II 

109TH CONGRESS 

1ST SESSION S. 1227 

To improve quality in health care by providing incentives for adoption of 

modern information technology. 

IN THE SENATE OF THE UNITED STATES 

JUNE 13, 2005 

Ms. STABENOW (for herself and Ms. SNOWE) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To improve quality in health care by providing incentives 

for adoption of modern information technology. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Health Information 

5 Technology Act of 2005’’. 

6 SEC. 2. INFORMATICS SYSTEMS GRANT PROGRAM. 

7 (a) GRANTS.— 

8 (1) IN GENERAL.—The Secretary of Health and 

9 Human Services (in this section referred to as the 

10 ‘‘Secretary’’) shall establish a program to award 
2 

•S 1227 IS

1 grants to eligible entities that have submitted appli2 cations in accordance with subsection (b) for the 

3 purpose of assisting such entities in offsetting the 

4 costs incurred after December 31, 2004, that are re5 lated to clinical health care informatics systems and 

6 services designed to improve quality in health care 

7 and patient safety. 

8 (2) DURATION.—The authority of the Secretary 

9 to make grants under this section shall terminate on 

10 September 30, 2010. 

11 (3) COSTS DEFINED.—For purposes of this sec12 tion, the term ‘‘costs’’ shall include total expendi13 tures incurred for— 

14 (A) purchasing, leasing, and installing 

15 computer software and hardware, including 

16 handheld computer technologies, and related 

17 services; 

18 (B) making improvements to existing com19 puter software and hardware; 

20 (C) purchasing or leasing communications 

21 capabilities necessary for clinical data access, 

22 storage, and exchange; 

23 (D) services associated with acquiring, im24 plementing, operating, or optimizing the use of 

25 new or existing computer software and hard-
3 

•S 1227 IS

1 ware and clinical health care informatics sys2 tems; 

3 (E) providing education and training to eli4 gible entity staff on information systems and 

5 technology designed to improve patient safety 

6 and quality of care; and 

7 (F) purchasing, leasing, subscribing, inte8 grating, or servicing clinical decision support 

9 tools that— 

10 (i) integrate patient-specific clinical 

11 data with well-established national treat12 ment guidelines; and 

13 (ii) provide ongoing continuous quality 

14 improvement functions that allow providers 

15 to assess improvement rates over time and 

16 against averages for similar providers. 

17 (4) ELIGIBLE ENTITY DEFINED.—For purposes 

18 of this section, the term ‘‘eligible entity’’ means the 

19 following entities: 

20 (A) HOSPITAL.—A hospital (as defined in 

21 section 1861(e) of the Social Security Act (42 

22 U.S.C. 1395x(e))). 

23 (B) CRITICAL ACCESS HOSPITAL.—A crit24 ical access hospital (as defined in section 
4 

•S 1227 IS

1 1861(mm)(1) of such Act (42 U.S.C. 

2 1395x(mm)(1))). 

3 (C) SKILLED NURSING FACILITY.—A 

4 skilled nursing facility (as defined in section 

5 1819(a) of such Act (42 U.S.C. 1395i–3(a))). 

6 (D) FEDERALLY QUALIFIED HEALTH CEN7 TER.—A Federally qualified health center (as 

8 defined in section 1861(aa)(4) of such Act (42 

9 U.S.C. 1395x(aa)(4))). 

10 (E) PHYSICIAN.—A physician (as defined 

11 in section 1861(r) of such Act (42 U.S.C. 

12 1395x(r))). 

13 (F) PHYSICIAN GROUP PRACTICE.—A phy14 sician group practice. 

15 (G) COMMUNITY MENTAL HEALTH CEN16 TER.—A community mental health center (as 

17 defined in section 1861(ff)(3)(B) of such Act 

18 (42 U.S.C. 1395x(ff)(3)(B))). 

19 (b) APPLICATION.— 

20 (1) IN GENERAL.—An eligible entity seeking a 

21 grant under this section shall submit an application 

22 to the Secretary at such time, in such form and 

23 manner, and containing the information described in 

24 paragraph (2). 
5 

•S 1227 IS

1 (2) INFORMATION DESCRIBED.—The informa2 tion described in this paragraph is the following in3 formation: 

4 (A) A description of— 

5 (i) the clinical health care informatics 

6 system and services that the eligible entity 

7 intends to implement with the assistance 

8 received under this section; and 

9 (ii) how the system will improve qual10 ity in health care and patient safety, in11 cluding estimates of the impact on the 

12 health of, and the health costs associated 

13 with the treatment of, patients with heart 

14 disease, cancer, stroke, diabetes, chronic 

15 obstructive pulmonary disease, asthma, or 

16 any other disease or condition specified by 

17 the Secretary. 

18 (B) Any additional information that the 

19 Secretary may specify. 

20 (c) PRIORITY FOR CERTAIN ELIGIBLE ENTITIES.— 

21 In awarding grants under this section, the Secretary shall 

22 give priority— 

23 (1) first, to eligible entities— 
6 

•S 1227 IS

1 (A) that are exempt from tax under section 

2 501(a) of the Internal Revenue Code of 1986; 

3 and 

4 (B)(i) in which the total of individuals that 

5 are eligible for benefits under the medicare pro6 gram under title XVIII of the Social Security 

7 Act, the medicaid program under title XIX of 

8 such Act, or under the State children’s health 

9 insurance program under title XXI of such Act 

10 make up a high percentage (as determined ap11 propriate by the Secretary) of the total patient 

12 population of the entity; or 

13 (ii) that provide services to a large number 

14 (as determined appropriate by the Secretary) of 

15 such individuals; 

16 (2) then, to eligible entities that meet the re17 quirement under clause (i) or (ii) of paragraph 

18 (1)(B); and 

19 (3) then, to other eligible entities. 

20 (d) RESERVE FUNDS FOR ENTITIES IN HEALTH

21 PROFESSIONAL SHORTAGE AREAS OR RURAL AREAS.— 

22 (1) IN GENERAL.—Subject to paragraph (2), 

23 the Secretary shall ensure that at least 20 percent 

24 of the funds available for making grants under this 

25 section to— 
7 

•S 1227 IS

1 (A) hospitals and critical access hospitals 

2 are used for making grants to such hospitals 

3 that are located exclusively in an applicable 

4 area; 

5 (B) skilled nursing facilities are used for 

6 making grants to such facilities that are located 

7 exclusively in an applicable area; 

8 (C) Federally qualified health centers are 

9 used for making grants to such centers that are 

10 located exclusively in an applicable area; 

11 (D) physicians and physician group prac12 tices are used for making grants to physicians 

13 and such practices that are located exclusively 

14 in an applicable area; and 

15 (E) community mental health centers are 

16 used for making grants to such centers that are 

17 located exclusively in an applicable area. 

18 (2) AVAILABILITY OF RESERVE FUNDS IF LIM19 ITED NUMBER OF ENTITIES APPLY FOR RESERVED

20 GRANTS.—If the Secretary estimates that the 

21 amount of funds reserved under subparagraph (A), 

22 (B), (C), (D), or (E) of paragraph (1) for the type 

23 of entity involved exceeds the maximum amount of 

24 funds permitted for such entities under subsection 

25 (e), the Secretary may reduce the amount reserved 
8 

•S 1227 IS

1 for such entities by an amount equal to such excess 

2 and use such funds for awarding grants to other eli3 gible entities. 

4 (3) APPLICABLE AREA DEFINED.—For pur5 poses of paragraph (1), the term ‘‘applicable area’’ 

6 means— 

7 (A) an area that is designated as a health 

8 professional shortage area under section 

9 332(a)(1)(A) of the Public Health Service Act; 

10 (B) a rural area (as such term is defined 

11 for purposes of section 1886(d) of the Social 

12 Security Act (42 U.S.C. 1395ww(d))); or 

13 (C) a rural census tract of a metropolitan 

14 statistical area (as determined under the most 

15 recent modification of the Goldsmith Modifica16 tion, originally published in the Federal Reg17 ister on February 27, 1992 (57 Fed. Reg. 

18 6725)). 

19 (e) AMOUNT OF GRANT.— 

20 (1) AMOUNT.— 

21 (A) IN GENERAL.—Subject to subpara22 graph (B) and paragraph (2), the Secretary 

23 shall determine the amount of a grant awarded 

24 under this section. 
9 

•S 1227 IS

1 (B) CONSIDERATION.—In determining the 

2 amount of a grant under this section, the Sec3 retary shall take into account the ability to take 

4 an expense deduction for health care 

5 informatics system expenses under section 179C 

6 of the Internal Revenue Code of 1986, as added 

7 by section 5. 

8 (2) LIMITATION.— 

9 (A) IN GENERAL.—A grant awarded under 

10 this section may not exceed the lesser of— 

11 (i) an amount equal to the applicable 

12 percentage of the costs incurred by the eli13 gible entity for the project for which the 

14 entity is seeking assistance under this sec15 tion; or 

16 (ii) in the case of a grant made to— 

17 (I) a hospital or a critical access 

18 hospital, $1,000,000; 

19 (II) a skilled nursing facility, 

20 $200,000; 

21 (III) a Federally qualified health 

22 center, $150,000; 

23 (IV) a physician, $15,000; 

24 (V) a physician group practice, 

25 an amount equal to $15,000 multi-
10 

•S 1227 IS

1 plied by the number of physicians in 

2 the practice; or 

3 (VI) a community mental health 

4 center, $75,000. 

5 (B) APPLICABLE PERCENTAGE.—For pur6 poses of subparagraph (A)(i), the term ‘‘appli7 cable percentage’’ means, with respect to an eli8 gible entity for the period involved, the percent9 age of total revenues (excluding grants and 

10 gifts from Federal, State, local government, and 

11 private sources) for such period that consists of 

12 total revenues from the medicare program, the 

13 medicaid program, and the State children’s 

14 health insurance program under titles XVIII, 

15 XIX, and XXI, respectively, of the Social Secu16 rity Act. 

17 (f) REQUIREMENTS.— 

18 (1) COMPLIANT WITH STANDARDS.—A clinical 

19 health care informatics system funded under this 

20 section and placed in service on or after the date the 

21 standards are adopted under section 4 shall be com22 pliant with such standards. 

23 (2) FURNISHING THE SECRETARY WITH INFOR24 MATION.— 
11 

•S 1227 IS

1 (A) IN GENERAL.—An eligible entity re2 ceiving a grant under this section shall furnish 

3 the Secretary with such information as the Sec4 retary may require to— 

5 (i) evaluate the project for which the 

6 grant is made; and 

7 (ii) ensure that assistance provided 

8 under the grant is expended for the pur9 poses for which it is made. 

10 (B) COORDINATION.—The Secretary shall 

11 ensure that the requirements for furnishing in12 formation under subparagraph (A) are coordi13 nated with other requirements for furnishing in14 formation to the Secretary that the eligible enti15 ty is subject to. 

16 (g) STUDIES.—The Secretary shall conduct studies 

17 to— 

18 (1) evaluate the use of clinical health care 

19 informatics systems and services implemented with 

20 assistance under this section to measure and report 

21 quality data based on accepted clinical performance 

22 measures; and 

23 (2) assess the impact of such systems and serv24 ices on improving patient care, reducing costs, and 

25 increasing efficiencies. 
12 

•S 1227 IS

1 (h) REPORTS.— 

2 (1) INTERIM REPORTS.— 

3 (A) IN GENERAL.—The Secretary shall 

4 submit, at least annually, a report to the appro5 priate committees of Congress on the grant pro6 gram established under this section. 

7 (B) CONTENTS.—A report submitted pur8 suant to subparagraph (A) shall include infor9 mation on— 

10 (i) the number of grants made; 

11 (ii) the nature of the projects for 

12 which assistance is provided under the 

13 grant program; 

14 (iii) the geographic distribution of 

15 grant recipients; 

16 (iv) the impact of the projects on the 

17 health of, and the health costs associated 

18 with the treatment of, patients with heart 

19 disease, cancer, stroke, diabetes, chronic 

20 obstructive pulmonary disease, asthma, or 

21 any other disease or conditions specified by 

22 the Secretary; 

23 (v) the results of the studies con24 ducted under subsection (g); and 
13 

•S 1227 IS

1 (vi) such other matters as the Sec2 retary determines appropriate. 

3 (2) FINAL REPORT.—Not later than 180 days 

4 after the completion of all of the projects for which 

5 assistance is provided under this section, the Sec6 retary shall submit a final report to the appropriate 

7 committees of Congress on the grant program estab8 lished under this section, together with such rec9 ommendations for legislation and administrative ac10 tion as the Secretary determines appropriate. 

11 (i) FUNDING.— 

12 (1) HOSPITALS.—There are appropriated from 

13 the Federal Hospital Insurance Trust Fund under 

14 section 1817 of the Social Security Act (42 U.S.C. 

15 1395i) $250,000,000, for each of the fiscal years 

16 2006 through 2010, for the purpose of making 

17 grants under this section to eligible entities that are 

18 hospitals or critical access hospitals. 

19 (2) SKILLED NURSING FACILITIES.—There are 

20 appropriated from the Federal Hospital Insurance 

21 Trust Fund under section 1817 of the Social Secu22 rity Act (42 U.S.C. 1395i) $100,000,000, for each 

23 of the fiscal years 2006 through 2010, for the pur24 pose of making grants under this section to eligible 

25 entities that are skilled nursing facilities. 
14 

•S 1227 IS

1 (3) FEDERALLY QUALIFIED HEALTH CEN2 TERS.—There are appropriated from the Federal 

3 Supplementary Medical Insurance Trust Fund under 

4 section 1841 of the Social Security Act (42 U.S.C. 

5 1395t) $40,000,000, for each of the fiscal years 

6 2006 through 2010, for the purpose of making 

7 grants under this section to eligible entities that are 

8 Federally qualified health centers. 

9 (4) PHYSICIANS.—There are appropriated from 

10 the Federal Supplementary Medical Insurance Trust 

11 Fund under section 1841 of the Social Security Act 

12 (42 U.S.C. 1395t) $400,000,000, for each of the fis13 cal years 2006 through 2010, for the purpose of 

14 making grants under this section to eligible entities 

15 that are physicians or physician group practices. 

16 (5) COMMUNITY MENTAL HEALTH CENTERS.— 

17 There are appropriated from the Federal Supple18 mentary Medical Insurance Trust Fund under sec19 tion 1841 of the Social Security Act (42 U.S.C. 

20 1395t) $20,000,000, for each of the fiscal years 

21 2006 through 2010, for the purpose of making 

22 grants under this section to eligible entities that are 

23 community mental health centers. 
15 

•S 1227 IS

1 SEC. 3. ADJUSTMENTS TO MEDICARE PAYMENTS FOR 

2 HEALTH INFORMATION TECHNOLOGY EN3 ABLED QUALITY SERVICES. 

4 (a) ADJUSTMENTS.—The Secretary of Health and 

5 Human Services (in this section referred to as the ‘‘Sec6 retary’’) shall establish a methodology for making adjust7 ments in payment amounts under title XVIII of the Social 

8 Security Act (42 U.S.C. 1395 et seq.) made to providers 

9 of services and suppliers who— 

10 (1) furnish items or services for which payment 

11 is made under such title; and 

12 (2) in the course of furnishing such items and 

13 services, use health information technology and tech14 nology services with patient-specific applications that 

15 the Secretary determines improves the quality and 

16 accuracy of clinical decision-making, compliance, 

17 health care delivery, and efficiency, such as elec18 tronic medical records, electronic prescribing, clinical 

19 decision support tools integrating well-established 

20 national treatment guidelines with continuous qual21 ity improvement functions, and computerized physi22 cian order entry with clinical decision-support capa23 bilities. 

24 (b) REQUIREMENTS.—The methodology established 

25 under subsection (a) shall— 
16 

•S 1227 IS

1 (1) include the establishment of new codes, 

2 modification of existing codes, and adjustment of 

3 evaluation and management modifiers to such codes, 

4 that take into account the costs of acquiring, using, 

5 and maintaining health information technology and 

6 services with patient-specific applications; 

7 (2) first address adjustments for payments for 

8 items and services related to the diagnosis or treat9 ment of heart disease, cancer, stroke, diabetes, 

10 chronic obstructive pulmonary disease (COPD), and 

11 other diseases and conditions that result in high ex12 penditures under the medicare program and for 

13 which effective health information technology exists; 

14 and 

15 (3) take into account estimated aggregate an16 nual savings in overall payments under such title 

17 XVIII attributable to the use of health information 

18 technology and services with patient-specific applica19 tions. 

20 (c) DURATION.—The Secretary may reduce or elimi21 nate adjustments made to payments pursuant to sub22 section (a) as payment methodologies under title XVIII 

23 of the Social Security Act (42 U.S.C. 1395 et seq.) are 

24 adjusted to reflect provider quality and efficiency. 
17 

•S 1227 IS

1 (d) RULE OF CONSTRUCTION.—In making national 

2 coverage determinations under section 1862(a) of the So3 cial Security Act (42 U.S.C. 1395y(a)) with respect to 

4 maintaining health information technology and services 

5 with patient-specific applications, in determining whether 

6 the health information technology and services are reason7 able and necessary for the diagnosis or treatment of illness 

8 or injury or to improve the functioning of a malformed 

9 body member, the Secretary shall consider whether the 

10 health information technology and services improve the 

11 health of medicare beneficiaries, including the improve12 ment of clinical outcomes or cost-effectiveness of treat13 ment. 

14 (e) DEFINITIONS.—In this section: 

15 (1) PROVIDER OF SERVICES.—The term ‘‘pro16 vider of services’’ has the meaning given that term 

17 under section 1861(u) of the Social Security Act (42 

18 U.S.C. 1395x(u)). 

19 (2) SUPPLIER.—The term ‘‘supplier’’ has the 

20 meaning given that term under section 1861(d) of 

21 such Act (42 U.S.C. 1395x(d)). 

22 SEC. 4. INTEROPERABILITY. 

23 (a) DEVELOPMENT AND ADOPTION OF STAND24 ARDS.— 
18 

•S 1227 IS

1 (1) IN GENERAL.—Not later than 2 years after 

2 the date of enactment of this Act, the Secretary of 

3 Health and Human Services (in this section referred 

4 to as the ‘‘Secretary’’) shall provide for the develop5 ment and adoption under programs administered by 

6 the Secretary of national data and communication 

7 health information technology standards that pro8 mote the efficient exchange of data between varieties 

9 of provider health information technology systems. 

10 In carrying out the preceding sentence, the Sec11 retary may adopt existing standards consistent with 

12 standards established under subsections (b)(2)(B)(i) 

13 and (e)(4) of section 1860D–4 of the Social Security 

14 Act (42 U.S.C. 1395w–104). 

15 (2) REQUIREMENTS.—The standards developed 

16 and adopted under paragraph (1) shall be designed 

17 to— 

18 (A) enable health information technology 

19 to be used for the collection and use of clinically 

20 specific data; 

21 (B) promote the interoperability of health 

22 care information across health care settings, in23 cluding reporting to the Secretary and other 

24 Federal agencies; and 
19 

•S 1227 IS

1 (C) facilitate clinical decision support 

2 through the use of health information tech3 nology. 

4 (b) IMPLEMENTATION OF PROCEDURES FOR THE

5 SECRETARY TO ACCEPT DATA USING STANDARDS.— 

6 (1) DATA FROM NEW HEALTH CARE REPORTING

7 REQUIREMENTS.—Not later than January 1, 2008, 

8 the Secretary shall implement procedures to enable 

9 the Department of Health and Human Services to 

10 accept the optional submission of data derived from 

11 health care reporting requirements established after 

12 the date of enactment of this Act using data stand13 ards adopted under this section. 

14 (2) DATA FROM ALL REQUIREMENTS.— 

15 (A) IN GENERAL.—Not later than January 

16 1, 2010, the Secretary shall implement proce17 dures to enable the Department of Health and 

18 Human Services to accept the optional submis19 sion of data derived from all health care report20 ing requirements using data standards adopted 

21 under this section. 

22 (B) LIMITATION.— 

23 (i) IN GENERAL.—On and after Janu24 ary 1, 2010, if an entity or individual 

25 elects to submit data to the Secretary 
20 

•S 1227 IS

1 using data standards adopted under this 

2 section, the Secretary, subject to clause 

3 (ii), may not require such entity or indi4 vidual to also submit such data in an addi5 tional format. 

6 (ii) EXCEPTION.—The Secretary may 

7 provide for an exception, not to exceed 2 

8 years, to the limitation under clause (i) 

9 with respect to certain types of data if the 

10 Secretary determines that such an excep11 tion is appropriate. 

12 SEC. 5. ELECTION TO EXPENSE HEALTH CARE 

13 INFORMATICS SYSTEMS. 

14 (a) IN GENERAL.—Part VI of subchapter B of chap15 ter 1 of the Internal Revenue Code of 1986 (relating to 

16 itemized deductions for individuals and corporations) is 

17 amended by inserting after section 179B the following new 

18 section: 

19 ‘‘SEC. 179C. HEALTH CARE INFORMATICS SYSTEM EXPENDI20 TURES. 

21 ‘‘(a) TREATMENT OF EXPENDITURES.— 

22 ‘‘(1) IN GENERAL.—An eligible entity may elect 

23 to treat any qualified health care informatics system 

24 expenditure which is paid or incurred by the tax25 payer as an expense which is not chargeable to cap-
21 

•S 1227 IS

1 ital account. Any expenditure which is so treated 

2 shall be allowed as a deduction. 

3 ‘‘(2) ELECTION.—An election under paragraph 

4 (1) shall be made under rules similar to the rules of 

5 section 179(c). 

6 ‘‘(b) LIMITATIONS.— 

7 ‘‘(1) DOLLAR LIMITATION.—With respect to 

8 any eligible entity, the aggregate cost which may be 

9 taken into account under subsection (a)(1) for any 

10 taxable year shall not exceed, when added to any 

11 cost taken into account under this section in any 

12 preceding taxable year, the dollar amount specified 

13 under section 2(e)(2)(A)(ii) of the Health Informa14 tion Technology Act of 2005. 

15 ‘‘(2) APPLICABLE RULES.—For purposes of this 

16 subsection, rules similar to the rules of paragraphs 

17 (3) and (4) of subsection (b) and paragraphs (6), 

18 (7), and (8) of subsection (d) of section 179 shall 

19 apply. 

20 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur21 poses of this section— 

22 ‘‘(1) QUALIFIED HEALTH CARE INFORMATICS

23 SYSTEM EXPENDITURES.— 

24 ‘‘(A) IN GENERAL.—The term ‘qualified 

25 health care informatics system expenditure’ 
22 

•S 1227 IS

1 means, with respect to any taxable year, any di2 rect or indirect costs incurred and properly 

3 taken into account with respect to the purchase 

4 or installation of equipment and facilities relat5 ing to any qualified health care informatics sys6 tem. Such term shall include so much of the 

7 purchase price paid by the lessor of equipment 

8 and facilities subject to a lease described in 

9 subparagraph (B)(ii) as is attributable to ex10 penditures incurred by the lessee which would 

11 otherwise be described in the preceding sen12 tence. 

13 ‘‘(B) WHEN EXPENDITURES TAKEN INTO

14 ACCOUNT.— 

15 ‘‘(i) IN GENERAL.—Qualified health 

16 care informatics system expenditures shall 

17 be taken into account under this section 

18 only with respect to equipment and facili19 ties— 

20 ‘‘(I) the original use of which 

21 commences with the taxpayer, and 

22 ‘‘(II) which are placed in service 

23 after December 31, 2004, and before 

24 October 1, 2010. 
23 

•S 1227 IS

1 ‘‘(ii) SALE-LEASEBACKS.—For pur2 poses of clause (i), if property— 

3 ‘‘(I) is originally placed in service 

4 after December 31, 2004, and before 

5 October 1, 2010, by any person, and 

6 ‘‘(II) sold and leased back by 

7 such person within 3 months after the 

8 date such property was originally 

9 placed in service, 

10 such property shall be treated as originally 

11 placed in service not earlier than the date 

12 on which such property is used under the 

13 leaseback referred to in subclause (II). 

14 ‘‘(C) GRANTS, ETC. EXCLUDED.—The term 

15 ‘qualified health care informatics system ex16 penditure’ shall not include any amount to the 

17 extent such amount is funded by any grant, 

18 contract, or otherwise by another person (or 

19 any governmental entity). 

20 ‘‘(2) QUALIFIED HEALTH CARE INFORMATICS

21 SYSTEM.—The term ‘qualified health care 

22 informatics system’ means a system which— 

23 ‘‘(A) has been individually approved by the 

24 Secretary of Health and Human Services for 

25 purposes of this section, 
24 

•S 1227 IS

1 ‘‘(B) consists of electronic health record 

2 systems and other health information tech3 nologies, and 

4 ‘‘(C) meets the standards adopted by the 

5 Secretary of Health and Human Services under 

6 section 4 of the Health Information Technology 

7 Act of 2005 by not later than the date which 

8 is 60 days after the date of the adoption of 

9 such standards. 

10 ‘‘(3) ELIGIBLE ENTITY.—The term ‘eligible en11 tity’ has the meaning given such term by section 

12 2(a)(4) of the Health Information Technology Act of 

13 2005. 

14 ‘‘(4) PROPERTY USED OUTSIDE THE UNITED

15 STATES, ETC., NOT QUALIFIED.—No expenditures 

16 shall be taken into account under subsection (a)(1) 

17 with respect to the portion of the cost of any prop18 erty referred to in section 50(b) or with respect to 

19 the portion of the cost of any property specified in 

20 an election under section 179. 

21 ‘‘(5) ORDINARY INCOME RECAPTURE.—For 

22 purposes of section 1245, the amount of the deduc23 tion allowable under subsection (a)(1) with respect 

24 to any property which is of a character subject to 

25 the allowance for depreciation shall be treated as a 
25 

•S 1227 IS

1 deduction allowed for depreciation under section 

2 167.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Section 263(a)(1) of the Internal Revenue 

5 Code of 1986 (relating to capital expenditures) is 

6 amended by striking ‘‘or’’ at the end of subpara7 graph (H), by striking the period at the end of sub8 paragraph (I) and inserting ‘‘, or’’, and by adding 

9 at the end the following new subparagraph: 

10 ‘‘(J) expenditures for which a deduction is 

11 allowed under section 179C.’’. 

12 (2) The table of sections for part VI of sub13 chapter A of chapter 1 of such Code is amended by 

14 inserting after the item relating to section 190 the 

15 following new item: 

‘‘Sec. 179C. Health care informatics system expenditures.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to property placed in service after 

18 December 31, 2004. 

19 SEC. 6. SENSE OF THE SENATE. 

20 It is the sense of the Senate that the provisions of, 

21 and amendments made by, this Act should achieve deficit 

22 neutrality over the 5-year period beginning on October 1, 

23 2005. 

Æ