``(3) Exempt governmental program defined.--For purposes of 
     this subchapter, the term `exempt governmental program' 
     means--
       ``(A) any insurance program established under title XVIII 
     of the Social Security Act,
       ``(B) the medical assistance program established by title 
     XIX or XXI of the Social Security Act,
       ``(C) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     individuals (or the spouses and dependents thereof) by reason 
     of such individuals being--
       ``(i) members of the Armed Forces of the United States, or
       ``(ii) veterans, and
       ``(D) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     members of Indian tribes (as defined in section 4(d) of the 
     Indian Health Care Improvement Act).
       ``(c) Treatment as Tax.--For purposes of subtitle F, the 
     fees imposed by this subchapter shall be treated as if they 
     were taxes.
       ``(d) No Cover Over to Possessions.--Notwithstanding any 
     other provision of law, no amount collected under this 
     subchapter shall be covered over to any possession of the 
     United States.''.
       (B) Clerical amendments.--
       (i) Chapter 34 of such Code is amended by striking the 
     chapter heading and inserting the following:

           ``CHAPTER 34--TAXES ON CERTAIN INSURANCE POLICIES

          ``subchapter a. policies issued by foreign insurers

         ``subchapter b. insured and self-insured health plans

         ``Subchapter A--Policies Issued By Foreign Insurers''.

       (ii) The table of chapters for subtitle D of such Code is 
     amended by striking the item relating to chapter 34 and 
     inserting the following new item:

          ``Chapter 34--Taxes on Certain Insurance Policies''.

     SEC. 3. GAO REPORT ON NATIONAL COVERAGE DETERMINATIONS 
                   PROCESS.

       Not later than 18 months after the date of enactment of 
     this Act, the Comptroller General of the United States shall 
     submit a report to Congress on the process for making 
     national coverage determinations (as defined in section 
     1869(f)(1)(B) of the Social Security Act (42 U.S.C. 
     1395ff(f)(1)(B)) under the Medicare program under title XVIII 
     of the Social Security Act. Such report shall include a 
     determination whether, in initiating and conducting such 
     process, the Secretary of Health and Human Services has 
     complied with applicable law and regulations, including 
     requirements for consultation with appropriate outside 
     experts, providing appropriate notice and comment 
     opportunities to the public, and making information and data 
     (other than proprietary data) considered in making such 
     determinations available to the public and to nonvoting 
     members of any advisory committees established to advise the 
     Secretary with respect to such determinations.

  Mr. CONRAD. Mr. President, today I join my good friend and colleague, 
Senator Baucus, in introducing the Comparative Effectiveness Research 
Act of 2008. This proposal is the product of months of careful 
deliberations regarding the best way to expand the quality and quantity 
of evidence available to health consumers about the comparative 
clinical effectiveness of health care services and treatments. We have 
met with dozens of key stakeholders and thought leaders to discuss 
various aspects of this legislation. I am proud of the result. This 
legislation lays the groundwork for improving health care outcomes, 
enhancing patient safety, and reducing overall health care costs in the 
long-run.
  As chairman of the Senate Budget Committee, I am acutely aware of the 
long-term budget challenges facing our nation. Health care spending is 
growing at an unsustainable rate. Although demographic changes 
associated with the retirement of the baby boom generation contribute 
to this spending growth, the most significant factor is growth in 
health care costs in excess of per capita GDP growth. According to 
Congressional Budget Office projections, by 2050, Medicare and Medicaid 
spending alone will consume 12 percent of our Nation's gross domestic 
product.
  But excess growth in per capita health care costs is not just a 
challenge for Federal health spending and the federal budget. If we 
continue on the current trajectory, the private sector will also be 
overwhelmed by rising health care costs. In fact, total health care 
spending is projected to grow from about 16 percent of GDP in 2007--
which is far higher than in other industrialized countries--to more 
than 37 percent of GDP in 2050.
  Clearly, we need to address the underlying causes of rising health 
care costs, not just in the Medicare and Medicaid programs, but in the 
overall health care system. Simply cutting Medicare and Medicaid 
without making other changes will do little to solve the larger problem 
we face. As GAO Comptroller General David Walker pointed out in 
testimony before the House Budget Committee, in 2005, ``[F]ederal 
health spending trends should not be viewed in isolation from the 
health care system as a whole . . . . Rather, in order to address the 
long-term fiscal challenge, it will be necessary to find approaches 
that deal with health care cost growth in the overall health care 
system.''
  A key problem we must confront is that our health care system does 
not deliver care as efficiently or effectively as it should. In fact, 
the United States spends far more on health expenditures as a percent 
of GDP than any other country in the Organization for Economic 
Cooperation and Development. For example, the United States spent 16 
percent of GDP on health expenditures in 2006, compared to 9 percent in 
Italy. And the disparity is even starker today. Despite this additional 
health care spending, health outcomes in the United States are no 
better than health outcomes in the other OECD countries. In fact, by 
some measures, they are worse.
  We can and must find ways to deliver health care more efficiently, 
reduce ineffective or unnecessary care, and get better health outcomes 
without harming patients.
  One solution is to generate better information about the relative 
effectiveness of alternative health strategies--and encourage patients 
and providers to use that information to make better choices about 
their health. Many newer, more expensive health care services and 
treatments are absorbed quickly into routine medical care--yet there is 
little evidence that these services and treatments are any more 
clinically effective than existing treatments and services.

  The Federal Government currently funds some comparative effectiveness 
research through the Agency for Healthcare Research and Quality. The 
Effective Health Care Program has been a successful initiative, and we 
commend AHRQ for its work, but comparative effectiveness research is 
not the primary focus of any federal agency--nor is this federal 
funding occurring on a large-scale. The Congressional Budget Office, 
CBO, the Medicare Payment Advisory Commission, MedPAC, and the 
Institute of Medicine, IOM, have all discussed the positive impact of 
creating a new entity charged solely with conducting research on the 
comparative effectiveness of health interventions, including 
pharmaceuticals, medical devices, medical procedures, diagnostic tools, 
medical services and other therapies.
  In its June 2007 report to Congress, MedPAC issued a unanimous 
recommendation that ``Congress should charge an independent entity to 
sponsor credible research on comparative effectiveness of health care 
services and disseminate this information to patients, providers, and 
public and private payers.''
  And the Congressional Budget Office agrees. In a recent report, 
entitled, ``Research on the Comparative Effectiveness of Medical 
Treatments: Issues and Options for an Expanded Federal

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Role,'' CBO Director Peter Orszag wrote that, ``generating better 
information about the costs and benefits of different treatment 
options--through research on the comparative effectiveness of those 
options--could help reduce health care spending without adversely 
affecting health overall.''
  The IOM also supports getting better information into the hands of 
patients and providers. As part of its report, ``Learning What Works 
Best: The Nation's Need for Evidence on Comparative Effectiveness in 
Health Care,'' the Institute concluded that,
``[a] substantially increased capacity to conduct and evaluate research 
      on clinical effectiveness of interventions brings many potential 
    opportunities for improvement across a wide spectrum of healthcare 
                                                               needs.''
  This bill that Senator Baucus and I are introducing today represents 
an important step in expanding comparative effectiveness research. The 
bill would significantly expand the conduct of comparative clinical 
effectiveness research to get better information into the hands of 
patients and providers in the hopes of improving health outcomes and 
reducing unnecessary or ineffective care.
  The purpose of this bill is to provide health care providers and 
patients with objective and credible evidence about which health care 
treatments, services, and items are most clinically effective for 
particular patient populations. The research conducted under our bill 
would evaluate and compare the clinical effectiveness of two or more 
health care interventions, treatment protocols, procedures, medical 
devices, diagnostic tools, pharmaceuticals, and other processes or 
items used in the treatment or diagnosis of patients. Access to better 
evidence about what works best will help patients and health care 
providers make better-informed decisions about how best to treat 
particular diseases and conditions. Our hope is that the evidence 
generated by this research could lead to savings in the overall health 
care system over the long-term by allowing providers to avoid 
treatments that may be clinically ineffective, while at the same time 
improving health care outcomes.
  Specifically, our bill creates a private, nonprofit corporation, 
known as the Health Care Comparative Effectiveness Research Institute, 
which would be responsible for organizing and implementing a national 
comparative effectiveness research agenda. In conducting the research, 
the Institute would contract with the Agency for Healthcare Research 
and Quality, the National Institutes of Health and other appropriate 
public and private entities and could use a variety of research 
methods, including clinical trials, observational studies and 
systematic reviews of existing evidence.
  Many thought leaders on this issue, such as the Medicare Payment 
Advisory Committee, had concerns that a large entity within the Federal 
Government would be vulnerable to political interference that could 
hamper the Institute's credibility, and, therefore, limit the 
usefulness of its research. As a result, we chose a model outside of 
the Federal Government, but subject to government oversight.
  In order to ensure that the information developed is credible and 
unbiased, our bill establishes a 21-Member Board of Governors to 
oversee the Institute's activities. Permanent board members would 
include the Secretary of Health and Human Services and the Directors of 
the Agency for Healthcare Research and Quality and the National 
Institutes of Health, NIH. The remaining 18 board members would be 
appointed by the Comptroller General of the United States and would 
include a balanced mix of patients, physicians, drug, device, and 
technology manufacturers, public and private payers, academic 
researchers, philanthropic organizations and quality improvement 
entities.
  To ensure further credibility, the Institute is also required to 
appoint advisory panels of patients, clinicians, and other stakeholders 
that would assist in the development and carrying out of the research 
agenda; establish a methodology committee that would help create 
standards by which all research commissioned by the Institute must be 
conducted; create a peer review process through which all research 
findings must be assessed; and develop protocols to help translate and 
disseminate the evidence in the most effective, user-friendly way.
  Moreover, Senator Baucus and I want to ensure that the operations of 
the Institute are transparent. Therefore, we built in a strong role for 
public comment prior to all key decisions made by the Institute. For 
example, the bill requires public comment periods prior to the approval 
of the overall research agenda and the individual study designs. In 
addition, the bill calls for periodic public forums to seek input, 
requires that all proceedings of the Institute be made public and 
available through annual reports, and requires that any conflicts of 
interest be made public and that board members recuse themselves from 
matters in which they have a financial or personal interest.
  Because all health care users will benefit from this research, our 
legislation funds the Institute with contributions from both public and 
private payers. These contributions will include mandatory general 
revenues from the Federal Government, amounts from the Medicare Trust 
Funds equal to $1 per beneficiary annually, and amounts from a $1 fee 
per-covered life assessed annually on insured and self-insured health 
plans. Funding will ramp up over a series of years. By the fifth year, 
we expect the Institute's total annual funding to exceed $300 million 
per year and continue to grow thereafter.
  The concept of an all-payer approach for comparative effectiveness 
research has been embraced by a number of health care experts. For 
example, on the subject of comparative effectiveness information in its 
June 2008 report, MedPAC stated: ``The Commission supports funding from 
federal and private sources as the research findings will benefit all 
users--patients, providers, private health plans, and federal health 
programs. The Commission also supports a dedicated funding mechanism to 
help ensure the entity's independence and stability. Dedicated broadly 
based financing would reduce the likelihood of outside influence and 
would best ensure the entity's stability . . .''

  To ensure accountability for these funds and to the Institute's 
mission, our bill requires an annual financial audit of the Institute. 
In addition, the bill requires GAO to report to Congress every five 
years on the processes developed by the Institute and its overall 
effectiveness, including how the research findings are used by health 
care consumers and what impact the research is having on the health 
economy. Finally, the bill requires a review after eight years of the 
adequacy of the Institute's funding, which will include a review of the 
appropriateness and adequacy of each funding source.
  Let me take a moment to address some of the criticisms that might be 
levied against this proposal. Some may say this Institute will impede 
access to care and will deny coverage for high-cost health care 
services. That is not the case. Our proposal explicitly prohibits the 
Institute from making coverage decisions or setting practice 
guidelines. It will be up to specialty societies and patient groups to 
use the research findings as they see fit. Moreover, to the extent that 
high-cost health care services or new technologies are studied by the 
Institute and found to be clinically ineffective compared to other 
services and technologies, such evidence will be made public to 
consumers and providers so that they can make the best possible health 
care decisions. Other critics may claim that this proposal will result 
in one-size-fits-all approach to comparative clinical effectiveness 
research. We recognize that different health care treatments may have 
different levels of effectiveness for different subpopulations. That is 
why our bill requires that the Institute's research be designed, as 
appropriate, to take into account the potential differences in the 
effectiveness of health care services as used with various 
subpopulations, such as women, racial and ethnic minorities, different 
age groups, and individuals with different comorbidities.
  This bill is a balanced, carefully crafted proposal that has taken 
into consideration the recommendations of a broad range of stakeholders 
and thought-leaders. We welcome further discussion and suggested 
improvements. But we refuse to allow this proposal to get bogged down 
in political

[[Page S7968]]

maneuvering or scare tactics. Our nation needs to ramp up comparative 
effectiveness research immediately to improve health outcomes and 
reduce ineffective and inefficient care.
  Senator Baucus and I will work jointly to push for the expeditious 
enactment of this bill. I urge all of my colleagues to join our effort 
and cosponsor the Comparative Effectiveness Research Act of 2008. There 
is no time to waste.
                                 ______