[Congressional Record (Bound Edition), Volume 147 (2001), Part 17]
[House]
[Pages 23832-23838]
[From the U.S. Government Publishing Office, www.gpo.gov]



              ADMINISTRATIVE SIMPLIFICATION COMPLIANCE ACT

  Mr. TAUZIN. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 3323) to ensure that covered entities comply with the 
standards for electronic health care transactions and code sets adopted 
under part C of title XI of the Social Security Act, and for other 
purposes, as amended.
  The Clerk read as follows:

                               H.R. 3323

       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 ``Administrative 
     Simplification Compliance Act''.

     SEC. 2. EXTENSION OF DEADLINE FOR COVERED ENTITIES SUBMITTING 
                   COMPLIANCE PLANS.

       (a) In General.--
       (1) Extension.--Subject to paragraph (2), notwithstanding 
     section 1175(b)(1)(A) of the Social Security Act (42 U.S.C. 
     1320d-4(b)(1)(A)) and section 162.900 of title 45, Code of 
     Federal Regulations, a health care provider, health plan 
     (other than a small health plan), or a health care 
     clearinghouse shall not be considered to be in noncompliance 
     with the applicable requirements of subparts I through R of 
     part 162 of title 45, Code of Federal Regulations, before 
     October 16, 2003.
       (2) Condition.--Paragraph (1) shall apply to a person 
     described in such paragraph only if, before October 16, 2002, 
     the person submits to the Secretary of Health and Human 
     Services a plan of how the person will come into compliance 
     with the requirements described in such paragraph not later 
     than October 16, 2003. Such plan shall be a summary of the 
     following:
       (A) An analysis reflecting the extent to which, and the 
     reasons why, the person is not in compliance.
       (B) A budget, schedule, work plan, and implementation 
     strategy for achieving compliance.
       (C) Whether the person plans to use or might use a 
     contractor or other vendor to assist the person in achieving 
     compliance.
       (D) A timeframe for testing that begins not later than 
     April 16, 2003.
       (3) Electronic submission.--Plans described in paragraph 
     (2) may be submitted electronically.
       (4) Model form.--Not later than March 31, 2002, the 
     Secretary of Health and Human Services shall promulgate a 
     model form that persons may use in drafting a plan described 
     in paragraph (2). The promulgation of such form shall be made 
     without regard to chapter 35 of title 44, United States Code 
     (commonly known as the ``Paperwork Reduction Act'').
       (5) Analysis of plans; reports on solutions.--
       (A) Analysis of plans.--
       (i) Furnishing of plans.--Subject to subparagraph (D), the 
     Secretary of Health and Human Services shall furnish the 
     National Committee on Vital and Health Statistics with a 
     sample of the plans submitted under paragraph (2) for 
     analysis by such Committee.
       (ii) Analysis.--The National Committee on Vital and Health 
     Statistics shall analyze the sample of the plans furnished 
     under clause (i).
       (B) Reports on solutions.--The National Committee on Vital 
     and Health Statistics shall regularly publish, and widely 
     disseminate to the public, reports containing effective 
     solutions to compliance problems identified in the plans 
     analyzed under subparagraph (A). Such reports shall not 
     relate specifically to any one plan but shall be written for 
     the purpose of assisting the maximum number of persons to 
     come into compliance by addressing the most common or 
     challenging problems encountered by persons submitting such 
     plans.
       (C) Consultation.--In carrying out this paragraph, the 
     National Committee on Vital and Health Statistics shall 
     consult with each organization--
       (i) described in section 1172(c)(3)(B) of the Social 
     Security Act (42 U.S.C. 1320d-1(c)(3)(B)); or
       (ii) designated by the Secretary of Health and Human 
     Services under section 162.910(a) of title 45, Code of 
     Federal Regulations.
       (D) Protection of confidential information.--
       (i) In general.--The Secretary of Health and Human Services 
     shall ensure that any material provided under subparagraph 
     (A) to the National Committee on Vital and Health Statistics 
     or any organization described in subparagraph (C) is redacted 
     so as to prevent the disclosure of any--

       (I) trade secrets;
       (II) commercial or financial information that is privileged 
     or confidential; and
       (III) other information the disclosure of which would 
     constitute a clearly unwarranted invasion of personal 
     privacy.

       (ii) Construction.--Nothing in clause (i) shall be 
     construed to affect the application of section 552 of title 
     5, United States Code (commonly known as the ``Freedom of 
     Information Act''), including the exceptions from disclosure 
     provided under subsection (b) of such section.
       (6) Enforcement through exclusion from participation in 
     medicare.--
       (A) In general.--In the case of a person described in 
     paragraph (1) who fails to submit a plan in accordance with 
     paragraph (2), and who is not in compliance with the 
     applicable requirements of subparts I through R of part 162 
     of title 45, Code of Federal Regulations, on or after October 
     16, 2002, the person may be excluded at the discretion of the 
     Secretary of Health and Human Services from participation 
     (including under part C or as a contractor under sections 
     1816, 1842, and 1893) in title XVIII of the Social Security 
     Act (42 U.S.C. 1395 et seq.).
       (B) Procedure.--The provisions of section 1128A of the 
     Social Security Act (42 U.S.C. 1320a-7a) (other than the 
     first and second sentences of subsection (a) and subsection 
     (b)) shall apply to an exclusion under this paragraph in the 
     same manner as such provisions apply with respect to an 
     exclusion or proceeding under section 1128A(a) of such Act.
       (C) Construction.--The availability of an exclusion under 
     this paragraph shall not be construed to affect the 
     imposition of penalties under section 1176 of the Social 
     Security Act (42 U.S.C. 1320d-5).


       (D) Nonapplicability to complying persons.--The exclusion 
     under subparagraph (A) shall not apply to a person who--
       (i) submits a plan in accordance with paragraph (2); or
       (ii) who is in compliance with the applicable requirements 
     of subparts I through R of part 162 of title 45, Code of 
     Federal Regulations, on or before October 16, 2002.
       (b) Special Rules.--
       (1) Rules of construction.--Nothing in this section shall 
     be construed--
       (A) as modifying the October 16, 2003, deadline for a small 
     health plan to comply with

[[Page 23833]]

     the requirements of subparts I through R of part 162 of title 
     45, Code of Federal Regulations; or
       (B) as modifying--
       (i) the April 14, 2003, deadline for a health care 
     provider, a health plan (other than a small health plan), or 
     a health care clearinghouse to comply with the requirements 
     of subpart E of part 164 of title 45, Code of Federal 
     Regulations; or
       (ii) the April 14, 2004, deadline for a small health plan 
     to comply with the requirements of such subpart.
       (2) Applicability of privacy standards before compliance 
     deadline for information transaction standards.--
       (A) In general.--Notwithstanding any other provision of 
     law, during the period that begins on April 14, 2003, and 
     ends on October 16, 2003, a health care provider or, subject 
     to subparagraph (B), a health care clearinghouse, that 
     transmits any health information in electronic form in 
     connection with a transaction described in subparagraph (C) 
     shall comply with the requirements of subpart E of part 164 
     of title 45, Code of Federal Regulations, without regard to 
     whether the transmission meets the standards required by part 
     162 of such title.
       (B) Application to health care clearinghouses.--For 
     purposes of this paragraph, during the period described in 
     subparagraph (A), an entity that processes or facilitates the 
     processing of information in connection with a transaction 
     described in subparagraph (C) and that otherwise would be 
     treated as a health care clearinghouse shall be treated as a 
     health care clearinghouse without regard to whether the 
     processing or facilitation produces (or is required to 
     produce) standard data elements or a standard transaction as 
     required by part 162 of title 45, Code of Federal 
     Regulations.
       (C) Transactions described.--The transactions described in 
     this subparagraph are the following:
       (i) A health care claims or equivalent encounter 
     information transaction.
       (ii) A health care payment and remittance advice 
     transaction.
       (iii) A coordination of benefits transaction.
       (iv) A health care claim status transaction.
       (v) An enrollment and disenrollment in a health plan 
     transaction.
       (vi) An eligibility for a health plan transaction.
       (vii) A health plan premium payments transaction.
       (viii) A referral certification and authorization 
     transaction.
       (c) Definitions.--In this section--
       (1) the terms ``health care provider'', ``health plan'', 
     and ``health care clearinghouse'' have the meaning given 
     those terms in section 1171 of the Social Security Act (42 
     U.S.C. 1320d) and section 160.103 of title 45, Code of 
     Federal Regulations;
       (2) the terms ``small health plan'' and ``transaction'' 
     have the meaning given those terms in section 160.103 of 
     title 45, Code of Federal Regulations; and
       (3) the terms ``health care claims or equivalent encounter 
     information transaction'', ``health care payment and 
     remittance advice transaction'', ``coordination of benefits 
     transaction'', ``health care claim status transaction'', 
     ``enrollment and disenrollment in a health plan 
     transaction'', ``eligibility for a health plan transaction'', 
     ``health plan premium payments transaction'', and ``referral 
     certification and authorization transaction'' have the 
     meanings given those terms in sections 162.1101, 162.1601, 
     162.1801, 162.1401, 162.1501, 162.1201, 162.1701, and 
     162.1301 of title 45, Code of Federal Regulations, 
     respectively.

     SEC. 3. REQUIRING ELECTRONIC SUBMISSION OF MEDICARE CLAIMS.

       (a) In General.--Section 1862 of the Social Security Act 
     (42 U.S.C. 1395y) is amended--
       (1) in subsection (a)--
       (A) by striking ``or'' at the end of paragraph (20);
       (B) by striking the period at the end of paragraph (21) and 
     inserting ``; or''; and
       (C) by inserting after paragraph (21) the following new 
     paragraph:
       ``(22) subject to subsection (h), for which a claim is 
     submitted other than in an electronic form specified by the 
     Secretary.''; and
       (2) by inserting after subsection (g) the following new 
     subsection:
       ``(h)(1) The Secretary--
       ``(A) shall waive the application of subsection (a)(22) in 
     cases in which--
       ``(i) there is no method available for the submission of 
     claims in an electronic form; or
       ``(ii) the entity submitting the claim is a small provider 
     of services or supplier; and
       ``(B) may waive the application of such subsection in such 
     unusual cases as the Secretary finds appropriate.
       ``(2) For purposes of this subsection, the term `small 
     provider of services or supplier' means--
       ``(A) a provider of services with fewer than 25 full-time 
     equivalent employees; or
       ``(B) a physician, practitioner, facility, or supplier 
     (other than provider of services) with fewer than 10 full-
     time equivalent employees.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to claims submitted on or after October 16, 2003.

     SEC. 4. CLARIFICATION WITH RESPECT TO APPLICABILITY OF 
                   ADMINISTRATIVE SIMPLIFICATION REQUIREMENTS TO 
                   MEDICARE+CHOICE ORGANIZATIONS.

       Section 1171(5)(D) of the Social Security Act (42 U.S.C. 
     1320d(5)(D)) is amended by striking ``Part A or part B'' and 
     inserting ``Parts A, B, or C''.

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS FOR IMPLEMENTATION OF 
                   REGULATIONS.

       (a) In General.--Subject to subsection (b), and in addition 
     to any other amounts that may be authorized to be 
     appropriated, there are authorized to be appropriated a total 
     of $44,200,000, for--
       (1) technical assistance, education and outreach, and 
     enforcement activities related to subparts I through R of 
     part 162 of title 45, Code of Federal Regulations; and
       (2) adopting the standards required to be adopted under 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2).
       (b) Reductions.--
       (1) Model form 14 days late.--If the Secretary fails to 
     promulgate the model form described in section 1(a)(4) by the 
     date that is 14 days after the deadline described in such 
     section, the amount referred to in subsection (a) shall be 
     reduced by 25 percent.
       (2) Model form 30 days late.--If the Secretary fails to 
     promulgate the model form described in section 1(a)(4) by the 
     date that is 30 days after the deadline described in such 
     section, the amount referred to in subsection (a) shall be 
     reduced by 50 percent.
       (3) Model form 45 days late.--If the Secretary fails to 
     promulgate the model form described in section 1(a)(4) by the 
     date that is 45 days after the deadline described in such 
     section, the amount referred to in subsection (a) shall be 
     reduced by 75 percent.
       (4) Model form 60 days late.--If the Secretary fails to 
     promulgate the model form described in section 1(a)(4) by the 
     date that is 60 days after the deadline described in such 
     section, the amount referred to in subsection (a) shall be 
     reduced by 100 percent.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Louisiana (Mr. Tauzin) and the gentleman from Ohio (Mr. Brown) each 
will control 20 minutes.
  Mr. BROWN of Ohio. Mr. Speaker, I ask unanimous consent that the 
gentleman from California (Mr. Stark) be permitted to control 10 
minutes of the time on this side.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. TAUZIN. Mr. Speaker, I ask unanimous consent that the gentlewoman 
from Connecticut (Mrs. Johnson) on behalf of the gentleman from 
California (Mr. Thomas) be permitted to control 10 minutes of time on 
this side.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Louisiana?
  There was no objection.


                             General Leave

  Mr. TAUZIN. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
and insert extraneous material on this legislation now being 
considered.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Louisiana?
  There was no objection.
  Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 3323, the Administrative 
Simplification Compliance Act introduced by the gentleman from Ohio 
(Mr. Hobson).
  A little over 5 years ago, Congress passed the Health Insurance 
Portability and Accountability Act, or HIPAA, a far-reaching law that 
imposed significant new requirements on health care plans and providers 
and created basic consumer protections in a number of areas. One of the 
most important provisions of the act, although infrequently discussed 
in Congress, relates to administrative simplification. This provision 
implements common standards for electronic health care transactions. It 
was designed to increase the health care system's efficiency and 
effectiveness, to improve law enforcement's ability to prevent fraud 
and abuse, and generally to reduce administrative burdens for plans and 
providers.
  We in Congress strongly support the goals of administrative 
simplification. The provision's implementation will eliminate the 
confusing patchwork of electronic and paper standards that exist in the 
health care marketplace. However, as plans and providers move toward 
common electronic standards,

[[Page 23834]]

we must also recognize that their efforts will require a significant 
amount of time and money, and that perhaps the time frames Congress 
originally set forth in statute to comply with these rules should be 
modified.
  On August 17, 2000, the Department of Health and Human Services 
published its final rule implementing the standards for electronic 
health care transactions. The rule required all plans and providers to 
come into compliance with administrative simplification standards by 
October 16, 2002. From speaking with many people in the health care 
system during the past year, we have concluded that this deadline is 
much too ambitious.
  That is why we are here today. The Hobson legislation will provide 
plans and providers with one additional year to come into compliance 
with the administrative simplification standards. His legislation, 
which is a compromise product negotiated between the bill's sponsors, 
the gentleman from Arizona (Mr. Shadegg), the Committee on Energy and 
Commerce, and the Committee on Ways and Means allows covered entities 
the extra time they need to ensure that they will continue taking steps 
to come into compliance.
  I would like to point out that one important change to the 
legislation is now in the bill in its reintroduced version. In its 
original form, H.R. 3323 imposed a $1 user fee on every paper claim 
submitted to the Medicare program. This provision has been replaced 
with a requirement that health care entities, with the exception of 
small providers, submit their claims to the Medicare program in 
electronic format. This requirement refinement significantly improves 
the bill and eliminates a tremendous burden for providers and the 
government.
  Mr. Speaker, this legislation has been vetted extensively with the 
stakeholders in the health care system. It deserves everyone's vote and 
we should all be grateful for the fine work of the gentleman from Ohio 
(Mr. Hobson) in the area.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BROWN of Ohio. Mr. Speaker, I yield myself 3 minutes.
  Mr. Speaker, in 1996 Congress passed landmark legislation, and most 
of us know it as Kennedy/Kassebaum or HIPAA, that answered several 
difficult questions: How do we minimize coverage disruptions and 
barriers in the private health insurance market? How do we improve the 
efficiency of health care financing and delivery in the United States?
  The gentlemen from my home State of Ohio (Mr. Sawyer) and (Mr. 
Hobson) took on the second question. They championed commonsense 
provisions in HIPAA that ensure the transition to fully electronic 
transfers between health plans and providers. Electronic claiming is 
far superior to the old-fashioned paper version. It saves money, it 
saves trees, and it typically saves patients from paying out-of-pocket 
for services ultimately covered by insurance.
  The deadline for implementing phase 1 of this transition is October 
2002, but the reality is some sectors of the health industry and State 
governments need extra time to make the technical and the procedural 
changes necessary to achieve compliance. Delaying the compliance 
deadlines for administrative simplification is not an action any Member 
of Congress, Mr. Speaker, should take lightly.
  CMS has estimated that the electronic claims processing can save $30 
billion over 10 years. Any delay in implementation reduces, obviously, 
those associated savings. Health plans and providers throughout the 
country have invested time and money to gear up for this transition. To 
the extent that their new operations sit idle, they are losing money 
too. That said, it would be inappropriate to fault both public and 
private sector entities that work in good faith against a deadline they 
did not create and found they simply could not meet.
  Mr. Speaker, H.R. 3323 accommodates the concerns of those on both 
sides of this issue. Under this legislation, health plans and providers 
must either meet the current compliance deadline or demonstrate their 
plans for achieving compliance by October 2003. This one-time 1-year 
extension creates a cushion for organizations bumping up against the 
current deadline without permitting an undue or indefinite delay.
  Mr. Speaker, I am pleased to support this reasonable compromise. I 
again thank the gentlemen from Ohio (Mr. Sawyer) and (Mr. Hobson) for 
their good work.

                              {time}  1630

  Mr. TAUZIN. Mr. Speaker, I am very pleased to yield 3 minutes to the 
distinguished gentleman from Florida (Mr. Bilirakis), the chairman of 
the Subcommittee on Health of the Committee on Energy and Commerce.
  Mr. BILIRAKIS. Mr. Speaker, I appreciate the gentleman yielding time 
to me.
  Mr. Speaker, I rise in support of H.R. 3323, a bill that would ensure 
that stakeholders in America's health care system are able to comply 
with regulations to standardize electronic health care transactions.
  This legislation extends by 1 year the deadline for compliance with 
administrative simplification provisions created as part of the Health 
Insurance Portability and Accountability Act of 1996, which we fondly 
pronounce as HIPAA.
  The legislation also implements an orderly transition process that 
will ensure that covered entities will be in a position to implement 
the new regulations by October of 2003.
  In 1996, Congress passed HIPAA to improve efficiency and 
effectiveness in the health care system, to make it easier to detect 
fraud and abuse, facilitate access to health and medical information by 
researchers, and to reduce administrative costs.
  When we passed HIPAA in 1996, it was the largest government action in 
health care since the creation of Medicare. Administrative 
simplification and standardization of the way medical data is 
transmitted electronically is vital to improving the quality of medical 
care. The American health care system currently has more than 12 
million providers, plans, suppliers, and other participants that 
require access to medical data.
  Today, there is no single standard by which this data can be 
exchanged electronically. Therefore, the full benefit of the 
technological revolution has yet to be implemented by the health care 
industry. Standardization of electronic data has the potential to 
simplify administrative functions, increase processing of medical 
claims, and improve the quality of care while substantially reducing 
health care costs.
  However, flawed implementation of this process will prevent the full 
benefit of standardization from being realized. This bill alleviates 
this problem by requiring that each stakeholder seeking an extension 
submit a report to the Secretary of Health and Human Services on how 
they plan to implement electronic standardization. This will allow the 
Secretary to have access to the best transition plans that are 
proposed, allowing for an exchange of information that will benefit 
stakeholders less prepared to implement this process.
  H.R. 3323 is a thoughtful and logical approach to ensuring that 
health care beneficiaries are able to take the fullest advantage of the 
coming revolution in medical care. I thank the gentleman from Arizona 
(Mr. Shadegg) for taking the lead on this issue for the Committee on 
Energy and Commerce and the gentleman from Ohio (Mr. Hobson) for 
introducing the support legislation.
  I urge my colleagues to join me in supporting H.R. 3323.
  Mr. TAUZIN. Mr. Speaker, I yield the balance of my time to the 
gentleman from Ohio (Mr. Hobson), the author of the legislation.
  The SPEAKER pro tempore (Mr. Culberson). The gentleman from Ohio (Mr. 
Hobson) is recognized for 4 minutes.
  Mr. HOBSON. Mr. Speaker, we have before us today a reasonable and 
balanced bill that provides the final push for an idea that my 
colleague, the gentleman from Ohio (Mr. Sawyer), and myself have been 
working on for 7 years: The simplification of paperwork

[[Page 23835]]

associated with paying health care costs.
  In 1993, my colleague, the gentleman from Ohio, began to develop 
legislation that would create a standard framework for electronic 
filing of health care claims. Today, we all recognize electronic health 
care filing represents significant advantages over paper filings for 
every level of health care, from providers to insurance.
  However, the patchwork of different computer systems needed to 
electronically file claims with different health care payers made the 
process a complicated, expensive, and unwieldy situation.
  In 1996, our work culminated in the administrative simplification 
provisions included in the Health Insurance Portability and 
Accountability Act of 1996, which required a common format for 
electronic health care claims. This would have the effect of 
simplifying the administrative burden associated with health care 
transactions, and would, according to the Health Care Financing 
Administration at the time, produce $9.9 billion in savings for the 
health care community.
  By reducing administrative overhead, we also help improve the quality 
of health care by freeing up resources now devoted to paperwork and 
administration. However, for a variety of reasons, the regulations 
implementing the administrative simplification provisions enacted in 
1996 were delayed.
  Now, 5 years later, two final rules are set to take effect shortly. 
The first, regarding medical privacy, is left untouched by the 
legislation before this body today, and will take effect as scheduled 
in April of 2003. The second, establishing code sets in transactions, 
is set to take effect October 16, 2002.
  However, the current state of readiness in the health care community 
is inconsistent, and significant sectors have argued for additional 
time to undertake systems changes necessary to reach compliance. At the 
same time, some entities clearly will be ready for the first set of 
standards.
  Mr. Speaker, the gentleman from Ohio (Mr. Sawyer) and I recognize the 
need for additional time for some entities to come into compliance. At 
the same time, we must ensure that this time is fully utilized by all 
the parties and that those entities that want to move forward can do so 
without penalty.
  Our legislation provides a solution to the current status by 
establishing two tracks for entities covered by the original statute. 
For those plans and providers who will be ready to go by October, 2002, 
they can proceed under the original timetable. These entities can be 
sending and receiving electronic transactions under the new 
standardized format in October of next year.
  However, our legislation also recognizes some entities may have 
underestimated what was needed to be operationally compliant with the 
standards of 2002. That is why our bill includes a provision which 
allows these plans and providers to file a plan with the Secretary of 
the Department of Health and Human Services explaining the steps they 
will take to reach compliance.
  One other important fact. This bill also ensures that the additional 
time provided is fully utilized, from the government's perspective. Our 
bill includes an authorization for $44.2 million for the Department of 
Health and Human Services which will allow the Department to adequately 
prepare for the transition.
  This authorization will support activities at the Department 
associated with finishing the remaining work on the original standards 
providing technical assistance and educational outreach and enforcement 
activities.
  Finally, our bill requires the filing of electronic claims with 
Medicare by extending the deadline to October 16, 2003, with the 
exception for small providers and those physically unable to file 
electronically. This will help prevent backsliding to paper 
transactions and will help focus all entities on reaching the cost-
saving goals of the original statute.
  In conclusion, this statute represents a balanced package of measures 
that does not simply delay the administrative simplification 
provisions, but rather, provides a clear plan and one-time extension to 
reach compliance in the marketplace.
  I urge my colleagues to support this legislation; and I would like to 
thank the staffs of both committees, my staff, Michael Beer, the staff 
of the gentleman from Ohio (Mr. Sawyer), and the staff of the Committee 
on Commerce.
  I would like to thank the leadership and the staff of the Committee 
on Ways and Means, and particularly the leadership of the gentleman 
from Texas (Mr. Armey) and the Speaker, who encouraged us to bring this 
bill forward. We think we have done something good here.
  Mr. STARK. Mr. Speaker, will the gentleman yield?
  Mr. HOBSON. I yield to the gentleman from California.
  Mr. STARK. Mr. Speaker, I appreciate the gentleman's leadership in 
this.
  I heard the gentleman's statement about the authorization for I think 
the $44.2 million for CMS for the Department of Health and Human 
Services to carry out their work.
  I know, as a distinguished member of the Committee on Appropriations, 
that that will come to the gentleman in another form.
  I often feel that we have added many chores to the Department of 
Health and Human Services without being so concerned as to how they 
will perform the activities. I want to commend the gentleman for 
thinking ahead and asking for the support for the Department of Health 
and Human Services to see that they have the resources to carry out 
this work. I would like to join with him to see that we get the 
appropriated funds.
  Mr. BROWN of Ohio. Mr. Speaker, I yield 4 minutes to my colleague, 
the gentleman from Summit and Portage Counties, Ohio (Mr. Sawyer).
  Mr. SAWYER. Mr. Speaker, I thank my friend, the gentleman from Lorain 
County, Ohio, for yielding time to me. I particularly want to thank my 
colleague, the gentleman from Ohio (Mr. Hobson), for his leadership, 
his persistence, and his hard work, and in the last year, his attention 
to detail with regard to the administration of this.
  I would also like to thank the chairman and ranking members of the 
Committee on Energy and Commerce and the Committee on Ways and Means, 
and particularly, their counterparts in the leadership of the 
subcommittees having to do with health care of both bodies.
  Mr. Speaker, I want to thank them for their assistance on this 
legislation, for bringing it to the floor. This measure is a bipartisan 
compromise which keeps administrative simplification on track and 
should be passed by the House. The gentleman from Ohio (Mr. Hobson) and 
I first started working on this back in the early 1990s. We met with a 
broad spectrum of industry groups on how to streamline the processes of 
administrative information and financial transactions.
  By standardizing these efforts for electronic transmission, we, along 
with the industry, strongly believed that this would reduce paperwork, 
limit fraud and abuse where it may or may not exist, and help contain 
health care costs.
  Every time we stand up here and talk about limiting waste, fraud and 
abuse, we do it too often by simply cutting money with the hopes that 
under that rubric, dollars lost can somehow go unreplaced. This goes a 
great deal further. It outlines a practical, hardheaded way to achieve 
the kinds of savings that we are talking about, and have been in this 
legislation for the last 5 years.
  Back in September of 1993, the gentleman from Ohio (Mr. Hobson) and I 
introduced this legislation for the first time. After 3 years of 
extensive and detailed consultation, the bill was included in HIPAA. 
According to HHS, as we have heard, it is expected to save about $30 
billion.
  Now, 5 years after enactment of the legislation, the first of a 
series of regulations are due to take effect next year. While an awful 
lot of health plans, hospital, and stakeholders have invested millions 
of dollars to be

[[Page 23836]]

ready, some plans and some State Medicaid systems simply will not be in 
compliance in time.
  That concern that this would disrupt transmission of health and 
financial information and cause any number of problems for the health 
care consumer is what motivates this legislation today. This bipartisan 
effort will prevent that from happening while still ensuring that the 
regulations are implemented in a timely manner.
  For those who will not be ready, the bill holds them accountable by 
requiring them to file a plan documenting how they will reach 
compliance. If they fail to do so, they may not be able to participate 
in Medicare.
  The document must include a budget, a work plan, and an 
implementation strategy for reaching compliance. This will ensure that 
at the end of the deadline all providers, plans, and other health care 
groups are ready. The plan must also outline a time frame for 
electronic testing, which means that consumers can be assured that 
there will be no disruptions in delivery, although the bill does 
provide additional time to reach compliance.
  Everyone involved in this should know that this is a one-time deal. 
We hope Members will not come back again asking for any further delays. 
The answer the next time will be, I am certain, a clear and inarguable 
no.
  This legislation will facilitate a smooth transition to processing 
electronic transactions and medical information by authorizing funds 
for HHS to issue the next set of regulations, and perhaps, even more 
importantly, to provide outreach, education, and technical assistance 
to those who seek to comply.
  Many doctors' offices will need that kind of help in reaching 
compliance. This bill gives HHS the ability to help them.
  Almost 10 years ago, we set out to make the health care system more 
efficient by encouraging the responsible electronic transfer of data. 
This legislation will help us meet that goal. I urge its passage.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself such time as 
I may consume.
  Mr. Speaker, I rise in strong support of the Hobson bill. It is 
instructive that we passed this directive in 1996. That is 5 years ago. 
This was going to save the system $30 billion through greater 
efficiency, so it was with great conviction that many of us resisted, 
including the gentleman from California (Chairman Thomas) of the 
Committee on Ways and Means, resisted a delay, and particularly an 
open-ended delay, of the implementation of these administrative 
simplification provisions of the Health Insurance Portability and 
Accountability Act.
  However, in recent weeks it has become very clear that a number of 
providers and plans, as well as the State governments, have some 
legitimate reasons why they will have a hard time complying by the 
October 2002 deadline and have asked for a year's extension.
  The gentlemen from Ohio (Mr. Hobson and Mr. Sawyer) have developed a 
very responsible compromise which the Committee on Ways and Means 
supports, the Committee on Energy and Commerce supports, and really is 
a good example of how rational thinking can guide the Nation 
effectively.
  This bill just creates a smoother glide path to compliance for all 
entities. It is not open-ended; it does require everybody who is going 
to be responsible to comply to think about what it is going to take to 
come into compliance with this very important provision, but one that 
is complicated, particularly for small providers or very, very large 
providers in this era of rapid change.
  It forces those responsible to comply to think about what budget it 
will take, what work plan will accomplish the goal, what needs to be 
tested, what strategy needs to be adopted to impact and accomplish 
compliance with the HIPAA requirements. That is good. That means it 
will happen more surely and with better or greater effectiveness.
  It not only requires that kind of planning, but it does not 
discourage those who can comply sooner.

                              {time}  1645

  I am particularly pleased that the Department of Health and Human 
Services under this legislation would be required to issue model 
guidance plans. So a lot of small providers can just take this plan, 
fill in the blanks and know exactly what they need to do and how they 
need to do it.
  In addition, I am pleased that the bill requires the Secretary to 
disseminate reports from evaluating these plans that provide solutions 
to some of the problems that are identified through reviewing the 
compliance plans. This creates, in fact, a new partnership between 
government and the private sector as we near the compliance date for 
the HIPAA requirements, and I think that is going to mean a better 
quality of compliance as well as surer compliance with a new date a 
year from 2002, March 31.
  I am also pleased that the bill does actually require all Medicare 
claims to be submitted electronically with the following exceptions: If 
there is no method to submit an electronic claim; or if one is a very 
small provider, a facility with fewer than 25 full-time employees; or a 
physician practice with fewer than 10 full-time employees; or in 
unusual circumstances as determined by the Secretary. I also believe 
that many of those small providers are going to use electronic means of 
submission because they are going to find it much faster, much more 
efficient, they will get paid more rapidly, and it will be more 
accurate.
  But this bill does recognize that small compliers and certain other 
situations may require an exception. So I commend my colleagues, the 
gentleman from Ohio (Mr. Hobson) and the gentleman from Ohio (Mr. 
Sawyer) for moving with and through both the Committee on Ways and 
Means and the Committee on Energy and Commerce to bring this to the 
floor. It was really their knowledge of this issue, their insight, 
their determination that helped us find this very constructive 
solution.
  Mr. Speaker, I reserve the balance of my time.
  Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I add my congratulations to the gentleman from Ohio (Mr. 
Hobson) and the gentleman from Ohio (Mr. Sawyer) for working to push 
this bill to fruition.
  Mr. Speaker, I rise in support of H.R. 3323. I remind my colleagues 
that the standards that we are talking about today for electronic 
claims and referrals are being passed because the health care industry 
asked for our help.
  Unlike the banking industry or the securities industry and others, 
the health care providers could not agree amongst themselves on how to 
talk to each other electronically. They asked us to step in and help 
establish standards, and now many of the sectors of the health industry 
have realized the wisdom of the saying, ``Be careful what you wish for, 
you might get it.''
  They support the goals of the administrative simplification, but they 
now say they underestimated the effort it will take for them to comply, 
and they say they need more time. I think some of the sectors, 
particularly hospitals, are ready to go and would like to participate 
in what they think might be up to $30 billion in savings. And I agree. 
I want these simplification plans to be adopted as soon as possible and 
with as little delay as we can allow them and still let them officially 
go ahead and put these rules into effect.
  I would like to make one thing quite clear for the record, and that 
is that this bill does not delay the HIPAA privacy regulation, not for 
health plans, not for health care providers, not for health care 
clearinghouses. There has been some concern that extending the 
transaction and codes sets compliance deadline would effectively exempt 
some health care providers and health care clearinghouses from the 
privacy rule.
  This bill should remove any and all ambiguity on that point. Any 
health care provider or health care clearinghouse that would be subject 
to the privacy rule before we pass this bill will still be subject to 
the privacy rule after we pass this bill, and they will need to

[[Page 23837]]

comply by April of 2003. The bill does not delay the privacy compliance 
deadline or negatively impact the privacy regulation. It is that 
simple.
  Having said that, again, all the people who have worked so diligently 
to bring this compromise and this bill to the floor, indeed, are to be 
congratulated. I hope it will save money, help the beneficiaries get 
their information more quickly and more efficiently, and help the 
providers provide good medical care to more people for less money over 
the years to come.
  Mr. Speaker, I yield back the balance of my time.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1 minute to the 
gentlewoman from Washington (Ms. Dunn), a member of the Subcommittee on 
Health of the Committee on Ways and Means. She is a hardworking member.
  Ms. DUNN. Mr. Speaker, I rise in support of H.R. 3323. That is a bill 
to delay the administrative simplification rules for 1 year. I want to 
thank the gentleman from California (Chairman Thomas), the chairwoman 
of the Subcommittee on Health, the gentlewoman from Connecticut (Mrs. 
Johnson), and particularly my colleague, the gentleman from Ohio (Mr. 
Hobson) for working very, very hard to put a compromise together that 
we could live with. They worked diligently and provided a 1-year delay 
without implementing a user fee.
  I would like to thank the gentleman from Arizona (Mr. Shadegg) for 
working with me earlier this year when we introduced legislation to 
provide for a 2-year delay.
  While I would have preferred our bill, I recognize that the 
compromise we have today balances the need of maintaining oversight and 
encouraging all providers to comply with the regulations.
  I am very pleased that the user fees were removed from this 
legislation. Like many of my colleagues, I was concerned about 
requiring some physician to pay a user fee when they will experience a 
reduction in Medicare payments next year. This delay is vital to help 
those struggling to meet the challenges of compliance. The people I 
represent, the doctors, the hospitals and the health plans, support a 
delay.
  I ask my colleagues to support this legislation. It is good 
legislation. Let us get it to the President's desk before the end of 
the year.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Ohio (Mr. Hobson).
  Mr. HOBSON. Mr. Speaker, I want to thank my colleague, the gentleman 
from Ohio (Mr. Brown) as well as the gentleman from Ohio (Mr. Sawyer) 
again, and all the people who worked on this.
  I want to explain to people this is a very complicated situation. 
This is not easy to do. It is not easy to understand what we are doing. 
This is a massive change in how we do things. But when we get done it 
will be more cost effective. We will have less fraud. We will have less 
abuse because we will have standardized coding. And we will have 
electronic transfer. And the frustrations that people have in doctors' 
offices about the huge stacks of bills that they are trying to collect 
should go away. That is a real step forward.
  We hope to save more than the $29.9 billion that we are talking about 
in this bill with this type of activity.
  The most important thing I want people to understand is sometimes we 
get all wrapped up in fights amongst ourselves. We did not in this 
legislation. The committees came together, the Members came together, 
and we worked out a situation that I think in the long run is maybe a 
better bill than we wrote, is a better bill than other people wrote. 
The finest solution to this is one that is good for this country, gives 
people time but moves the system forward to the final completion that 
we all want.
  I want to particularly thank everybody, all the staffs, all the 
Members who worked so hard to make this work.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the gentleman from 
Ohio (Mr. Hobson) for his really outstanding and consistent leadership 
on this issue.
  Mr. MARKEY. Mr. Speaker, I rise in support of the language in the 
Administrative Simplification Compliance Act, H.R. 3323 which exempts 
from delay the compliance date for the Health Insurance Portability and 
Accountability Act (HIPAA) Privacy Rule.
  In 1996 Congress made a promise to the American people that by 
February 2001 medical privacy protections would be in place. Despite 
the efforts of privacy opponents who lobbied this Administration 
heavily to postpone the effective date of these protections, the final 
privacy rule went forward in April 2001--a victory for patients, 
doctors and the quality of our nation's health care. But we're not 
quite out of the woods yet--the Administration has indicated that 
certain sections of this rule are to be opened for public comment early 
next year. It is my hope that this plan will not serve to undermine the 
strong privacy protections already in place and that the compliance 
date for these protections will not be postponed.
  The date of compliance for these first time, fundamental medical 
privacy protections is April 2003. While we can all agree that these 
protections don't go far enough in providing comprehensive privacy for 
medical records they are a good first step.
  I praise Representative Hobson, the author of H.R. 3323, for 
including language to preserve the compliance date for the HIPAA 
privacy protections. Americans have waited far too long for medical 
privacy and they deserve it as soon possible.
  Mr. SHADEGG. Mr. Speaker, I rise to support H.R. 3323, the 
Administrative Simplification Compliance Act. Mr. Speaker, earlier this 
year, I introduced legislation, H.R. 1975, that would have greatly 
assisted health care providers, physicians, health plans, and the 
states in coming into compliance with the Administrative Simplification 
provisions that were passed as part of the Health Insurance Portability 
and Accountability Act (HIPAA). My bill recognized the difficulty that 
health plans, providers, and states face in updating their computer 
systems by delaying the HIPAA compliance date to the later of October 
16, 2004, or two years after the Secretary finalized all of the 
Administrative Simplification regulations. Unfortunately, however, 
there was skepticism as to the merit of any extension.
  While the intention of the Administrative Simplification requirements 
is meritorious--moving from a slothy paper-based health care 
transaction system to an efficient electronic-based one--it is clear 
that health plans and providers will not be able to meet the deadlines 
set forth in regulations that were late in their release. According to 
a recent survey conducted by Phoenix Health Systems, ``industry-wide 
readiness for the October 16, 2002 transactions deadline is 
questionable--even unlikely.
  Further evidence of the difficulty of meeting the October 16, 2002 
deadline for transactions and code sets found in an October 11, 2001 
letter signed by the National Governors Association, National 
Conference of State Legislatures, Council of State Governments, 
National Association of Counties, National League of Cities, and the 
U.S. Conference of Mayors which stated ``State and local governments 
will be unable to meet the requirements of HIPAA under the current 
implementation schedule. Regardless of whether other covered entities--
such as hospitals, health plans, providers, and clearinghouse--except 
to be compliant with HIPAA under the current system, if state and local 
governments are not ready, HIPAA will not work.''
  The bill on the floor today represents a compromise. The bill does 
not contain all of the provisions I would like. It is, however, an 
improvement over its original form, which contained an onerous user fee 
on Medicare providers, an idea that has been rejected by the House of 
Representatives time and time again. In addition, the compliance plans 
that covered entities will have to submit--something that will get 
entities to focus on how to come into compliance--will be less 
burdensome under the new amended bill. I still have concerns about the 
bill's effect on small providers, but believe that the exceptions we 
have included are sufficient to not punish small physician practices.
  Mr. Speaker, I want to thank Mr. Hobson, Mr. Sawyer, Chairman Tauzin, 
and Chairman Thomas for their work on this issue.
  Mr. DINGELL. Mr. Speaker, H.R. 3323, the ``Administrative 
Simplification Compliance Act'' is a responsible compromise. 
Congressman Hobson and Sawyer have addressed the concerns of the health 
care industry while maintaining the integrity of the administrative 
simplification requirements. H.R. 3323 also reflects the bipartisan 
input of the committees of jurisdiction, the Committee on Energy and 
Commerce and the Committee on Ways and Means.
  H.R. 3323 delays the implementation of the administrative 
simplification requirements in

[[Page 23838]]

the Health Insurance Portability and Accountability Act of 1996 (HIPAA) 
by one year. It ensures, however, that those sectors of the health care 
industry that take advantage of this delay are using the extra year to 
ready themselves for compliance.
  Most importantly, the bill ensures that the one-year delay of 
administrative simplification does not touch the implementation of the 
health information privacy requirements in HIPAA, which will go into 
effect as scheduled.
  H.R. 3323 also requires that Medicare claims be submitted 
electronically, with reasonable exceptions. The Medicare program has 
paved the way in moving from paper-based claims processing to 
electronic processing, and this requirement will help Medicare run more 
smoothly.
  Ultimately, the administration simplification requirements in HIPAA 
will make our health system more efficient. These requirements will 
result in billions of dollars in savings, thus freeing up more funds to 
focus on expanding health care coverage and promoting higher quality 
care. H.R. 3323 reaffirms the importance of these requirements while 
giving additional time to prepare for their implementation. I ask my 
colleagues to join me in support of this bill.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I have no further requests 
for time, and I yield back the balance of my time.
  Mr. BROWN of Ohio. Mr. Speaker, I have no further requests for time, 
and I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Culberson). The question is on the 
motion offered by the gentleman from Louisiana (Mr. Tauzin) that the 
House suspend the rules and pass the bill, H.R. 3323, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, on that I demand the yeas 
and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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