SECTION 1. MEDICARE INTERNET-BASED CLAIMS SUBMISSION DEMONSTRATION 
              PROJECT.

    (a) Establishment of Demonstration Project.--The Secretary of 
Health and Human Services shall implement a demonstration project (in 
this section referred to as the ``project'') to provide for the use of 
the Internet for the electronic submission of claims by providers of 
services under the medicare program for which the HCFA-1500 claim form 
is utilized. The Secretary may carry out the project directly or 
through a third-party contractor.
    (b) Prompt Payment of Claims.--
            (1) In general.--Subject to paragraph (2), for each clean 
        claim that is submitted electronically by a provider of 
        services under the project, the Secretary shall make payment to 
        the provider of services for the claim by not later than 30 
        days after receipt of the claim.
            (2) Exceptions for fraud.--Payment shall not be made if the 
        Secretary determines the claim is fraudulent, in part or in 
        whole. In promulgating regulations to carry out the project, 
        the Secretary shall provide examples of fraudulent or otherwise 
        deficient claims for which payment would not be made under the 
        medicare program or through the project.
    (c) Designation of Medicare Payment Areas Covered by Project.--The 
Secretary shall designate medicare payment areas located in the New 
England or mid-Atlantic areas as areas in which the project under this 
section will be conducted.
    (d) Consultation.--Before implementing the project under this 
section, the Secretary shall consult with affected parties on--
            (1) the design of the project, including requirements for 
        electronic signatures;
            (2) the selection criteria for the third-party contractor; 
        and
            (3) the establishment of performance standards, as 
        described in subsection (e).
    (e) Performance Standards.--
            (1) In general.--The Secretary shall establish performance 
        standards for the accuracy and timeliness of claims filing, 
        processing, and payment functions performed under the project.
            (2) Noncompliance.--In the event that a third-party 
        contractor (if any) is not in substantial compliance with the 
        performance standards established under paragraph (1), such 
        claims filing, processing, and payment functions shall be 
        performed by the Secretary unless the Secretary contracts with 
        another third-party contractor.
    (f) Confidentiality of Information.--
            (1) Compliance with hipaa rules.--The Secretary shall 
        ensure that a third-party contractor participating under the 
        project shall protect the confidentiality of individually 
        identifiable health information consistent with the standards 
        for the privacy of such information promulgated by the 
        Secretary under the Health Insurance Portability and 
        Accountability Act of 1996, or any subsequent comprehensive and 
        more protective set of confidentiality standards enacted into 
        law or promulgated by the Secretary.
            (2) Prohibition on sale of individually identifiable health 
        information.--A third-party contractor participating under the 
        project may not sell any individually identifiable health 
        information collected under the project.
    (g) Report to Congress.--The Secretary shall periodically submit 
reports to the Congress providing--
            (1) analysis of the overall effectiveness of the project;
            (2) findings with respect to--
                    (A) increase or reduction in funds lost to fraud, 
                abuse, misuse, mistakes, and any other factor the 
                Secretary determines to be appropriate; and
                    (B) changes in efficiency in processing claims 
                submitted by electronic means compared with claims not 
                submitted electronically; and
            (3) recommendations on--
                    (A) continuation of the project; and
                    (B) extension or expansion of the use of Internet-
                based electronic claims submission under the medicare 
                program.
    (h) Waiver Authority.--The Secretary shall waive compliance with 
the requirements of title XVIII of the Social Security Act to such 
extent and for such period as the Secretary determines is necessary to 
conduct the project.
    (i) Duration.--A demonstration project under this section shall be 
conducted for a 3-year period.
    (j) Definitions.--In this section:
            (1) The term ``medicare program'' means the health 
        insurance program established under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (2) The term ``provider of service'' has the meaning given 
        that term in section 1861(u) of such Act (42 U.S.C. 1395x(u)), 
        and includes a physician (as defined in section 1861(r) of such 
        Act (42 U.S.C. 1395x(r)).
            (3) The term ``clean claim'' has the meaning given that 
        term in section 1816(c)(2)(B)(i) of such Act (42 U.S.C. 
        1395h(c)(2)(B)(i)).
Directs the Secretary of Health and Human Services to implement a demonstration project to provide for the use of the Internet for the electronic submission of claims by service providers under title XVIII (Medicare) of the Social Security Act for which the HCFA-1500 claim form is utilized.
To direct the Secretary of Health and Human Services to establish a demonstration project for the use of an Internet-based form for submission of certain claims under the Medicare Program.