II 

109TH CONGRESS 

1ST SESSION S. 1262 

To reduce healthcare costs, improve efficiency, and improve healthcare quality 

through the development of a nationwide interoperable health information 

technology system, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 16, 2005 

Mr. FRIST (for himself, Mrs. CLINTON, Mr. MARTINEZ, Mr. BINGAMAN, Mr. 

TALENT, Ms. MIKULSKI, Mr. THUNE, and Mr. OBAMA) introduced the 

following bill; which was read twice and referred to the Committee on 

Health, Education, Labor, and Pensions 

A BILL 

To reduce healthcare costs, improve efficiency, and improve 

healthcare quality through the development of a nationwide interoperable health information technology system, 

and for other purposes. 

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 Technology to 

5 Enhance Quality Act of 2005’’ or the ‘‘Health TEQ Act 

6 of 2005’’. 
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1 TITLE I—HEALTH INFORMATION 

2 TECHNOLOGY STANDARDS 

3 ADOPTION AND INFRASTRUC4 TURE DEVELOPMENT 

5 SEC. 101. ESTABLISHMENT OF NATIONAL COORDINATOR; 

6 RECOMMENDATION, ADOPTION, AND IMPLE7 MENTATION OF HEALTH INFORMATION 

8 ELECTRONIC EXCHANGE STANDARDS. 

9 The Public Health Service Act (42 U.S.C. 201 et 

10 seq.) is amended by adding at the end the following: 

11 ‘‘TITLE XXIX—HEALTH 

12 INFORMATION TECHNOLOGY 

13 ‘‘SEC. 2901. DEFINITIONS. 

14 ‘‘For purposes of this title: 

15 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group 

16 health plan’ has the meaning giving that term in 

17 section 2791. 

18 ‘‘(2) HEALTHCARE PROVIDER.—The term 

19 ‘healthcare provider’ means a hospital, skilled nurs20 ing facility, home health entity, healthcare clinic, 

21 community health center, group practice (as defined 

22 in section 1877(h)(4) of the Social Security Act), a 

23 physician (as defined in section 1861(r)(1) of the 

24 Social Security Act), a pharmacist, a pharmacy, a 
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1 laboratory, and any other category of facility or cli2 nician determined appropriate by the Secretary. 

3 ‘‘(3) HEALTH INFORMATION.—The term ‘health 

4 information’ means any information, recorded in any 

5 form or medium, that relates to the past, present, or 

6 future physical or mental health or condition of an 

7 individual, the provision of healthcare to an indi8 vidual, or the past, present, or future payment for 

9 the provision of healthcare to an individual. 

10 ‘‘(4) HEALTH INSURANCE ISSUER.—The term 

11 ‘health insurance issuer’ has the meaning given that 

12 term in section 2791. 

13 ‘‘(5) LABORATORY.—The term ‘laboratory’ has 

14 the meaning given that term in section 353. 

15 ‘‘(6) PHARMACIST.—The term ‘pharmacist’ has 

16 the meaning given that term in section 804 of the 

17 Federal Food, Drug, and Cosmetic Act. 

18 ‘‘SEC. 2902. OFFICE OF THE NATIONAL COORDINATOR OF 

19 HEALTH INFORMATION TECHNOLOGY. 

20 ‘‘(a) OFFICE OF NATIONAL HEALTH INFORMATION

21 TECHNOLOGY.—There is established within the Office of 

22 the Secretary an Office of the National Coordinator of 

23 Health Information Technology (referred to in this section 

24 as the ‘Office’). The Office shall be headed by a National 

25 Coordinator who shall be appointed by the President in 
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1 consultation with the Secretary and shall report directly 

2 to the Secretary. 

3 ‘‘(b) PURPOSE.—It shall be the purpose of the Office 

4 to carry out programs and activities to develop a nation5 wide interoperable health information technology infra6 structure that— 

7 ‘‘(1) improves healthcare quality, reduces med8 ical errors, and advances the delivery of patient-cen9 tered medical care; 

10 ‘‘(2) reduces healthcare costs resulting from in11 efficiency, medical errors, inappropriate care, and in12 complete information; 

13 ‘‘(3) ensures that appropriate information to 

14 help guide medical decisions is available at the time 

15 and place of care; 

16 ‘‘(4) promotes a more effective marketplace, 

17 greater competition, and increased choice through 

18 the wider availability of accurate information on 

19 healthcare costs, quality, and outcomes; 

20 ‘‘(5) improves the coordination of care and in21 formation among hospitals, laboratories, physician 

22 offices, and other entities through an effective infra23 structure for the secure and authorized exchange of 

24 healthcare information; 
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1 ‘‘(6) improves public health reporting and facili2 tates the early identification and rapid response to 

3 public health threats and emergencies, including bio4 terror events and infectious disease outbreaks; 

5 ‘‘(7) facilitates health research; and 

6 ‘‘(8) ensures that patients’ health information 

7 is secure and protected. 

8 ‘‘(c) DUTIES OF NATIONAL COORDINATOR.— 

9 ‘‘(1) IN GENERAL.—The National Coordinator 

10 shall— 

11 ‘‘(A) facilitate the adoption of a national 

12 system for the electronic exchange of health in13 formation; 

14 ‘‘(B) serve as the principal advisor to the 

15 Secretary on the development, application, and 

16 use of health information technology, and co17 ordinate and oversee the health information 

18 technology programs of the Department; 

19 ‘‘(C) ensure the adoption and implementa20 tion of standards for the electronic exchange of 

21 health information, including coordinating the 

22 activities of the Standards Working Group 

23 under section 2903; 
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1 ‘‘(D) carry out activities related to the 

2 electronic exchange of health information that 

3 reduce cost and improve healthcare quality; 

4 ‘‘(E) ensure that health information tech5 nology policy and programs of the Department 

6 are coordinated with those of relevant executive 

7 branch agencies (including Federal commis8 sions) with a goal of avoiding duplication of ef9 forts and of helping to ensure that each agency 

10 undertakes health information technology activi11 ties primarily within the areas of its greatest 

12 expertise and technical capability; 

13 ‘‘(F) to the extent permitted by law, co14 ordinate outreach and consultation by the rel15 evant executive branch agencies (including Fed16 eral commissions) with public and private par17 ties of interest, including consumers, payers, 

18 employers, hospitals and other healthcare pro19 viders, physicians, community health centers, 

20 laboratories, vendors and other stakeholders; 

21 ‘‘(G) advise the President regarding spe22 cific Federal health information technology pro23 grams; and 

24 ‘‘(H) submit the reports described under 

25 paragraph (2). 
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1 ‘‘(2) REPORTS TO CONGRESS.—The National 

2 Coordinator shall submit to Congress, on an annual 

3 basis, a report that describes— 

4 ‘‘(A) specific steps that have been taken to 

5 facilitate the adoption of a nationwide system 

6 for the electronic exchange of health informa7 tion; 

8 ‘‘(B) barriers to the adoption of such a na9 tionwide system; and 

10 ‘‘(C) recommendations to achieve full im11 plementation of such a nationwide system. 

12 ‘‘(d) DETAIL OF FEDERAL EMPLOYEES.— 

13 ‘‘(1) IN GENERAL.—Upon the request of the 

14 National Coordinator, the head of any Federal agen15 cy is authorized to detail, with or without reimburse16 ment from the Office, any of the personnel of such 

17 agency to the Office to assist it in carrying out its 

18 duties under this section. 

19 ‘‘(2) EFFECT OF DETAIL.—Any such detail 

20 shall— 

21 ‘‘(A) not interrupt or otherwise affect the 

22 civil service status or privileges of the Federal 

23 employee; and 
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1 ‘‘(B) be in addition to any other staff of 

2 the Department employed by the National Co3 ordinator. 

4 ‘‘(3) ACCEPTANCE OF DETAILEES.—Notwith5 standing any other provision of law, the Office may 

6 accept detailed personnel from other Federal agen7 cies without regard to whether the agency described 

8 under paragraph (1) is reimbursed. 

9 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 

10 are authorized to be appropriated such sums as may be 

11 necessary to carry out the activities of the Office under 

12 this section for each of fiscal years 2006 through 2010. 

13 ‘‘SEC. 2903. COLLABORATIVE PROCESS FOR THE REC14 OMMENDATION, ADOPTION, AND IMPLEMEN15 TATION OF HEALTH INFORMATION STAND16 ARDS. 

17 ‘‘(a) ESTABLISHMENT OF WORKING GROUP.—Not 

18 later than 60 days after the date of enactment of this title, 

19 the National Coordinator, in consultation with the Direc20 tor of the National Institute of Standards and Technology 

21 (referred to in this section as the ‘Director’), shall estab22 lish a permanent Electronic Health Information Stand23 ards Development Working Group (referred to in this title 

24 as the ‘Standards Working Group’). 
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1 ‘‘(b) COMPOSITION.—The Standards Working Group 

2 shall be composed of— 

3 ‘‘(1) the National Coordinator, who shall serve 

4 as the chairperson of the Standards Working Group; 

5 ‘‘(2) the Director; 

6 ‘‘(3) representatives of the relevant Federal 

7 agencies and departments, as selected by the Sec8 retary in consultation with the National Coordinator, 

9 including representatives of the Department of Vet10 erans Affairs, the Department of Defense, the Office 

11 of Management and Budget, the Department of 

12 Homeland Security, and the Environmental Protec13 tion Agency; 

14 ‘‘(4) private entities accredited by the American 

15 National Standards Institute, as selected by the Na16 tional Coordinator; 

17 ‘‘(5) representatives, as selected by the National 

18 Coordinator— 

19 ‘‘(A) of group health plans or other health 

20 insurance issuers; 

21 ‘‘(B) of healthcare provider organizations; 

22 ‘‘(C) with expertise in health information 

23 security; 

24 ‘‘(D) with expertise in health information 

25 privacy; 
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1 ‘‘(E) with experience in healthcare quality 

2 and patient safety, including those with experi3 ence in utilizing health information technology 

4 to improve healthcare quality and patient safe5 ty; 

6 ‘‘(F) of consumer and patient organiza7 tions; 

8 ‘‘(G) of employers; 

9 ‘‘(H) with experience in data exchange; 

10 and 

11 ‘‘(I) with experience in developing health 

12 information technology standards and new 

13 health information technology; and 

14 ‘‘(6) other representatives as determined appro15 priate by the National Coordinator in consultation 

16 with the Secretary. 

17 ‘‘(c) STANDARDS DEEMED ADOPTED.—On the date 

18 of enactment of this title, the Secretary and the Standards 

19 Working Group shall deem as adopted, for use by the Sec20 retary and private entities, the standards adopted by the 

21 Consolidated Health Informatics Initiative prior to such 

22 date of enactment. 

23 ‘‘(d) DUTIES.— 
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1 ‘‘(1) FIRST YEAR REVIEW.—Not later than 1 

2 year after the date of enactment of this title, the 

3 Standards Working Group shall— 

4 ‘‘(A) review existing standards (including 

5 content, communication, and security stand6 ards) for the electronic exchange of health in7 formation, including such standards deemed 

8 adopted under subsection (c); 

9 ‘‘(B) identify deficiencies and omissions in 

10 such existing standards; 

11 ‘‘(C) identity duplications and omissions in 

12 existing standards, and recommend modifica13 tions to such standards as necessary; and 

14 ‘‘(D) submit a report to the Secretary rec15 ommending for adoption by such Secretary and 

16 private entities— 

17 ‘‘(i) modifications to the standards 

18 deemed adopted under subsection (c); and 

19 ‘‘(ii) any additional standards re20 viewed pursuant to this paragraph. 

21 ‘‘(2) ONGOING REVIEW.—Beginning 1 year 

22 after the date of enactment of this title, and on an 

23 ongoing basis thereafter, the Standards Working 

24 Group shall— 
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1 ‘‘(A) review existing standards (including 

2 content, communication, and security stand3 ards) for the electronic exchange of health in4 formation, including such standards adopted by 

5 the Secretary under subsections (c) and (e); 

6 ‘‘(B) identify deficiencies and omissions in 

7 such existing standards; 

8 ‘‘(C) identity duplications and omissions in 

9 existing standards, and recommend modifica10 tions to such standards as necessary; and 

11 ‘‘(D) submit reports to the Secretary rec12 ommending for adoption by such Secretary and 

13 private entities— 

14 ‘‘(i) modifications to any existing 

15 standards; and 

16 ‘‘(ii) any additional standards re17 viewed pursuant to this paragraph. 

18 ‘‘(3) LIMITATION.—The standards described 

19 under this subsection shall not include any stand20 ards developed pursuant the Health Insurance Port21 ability and Accountability Act of 1996. 

22 ‘‘(e) ADOPTION BY SECRETARY.—Not later than 1 

23 year after the receipt of a report from the Standards 

24 Working Group under paragraph (1)(D) or (2)(D) of sub25 section (d), the Secretary shall review and provide for the 
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1 adoption by the Federal Government of any modification 

2 or standard recommended in such report. 

3 ‘‘(f) VOLUNTARY ADOPTION.—Any standards adopt4 ed by the Secretary under this section shall be voluntary 

5 for private entities. 

6 ‘‘(g) APPLICATION OF FACA.— 

7 ‘‘(1) IN GENERAL.—The Federal Advisory Com8 mittee Act (5 U.S.C. App.) shall apply to the Stand9 ards Working Group established under this section. 

10 ‘‘(2) LIMITATION.—Notwithstanding paragraph 

11 (1), the 2-year termination date under section 14 of 

12 the Federal Advisory Committee Act shall not apply 

13 to the Standards Working Group. 

14 ‘‘SEC. 2904. IMPLEMENTATION AND CERTIFICATION OF 

15 HEALTH INFORMATION STANDARDS. 

16 ‘‘(a) IMPLEMENTATION.— 

17 ‘‘(1) IN GENERAL.—The Secretary, in consulta18 tion with the National Coordinator and the Director 

19 of the National Institute of Standards and Tech20 nology, shall develop criteria to ensure uniform and 

21 consistent implementation of any standards for the 

22 electronic exchange of health information voluntarily 

23 adopted by private entities in technical conformance 

24 with such standards adopted under this title. 
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1 ‘‘(2) IMPLEMENTATION ASSISTANCE.—The Sec2 retary may recognize a private entity or entities to 

3 assist private entities in the implementation of the 

4 standards adopted under this title. 

5 ‘‘(b) CERTIFICATION.— 

6 ‘‘(1) IN GENERAL.—The Secretary, in consulta7 tion with the National Coordinator and the Director 

8 of the National Institute of Standards and Tech9 nology shall develop criteria to ensure and certify 

10 that hardware, software, and support services that 

11 claim to be in compliance with any standard for the 

12 electronic exchange of health information adopted 

13 under this title have established and maintain such 

14 compliance in technical conformance with such 

15 standard. 

16 ‘‘(2) CERTIFICATION ASSISTANCE.—The Sec17 retary may recognize a private entity or entities to 

18 assist in the certification described under paragraph 

19 (1). 

20 ‘‘(c) DELEGATION AUTHORITY.—The Secretary may 

21 delegate the development of the criteria under subsection 

22 (a) and (b) to a private entity. 
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1 ‘‘SEC. 2905. AUTHORITY FOR COORDINATION AND SPEND2 ING. 

3 ‘‘(a) IN GENERAL.—The Secretary acting through 

4 the National Coordinator— 

5 ‘‘(1) shall direct and coordinate— 

6 ‘‘(A) Federal spending related to the devel7 opment, adoption, and implementation of stand8 ards for the electronic exchange of health infor9 mation; and 

10 ‘‘(B) the adoption of the recommendations 

11 submitted to such Secretary by the Standards 

12 Working Group established under section 2903; 

13 and 

14 ‘‘(2) may utilize the entities recognized under 

15 section 2904 to assist in implementation and certifi16 cation related to the implementation by the Federal 

17 Government of the standards adopted by the Sec18 retary under this title. 

19 ‘‘(b) LIMITATION.— 

20 ‘‘(1) IN GENERAL.—Notwithstanding any other 

21 provision of law, no Federal agency shall expend 

22 Federal funds for the purchase of hardware, soft23 ware, or support services for the purpose of imple24 menting a standard related to the electronic ex25 change of health information that is not a standard 

26 adopted by the Secretary under section 2903. 
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1 ‘‘(2) EFFECTIVE DATE.—The limitation under 

2 paragraph (1) shall take effect not later than 1 year 

3 after the adoption by the Secretary of such stand4 ards under section 2903.’’. 

5 SEC. 102. ENCOURAGING SECURE EXCHANGE OF HEALTH 

6 INFORMATION. 

7 (a) STUDY AND GRANT PROGRAMS RELATED TO

8 STATE HEALTH INFORMATION LAWS AND PRACTICES.— 

9 (1) STUDY OF STATE HEALTH INFORMATION

10 LAWS AND PRACTICES.— 

11 (A) IN GENERAL.—The Secretary of 

12 Health and Human Services (referred to in this 

13 Act as the ‘‘Secretary’’) shall carry out, or con14 tract with a private entity to carry out, a study 

15 that examines— 

16 (i) the variation among State laws 

17 and practices that relate to the privacy, 

18 confidentiality, and security of health in19 formation; 

20 (ii) how such variation among State 

21 laws and practices may impact the elec22 tronic exchange of health information (as 

23 defined in section 2901 of the Public 

24 Health Service Act) (as added by section 

25 101)— 
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1 (I) among the States; 

2 (II) between the States and the 

3 Federal Government; and 

4 (III) among private entities; and 

5 (iii) how such laws and practices may 

6 be harmonized to permit the secure elec7 tronic exchange of health information. 

8 (B) REPORT AND RECOMMENDATIONS.— 

9 Not later than 1 year after the date of enact10 ment of this Act, the Secretary shall submit to 

11 Congress a report that— 

12 (i) describes the results of the study 

13 carried out under subparagraph (A); and 

14 (ii) makes recommendations based on 

15 the results of such study. 

16 (2) SECURE EXCHANGE OF HEALTH INFORMA17 TION; INCENTIVE GRANTS.—Title XXIX of the Pub18 lic Health Service Act (as added by section 101) is 

19 amended by adding at the end the following: 

20 ‘‘SEC. 2906. SECURE EXCHANGE OF HEALTH INFORMATION; 

21 INCENTIVE GRANTS. 

22 ‘‘(a) IN GENERAL.—The Secretary may make grants 

23 to States to carry out programs under which such States 

24 cooperate with other States to develop and implement 

25 State policies that will facilitate the secure electronic ex-
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1 change of health information utilizing the standards 

2 adopted under section 2903— 

3 ‘‘(1) among the States; 

4 ‘‘(2) between the States and the Federal Gov5 ernment; and 

6 ‘‘(3) among private entities. 

7 ‘‘(b) PRIORITY.—In awarding grants under sub8 section (a), the Secretary shall give priority to States that 

9 provide assurance that any funding awarded under such 

10 a grant shall be used to harmonize privacy laws and prac11 tices between the States, the States and the Federal Gov12 ernment, and among private entities related to the privacy, 

13 confidentiality, and security of health information. 

14 ‘‘(c) DISSEMINATION OF INFORMATION.—The Sec15 retary shall disseminate information regarding the efficacy 

16 of efforts of a recipient of a grant under this section. 

17 ‘‘(d) TECHNICAL ASSISTANCE.—The Secretary may 

18 provide technical assistance to recipients of a grant under 

19 this section. 

20 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the 

21 purpose of carrying out subsection (a), there are author22 ized to be appropriated such sums as may be necessary 

23 for each of the fiscal years 2006 through 2010.’’. 

24 (b) STUDY AND GRANT PROGRAMS RELATED TO

25 STATE LICENSURE LAWS.— 
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1 (1) STUDY OF STATE LICENSURE LAWS.— 

2 (A) IN GENERAL.—The Secretary shall 

3 carry out, or contract with a private entity to 

4 carry out, a study that examines— 

5 (i) the variation among State laws 

6 that relate to the licensure, registration, 

7 and certification of medical professionals; 

8 and 

9 (ii) how such variation among State 

10 laws impacts the secure electronic ex11 change of health information (as defined in 

12 section 2901 of the Public Health Service 

13 Act) (as added by section 101)— 

14 (I) among the States; and 

15 (II) between the States and the 

16 Federal Government. 

17 (B) REPORT AND RECOMMENDATIONS.— 

18 Not later than 1 year after the date of enact19 ment of this Act, the Secretary shall publish a 

20 report that— 

21 (i) describes the results of the study 

22 carried out under subparagraph (A); and 

23 (ii) makes recommendations to States 

24 regarding the harmonization of State laws 

25 based on the results of such study. 
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1 (2) REAUTHORIZATION OF INCENTIVE GRANTS

2 REGARDING TELEMEDICINE.—Section 330L(b) of 

3 the Public Health Service Act (42 U.S.C. 254c– 

4 18(b)) is amended by striking ‘‘2002 through 2006’’ 

5 and inserting ‘‘2006 through 2010’’. 

6 (3) HIPAA APPLICATION TO ELECTRONIC

7 HEALTH INFORMATION.—Title XXIX of the Public 

8 Health Service Act (as added by section 101 and 

9 amended by subsection (a)) is further amended by 

10 adding at the end the following: 

11 ‘‘SEC. 2907. APPLICABILITY OF PRIVACY AND SECURITY 

12 REGULATIONS. 

13 ‘‘The regulations promulgated by the Secretary under 

14 part C of title XI of the Social Security Act and sections 

15 261, 262, 263, and 264 of the Health Insurance Port16 ability and Accountability Act of 1996 with respect to the 

17 privacy, confidentiality, and security of health information 

18 shall— 

19 ‘‘(1) apply to any health information stored or 

20 transmitted in an electronic format as of the date of 

21 enactment of this title; and 

22 ‘‘(2) apply to the implementation of standards, 

23 programs, and activities under this title.’’. 

24 (c) STUDY AND REPORT.— 
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1 (1) STUDY.—Not later than 2 years after the 

2 date of enactment of this Act, the Secretary shall 

3 carry out, or contract with a private entity to carry 

4 out, a study that examines the integration of the 

5 standards adopted under the amendments made by 

6 this Act with the standards adopted under the 

7 Health Insurance Portability and Accountability Act 

8 of 1996 (Public Law 104–191). 

9 (2) PLAN; REPORT.—

10 (A) PLAN.—Not later than 3 years after 

11 the date of enactment of this Act, the Secretary 

12 shall, based on the results of the study carried 

13 out under paragraph (1), develop a plan for the 

14 integration of the standards described under 

15 such paragraph and submit a report to Con16 gress describing such plan. 

17 (B) PERIODIC REPORTS.—The Secretary 

18 shall submit periodic reports to Congress that 

19 describe the progress of the integration de20 scribed under subparagraph (A). 
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1 TITLE II—FACILITATING THE 

2 ADOPTION AND IMPLEMEN3 TATION OF INTEROPERABLE 

4 ELECTRONIC HEALTH INFOR5 MATION 

6 SEC. 201. GRANTS FOR THE IMPLEMENTATION OF RE7 GIONAL OR LOCAL HEALTH INFORMATION 

8 TECHNOLOGY PLANS. 

9 Title XXIX of the Public Health Service Act (as 

10 amended by section 102) is further amended by adding 

11 at the end the following: 

12 ‘‘SEC. 2908. GRANTS FOR THE IMPLEMENTATION OF RE13 GIONAL OR LOCAL HEALTH INFORMATION 

14 TECHNOLOGY PLANS. 

15 ‘‘(a) IN GENERAL.—The Secretary, in consultation 

16 with the National Coordinator, may award competitive 

17 grants to eligible entities to implement regional or local 

18 health information plans to improve healthcare quality and 

19 efficiency through the electronic exchange of health infor20 mation pursuant to the standards, protocols, and other re21 quirements adopted by the Secretary under sections 2903 

22 and 2910. 

23 ‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 

24 under subsection (a) an entity shall— 
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1 ‘‘(1) demonstrate financial need to the Sec2 retary; 

3 ‘‘(2) demonstrate that one of its principal mis4 sions or purposes is to use information technology to 

5 improve healthcare quality and efficiency; 

6 ‘‘(3) adopt bylaws, memoranda of under7 standing, or other charter documents that dem8 onstrate that the governance structure and decision9 making processes of such entity allow for participa10 tion on an ongoing basis by multiple stakeholders 

11 within a community, including— 

12 ‘‘(A) physicians (as defined in section 

13 1861(r)(1) of the Social Security Act), includ14 ing physicians that provide services to low in15 come and underserved populations; 

16 ‘‘(B) hospitals (including hospitals that 

17 provide services to low income and underserved 

18 populations); 

19 ‘‘(C) group health plans or other health in20 surance issuers; 

21 ‘‘(D) health centers (as defined in section 

22 330(b)) and Federally qualified health centers 

23 (as defined in section 1861(aa)(4) of the Social 

24 Security Act); 
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1 ‘‘(E) rural health clinics (as defined in sec2 tion 1861(aa) of the Social Security Act); 

3 ‘‘(F) consumer organizations; 

4 ‘‘(G) employers; and 

5 ‘‘(H) any other healthcare providers or 

6 other entities, as determined appropriate by the 

7 Secretary; 

8 ‘‘(4) adopt nondiscrimination and conflict of in9 terest policies that demonstrate a commitment to 

10 open, fair, and nondiscriminatory participation in 

11 the health information plan by all stakeholders; 

12 ‘‘(5) adopt the national health information tech13 nology standards adopted by the Secretary under 

14 section 2903; 

15 ‘‘(6) facilitate the electronic exchange of health 

16 information within the local or regional area and 

17 among local and regional areas; 

18 ‘‘(7) prepare and submit to the Secretary an 

19 application in accordance with subsection (c); and 

20 ‘‘(8) agree to provide matching funds in accord21 ance with subsection (e). 

22 ‘‘(c) APPLICATION.— 

23 ‘‘(1) IN GENERAL.—To be eligible to receive a 

24 grant under subsection (a), an entity shall submit to 

25 the Secretary an application at such time, in such 
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1 manner, and containing such information as the Sec2 retary may require. 

3 ‘‘(2) REQUIRED INFORMATION.—At a min4 imum, an application submitted under this sub5 section shall include— 

6 ‘‘(A) clearly identified short-term and long7 term objectives of the regional or local health 

8 information plan; 

9 ‘‘(B) a technology plan that complies with 

10 the standards adopted under section 2903 and 

11 that includes a descriptive and reasoned esti12 mate of costs of the hardware, software, train13 ing, and consulting services necessary to imple14 ment the regional or local health information 

15 plan; 

16 ‘‘(C) a strategy that includes initiatives to 

17 improve healthcare quality and efficiency, in18 cluding the use of healthcare quality measures 

19 adopted under section 2910; 

20 ‘‘(D) a plan that describes provisions to 

21 encourage the implementation of the electronic 

22 exchange of health information by all physi23 cians, including single physician practices and 

24 small physician groups participating in the 

25 health information plan; 
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1 ‘‘(E) a plan to ensure the privacy and se2 curity of personal health information that is 

3 consistent with Federal and State law; 

4 ‘‘(F) a governance plan that defines the 

5 manner in which the stakeholders shall jointly 

6 make policy and operational decisions on an on7 going basis; and 

8 ‘‘(G) a financial or business plan that de9 scribes— 

10 ‘‘(i) the sustainability of the plan; 

11 ‘‘(ii) the financial costs and benefits 

12 of the plan; and 

13 ‘‘(iii) the entities to which such costs 

14 and benefits will accrue. 

15 ‘‘(d) USE OF FUNDS.—Amounts received under a 

16 grant under subsection (a) shall be used to establish and 

17 implement a regional or local health information plan in 

18 accordance with this section. 

19 ‘‘(e) MATCHING REQUIREMENT.— 

20 ‘‘(1) IN GENERAL.—The Secretary may not 

21 make a grant under this section to an entity unless 

22 the entity agrees that, with respect to the costs to 

23 be incurred by the entity in carrying out the infra24 structure program for which the grant was awarded, 

25 the entity will make available (directly or through 
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1 donations from public or private entities) non-Fed2 eral contributions toward such costs in an amount 

3 equal to not less than 50 percent of such costs ($1 

4 for each $2 of Federal funds provided under the 

5 grant). 

6 ‘‘(2) DETERMINATION OF AMOUNT CONTRIB7 UTED.—Non-Federal contributions required under 

8 paragraph (1) may be in cash or in kind, fairly eval9 uated, including equipment, technology, or services. 

10 Amounts provided by the Federal Government, or 

11 services assisted or subsidized to any significant ex12 tent by the Federal Government, may not be in13 cluded in determining the amount of such non-Fed14 eral contributions. 

15 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.— 

16 ‘‘(1) IN GENERAL.—There is authorized to be 

17 appropriated to carry out this section, $125,000,000 

18 for each of fiscal years 2006 through 2010. 

19 ‘‘(2) AVAILABILITY.—Amounts appropriated 

20 under paragraph (1) shall remain available for obli21 gation until expended. 

22 ‘‘SEC. 2909. REPORTS. 

23 ‘‘Not later than 1 year after the date on which the 

24 first grant is awarded under section 2908, and annually 

25 thereafter during the grant period, an entity that receives 
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1 a grant under such section shall submit to the Secretary, 

2 acting through the National Coordinator, a report on the 

3 activities carried out under the grant involved. Each such 

4 report shall include— 

5 ‘‘(1) a description of the financial costs and 

6 benefits of the project involved and of the entities to 

7 which such costs and benefits accrue; 

8 ‘‘(2) an analysis of the impact of the project on 

9 healthcare quality and safety; 

10 ‘‘(3) a description of any reduction in duplica11 tive or unnecessary care as a result of the project in12 volved; and 

13 ‘‘(4) other information as required by the Sec14 retary.’’. 

15 SEC. 202. EXCEPTION FOR THE PROVISION OF PERMITTED 

16 SUPPORT. 

17 (a) EXEMPTION FROM CRIMINAL PENALTIES.—Sec18 tion 1128B(b) of the Social Security Act (42 U.S.C. 

19 1320a–7b(b)(3)) is amended— 

20 (1) in paragraph (3)— 

21 (A) in subparagraph (G), by striking 

22 ‘‘and’’ at the end; 

23 (B) in subparagraph (H), as added by sec24 tion 237(d) of the Medicare Prescription Drug, 
29 

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1 Improvement, and Modernization Act of 2003 

2 (Public Law 108–173; 117 Stat. 2213)— 

3 (i) by moving such subparagraph 2 

4 ems to the left; and 

5 (ii) by striking the period at the end 

6 and inserting a semicolon; 

7 (C) by redesignating subparagraph (H), as 

8 added by section 431(a) of the Medicare Pre9 scription Drug, Improvement, and Moderniza10 tion Act of 2003 (Public Law 108–173; 117 

11 Stat. 2287), as subparagraph (I); 

12 (D) in subparagraph (I), as so redesig13 nated— 

14 (i) by moving such subparagraph 2 

15 ems to the left; and 

16 (ii) by striking the period at the end 

17 and inserting ‘‘; and’’; and 

18 (E) by adding at the end the following 

19 new: 

20 ‘‘(J) subject to paragraph (4), the provi21 sion, with or without charge, of any permitted 

22 support (as defined in paragraph (4)(A) and 

23 subject to the conditions in paragraph (4)(B)) 

24 to an entity or individual for developing, imple25 menting, operating, or facilitating the electronic 
30 

•S 1262 IS 

1 exchange of health information (as defined in 

2 section 2901 of the Public Health Service Act), 

3 so long as such support is primarily designed to 

4 promote the electronic exchange of health infor5 mation.’’; and 

6 (2) by adding at the end the following: 

7 ‘‘(4) PERMITTED SUPPORT.— 

8 ‘‘(A) DEFINITION OF PERMITTED SUP9 PORT.—In this section, the term ‘permitted 

10 support’ means the provision of, or funding 

11 used exclusively to provide or pay for, any 

12 equipment, item, information, right, license, in13 tellectual property, software, or service, regard14 less of whether any such support may have util15 ity or value to the recipient for any purpose be16 yond the exchange of health information (as de17 fined in section 2901 of the Public Health Serv18 ice Act). 

19 ‘‘(B) CONDITIONS ON PERMITTED SUP20 PORT.—Paragraph (3)(J) shall not apply unless 

21 the following conditions are met: 

22 ‘‘(i) The provision of permitted sup23 port is not conditioned on the recipient of 

24 such support making any referral to, or 

25 generating any business for, any entity or 
31 

•S 1262 IS 

1 individual for which any Federal health 

2 care program provides reimbursement. 

3 ‘‘(ii) The permitted support complies 

4 with the standards for the electronic ex5 change of health information adopted by 

6 the Secretary under section 2903 of the 

7 Public Health Service Act. 

8 ‘‘(iii) The entity or network receiving 

9 permitted support is able to document that 

10 such support is used by the entity or the 

11 network for the electronic exchange of 

12 health information in accordance with the 

13 standards adopted by the Secretary under 

14 section 2903 of the Public Health Service 

15 Act.’’. 

16 (b) EXEMPTION FROM LIMITATION ON CERTAIN

17 PHYSICIAN REFERRALS.—Section 1877(e) of the Social 

18 Security Act (42 U.S.C. 1395nn(e)) is amended by adding 

19 at the end the following: 

20 ‘‘(9) PERMITTED SUPPORT.—The provision of 

21 permitted support (as described in section 

22 1128B(b)(3)(J)).’’. 

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

24 this section shall apply to permitted support provided on 

25 or after the date of enactment of this Act. 
32 

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1 SEC. 203. GROUP PURCHASING. 

2 (a) IN GENERAL.—Not later than 1 year after the 

3 date of enactment of this Act, the Secretary shall establish 

4 a safe harbor for group purchasing of hardware, software, 

5 and support services for the electronic exchange of health 

6 information in compliance with section 2903 of the Public 

7 Health Service Act (as added by section 101). 

8 (b) CONDITIONS.—In establishing the safe harbor 

9 under subsection (a), the Secretary shall establish condi10 tions on such safe harbor consistent with the purposes 

11 of— 

12 (1) improving healthcare quality; 

13 (2) reducing medical errors; 

14 (3) reducing healthcare costs; 

15 (4) improving the coordination of care; 

16 (5) streamlining administrative processes; and 

17 (6) promoting transparency and competition. 

18 SEC. 204. PERMISSIBLE ARRANGEMENTS. 

19 (a) IN GENERAL.—Not later than 1 year after the 

20 date of enactment of this Act and notwithstanding any 

21 other provision of law, the Secretary shall establish guide22 lines in compliance with section 2903 of the Public Health 

23 Service Act that permit certain arrangements between 

24 group health plans and health insurance issuers (as de25 fined in section 2791 of the Public Health Service Act (42 

26 U.S.C. 300gg–91)) and between healthcare providers (as 
33 

•S 1262 IS 

1 defined in section 2901 of such Act, as added by section 

2 101) in accordance with subsection (b). 

3 (b) CONDITIONS.—In establishing the guidelines 

4 under subsection (a), the Secretary shall establish condi5 tions on such arrangements consistent with the purposes 

6 of— 

7 (1) improving healthcare quality; 

8 (2) reducing medical errors; 

9 (3) reducing healthcare costs; 

10 (4) improving the coordination of care; 

11 (5) streamlining administrative processes; and 

12 (6) promoting transparency and competition. 

13 TITLE III—ADOPTION, IMPLE14 MENTATION, AND USE OF 

15 HEALTHCARE QUALITY MEAS16 URES 

17 SEC. 301. STANDARDIZED MEASURES. 

18 Title XXIX of the Public Health Service Act (as 

19 amended by section 201) is further amended by adding 

20 at the end the following: 

21 ‘‘SEC. 2910. COLLABORATIVE PROCESS FOR THE DEVELOP22 MENT, RECOMMENDATION, AND ADOPTION 

23 OF STANDARDIZED MEASURES OF QUALITY 

24 HEALTHCARE. 

25 ‘‘(a) IN GENERAL.— 
34 

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1 ‘‘(1) COLLABORATION.—The Secretary, the 

2 Secretary of Defense, the Secretary of Veterans Af3 fairs, and any other heads of relevant Federal agen4 cies as determined appropriate by the President, (re5 ferred to in this section as the ‘Secretaries’) shall 

6 adopt, on an ongoing basis, uniform healthcare qual7 ity measures to assess the effectiveness, timeliness, 

8 patient self-management, patient-centeredness, effi9 ciency, and safety of care delivered by healthcare 

10 providers across Federal healthcare programs, in11 cluding those in titles XVIII, XIX, and XXI of the 

12 Social Security Act. 

13 ‘‘(2) REVIEW OF MEASURES ADOPTED.—The 

14 Secretaries shall conduct an ongoing review of the 

15 measures adopted under paragraph (1). 

16 ‘‘(3) EXISTING ACTIVITIES—Notwithstanding 

17 any other provision of law, the measures and report18 ing activities described in this subsection shall re19 place, to the extent practicable and appropriate, any 

20 duplicative or redundant existing measurement and 

21 reporting activities currently utilized by Federal 

22 healthcare programs, including those in titles XVIII, 

23 XIX, and XXI of the Social Security Act. 

24 ‘‘(b) PRIORITY MEASURES.— 
35 

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1 ‘‘(1) IN GENERAL.—In determining the meas2 ures to be adopted under subsection (a), and the 

3 timing of any such adoption, the Secretaries shall 

4 give priority to— 

5 ‘‘(A) measures with the greatest potential 

6 impact for improving the quality and efficiency 

7 of care provided under Federal programs; 

8 ‘‘(B) measures that may be rapidly imple9 mented by group health plans, health insurance 

10 issuers, physicians, hospitals, nursing homes, 

11 long-term care providers, and other providers; 

12 and 

13 ‘‘(C) measures which may inform 

14 healthcare decisions made by consumers and 

15 patients. 

16 ‘‘(2) NATIONAL QUALITY FORUM MEASURES; 

17 QUALITY OF CARE INDICATORS.—To the extent de18 termined feasible and appropriate by the Secretaries, 

19 the Secretaries shall adopt— 

20 ‘‘(A) measures endorsed by the National 

21 Quality Forum, subject to compliance with the 

22 amendments made by the National Technology 

23 Transfer and Advancement Act of 1995; and 

24 ‘‘(B) indicators relating to the quality of 

25 care data submitted to the Secretary by hos-
36 

•S 1262 IS 

1 pitals under section 1886(b)(3)(B)(vii)(II) of 

2 the Social Security Act. 

3 ‘‘(c) COLLABORATION WITH PRIVATE ENTITIES.— 

4 ‘‘(1) IN GENERAL.—The Secretaries may estab5 lish collaborative agreements with private entities, 

6 including group health plans and health insurance 

7 issuers, providers, purchasers, consumer organiza8 tions, and entities receiving a grant under section 

9 2908, to— 

10 ‘‘(A) encourage the use of the healthcare 

11 quality measures adopted by the Secretary 

12 under this section; and 

13 ‘‘(B) foster uniformity between the 

14 healthcare quality measures utilized in Federal 

15 programs and private entities. 

16 ‘‘(2) USE OF MEASURES.—The measures adopt17 ed by the Secretaries under this section may apply 

18 in one or more disease areas and across delivery set19 tings, in order to improve the quality of care pro20 vided or delivered by private entities. 

21 ‘‘(d) COMPARATIVE QUALITY REPORTS.—Beginning 

22 on January 1, 2008, in order to make comparative quality 

23 information available to healthcare consumers, health pro24 fessionals, public health officials, researchers, and other 

25 appropriate individuals and entities, the Secretaries and 
37 

•S 1262 IS 

1 other relevant agencies shall provide for the aggregation, 

2 analysis, and dissemination of quality measures collected 

3 under this section. Nothing in this section shall be con4 strued as modifying the privacy standards under the 

5 Health Insurance Portability and Accountability Act of 

6 1996 (Public Law 104–191). 

7 ‘‘(e) EVALUATIONS.— 

8 ‘‘(1) ONGOING EVALUATIONS OF USE.—The 

9 Secretary shall ensure the ongoing evaluation of the 

10 use of the healthcare quality measures adopted 

11 under this section. 

12 ‘‘(2) EVALUATION AND REPORT.— 

13 ‘‘(A) EVALUATION.—The Secretary shall, 

14 directly or indirectly through a contract with 

15 another entity, conduct an evaluation of the col16 laborative efforts of the Secretaries to adopt 

17 uniform healthcare quality measures and re18 porting requirements for federally supported 

19 healthcare delivery programs as required under 

20 this section. 

21 ‘‘(B) REPORT.—Not later than 2 years 

22 after the date of enactment of this title, the 

23 Secretary shall submit a report to the appro24 priate committees of Congress concerning the 
38 

•S 1262 IS 

1 results of the evaluation under subparagraph 

2 (A).’’. 

3 SEC. 302. VALUE BASED PURCHASING PROGRAMS; SENSE 

4 OF THE SENATE. 

5 (a) MEDICARE VALUE BASED PURCHASING PILOT

6 PROGRAM.— 

7 (1) IN GENERAL.—The Secretary shall establish 

8 under title XVIII of the Social Security Act (42 

9 U.S.C. 1395 et seq.) a value based purchasing pilot 

10 program based on the reporting of quality measures 

11 pursuant to those adopted in section 2910 of the 

12 Public Health Service Act (as added by section 301) 

13 and the overall improvement of healthcare quality 

14 through the use of the electronic exchange of health 

15 information by entities (including Federally qualified 

16 health centers, as defined in section 1861(aa)(4) of 

17 the Social Security Act (42 U.S.C. 1395x(aa)(4))) 

18 pursuant to the standards adopted under section 

19 2903 of the Public Health Service Act (as added by 

20 section 101). Such pilot program should be based on 

21 experience gained through previous demonstration 

22 projects conducted by the Secretary, including dem23 onstration projects conducted under sections 1866A 

24 and 1866C of the Social Security Act (42 U.S.C. 

25 1395cc–1; 1395cc–3), section 649 of the Medicare 
39 

•S 1262 IS 

1 Prescription Drug, Improvement, and Modernization 

2 Act of 2003 (Public Law 108–173; 117 Stat. 2322), 

3 and other relevant work conducted by private enti4 ties. 

5 (2) EXPANSION.—After conducting the pilot 

6 program under paragraph (1) for not less than 2 

7 years, the Secretary may transition and implement 

8 such program on a national basis. 

9 (3) FUNDING.— 

10 (A) IN GENERAL.—Payments for the costs 

11 of carrying out the provisions of this subsection 

12 shall be made from the Federal Hospital Insur13 ance Trust Fund under section 1817 of the So14 cial Security Act (42 U.S.C. 1395i) and the 

15 Federal Supplementary Insurance Trust Fund 

16 under section 1841 of such Act (42 U.S.C. 

17 1395t) (in this subsection referred to as the 

18 ‘‘Trust Funds’’), as determined appropriate by 

19 the Secretary. 

20 (B) LIMITATION TO ENSURE BUDGET NEU21 TRALITY.—The Secretary shall ensure that the 

22 total amount of expenditures from the Trust 

23 Funds in a year does not exceed the total 

24 amount of expenditures from the Trust Funds 
40 

•S 1262 IS 

1 that would have been made in such year if this 

2 subsection had not been enacted. 

3 (C) MONITORING AND REPORTS.— 

4 (i) ONGOING MONITORING BY THE

5 SECRETARY TO ENSURE FUNDING LIMITA6 TION IS NOT VIOLATED.—The Secretary 

7 shall continually monitor expenditures 

8 made from the Trust Funds by reason of 

9 the provisions of this subsection to ensure 

10 that the limitation described in subpara11 graph (B) is not violated. 

12 (ii) REPORTS.—Not later than April 1 

13 of each year (beginning in the year fol14 lowing the year in which the pilot program 

15 under paragraph (1) is implemented), the 

16 Secretary shall submit a report to Con17 gress and the Comptroller General of the 

18 United States that includes— 

19 (I) a detailed description of— 

20 (aa) the total amount ex21 pended from the Trust Funds 

22 (including all amounts expended 

23 as a result of the provisions of 

24 this subsection) during the pre25 vious year compared to the total 
41 

•S 1262 IS 

1 amount that would have been ex2 pended from the Trust Funds 

3 during such year if this sub4 section had not been enacted; 

5 (bb) the projections of the 

6 total amount that will be ex7 pended from the Trust Funds 

8 (including all amounts that will 

9 be expended as a result of the 

10 provisions of this subsection) 

11 during the year in which the re12 port is submitted compared to 

13 the total amount that would have 

14 been expended from the Trust 

15 Funds during the year if this 

16 subsection had not been enacted; 

17 and 

18 (cc) specify the steps (if 

19 any) that the Secretary will take 

20 pursuant to subparagraph (D) to 

21 ensure that the limitation de22 scribed in subparagraph (B) will 

23 not be violated; and 

24 (II) a certification from the Chief 

25 Actuary of the Centers for Medicare & 
42 

•S 1262 IS 

1 Medicaid Services that the descrip2 tions under items (aa), (bb), and (cc) 

3 of subclause (I) are reasonable, accu4 rate, and based on generally accepted 

5 actuarial principles and methodolo6 gies, including that the steps de7 scribed in subclause (I)(cc) will be 

8 adequate to avoid violating the limita9 tion described in subparagraph (B). 

10 (D) APPLICATION OF LIMITATION.—If the 

11 Secretary determines that the provisions of this 

12 subsection will result in the limitation described 

13 in subparagraph (B) being violated in any year, 

14 the Secretary shall take appropriate steps to re15 duce spending that is occurring by reason of 

16 such provisions, including through reducing the 

17 scope, site, and duration of the pilot project. 

18 (E) AUTHORITY.—The Secretary shall 

19 make necessary spending adjustments under 

20 the medicare program to recoup amounts so 

21 that the limitation described in subparagraph 

22 (B) is not violated in any year. 

23 (b) SENSE OF THE SENATE REGARDING PHYSICIAN

24 PAYMENTS UNDER MEDICARE.—It is the sense of the 

25 Senate that modifications to the medicare fee schedule for 
43 

•S 1262 IS 

1 physicians’ services under section 1848 of the Social Secu2 rity Act (42 U.S.C. 1394w–4) should include provisions 

3 based on the reporting of quality measures pursuant to 

4 those adopted in section 2910 of the Public Health Service 

5 Act (as added by section 301) and the overall improvement 

6 of healthcare quality through the use of the electronic ex7 change of health information pursuant to the standards 

8 adopted under section 2903 of such Act (as added by sec9 tion 101). 

10 (c) MEDICAID VALUE BASED PURCHASING PRO11 GRAMS.— 

12 (1) IN GENERAL.—The Secretary shall author13 ize waivers under section 1115 of the Social Security 

14 Act (42 U.S.C. 1315) for States to establish value 

15 based purchasing programs for State medicaid pro16 grams established under title XIX of such Act (42 

17 U.S.C. 1396 et seq.). Such programs shall be based 

18 on the reporting of quality measures pursuant to 

19 those adopted in section 2910 of the Public Health 

20 Service Act (as added by section 301) and the over21 all improvement of healthcare quality through the 

22 use of the electronic exchange of health information 

23 pursuant to the standards adopted under section 

24 2903 of the Public Health Service Act (as added by 

25 section 101). 
44 

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1 (2) WAIVER.—In authorizing such waivers, the 

2 Secretary shall waive any provisions of title XI or 

3 XIX of the Social Security Act that would otherwise 

4 prevent a State from establishing a value based pur5 chasing program in accordance with paragraph (1). 

6 (d) QUALITY INFORMATION SHARING.— 

7 (1) REVIEW OF MEDICARE CLAIMS DATA.— 

8 (A) PROCEDURES.—In order to improve 

9 the quality and efficiency of items and services 

10 furnished to medicare beneficiaires under title 

11 XVIII of the Social Security Act, the Secretary 

12 shall establish procedures to review claims data 

13 submitted under such title with respect to items 

14 and services furnished or ordered by physicians. 

15 (B) USE OF MOST RECENT MEDICARE

16 CLAIMS DATA.—In conducting the review under 

17 subparagraph (A), the Secretary shall use the 

18 most recent claims data that is available to the 

19 Secretary. 

20 (2) SHARING OF DATA.—Beginning in 2006, 

21 the Secretary shall periodically provide physicians 

22 with comparative information on the utilization of 

23 items and services under such title XVIII based 

24 upon the review of claims data under paragraph (1). 
45 

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1 SEC. 303. QUALITY IMPROVEMENT ORGANIZATION ASSIST2 ANCE. 

3 (a) IN GENERAL.—Section 1154(a) of the Social Se4 curity Act (42 U.S.C. 1320c–3(a)) is amended by adding 

5 at the end the following: 

6 ‘‘(18) The organization shall assist, at such 

7 time and in such manner as the Secretary may re8 quire, healthcare providers (as defined in section 

9 2901 of the Public Health Service Act) in imple10 menting the electronic exchange of health informa11 tion (as defined in such section 2901).’’. 

12 (b) EFFECTIVE DATE.—The amendment made by 

13 this section shall apply to contracts entered into on or 

14 after the date of enactment of this Act. 

Æ