II

109TH CONGRESS 

1ST SESSION S. 1503 

To reduce healthcare costs, expand access to affordable healthcare coverage, 

and improve healthcare and strengthen the healthcare safety net, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 26, 2005 

Mr. FRIST (for himself, Mr. MCCONNELL, Mr. GREGG, Mr. ENZI, Ms. MURKOWSKI, and Mr. DEMINT) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To reduce healthcare costs, expand access to affordable 

healthcare coverage, and improve healthcare and 

strengthen the healthcare safety net, 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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Healthy America Act of 2005’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 
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Sec. 2. Findings. 

TITLE I—MAKING HEALTH CARE MORE AFFORDABLE 

Subtitle A—Medical Liability Reform 

Sec. 101. Short title. 

Sec. 102. Findings and purpose. 

Sec. 103. Encouraging speedy resolution of claims. 

Sec. 104. Compensating patient injury. 

Sec. 105. Maximizing patient recovery. 

Sec. 106. Additional health benefits. 

Sec. 107. Punitive damages. 

Sec. 108. Authorization of payment of future damages to claimants in health 

care lawsuits. 

Sec. 109. Definitions. 

Sec. 110. Effect on other laws. 

Sec. 111. State flexibility and protection of States’ rights. 

Sec. 112. Applicability; effective date. 

Subtitle B—Health Information Technology 

CHAPTER 1—GENERAL PROVISIONS

Sec. 121. Improving health care, quality, safety, and efficiency. 

Sec. 122. HIPAA report. 

Sec. 123. Study of reimbursement incentives. 

Sec. 124. Reauthorization of incentive grants regarding telemedicine. 

Sec. 125. Sense of the Senate on physician payment. 

Sec. 126. Establishment of quality measurement systems for medicare valuebased purchasing programs. 

Sec. 127. Exception to Federal anti-kickback and physician self referral laws 

for the provision of permitted support. 

CHAPTER 2—VALUE BASED PURCHASING

Sec. 131. Value based purchasing programs. 

Subtitle C—Patient Safety and Quality Improvement 

Sec. 141. Short title. 

Sec. 142. Findings and purposes. 

Sec. 143. Amendments to Public Health Service Act. 

Sec. 144. Studies and reports. 

Subtitle D—Fraud and Abuse 

Sec. 151. National expansion of the medicare-medicaid data match pilot program. 

Subtitle E—Miscellaneous Provisions 

Sec. 161. Sense of the Senate on establishing a mandated benefits commission. 

Sec. 162. Enforcement of reimbursement provisions by fiduciaries. 

TITLE II—EXPANDING ACCESS TO AFFORDABLE HEALTH 

COVERAGE THROUGH TAX INCENTIVES AND OTHER INITIATIVES 

Subtitle A—Refundable Health Insurance Credit 
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Sec. 201. Refundable health insurance costs credit. 

Sec. 202. Advance payment of credit to issuers of qualified health insurance. 

Subtitle B—High Deductible Health Plans and Health Savings Accounts 

Sec. 211. Deduction of premiums for high deductible health plans. 

Sec. 212. Refundable credit for contributions to health savings accounts of 

small business employees. 

Subtitle C—Improvement of the Health Coverage Tax Credit 

Sec. 221. Change in State-based coverage rules related to preexisting conditions. 

Sec. 222. Eligibility of spouse of certain individuals entitled to medicare. 

Sec. 223. Eligible PBGC pension recipient. 

Sec. 224. Application of option to offer State-based coverage to Puerto Rico, 

Northern Mariana Islands, American Samoa, Guam, and the 

United States Virgin Islands. 

Sec. 225. Clarification of disclosure rules. 

Sec. 226. Clarification that State-based COBRA continuation coverage is subject to same rules as Federal COBRA. 

Sec. 227. Application of rules for other specified coverage to eligible alternative 

taa recipients consistent with rules for other eligible individuals. 

Subtitle D—Long-Term Care Insurance 

Sec. 231. Sense of the Senate concerning long-term care. 

Subtitle E—Other Provisions 

Sec. 241. Disposition of unused health benefits in cafeteria plans and flexible 

spending arrangements. 

Sec. 242. Microentrepreneurs. 

Sec. 243. Study on access to affordable health insurance for full-time college 

and university students. 

Sec. 244. Extension of funding for operation of State high risk health insurance pools. 

Sec. 245. Sense of the senate on affordable health coverage for small employers. 

Subtitle F—Covering Kids 

Sec. 251. Short title. 

Sec. 252. Grants to promote innovative outreach and enrollment under medicaid and SCHIP. 

Sec. 253. State option to provide for simplified determinations of a child’s financial eligibility for medical assistance under medicaid or 

child health assistance under SCHIP. 

TITLE III—IMPROVING CARE AND STRENGTHENING THE SAFETY 

NET 

Subtitle A—High Needs Areas 

Sec. 301. Purpose. 

Sec. 302. High need community health centers. 

Sec. 303. Grant application process. 
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Subtitle B—Qualified Integrated Health Care systems 

Sec. 321. Grants to qualified integrated health care systems. 

Subtitle C—Miscellaneous Provisions 

Sec. 331. Community health center collaborative access expansion. 

Sec. 332. Improvements to section 340B program. 

Sec. 333. Forbearance for student loans for physicians providing services in 

free clinics. 

Sec. 334. Amendments to the Public Health Service Act relating to liability. 

Sec. 335. Sense of the Senate concerning health disparities. 

1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) Health care costs are growing rapidly, put4 ting health insurance and needed care out of reach 

5 for too many Americans. 

6 (2) Rapidly growing health care costs pose a 

7 threat to the United States economy, as they make 

8 American businesses less competitive and make it 

9 more difficult to create new jobs. 

10 (3) Growing health care costs are compromising 

11 the stability of health care safety net and entitle12 ment programs. 

13 (4) There are a series of steps Congress can 

14 and should take to slow the growth of health care 

15 costs, expand access to health coverage, and improve 

16 access to quality health care for millions of Ameri17 cans. 
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1 TITLE I—MAKING HEALTH CARE 

2 MORE AFFORDABLE 

3 Subtitle A—Medical Liability 

4 Reform 

5 SEC. 101. SHORT TITLE. 

6 This subtitle may be cited as the ‘‘Patients First Act 

7 of 2005’’. 

8 SEC. 102. FINDINGS AND PURPOSE. 

9 (a) FINDINGS.— 

10 (1) EFFECT ON HEALTH CARE ACCESS AND

11 COSTS.—Congress finds that our current civil justice 

12 system is adversely affecting patient access to health 

13 care services, better patient care, and cost-efficient 

14 health care, in that the current health care liability 

15 system is a costly and ineffective mechanism for re16 solving claims of health care liability and compen17 sating injured patients, and is a deterrent to the 

18 sharing of information among health care profes19 sionals which impedes efforts to improve patient 

20 safety and quality of care. 

21 (2) EFFECT ON INTERSTATE COMMERCE.— 

22 Congress finds that the health care and insurance 

23 industries are industries affecting interstate com24 merce and the health care liability litigation systems 

25 existing throughout the United States are activities 
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1 that affect interstate commerce by contributing to 

2 the high costs of health care and premiums for 

3 health care liability insurance purchased by health 

4 care system providers. 

5 (3) EFFECT ON FEDERAL SPENDING.—Con6 gress finds that the health care liability litigation 

7 systems existing throughout the United States have 

8 a significant effect on the amount, distribution, and 

9 use of Federal funds because of— 

10 (A) the large number of individuals who 

11 receive health care benefits under programs op12 erated or financed by the Federal Government; 

13 (B) the large number of individuals who 

14 benefit because of the exclusion from Federal 

15 taxes of the amounts spent to provide them 

16 with health insurance benefits; and 

17 (C) the large number of health care pro18 viders who provide items or services for which 

19 the Federal Government makes payments. 

20 (b) PURPOSE.—It is the purpose of this subtitle to 

21 implement reasonable, comprehensive, and effective health 

22 care liability reforms designed to— 

23 (1) improve the availability of health care serv24 ices in cases in which health care liability actions 
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1 have been shown to be a factor in the decreased 

2 availability of services; 

3 (2) reduce the incidence of ‘‘defensive medi4 cine’’ and lower the cost of health care liability in5 surance, all of which contribute to the escalation of 

6 health care costs; 

7 (3) ensure that persons with meritorious health 

8 care injury claims receive fair and adequate com9 pensation, including reasonable noneconomic dam10 ages; 

11 (4) improve the fairness and cost-effectiveness 

12 of our current health care liability system to resolve 

13 disputes over, and provide compensation for, health 

14 care liability by reducing uncertainty in the amount 

15 of compensation provided to injured individuals; 

16 (5) provide an increased sharing of information 

17 in the health care system which will reduce unin18 tended injury and improve patient care. 

19 SEC. 103. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

20 The time for the commencement of a health care law21 suit shall be 3 years after the date of manifestation of 

22 injury or 1 year after the claimant discovers, or through 

23 the use of reasonable diligence should have discovered, the 

24 injury, whichever occurs first. In no event shall the time 

25 for commencement of a health care lawsuit exceed 3 years 
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1 after the date of manifestation of injury unless tolled for 

2 any of the following: 

3 (1) Upon proof of fraud. 

4 (2) Intentional concealment. 

5 (3) The presence of a foreign body, which has 

6 no therapeutic or diagnostic purpose or effect, in the 

7 person of the injured person. 

8 Actions by a minor shall be commenced within 3 years 

9 from the date of the alleged manifestation of injury except 

10 that actions by a minor under the full age of 6 years shall 

11 be commenced within 3 years of manifestation of injury 

12 or prior to the minor’s 8th birthday, whichever provides 

13 a longer period. Such time limitation shall be tolled for 

14 minors for any period during which a parent or guardian 

15 and a health care provider or health care organization 

16 have committed fraud or collusion in the failure to bring 

17 an action on behalf of the injured minor. 

18 SEC. 104. COMPENSATING PATIENT INJURY. 

19 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

20 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

21 health care lawsuit, the full amount of a claimant’s eco22 nomic loss may be fully recovered without limitation. 

23 (b) ADDITIONAL NONECONOMIC DAMAGES.—In any 

24 health care lawsuit, the amount of noneconomic damages 

25 recovered may be as much as $250,000, regardless of the 
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1 number of parties against whom the action is brought or 

2 the number of separate claims or actions brought with re3 spect to the same occurrence. 

4 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

5 DAMAGES.—In any health care lawsuit, an award for fu6 ture noneconomic damages shall not be discounted to 

7 present value. The jury shall not be informed about the 

8 maximum award for noneconomic damages. An award for 

9 noneconomic damages in excess of $250,000 shall be re10 duced either before the entry of judgment, or by amend11 ment of the judgment after entry of judgment, and such 

12 reduction shall be made before accounting for any other 

13 reduction in damages required by law. If separate awards 

14 are rendered for past and future noneconomic damages 

15 and the combined awards exceed $250,000, the future 

16 noneconomic damages shall be reduced first. 

17 (d) FAIR SHARE RULE.—In any health care lawsuit, 

18 each party shall be liable for that party’s several share 

19 of any damages only and not for the share of any other 

20 person. Each party shall be liable only for the amount of 

21 damages allocated to such party in direct proportion to 

22 such party’s percentage of responsibility. A separate judg23 ment shall be rendered against each such party for the 

24 amount allocated to such party. For purposes of this sec-
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1 tion, the trier of fact shall determine the proportion of 

2 responsibility of each party for the claimant’s harm. 

3 SEC. 105. MAXIMIZING PATIENT RECOVERY. 

4 (a) COURT SUPERVISION OF SHARE OF DAMAGES

5 ACTUALLY PAID TO CLAIMANTS.—In any health care law6 suit, the court shall supervise the arrangements for pay7 ment of damages to protect against conflicts of interest 

8 that may have the effect of reducing the amount of dam9 ages awarded that are actually paid to claimants. In par10 ticular, in any health care lawsuit in which the attorney 

11 for a party claims a financial stake in the outcome by vir12 tue of a contingent fee, the court shall have the power 

13 to restrict the payment of a claimant’s damage recovery 

14 to such attorney, and to redirect such damages to the 

15 claimant based upon the interests of justice and principles 

16 of equity. In no event shall the total of all contingent fees 

17 for representing all claimants in a health care lawsuit ex18 ceed the following limits: 

19 (1) 40 percent of the first $50,000 recovered by 

20 the claimant(s). 

(2) 331 21 ⁄3 percent of the next $50,000 recovered 

22 by the claimant(s). 

23 (3) 25 percent of the next $500,000 recovered 

24 by the claimant(s). 
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1 (4) 15 percent of any amount by which the re2 covery by the claimant(s) is in excess of $600,000. 

3 (b) APPLICABILITY.—The limitations in subsection 

4 (a) shall apply whether the recovery is by judgment, settle5 ment, mediation, arbitration, or any other form of alter6 native dispute resolution. In a health care lawsuit involv7 ing a minor or incompetent person, a court retains the 

8 authority to authorize or approve a fee that is less than 

9 the maximum permitted under this section. 

10 (c) EXPERT WITNESSES.— 

11 (1) REQUIREMENT.—No individual shall be 

12 qualified to testify as an expert witness concerning 

13 issues of negligence in any health care lawsuit 

14 against a defendant unless such individual— 

15 (A) except as required under paragraph 

16 (2), is a health care professional who— 

17 (i) is appropriately credentialed or li18 censed in 1 or more States to deliver 

19 health care services; and 

20 (ii) typically treats the diagnosis or 

21 condition or provides the type of treatment 

22 under review; and 

23 (B) can demonstrate by competent evi24 dence that, as a result of training, education, 

25 knowledge, and experience in the evaluation, di-
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1 agnosis, and treatment of the disease or injury 

2 which is the subject matter of the lawsuit 

3 against the defendant, the individual was sub4 stantially familiar with applicable standards of 

5 care and practice as they relate to the act or 

6 omission which is the subject of the lawsuit on 

7 the date of the incident. 

8 (2) PHYSICIAN REVIEW.—In a health care law9 suit, if the claim of the plaintiff involved treatment 

10 that is recommended or provided by a physician 

11 (allopathic or osteopathic), an individual shall not be 

12 qualified to be an expert witness under this sub13 section with respect to issues of negligence con14 cerning such treatment unless such individual is a 

15 physician. 

16 (3) SPECIALTIES AND SUBSPECIALTIES.—With 

17 respect to a lawsuit described in paragraph (1), a 

18 court shall not permit an expert in one medical spe19 cialty or subspecialty to testify against a defendant 

20 in another medical specialty or subspecialty unless, 

21 in addition to a showing of substantial familiarity in 

22 accordance with paragraph (1)(B), there is a show23 ing that the standards of care and practice in the 

24 two specialty or subspecialty fields are similar. 
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1 (4) LIMITATION.—The limitations in this sub2 section shall not apply to expert witnesses testifying 

3 as to the degree or permanency of medical or phys4 ical impairment. 

5 SEC. 106. ADDITIONAL HEALTH BENEFITS. 

6 (a) IN GENERAL.—The amount of any damages re7 ceived by a claimant in any health care lawsuit shall be 

8 reduced by the court by the amount of any collateral 

9 source benefits to which the claimant is entitled, less any 

10 insurance premiums or other payments made by the claim11 ant (or by the spouse, parent, child, or legal guardian of 

12 the claimant) to obtain or secure such benefits. 

13 (b) PRESERVATION OF CURRENT LAW.—Where a 

14 payor of collateral source benefits has a right of recovery 

15 by reimbursement or subrogation and such right is per16 mitted under Federal or State law, subsection (a) shall 

17 not apply. 

18 (c) APPLICATION OF PROVISION.—This section shall 

19 apply to any health care lawsuit that is settled or resolved 

20 by a fact finder. 

21 SEC. 107. PUNITIVE DAMAGES. 

22 (a) IN GENERAL.—Punitive damages may, if other23 wise permitted by applicable State or Federal law, be 

24 awarded against any person in a health care lawsuit only 

25 if it is proven by clear and convincing evidence that such 
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1 person acted with malicious intent to injure the claimant, 

2 or that such person deliberately failed to avoid unneces3 sary injury that such person knew the claimant was sub4 stantially certain to suffer. In any health care lawsuit 

5 where no judgment for compensatory damages is rendered 

6 against such person, no punitive damages may be awarded 

7 with respect to the claim in such lawsuit. No demand for 

8 punitive damages shall be included in a health care lawsuit 

9 as initially filed. A court may allow a claimant to file an 

10 amended pleading for punitive damages only upon a mo11 tion by the claimant and after a finding by the court, upon 

12 review of supporting and opposing affidavits or after a 

13 hearing, after weighing the evidence, that the claimant has 

14 established by a substantial probability that the claimant 

15 will prevail on the claim for punitive damages. At the re16 quest of any party in a health care lawsuit, the trier of 

17 fact shall consider in a separate proceeding— 

18 (1) whether punitive damages are to be award19 ed and the amount of such award; and 

20 (2) the amount of punitive damages following a 

21 determination of punitive liability. 

22 If a separate proceeding is requested, evidence relevant 

23 only to the claim for punitive damages, as determined by 

24 applicable State law, shall be inadmissible in any pro-
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1 ceeding to determine whether compensatory damages are 

2 to be awarded. 

3 (b) DETERMINING AMOUNT OF PUNITIVE DAM4 AGES.— 

5 (1) FACTORS CONSIDERED.—In determining 

6 the amount of punitive damages, if awarded, in a 

7 health care lawsuit, the trier of fact shall consider 

8 only the following: 

9 (A) the severity of the harm caused by the 

10 conduct of such party; 

11 (B) the duration of the conduct or any 

12 concealment of it by such party; 

13 (C) the profitability of the conduct to such 

14 party; 

15 (D) the number of products sold or med16 ical procedures rendered for compensation, as 

17 the case may be, by such party, of the kind 

18 causing the harm complained of by the claim19 ant; 

20 (E) any criminal penalties imposed on such 

21 party, as a result of the conduct complained of 

22 by the claimant; and 

23 (F) the amount of any civil fines assessed 

24 against such party as a result of the conduct 

25 complained of by the claimant. 
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1 (2) MAXIMUM AWARD.—The amount of punitive 

2 damages, if awarded, in a health care lawsuit may 

3 be as much as $250,000 or as much as two times 

4 the amount of economic damages awarded, which5 ever is greater. The jury shall not be informed of 

6 this limitation. 

7 (c) NO PENALTIES FOR PROVIDERS IN COMPLIANCE

8 WITH FDA STANDARDS.—A health care provider who 

9 prescribes a medical product approved or cleared by the 

10 Food and Drug Administration shall not be named as a 

11 party to a product liability lawsuit involving such product 

12 and shall not be liable to a claimant in a class action law13 suit against the manufacturer, distributor, or seller of 

14 such product. 

15 SEC. 108. AUTHORIZATION OF PAYMENT OF FUTURE DAM16 AGES TO CLAIMANTS IN HEALTH CARE LAW17 SUITS. 

18 (a) IN GENERAL.—In any health care lawsuit, if an 

19 award of future damages, without reduction to present 

20 value, equaling or exceeding $50,000 is made against a 

21 party with sufficient insurance or other assets to fund a 

22 periodic payment of such a judgment, the court shall, at 

23 the request of any party, enter a judgment ordering that 

24 the future damages be paid by periodic payments in ac25 cordance with the Uniform Periodic Payment of Judg-
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1 ments Act promulgated by the National Conference of 

2 Commissioners on Uniform State Laws. 

3 (b) APPLICABILITY.—This section applies to all ac4 tions which have not been first set for trial or retrial be5 fore the effective date of this Act. 

6 SEC. 109. DEFINITIONS. 

7 In this subtitle: 

8 (1) ALTERNATIVE DISPUTE RESOLUTION SYS9 TEM; ADR.—The term ‘‘alternative dispute resolution 

10 system’’ or ‘‘ADR’’ means a system that provides 

11 for the resolution of health care lawsuits in a man12 ner other than through a civil action brought in a 

13 State or Federal court. 

14 (2) CLAIMANT.—The term ‘‘claimant’’ means 

15 any person who brings a health care lawsuit, includ16 ing a person who asserts or claims a right to legal 

17 or equitable contribution, indemnity or subrogation, 

18 arising out of a health care liability claim or action, 

19 and any person on whose behalf such a claim is as20 serted or such an action is brought, whether de21 ceased, incompetent, or a minor. 

22 (3) COLLATERAL SOURCE BENEFITS.—The 

23 term ‘‘collateral source benefits’’ means any amount 

24 paid or reasonably likely to be paid in the future to 

25 or on behalf of the claimant, or any service, product 
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1 or other benefit provided or reasonably likely to be 

2 provided in the future to or on behalf of the claim3 ant, as a result of the injury or wrongful death, pur4 suant to— 

5 (A) any State or Federal health, sickness, 

6 income-disability, accident, or workers’ com7 pensation law; 

8 (B) any health, sickness, income-disability, 

9 or accident insurance that provides health bene10 fits or income-disability coverage; 

11 (C) any contract or agreement of any 

12 group, organization, partnership, or corporation 

13 to provide, pay for, or reimburse the cost of 

14 medical, hospital, dental, or income disability 

15 benefits; and 

16 (D) any other publicly or privately funded 

17 program. 

18 (4) COMPENSATORY DAMAGES.—The term 

19 ‘‘compensatory damages’’ means objectively 

20 verifiable monetary losses incurred as a result of the 

21 provision of, use of, or payment for (or failure to 

22 provide, use, or pay for) health care services or med23 ical products, such as past and future medical ex24 penses, loss of past and future earnings, cost of ob25 taining domestic services, loss of employment, and 
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1 loss of business or employment opportunities, dam2 ages for physical and emotional pain, suffering, in3 convenience, physical impairment, mental anguish, 

4 disfigurement, loss of enjoyment of life, loss of soci5 ety and companionship, loss of consortium (other 

6 than loss of domestic service), hedonic damages, in7 jury to reputation, and all other nonpecuniary losses 

8 of any kind or nature. The term ‘‘compensatory 

9 damages’’ includes economic damages and non10 economic damages, as such terms are defined in this 

11 section. 

12 (5) CONTINGENT FEE.—The term ‘‘contingent 

13 fee’’ includes all compensation to any person or per14 sons which is payable only if a recovery is effected 

15 on behalf of one or more claimants. 

16 (6) ECONOMIC DAMAGES.—The term ‘‘economic 

17 damages’’ means objectively verifiable monetary 

18 losses incurred as a result of the provision of, use 

19 of, or payment for (or failure to provide, use, or pay 

20 for) health care services or medical products, such as 

21 past and future medical expenses, loss of past and 

22 future earnings, cost of obtaining domestic services, 

23 loss of employment, and loss of business or employ24 ment opportunities. 
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1 (7) HEALTH CARE LAWSUIT.—The term 

2 ‘‘health care lawsuit’’ means any health care liability 

3 claim concerning the provision of health care goods 

4 or services affecting interstate commerce, or any 

5 health care liability action concerning the provision 

6 of health care goods or services affecting interstate 

7 commerce, brought in a State or Federal court or 

8 pursuant to an alternative dispute resolution system, 

9 against a health care provider, a health care organi10 zation, or the manufacturer, distributor, supplier, 

11 marketer, promoter, or seller of a medical product, 

12 regardless of the theory of liability on which the 

13 claim is based, or the number of claimants, plain14 tiffs, defendants, or other parties, or the number of 

15 claims or causes of action, in which the claimant al16 leges a health care liability claim. 

17 (8) HEALTH CARE LIABILITY ACTION.—The 

18 term ‘‘health care liability action’’ means a civil ac19 tion brought in a State or Federal Court or pursu20 ant to an alternative dispute resolution system, 

21 against a health care provider, a health care organi22 zation, or the manufacturer, distributor, supplier, 

23 marketer, promoter, or seller of a medical product, 

24 regardless of the theory of liability on which the 

25 claim is based, or the number of plaintiffs, defend-
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1 ants, or other parties, or the number of causes of ac2 tion, in which the claimant alleges a health care li3 ability claim. 

4 (9) HEALTH CARE LIABILITY CLAIM.—The 

5 term ‘‘health care liability claim’’ means a demand 

6 by any person, whether or not pursuant to ADR, 

7 against a health care provider, health care organiza8 tion, or the manufacturer, distributor, supplier, mar9 keter, promoter, or seller of a medical product, in10 cluding, but not limited to, third-party claims, cross11 claims, counter-claims, or contribution claims, which 

12 are based upon the provision of, use of, or payment 

13 for (or the failure to provide, use, or pay for) health 

14 care services or medical products, regardless of the 

15 theory of liability on which the claim is based, or the 

16 number of plaintiffs, defendants, or other parties, or 

17 the number of causes of action. 

18 (10) HEALTH CARE ORGANIZATION.—The term 

19 ‘‘health care organization’’ means any person or en20 tity which is obligated to provide or pay for health 

21 benefits under any health plan, including any person 

22 or entity acting under a contract or arrangement 

23 with a health care organization to provide or admin24 ister any health benefit. 
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1 (11) HEALTH CARE PROVIDER.—The term 

2 ‘‘health care provider’’ means any person or entity 

3 required by State or Federal laws or regulations to 

4 be licensed, registered, or certified to provide health 

5 care services, and being either so licensed, reg6 istered, or certified, or exempted from such require7 ment by other statute or regulation. 

8 (12) HEALTH CARE GOODS OR SERVICES.—The 

9 term ‘‘health care goods or services’’ means any 

10 goods or services provided by a health care organiza11 tion, provider, or by any individual working under 

12 the supervision of a health care provider, that relates 

13 to the diagnosis, prevention, or treatment of any 

14 human disease or impairment, or the assessment of 

15 the health of human beings. 

16 (13) MALICIOUS INTENT TO INJURE.—The 

17 term ‘‘malicious intent to injure’’ means inten18 tionally causing or attempting to cause physical in19 jury other than providing health care goods or serv20 ices. 

21 (14) MEDICAL PRODUCT.—The term ‘‘medical 

22 product’’ means a drug or device intended for hu23 mans, and the terms ‘‘drug’’ and ‘‘device’’ have the 

24 meanings given such terms in sections 201(g)(1) and 

25 201(h) of the Federal Food, Drug and Cosmetic Act 
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1 (21 U.S.C. 321), respectively, including any compo2 nent or raw material used therein, but excluding 

3 health care services. 

4 (15) NONECONOMIC DAMAGES.—The term 

5 ‘‘noneconomic damages’’ means damages for phys6 ical and emotional pain, suffering, inconvenience, 

7 physical impairment, mental anguish, disfigurement, 

8 loss of enjoyment of life, loss of society and compan9 ionship, loss of consortium (other than loss of do10 mestic service), hedonic damages, injury to reputa11 tion, and all other nonpecuniary losses of any kind 

12 or nature. 

13 (16) PUNITIVE DAMAGES.—The term ‘‘punitive 

14 damages’’ means damages awarded, for the purpose 

15 of punishment or deterrence, and not solely for com16 pensatory purposes, against a health care provider, 

17 health care organization, or a manufacturer, dis18 tributor, or supplier of a medical product. Punitive 

19 damages are neither economic nor noneconomic 

20 damages. 

21 (17) RECOVERY.—The term ‘‘recovery’’ means 

22 the net sum recovered after deducting any disburse23 ments or costs incurred in connection with prosecu24 tion or settlement of the claim, including all costs 

25 paid or advanced by any person. Costs of health care 
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1 incurred by the plaintiff and the attorneys’ office 

2 overhead costs or charges for legal services are not 

3 deductible disbursements or costs for such purpose. 

4 (18) STATE.—The term ‘‘State’’ means each of 

5 the several States, the District of Columbia, the 

6 Commonwealth of Puerto Rico, the Virgin Islands, 

7 Guam, American Samoa, the Northern Mariana Is8 lands, the Trust Territory of the Pacific Islands, and 

9 any other territory or possession of the United 

10 States, or any political subdivision thereof. 

11 SEC. 110. EFFECT ON OTHER LAWS. 

12 (a) VACCINE INJURY.— 

13 (1) To the extent that title XXI of the Public 

14 Health Service Act establishes a Federal rule of law 

15 applicable to a civil action brought for a vaccine-re16 lated injury or death— 

17 (A) this subtitle does not affect the appli18 cation of the rule of law to such an action; and 

19 (B) any rule of law prescribed by this sub20 title in conflict with a rule of law of such title 

21 XXI shall not apply to such action. 

22 (2) If there is an aspect of a civil action 

23 brought for a vaccine-related injury or death to 

24 which a Federal rule of law under title XXI of the 

25 Public Health Service Act does not apply, then this 
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1 subtitle or otherwise applicable law (as determined 

2 under this subtitle) will apply to such aspect of such 

3 action. 

4 (b) OTHER FEDERAL LAW.—Except as provided in 

5 this section, nothing in this subtitle shall be deemed to 

6 affect any defense available to a defendant in a health care 

7 lawsuit or action under any other provision of Federal law. 

8 SEC. 111. STATE FLEXIBILITY AND PROTECTION OF 

9 STATES’ RIGHTS. 

10 (a) HEALTH CARE LAWSUITS.—The provisions gov11 erning health care lawsuits set forth in this subtitle pre12 empt, subject to subsections (b) and (c), State law to the 

13 extent that State law prevents the application of any pro14 visions of law established by or under this subtitle. The 

15 provisions governing health care lawsuits set forth in this 

16 subtitle supersede chapter 171 of title 28, United States 

17 Code, to the extent that such chapter— 

18 (1) provides for a greater amount of damages 

19 or contingent fees, a longer period in which a health 

20 care lawsuit may be commenced, or a reduced appli21 cability or scope of periodic payment of future dam22 ages, than provided in this subtitle; or 

23 (2) prohibits the introduction of evidence re24 garding collateral source benefits, or mandates or 
26 

•S 1503 IS 

1 permits subrogation or a lien on collateral source 

2 benefits. 

3 (b) PROTECTION OF STATES’ RIGHTS.—Any issue 

4 that is not governed by any provision of law established 

5 by or under this subtitle (including State standards of 

6 negligence) shall be governed by otherwise applicable State 

7 or Federal law. This subtitle does not preempt or super8 sede any law that imposes greater protections (such as a 

9 shorter statute of limitations) for health care providers 

10 and health care organizations from liability, loss, or dam11 ages than those provided by this subtitle. 

12 (c) STATE FLEXIBILITY.—No provision of this sub13 title shall be construed to preempt— 

14 (1) any State law (whether effective before, on, 

15 or after the date of the enactment of this subtitle) 

16 that specifies a particular monetary amount of com17 pensatory or punitive damages (or the total amount 

18 of damages) that may be awarded in a health care 

19 lawsuit, regardless of whether such monetary 

20 amount is greater or lesser than is provided for 

21 under this subtitle, notwithstanding section 104(a); 

22 or 

23 (2) any defense available to a party in a health 

24 care lawsuit under any other provision of State or 

25 Federal law. 
27 

•S 1503 IS 

1 SEC. 112. APPLICABILITY; EFFECTIVE DATE. 

2 This subtitle shall apply to any health care lawsuit 

3 brought in a Federal or State court, or subject to an alter4 native dispute resolution system, that is initiated on or 

5 after the date of the enactment of this Act, except that 

6 any health care lawsuit arising from an injury occurring 

7 prior to the date of the enactment of this Act shall be 

8 governed by the applicable statute of limitations provisions 

9 in effect at the time the injury occurred. 

10 Subtitle B—Health Information 

11 Technology 

12 CHAPTER 1—GENERAL PROVISIONS 

13 SEC. 121. IMPROVING HEALTH CARE, QUALITY, SAFETY, 

14 AND EFFICIENCY. 

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

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

17 ‘‘TITLE XXIX—HEALTH 

18 INFORMATION TECHNOLOGY 

19 ‘‘SEC. 2901. DEFINITIONS. 

20 ‘‘In this title: 

21 ‘‘(1) HEALTH CARE PROVIDER.—The term 

22 ‘health care provider’ means a hospital, skilled nurs23 ing facility, home health entity, health care clinic, 

24 federally qualified health center, group practice (as 

25 defined in section 1877(h)(4) of the Social Security 

26 Act), a pharmacist, a pharmacy, a laboratory, a phy-
28 

•S 1503 IS 

1 sician (as defined in section 1861(r) of the Social 

2 Security Act), a health facility operated by or pursu3 ant to a contract with the Indian Health Service, a 

4 rural health clinic, and any other category of facility 

5 or clinician determined appropriate by the Secretary. 

6 ‘‘(2) HEALTH INFORMATION.—The term ‘health 

7 information’ has the meaning given such term in 

8 section 1171(4) of the Social Security Act. 

9 ‘‘(3) HEALTH INSURANCE PLAN.—The term 

10 ‘health insurance plan’ means— 

11 ‘‘(A) a health insurance issuer (as defined 

12 in section 2791(b)(2)); 

13 ‘‘(B) a group health plan (as defined in 

14 section 2791(a)(1)); and 

15 ‘‘(C) a health maintenance organization 

16 (as defined in section 2791(b)(3)). 

17 ‘‘(4) LABORATORY.—The term ‘laboratory’ has 

18 the meaning given that term in section 353. 

19 ‘‘(5) PHARMACIST.—The term ‘pharmacist’ has 

20 the meaning given that term in section 804 of the 

21 Federal Food, Drug, and Cosmetic Act. 

22 ‘‘(6) STATE.—The term ‘State’ means each of 

23 the several States, the District of Columbia, Puerto 

24 Rico, the Virgin Islands, Guam, American Samoa, 

25 and the Northern Mariana Islands. 
29 

•S 1503 IS 

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

2 HEALTH INFORMATION TECHNOLOGY. 

3 ‘‘(a) OFFICE OF NATIONAL HEALTH INFORMATION

4 TECHNOLOGY.—There is established within the Office of 

5 the Secretary an Office of the National Coordinator of 

6 Health Information Technology (referred to in this section 

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

8 Coordinator who shall be appointed by the Secretary, in 

9 consultation with the President, and shall report directly 

10 to the Secretary. 

11 ‘‘(b) Purpose.—It shall be the purpose of the Office 

12 to coordinate with relevant Federal agencies and oversee 

13 programs and activities to develop a nationwide interoper14 able health information technology infrastructure that— 

15 ‘‘(1) ensures that patients’ individually identifi16 able health information is secure and protected; 

17 ‘‘(2) improves health care quality, reduces med18 ical errors, and advances the delivery of patient-cen19 tered medical care; 

20 ‘‘(3) reduces health care costs resulting from 

21 inefficiency, medical errors, inappropriate care, and 

22 incomplete information; 

23 ‘‘(4) ensures that appropriate information to 

24 help guide medical decisions is available at the time 

25 and place of care; 
30 

•S 1503 IS 

1 ‘‘(5) promotes a more effective marketplace, 

2 greater competition, and increased choice through 

3 the wider availability of accurate information on 

4 health care costs, quality, and outcomes; and 

5 ‘‘(6) improves the coordination of care and in6 formation among hospitals, laboratories, physician 

7 offices, and other entities through an effective infra8 structure for the secure and authorized exchange of 

9 health care information. 

10 ‘‘(c) DUTIES OF THE NATIONAL COORDI11 NATOR.—The National Coordinator shall— 

12 ‘‘(1) provide support to the public-private 

13 American Health Information Collaborative estab14 lished under section 2903; 

15 ‘‘(2) serve as the principal advisor to the Sec16 retary concerning the development, application, and 

17 use of health information technology, and coordinate 

18 and oversee the health information technology pro19 grams of the Department; 

20 ‘‘(3) facilitate the adoption of a nationwide, 

21 interoperable system for the electronic exchange of 

22 health information; 

23 ‘‘(4) ensure the adoption and implementation of 

24 standards for the electronic exchange of health infor-
31 

•S 1503 IS 

1 mation to reduce cost and improve health care qual2 ity; 

3 ‘‘(5) ensure that health information technology 

4 policy and programs of the Department are coordi5 nated with those of relevant executive branch agen6 cies (including Federal commissions) with a goal of 

7 avoiding duplication of efforts and of helping to en8 sure that each agency undertakes health information 

9 technology activities primarily within the areas of its 

10 greatest expertise and technical capability; 

11 ‘‘(6) to the extent permitted by law, coordinate 

12 outreach and consultation by the relevant executive 

13 branch agencies (including Federal commissions) 

14 with public and private parties of interest, including 

15 consumers, payers, employers, hospitals and other 

16 health care providers, physicians, community health 

17 centers, laboratories, vendors and other stake18 holders; 

19 ‘‘(7) advise the President regarding specific 

20 Federal health information technology programs; 

21 and 

22 ‘‘(8) submit the reports described under section 

23 2903(i) (excluding paragraph (4) of such section). 

24 ‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec25 tion shall be construed to require the duplication of Fed-
32 

•S 1503 IS 

1 eral efforts with respect to the establishment of the Office, 

2 regardless of whether such efforts were carried out prior 

3 to or after the enactment of this title. 

4 ‘‘SEC. 2903. AMERICAN HEALTH INFORMATION COLLABO5 RATIVE. 

6 ‘‘(a) PURPOSE.—The Secretary shall establish the 

7 public-private American Health Information Collaborative 

8 (referred to in this section as the ‘Collaborative’) to— 

9 ‘‘(1) advise the Secretary and recommend spe10 cific actions to achieve a nationwide interoperable 

11 health information technology infrastructure; 

12 ‘‘(2) serve as a forum for the participation of 

13 a broad range of stakeholders to provide input on 

14 achieving the interoperability of health information 

15 technology; and 

16 ‘‘(3) recommend standards (including content, 

17 communication, and security standards) for the elec18 tronic exchange of health information for adoption 

19 by the Federal Government and voluntary adoption 

20 by private entities. 

21 ‘‘(b) COMPOSITION.— 

22 ‘‘(1) IN GENERAL.—The Collaborative shall be 

23 composed of— 

24 ‘‘(A) the Secretary, who shall serve as the 

25 chairperson of the Collaborative; 
33 

•S 1503 IS 

1 ‘‘(B) the Secretary of Defense, or his or 

2 her designee; 

3 ‘‘(C) the Secretary of Veterans Affairs, or 

4 his or her designee; 

5 ‘‘(D) the Secretary of Commerce, or his or 

6 her designee; 

7 ‘‘(E) representatives of other relevant Fed8 eral agencies, as determined appropriate by the 

9 Secretary; and 

10 ‘‘(F) representatives from among the fol11 lowing categories to be appointed by the Sec12 retary from nominations submitted by the pub13 lic— 

14 ‘‘(i) consumer and patient organizations; 

15 ‘‘(ii) experts in health information privacy 

16 and security; 

17 ‘‘(iii) health care providers; 

18 ‘‘(iv) health insurance plans or other third 

19 party payors; 

20 ‘‘(v) standards development organizations; 

21 ‘‘(vi) information technology vendors; 

22 ‘‘(vii) purchasers or employers; and 

23 ‘‘(viii) State or local government agencies 

24 or Indian tribe or tribal organizations. 
34 

•S 1503 IS 

1 ‘‘(2) CONSIDERATIONS.—In appointing 

2 members under paragraph (1)(F), the Secretary 

3 shall select individuals with expertise in— 

4 ‘‘(A) health information privacy; 

5 ‘‘(B) health information security; 

6 ‘‘(C) health care quality and patient safety, 

7 including those individuals with experience in 

8 utilizing health information technology to im9 prove health care quality and patient safety; 

10 ‘‘(D) data exchange; and 

11 ‘‘(E) developing health information tech12 nology standards and new health information 

13 technology. 

14 ‘‘(3) TERMS.—Members appointed under para15 graph (1)(G) shall serve for 2 year terms, except 

16 that any member appointed to fill a vacancy for an 

17 unexpired term shall be appointed for the remainder 

18 of such term. A member may serve for not to exceed 

19 180 days after the expiration of such member’s term 

20 or until a successor has been appointed. 

21 ‘‘(c) RECOMMENDATIONS AND POLICIES.—The Col22 laborative shall make recommendations to identify uni23 form national policies for adoption by the Federal Govern24 ment and voluntary adoption by private entities to support 
35 

•S 1503 IS 

1 the widespread adoption of health information technology, 

2 including— 

3 ‘‘(1) protection of individually identifiable 

4 health information through privacy and security 

5 practices; 

6 ‘‘(2) measures to prevent unauthorized access 

7 to health information; 

8 ‘‘(3) methods to facilitate secure patient access 

9 to health information; 

10 ‘‘(4) the ongoing harmonization of industry11 wide health information technology standards; 

12 ‘‘(5) recommendations for a nationwide inter13 operable health information technology infrastruc14 ture; 

15 ‘‘(6) the identification and prioritization of spe16 cific use cases for which health information tech17 nology is valuable, beneficial, and feasible; 

18 ‘‘(7) recommendations for the establishment of 

19 an entity to ensure the continuation of the functions 

20 of the Collaborative; and 

21 ‘‘(8) other policies determined to be necessary 

22 by the Collaborative. 

23 ‘‘(d) STANDARDS.— 

24 ‘‘(1) EXISTING STANDARDS.—The standards 

25 adopted by the Consolidated Health Informatics Ini-
36 

•S 1503 IS 

1 tiative shall be deemed to have been recommended 

2 by the Collaborative under this section. 

3 ‘‘(2) FIRST YEAR REVIEW.—Not later than 1 

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

5 Collaborative shall— 

6 ‘‘(A) review existing standards (including 

7 content, communication, and security stand8 ards) for the electronic exchange of health in9 formation, including such standards adopted by 

10 the Secretary under paragraph (2)(A); 

11 ‘‘(B) identify deficiencies and omissions in 

12 such existing standards; and 

13 ‘‘(C) identify duplication and overlap in 

14 such existing standards; 

15 and recommend modifications to such standards as 

16 necessary. 

17 ‘‘(3) ONGOING REVIEW.—Beginning 1 year 

18 after the date of enactment of this title, and annu19 ally thereafter, the Collaborative shall— 

20 ‘‘(A) review existing standards (including 

21 content, communication, and security stand22 ards) for the electronic exchange of health in23 formation, including such standards adopted by 

24 the Secretary under paragraph (2)(A); 
37 

•S 1503 IS 

1 ‘‘(B) identify deficiencies and omissions in 

2 such existing standards; and 

3 ‘‘(C) identify duplication and overlap in 

4 such existing standards; 

5 and recommend modifications to such standards as 

6 necessary. 

7 ‘‘(4) LIMITATION.—The standards described in 

8 this section shall be consistent with any standards 

9 developed pursuant to the Health Insurance Port10 ability and Accountability Act of 1996. 

11 ‘‘(e) FEDERAL ACTION.—Not later than 60 days 

12 after the issuance of a recommendation from the Collabo13 rative under subsection (d)(2), the Secretary of Health 

14 and Human Services, in consultation with the Secretary 

15 of Veterans Affairs, the Secretary of Defense, and rep16 resentatives of other relevant Federal agencies, as deter17 mined appropriate by the Secretary, shall review such rec18 ommendations. The Secretary shall provide for the adop19 tion by the Federal Government of any standard or stand20 ards contained in such recommendation. 

21 ‘‘(f) COORDINATION OF FEDERAL SPENDING.—Not 

22 later than 1 year after the adoption by the Federal Gov23 ernment of a recommendation as provided for in sub24 section (e), and in compliance with chapter 113 of title 

25 40, United States Code, no Federal agency shall expend 
38 

•S 1503 IS 

1 Federal funds for the purchase of any form of health in2 formation technology or health information technology 

3 system for clinical care or for the electronic retrieval, stor4 age, or exchange of health information that is not con5 sistent with applicable standards adopted by the Federal 

6 Government under subsection (e). 

7 ‘‘(g) COORDINATION OF FEDERAL DATA COLLEC8 TION.—Not later than 3 years after the adoption by the 

9 Federal Government of a recommendation as provided for 

10 in subsection (e), all Federal agencies collecting health 

11 data for the purposes of surveillance, epidemiology, ad12 verse event reporting, research, or for other purposes de13 termined appropriate by the Secretary shall comply with 

14 standards adopted under subsection (e). 

15 ‘‘(h) VOLUNTARY ADOPTION.— 

16 ‘‘(1) IN GENERAL.—Any standards adopted by 

17 the Federal Government under subsection (e) shall 

18 be voluntary with respect to private entities. 

19 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

20 this section shall be construed to require that a pri21 vate entity that enters into a contract with the Fed22 eral Government adopt the standards adopted by the 

23 Federal Government under section 2903 with re24 spect to activities not related to the contract. 
39 

•S 1503 IS 

1 ‘‘(3) LIMITATION.—Private entities that enter 

2 into a contract with the Federal Government shall 

3 adopt the standards adopted under section 2903 for 

4 the purpose of activities under such Federal con5 tract. 

6 ‘‘(i) EFFECT ON OTHER PROVISIONS.—Nothing in 

7 this title shall be construed to effect the scope or sub8 stance of— 

9 ‘‘(1) section 264 of the Health Insurance Port10 ability and Accountability Act of 1996; 

11 ‘‘(2) sections 1171 through 1179 of the Social 

12 Security Act; and 

13 ‘‘(3) any regulation issued pursuant to any such 

14 section; 

15 and such sections shall remain in effect and shall apply 

16 to the implementation of standards, programs and activi17 ties under this title. 

18 ‘‘(j) REPORTS.—The Secretary shall submit to the 

19 Committee on Health, Education, Labor, and Pensions 

20 and the Committee on Finance of the Senate and the 

21 Committee on Energy and Commerce and the Committee 

22 on Ways and Means of the House of Representatives, on 

23 an annual basis, a report that— 

24 ‘‘(1) describes the specific actions that have 

25 been taken by the Federal Government and private 
40 

•S 1503 IS 

1 entities to facilitate the adoption of an interoperable 

2 nationwide system for the electronic exchange of 

3 health information; 

4 ‘‘(2) describes barriers to the adoption of such 

5 a nationwide system; 

6 ‘‘(3) contains recommendations to achieve full 

7 implementation of such a nationwide system; and 

8 ‘‘(4) contains a plan and progress toward the 

9 establishment of an entity to ensure the continuation 

10 of the functions of the Collaborative. 

11 ‘‘(k) APPLICATION OF FACA.—The Federal Advisory 

12 Committee Act (5 U.S.C. App.) shall apply to the Collabo13 rative, except that the term provided for under section 

14 14(a)(2) shall be 5 years. 

15 ‘‘(l) RULE OF CONSTRUCTION.—Nothing in this sec16 tion shall be construed to require the duplication of Fed17 eral efforts with respect to the establishment of the Col18 laborative, regardless of whether such efforts were carried 

19 out prior to or after the enactment of this title. 

20 ‘‘SEC. 2904. IMPLEMENTATION AND CERTIFICATION OF 

21 HEALTH INFORMATION STANDARDS. 

22 ‘‘(a) IMPLEMENTATION.— 

23 ‘‘(1) IN GENERAL.—The Secretary, based upon 

24 the recommendations of the Collaborative, shall de25 velop criteria to ensure uniform and consistent im-
41 

•S 1503 IS 

1 plementation of any standards for the electronic ex2 change of health information voluntarily adopted by 

3 private entities in technical conformance with such 

4 standards adopted under this title. 

5 ‘‘(2) IMPLEMENTATION ASSISTANCE.—The Sec6 retary may recognize a private entity or entities to 

7 assist private entities in the implementation of the 

8 standards adopted under this title using the criteria 

9 developed by the Secretary under this section. 

10 ‘‘(b) CERTIFICATION.— 

11 ‘‘(1) IN GENERAL.—The Secretary, based upon 

12 the recommendations of the Collaborative, shall de13 velop criteria to ensure and certify that hardware, 

14 software, and support services that claim to be in 

15 compliance with any standard for the electronic ex16 change of health information adopted under this title 

17 have established and maintained such compliance in 

18 technical conformance with such standards. 

19 ‘‘(2) CERTIFICATION ASSISTANCE.—The Sec20 retary may recognize a private entity or entities to 

21 assist in the certification described under paragraph 

22 (1) using the criteria developed by the Secretary 

23 under this section. 

24 ‘‘(c) DELEGATION AUTHORITY.—The Secretary, 

25 through consultation with the Collaborative, may delegate 
42 

•S 1503 IS 

1 the development of the criteria under subsections (a) and 

2 (b) to a private entity. 

3 ‘‘SEC. 2905. STUDY OF STATE HEALTH INFORMATION LAWS 

4 AND PRACTICES. 

5 ‘‘(a) IN GENERAL.—The Secretary shall carry out, 

6 or contract with a private entity to carry out, a study that 

7 examines— 

8 ‘‘(1) the variation among State laws and prac9 tices that relate to the privacy, confidentiality, and 

10 security of health information; 

11 ‘‘(2) how such variation among State laws and 

12 practices may impact the electronic exchange of 

13 health information— 

14 ‘‘(A) among the States; 

15 ‘‘(B) between the States and the Federal 

16 Government; and 

17 ‘‘(C) among private entities; and 

18 ‘‘(3) how such laws and practices may be har19 monized to permit the secure electronic exchange of 

20 health information. 

21 ‘‘(b) REPORT AND RECOMMENDATIONS.—Not later 

22 than 1 year after the date of enactment of this title, the 

23 Secretary shall submit to Congress a report that— 

24 ‘‘(1) describes the results of the study carried 

25 out under subsection (a); and 
43 

•S 1503 IS 

1 ‘‘(2) makes recommendations based on the re2 sults of such study. 

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

4 INCENTIVE GRANTS. 

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

6 to States to carry out programs under which such States 

7 cooperate with other States to develop and implement 

8 State policies that will facilitate the secure electronic ex9 change of health information utilizing the standards 

10 adopted under section 2903— 

11 ‘‘(1) among the States; 

12 ‘‘(2) between the States and the Federal Gov13 ernment; and 

14 ‘‘(3) among private entities. 

15 ‘‘(b) PRIORITY.—In awarding grants under sub16 section (a), the Secretary shall give priority to States that 

17 provide assurance that any funding awarded under such 

18 a grant shall be used to harmonize privacy laws and prac19 tices between the States, the States and the Federal Gov20 ernment, and among private entities related to the privacy, 

21 confidentiality, and security of health information. 

22 ‘‘(c) DISSEMINATION OF INFORMATION.—The Sec23 retary shall disseminate information regarding the efficacy 

24 of efforts of a recipient of a grant under this section. 
44 

•S 1503 IS 

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

2 provide technical assistance to recipients of a grant under 

3 this section. 

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

5 purpose of carrying out subsection (a), there are author6 ized to be appropriated such sums as may be necessary 

7 for each of the fiscal years 2006 through 2010. 

8 ‘‘SEC. 2907. LICENSURE AND THE ELECTRONIC EXCHANGE 

9 OF HEALTH INFORMATION. 

10 ‘‘(a) IN GENERAL.—The Secretary shall carry out, 

11 or contract with a private entity to carry out, a study that 

12 examines— 

13 ‘‘(1) the variation among State laws that relate 

14 to the licensure, registration, and certification of 

15 medical professionals; and 

16 ‘‘(2) how such variation among State laws im17 pacts the secure electronic exchange of health infor18 mation— 

19 ‘‘(A) among the States; and 

20 ‘‘(B) between the States and the Federal 

21 Government. 

22 ‘‘(b) REPORT AND RECOMMENDATIONS.—Not later 

23 than 1 year after the date of enactment of this title, the 

24 Secretary shall publish a report that— 
45 

•S 1503 IS 

1 ‘‘(1) describes the results of the study carried 

2 out under subsection (a); and 

3 ‘‘(2) makes recommendations to States regard4 ing the harmonization of State laws based on the re5 sults of such study. 

6 ‘‘SEC. 2908. AUTHORIZATION OF APPROPRIATIONS. 

7 ‘‘(a) IN GENERAL.—For the purpose of carrying out 

8 this title, there is authorized to be appropriated 

9 $125,000,000 for fiscal year 2006, and such sums as may 

10 be necessary for each of fiscal years 2007 through 2010. 

11 ‘‘(b) AVAILABILITY.—Amounts appropriated under 

12 subsection (a) shall remain available through fiscal year 

13 2010.’’. 

14 SEC. 122. HIPAA REPORT. 

15 (a) STUDY.—Not later than 2 years after the date 

16 of enactment of this Act, the Secretary of Health and 

17 Human Services shall carry out, or contract with a private 

18 entity to carry out, a study that examines the integration 

19 of the standards adopted under the amendments made by 

20 this subtitle with the standards adopted under the Health 

21 Insurance Portability and Accountability Act of 1996 

22 (Public Law 104–191). 

23 (b) PLAN; REPORT.— 

24 (1) PLAN.—Not later than 3 years after the 

25 date of enactment of this Act, the Secretary of 
46 

•S 1503 IS 

1 Health and Human Services shall, based on the re2 sults of the study carried out under subsection (a), 

3 develop a plan for the integration of the standards 

4 described under such subsection and submit a report 

5 to Congress describing such plan. 

6 (2) PERIODIC REPORTS.—The Secretary shall 

7 submit periodic reports to Congress that describe the 

8 progress of the integration described under para9 graph (1). 

10 SEC. 123. STUDY OF REIMBURSEMENT INCENTIVES. 

11 The Secretary of Health and Human Services shall 

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

13 a study that examines methods to create efficient reim14 bursement incentives for improving health care quality in 

15 Federally qualified health centers, rural health clinics, and 

16 free clinics. 

17 SEC. 124. REAUTHORIZATION OF INCENTIVE GRANTS RE18 GARDING TELEMEDICINE. 

19 Section 330L(b) of the Public Health Service Act (42 

20 U.S.C. 254c–18(b)) is amended by striking ‘‘2002 through 

21 2006’’ and inserting ‘‘2006 through 2010’’. 

22 SEC. 125. SENSE OF THE SENATE ON PHYSICIAN PAYMENT. 

23 It is the sense of the Senate that modifications to 

24 the medicare fee schedule for physicians’ services under 

25 section 1848 of the Social Security Act (42 U.S.C. 
47 

•S 1503 IS 

1 1394w–4) should include provisions based on the reporting 

2 of quality measures pursuant to those adopted in section 

3 2909 of the Public Health Service Act (as added by sec4 tion 121) and the overall improvement of healthcare qual5 ity through the use of the electronic exchange of health 

6 information pursuant to the standards adopted under sec7 tion 2903 of such Act (as added by section 121). 

8 SEC. 126. ESTABLISHMENT OF QUALITY MEASUREMENT 

9 SYSTEMS FOR MEDICARE VALUE-BASED PUR10 CHASING PROGRAMS. 

11 (a) IN GENERAL.—Title XVIII (42 U.S.C. 1395 et 

12 seq.) is amended— 

13 (1) by redesignating part E as part F; and 

14 (2) by inserting after part D the following new 

15 part: 

16 ‘‘PART E—VALUE-BASED PURCHASING

17 ‘‘QUALITY MEASUREMENT SYSTEMS FOR VALUE-BASED

18 PURCHASING PROGRAMS

19 ‘‘SEC. 1860E–1. (a) ESTABLISHMENT.— 

20 ‘‘(1) IN GENERAL.—The Secretary shall develop 

21 quality measurement systems for purposes of pro22 viding value-based payments to— 

23 ‘‘(A) hospitals pursuant to section 1860E– 

24 2; 
48 

•S 1503 IS 

1 ‘‘(B) physicians and practitioners pursuant 

2 to section 1860E–3; 

3 ‘‘(C) plans pursuant to section 1860E–4; 

4 ‘‘(D) end stage renal disease providers and 

5 facilities pursuant to section 1860E–5; and 

6 ‘‘(E) home health agencies pursuant to 

7 section 1860E–6. 

8 ‘‘(2) QUALITY.—The systems developed under 

9 paragraph (1) shall measure the quality of the care 

10 furnished by the provider involved. 

11 ‘‘(3) HIGH QUALITY HEALTH CARE DEFINED.— 

12 In this part, the term ‘high quality health care’ 

13 means health care that is safe, effective, patient-cen14 tered, timely, equitable, efficient, necessary, and ap15 propriate. 

16 ‘‘(b) REQUIREMENTS FOR SYSTEMS.—Under each 

17 quality measurement system described in subsection 

18 (a)(1), the Secretary shall do the following: 

19 ‘‘(1) MEASURES.— 

20 ‘‘(A) IN GENERAL.—Subject to subpara21 graph (B), the Secretary shall select measures 

22 of quality to be used by the Secretary under 

23 each system. 

24 ‘‘(B) REQUIREMENTS.—In selecting the 

25 measures to be used under each system pursu-
49 

•S 1503 IS 

1 ant to subparagraph (A), the Secretary shall, to 

2 the extent feasible, ensure that— 

3 ‘‘(i) such measures are evidence4 based, reliable and valid, and feasible to 

5 collect and report; 

6 ‘‘(ii) measures of process, structure, 

7 outcomes, beneficiary experience, effi8 ciency, and equity are included; 

9 ‘‘(iii) measures of overuse and 

10 underuse of health care items and services 

11 are included; 

12 ‘‘(iv)(I) at least 1 measure of health 

13 information technology infrastructure that 

14 enables the provision of high quality health 

15 care and facilitates the exchange of health 

16 information, such as the use of one or 

17 more elements of a qualified health infor18 mation system (as defined in subparagraph 

19 (E)), is included during the first year each 

20 system is implemented; and 

21 ‘‘(II) additional measures of health in22 formation technology infrastructure are in23 cluded in subsequent years; 

24 ‘‘(v) in the case of the system that is 

25 used to provide value-based payments to 
50 

•S 1503 IS 

1 hospitals under section 1860E–2, by not 

2 later than January 1, 2008, at least 5 

3 measures that take into account the unique 

4 characteristics of small hospitals located in 

5 rural areas and frontier areas are included; 

6 and 

7 ‘‘(vi) measures that assess the quality 

8 of care furnished to frail individuals over 

9 the age of 75 and to individuals with mul10 tiple complex chronic conditions are in11 cluded. 

12 ‘‘(C) REQUIREMENT FOR COLLECTION OF

13 DATA ON A MEASURE FOR 1 YEAR PRIOR TO

14 USE UNDER THE SYSTEMS.—Data on any 

15 measure selected by the Secretary under sub16 paragraph (A) must be collected by the Sec17 retary for at least a 12-month period before 

18 such measure may be used to determine wheth19 er a provider receives a value-based payment 

20 under a program described in subsection (a)(1). 

21 ‘‘(D) AUTHORITY TO VARY MEASURES.— 

22 ‘‘(i) UNDER SYSTEM APPLICABLE TO

23 HOSPITALS.—In the case of the system ap24 plicable to hospitals under section 1860E– 

25 2, the Secretary may vary the measures se-
51 

•S 1503 IS 

1 lected under subparagraph (A) by hospital 

2 depending on the size of, and the scope of 

3 services provided by, the hospital. 

4 ‘‘(ii) UNDER SYSTEM APPLICABLE TO

5 PHYSICIANS AND PRACTITIONERS.—In the 

6 case of the system applicable to physicians 

7 and practitioners under section 1860E–3, 

8 the Secretary may vary the measures se9 lected under subparagraph (A) by physi10 cian or practitioner depending on the spe11 cialty of the physician, the type of practi12 tioner, or the volume of services furnished 

13 to beneficiaries by the physician or practi14 tioner. 

15 ‘‘(iii) UNDER SYSTEM APPLICABLE TO

16 ESRD PROVIDERS AND FACILITIES.—In the 

17 case of the system applicable to providers 

18 of services and renal dialysis facilities 

19 under section 1860E–5, the Secretary may 

20 vary the measures selected under subpara21 graph (A) by provider or facility depending 

22 on the type of, the size of, and the scope 

23 of services provided by, the provider or fa24 cility. 
52 

•S 1503 IS 

1 ‘‘(iv) UNDER SYSTEM APPLICABLE TO

2 HOME HEALTH AGENCIES.—In the case of 

3 the system applicable to home health agen4 cies under section 1860E–6, the Secretary 

5 may vary the measures selected under sub6 paragraph (A) by agency depending on the 

7 size of, and the scope of services provided 

8 by, the agency. 

9 ‘‘(E) QUALIFIED HEALTH INFORMATION

10 SYSTEM DEFINED.—For purposes of subpara11 graph (B)(iv)(I), the term ‘qualified health in12 formation system’ means a computerized sys13 tem (including hardware, software, and train14 ing) that— 

15 ‘‘(i) protects the privacy and security 

16 of health information and properly 

17 encrypts such health information; 

18 ‘‘(ii) maintains and provides access to 

19 patients’ health records in an electronic 

20 format; 

21 ‘‘(iii) incorporates decision support 

22 software to reduce medical errors and en23 hance health care quality; 
53 

•S 1503 IS 

1 ‘‘(iv) is consistent with data standards 

2 and certification processes recommended 

3 by the Secretary; 

4 ‘‘(v) allows for the reporting of quality 

5 measures; and 

6 ‘‘(vi) includes other features deter7 mined appropriate by the Secretary. 

8 ‘‘(2) WEIGHTS OF MEASURES.— 

9 ‘‘(A) IN GENERAL.—The Secretary shall 

10 assign weights to the measures used by the Sec11 retary under each system. 

12 ‘‘(B) CONSIDERATION.—If the Secretary 

13 determines appropriate, in assigning the 

14 weights under subparagraph (A)— 

15 ‘‘(i) measures of clinical effectiveness 

16 shall be weighted more heavily than meas17 ures of beneficiary experience; and 

18 ‘‘(ii) measures of risk adjusted out19 comes shall be weighted more heavily than 

20 measures of process; and 

21 ‘‘(3) RISK ADJUSTMENT.—The Secretary shall 

22 establish procedures, as appropriate, to control for 

23 differences in beneficiary health status and bene24 ficiary characteristics. To the extent feasible, such 
54 

•S 1503 IS 

1 procedures may be based on existing models for con2 trolling for such differences. 

3 ‘‘(4) MAINTENANCE.— 

4 ‘‘(A) IN GENERAL.—The Secretary shall, 

5 as determined appropriate, but not more often 

6 than once each 12-month period, update each 

7 system, including through— 

8 ‘‘(i) the addition of more accurate and 

9 precise measures under the systems and 

10 the retirement of existing outdated meas11 ures under the system; 

12 ‘‘(ii) the refinement of the weights as13 signed to measures under the system; and 

14 ‘‘(iii) the refinement of the risk ad15 justment procedures established pursuant 

16 to paragraph (3) under the system. 

17 ‘‘(B) UPDATE SHALL ALLOW FOR COM18 PARISON OF DATA.—Each update under sub19 paragraph (A) of a quality measurement system 

20 shall allow for the comparison of data from one 

21 year to the next for purposes of providing 

22 value-based payments under the programs de23 scribed in subsection (a)(1). 

24 ‘‘(5) USE OF MOST RECENT QUALITY DATA.— 
55 

•S 1503 IS 

1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), the Secretary shall use the 

3 most recent quality data with respect to the 

4 provider involved that is available to the Sec5 retary. 

6 ‘‘(B) INSUFFICIENT DATA DUE TO LOW

7 VOLUME.—If the Secretary determines that 

8 there is insufficient data with respect to a 

9 measure or measures because of a low number 

10 of services provided, the Secretary may aggre11 gate data across more than 1 fiscal or calendar 

12 year, as the case may be. 

13 ‘‘(c) REQUIREMENTS FOR DEVELOPING AND UPDAT14 ING THE SYSTEMS.—In developing and updating each 

15 quality measurement system under this section, the Sec16 retary shall— 

17 ‘‘(1) take into account the quality measures de18 veloped by nationally recognized quality measure19 ment organizations, researchers, health care provider 

20 organizations, and other appropriate groups; 

21 ‘‘(2) consult with, and take into account the 

22 recommendations of, the entity that the Secretary 

23 has an arrangement with under subsection (e); 

24 ‘‘(3) consult with provider-based groups and 

25 clinical specialty societies; 
56 

•S 1503 IS 

1 ‘‘(4) take into account existing quality measure2 ment systems that have been developed through a 

3 rigorous process of validation and with the involve4 ment of entities and persons described in subsection 

5 (e)(2)(B); and 

6 ‘‘(5) take into account— 

7 ‘‘(A) each of the reports by the Medicare 

8 Payment Advisory Commission that are re9 quired under the Medicare Value Purchasing 

10 Act of 2005; 

11 ‘‘(B) the results of— 

12 ‘‘(i) the demonstrations required 

13 under such Act; 

14 ‘‘(ii) the demonstration program 

15 under section 1866A; 

16 ‘‘(iii) the demonstration program 

17 under section 1866C; and 

18 ‘‘(iv) any other demonstration or pilot 

19 program conducted by the Secretary relat20 ing to measuring and rewarding quality 

21 and efficiency of care; and 

22 ‘‘(C) the report by the Institute of Medi23 cine of the National Academy of Sciences under 

24 section 238(b) of the Medicare Prescription 
57 

•S 1503 IS 

1 Drug, Improvement, and Modernization Act of 

2 2003 (Public Law 108–173). 

3 ‘‘(d) REQUIREMENTS FOR IMPLEMENTING THE SYS4 TEMS.—In implementing each quality measurement sys5 tem under this section, the Secretary shall consult with 

6 entities— 

7 ‘‘(1) that have joined together to develop strate8 gies for quality measurement and reporting, includ9 ing the feasibility of collecting and reporting mean10 ingful data on quality measures; and 

11 ‘‘(2) that involve representatives of health care 

12 providers, health plans, consumers, employers, pur13 chasers, quality experts, government agencies, and 

14 other individuals and groups that are interested in 

15 quality of care. 

16 ‘‘(e) ARRANGEMENT WITH AN ENTITY TO PROVIDE

17 ADVICE AND RECOMMENDATIONS.— 

18 ‘‘(1) ARRANGEMENT.—On and after July 1, 

19 2006, the Secretary shall have in place an arrange20 ment with an entity that meets the requirements de21 scribed in paragraph (2) under which such entity 

22 provides the Secretary with advice on, and rec23 ommendations with respect to, the development and 

24 updating of the quality measurement systems under 
58 

•S 1503 IS 

1 this section, including the assigning of weights to 

2 the measures under subsection (b)(2). 

3 ‘‘(2) REQUIREMENTS DESCRIBED.—The re4 quirements described in this paragraph are the fol5 lowing: 

6 ‘‘(A) The entity is a private nonprofit enti7 ty governed by an executive director and a 

8 board. 

9 ‘‘(B) The members of the entity include 

10 representatives of— 

11 ‘‘(i)(I) health plans and providers re12 ceiving reimbursement under this title for 

13 the provision of items and services, includ14 ing health plans and providers with experi15 ence in the care of the frail elderly and in16 dividuals with multiple complex chronic 

17 conditions; or 

18 ‘‘(II) groups representing such health 

19 plans and providers; 

20 ‘‘(ii) groups representing individuals 

21 receiving benefits under this title; 

22 ‘‘(iii) purchasers and employers or 

23 groups representing purchasers or employ24 ers; 
59 

•S 1503 IS 

1 ‘‘(iv) organizations that focus on qual2 ity improvement as well as the measure3 ment and reporting of quality measures; 

4 ‘‘(v) State government health pro5 grams; 

6 ‘‘(vi) persons skilled in the conduct 

7 and interpretation of biomedical, health 

8 services, and health economics research 

9 and with expertise in outcomes and effec10 tiveness research and technology assess11 ment; and 

12 ‘‘(vii) persons or entities involved in 

13 the development and establishment of 

14 standards and certification for health in15 formation technology systems and clinical 

16 data. 

17 ‘‘(C) The membership of the entity is rep18 resentative of individuals with experience 

19 with— 

20 ‘‘(i) urban health care issues; 

21 ‘‘(ii) safety net health care issues; and 

22 ‘‘(iii) rural and frontier health care 

23 issues. 

24 ‘‘(D) The entity does not charge a fee for 

25 membership for participation in the work of the 
60 

•S 1503 IS 

1 entity related to the arrangement with the Sec2 retary under paragraph (1). If the entity does 

3 require a fee for membership for participation 

4 in other functions of the entity, there shall be 

5 no linkage between such fee and participation 

6 in the work of the entity related to such ar7 rangement with the Secretary. 

8 ‘‘(E) The entity— 

9 ‘‘(i) permits any member described in 

10 subparagraph (B) to vote on matters of 

11 the entity related to the arrangement with 

12 the Secretary under paragraph (1); and 

13 ‘‘(ii) ensures that such members have 

14 an equal vote on such matters . 

15 ‘‘(F) With respect to matters related to the 

16 arrangement with the Secretary under para17 graph (1), the entity conducts its business in an 

18 open and transparent manner and provides the 

19 opportunity for public comment. 

20 ‘‘(G) The entity operates as a voluntary 

21 consensus standards setting organization as de22 fined for purposes of section 12(d) of the Na23 tional Technology Transfer and Advancement 

24 Act of 1995 (Public Law 104–113) and Office 

25 of Management and Budget Revised Circular 
61 

•S 1503 IS 

1 A–119 (published in the Federal Register on 

2 February 10, 1998).’’. 

3 (b) CONFORMING REFERENCES TO PREVIOUS PART

4 E.—Any reference in law (in effect before the date of the 

5 enactment of this Act) to part E of title XVIII of the So6 cial Security Act is deemed a reference to part F of such 

7 title (as in effect after such date). 

8 SEC. 127. EXCEPTION TO FEDERAL ANTI-KICKBACK AND 

9 PHYSICIAN SELF REFERRAL LAWS FOR THE 

10 PROVISION OF PERMITTED SUPPORT. 

11 (a) ANTI-KICKBACK.—Section 1128B(b) (42 U.S.C. 

12 1320a–7b(b)(3)) is amended— 

13 (1) in paragraph (3)— 

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

15 ‘‘and’’ at the end; 

16 (B) in subparagraph (H), as added by sec17 tion 237(d) of the Medicare Prescription Drug, 

18 Improvement, and Modernization Act of 2003 

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

20 (i) by moving such subparagraph 2 

21 ems to the left; and 

22 (ii) by striking the period at the end 

23 and inserting a semicolon; 

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

25 added by section 431(a) of the Medicare Pre-
62 

•S 1503 IS 

1 scription Drug, Improvement, and Moderniza2 tion Act of 2003 (Public Law 108–173; 117 

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

4 (D) in subparagraph (I), as so redesig5 nated— 

6 (i) by moving such subparagraph 2 

7 ems to the left; and 

8 (ii) by striking the period at the end 

9 and inserting ‘‘; and’’; and 

10 (E) by adding at the end the following 

11 new: 

12 ‘‘(J) during the 5-year period beginning on 

13 the date the Secretary issues the interim final 

14 rule under section 801(c)(1) of the Medicare 

15 Value Purchasing Act of 2005, the provision, 

16 with or without charge, of any permitted sup17 port (as defined in paragraph (4)).’’; and 

18 (2) by adding at the end the following new 

19 paragraph: 

20 ‘‘(4) PERMITTED SUPPORT.— 

21 ‘‘(A) DEFINITION OF PERMITTED SUP22 PORT.—Subject to subparagraph (B), in this 

23 section, the term ‘permitted support’ means the 

24 provision of any equipment, item, information, 

25 right, license, intellectual property, software, 
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•S 1503 IS 

1 training, or service used for developing, imple2 menting, operating, or facilitating the use of 

3 systems designed to improve the quality of 

4 health care and to promote the electronic ex5 change of health information. 

6 ‘‘(B) EXCEPTION.—The term ‘permitted 

7 support’ shall not include the provision of— 

8 ‘‘(i) any support that is determined in 

9 a manner that is related to the volume or 

10 value of any referrals or other business 

11 generated between the parties for which 

12 payment may be made in whole or in part 

13 under a Federal health care program; 

14 ‘‘(ii) any support that has more than 

15 incidental utility or value to the recipient 

16 beyond the exchange of health care infor17 mation; or 

18 ‘‘(iii) any health information tech19 nology system, product, or service that is 

20 not capable of exchanging health care in21 formation in compliance with data stand22 ards consistent with interoperability. 

23 ‘‘(C) DETERMINATION.—In establishing 

24 regulations with respect to the requirement 
64 

•S 1503 IS 

1 under subparagraph (B)(iii), the Secretary shall 

2 take in account— 

3 ‘‘(I) whether the health information 

4 technology system, product, or service is 

5 widely accepted within the industry and 

6 whether there is sufficient industry experi7 ence to ensure successful implementation 

8 of the system, product, or service; and 

9 ‘‘(II) whether the health information 

10 technology system, product, or service im11 proves quality of care, enhances patient 

12 safety, or provides greater administrative 

13 efficiencies.’’. 

14 (b) PHYSICIAN SELF-REFERRAL.—Section 1877(e) 

15 (42 U.S.C. 1395nn(e)) is amended by adding at the end 

16 the following new paragraph: 

17 ‘‘(9) PERMITTED SUPPORT.—During the 5-year 

18 period beginning on the date the Secretary issues 

19 the interim final rule under section 801(c)(1) of the 

20 Medicare Value Purchasing Act of 2005, the provi21 sion, with or without charge, of any permitted sup22 port (as defined in section 1128B(b)(4)).’’. 

23 (c) REGULATIONS.—In order to carry out the amend24 ments made by this section— 
65 

•S 1503 IS 

1 (1) the Secretary shall issue an interim final 

2 rule with comment period by not later than the date 

3 that is 180 days after the date of enactment of this 

4 Act; 

5 (2) the Secretary shall issue a final rule by not 

6 later than the date that is 180 days after the date 

7 that the interim final rule under paragraph (1) is 

8 issued. 

9 CHAPTER 2—VALUE BASED PURCHASING 

10 SEC. 131. VALUE BASED PURCHASING PROGRAMS; SENSE 

11 OF THE SENATE. 

12 (a) MEDICARE VALUE BASED PURCHASING PILOT

13 PROGRAM.— 

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

15 Human Services (referred to in this section as the 

16 ‘‘Secretary’’) shall establish under title XVIII of the 

17 Social Security Act (42 U.S.C. 1395 et seq.) a value 

18 based purchasing pilot program based on the report19 ing of quality measures pursuant to those adopted in 

20 section 1860E–1 of the Social Security Act (as 

21 added by section 126). Such pilot program should be 

22 based on experience gained through previous dem23 onstration projects conducted by the Secretary, in24 cluding demonstration projects conducted under sec25 tions 1866A and 1866C of the Social Security Act 
66 

•S 1503 IS 

1 (42 U.S.C. 1395cc–1; 1395cc–3), section 649 of the 

2 Medicare Prescription Drug, Improvement, and 

3 Modernization Act of 2003 (Public Law 108–173; 

4 117 Stat. 2322), and other relevant work conducted 

5 by private entities. 

6 (2) EXPANSION.—Not later than 2 years after 

7 conducting the pilot program under paragraph (1), 

8 the Secretary shall transition and implement such 

9 program on a national basis. 

10 (3) INFORMATION TECHNOLOGY.—Providers re11 porting quality measurement data electronically 

12 under this section shall report such data pursuant to 

13 the standards adopted under title XXIX of the Pub14 lic Health Service Act (as added by section 121). 

15 (4) FUNDING.—The Secretary shall ensure that 

16 the total amount of expenditures under this Act in 

17 a year does not exceed the total amount of expendi18 tures that would have been expended in such year 

19 under this Act if this subsection had not been en20 acted. 

21 (b) MEDICAID VALUE BASED PURCHASING PRO22 GRAMS.— 

23 (1) IN GENERAL.—The Secretary shall author24 ize waivers under section 1115 of the Social Security 

25 Act (42 U.S.C. 1315) for States to establish value 
67 

•S 1503 IS 

1 based purchasing programs for State medicaid pro2 grams established under title XIX of such Act (42 

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

4 on the reporting of quality measures pursuant to 

5 those adopted in section 1860E–1 of the Social Se6 curity Act (as added by section 126). 

7 (2) INFORMATION TECHNOLOGY.—Providers re8 porting quality measurement data electronically 

9 under this section shall report such data pursuant to 

10 the standards adopted under title XXIX of the Pub11 lic Health Service Act (as added by section 121). 

12 (3) WAIVER.—In authorizing such waivers, the 

13 Secretary shall waive any provisions of title XI or 

14 XIX of the Social Security Act that would otherwise 

15 prevent a State from establishing a value based pur16 chasing program in accordance with paragraph (1). 

17 Subtitle C—Patient Safety and 

18 Quality Improvement 

19 SEC. 141. SHORT TITLE. 

20 This subtitle may be cited as the ‘‘Patient Safety and 

21 Quality Improvement Act of 2005’’. 

22 SEC. 142. FINDINGS AND PURPOSES. 

23 (a) FINDINGS.—Congress makes the following find24 ings: 
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1 (1) In 1999, the Institute of Medicine released 

2 a report entitled To Err is Human that described 

3 medical errors as the eighth leading cause of death 

4 in the United States, with as many as 98,000 people 

5 dying as a result of medical errors each year. 

6 (2) To address these deaths and injuries due to 

7 medical errors, the health care system must identify 

8 and learn from such errors so that systems of care 

9 can be improved. 

10 (3) In their report, the Institute of Medicine 

11 called on Congress to provide legal protections with 

12 respect to information reported for the purposes of 

13 quality improvement and patient safety. 

14 (4) The Health, Education, Labor, and Pen15 sions Committee of the Senate held 4 hearings in 

16 the 106th Congress and 1 hearing in the 107th Con17 gress on patient safety where experts in the field 

18 supported the recommendation of the Institute of 

19 Medicine for congressional action. 

20 (5) Myriad public and private patient safety ini21 tiatives have begun. The Quality Interagency Coordi22 nation Taskforce has recommended steps to improve 

23 patient safety that may be taken by each Federal 

24 agency involved in health care and activities relating 

25 to these steps are ongoing. 
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•S 1503 IS 

1 (6) The research on patient safety unequivo2 cally calls for a learning environment, rather than a 

3 punitive environment, in order to improve patient 

4 safety. 

5 (7) Voluntary data gathering systems are more 

6 supportive than mandatory systems in creating the 

7 learning environment referred to in paragraph (6) as 

8 stated in the Institute of Medicine’s report. 

9 (8) Promising patient safety reporting systems 

10 have been established throughout the United States 

11 and the best ways to structure and use these sys12 tems are currently being determined, largely through 

13 projects funded by the Agency for Healthcare Re14 search and Quality. 

15 (9) Many organizations currently collecting pa16 tient safety data have expressed a need for legal pro17 tections that will allow them to review protected in18 formation and collaborate in the development and 

19 implementation of patient safety improvement strat20 egies. Currently, the State peer review protections 

21 are inadequate to allow the sharing of information to 

22 promote patient safety. 

23 (b) PURPOSES.—It is the purpose of this subtitle 

24 to— 
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•S 1503 IS 

1 (1) encourage a culture of safety and quality in 

2 the United States health care system by providing 

3 for legal protection of information reported volun4 tarily for the purposes of quality improvement and 

5 patient safety; and 

6 (2) ensure accountability by raising standards 

7 and expectations for continuous quality improve8 ments in patient safety. 

9 SEC. 143. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT. 

10 Title IX of the Public Health Service Act (42 U.S.C. 

11 299 et seq.) is amended— 

12 (1) in section 912(c), by inserting ‘‘, in accord13 ance with part C,’’ after ‘‘The Director shall’’; 

14 (2) by redesignating part C as part D; 

15 (3) by redesignating sections 921 through 928, 

16 as sections 931 through 938, respectively; 

17 (4) in 934(d) (as so redesignated), by striking 

18 the second sentence and inserting the following: 

19 ‘‘Penalties provided for under this section shall be 

20 imposed and collected by the Secretary using the ad21 ministrative and procedural processes used to impose 

22 and collect civil money penalties under section 

23 1128A of the Social Security Act (other than sub24 sections (a) and (b), the second sentence of sub25 section (f), and subsections (i), (m), and (n)), unless 
71 

•S 1503 IS 

1 the Secretary determines that a modification of pro2 cedures would be more suitable or reasonable to 

3 carry out this subsection and provides for such 

4 modification by regulation.’’; 

5 (5) in section 938(1) (as so redesignated), by 

6 striking ‘‘921’’ and inserting ‘‘931’’; and 

7 (6) by inserting after part B the following: 

8 ‘‘PART C—PATIENT SAFETY IMPROVEMENT 

9 ‘‘SEC. 921. DEFINITIONS. 

10 ‘‘In this part: 

11 ‘‘(1) NON-IDENTIFIABLE INFORMATION.— 

12 ‘‘(A) IN GENERAL.—The term ‘non-identi13 fiable information’ means, with respect to infor14 mation, that the information is presented in a 

15 form and manner that prevents the identifica16 tion of a provider, a patient, or a reporter of 

17 patient safety data. 

18 ‘‘(B) IDENTIFIABILITY OF PATIENT.—For 

19 purposes of subparagraph (A), the term ‘pre20 sented in a form and manner that prevents the 

21 identification of a patient’ means, with respect 

22 to information that has been subject to rules 

23 promulgated pursuant to section 264(c) of the 

24 Health Insurance Portability and Accountability 

25 Act of 1996 (42 U.S.C. 1320d–2 note), that the 
72 

•S 1503 IS 

1 information has been de-identified so that it is 

2 no longer individually identifiable health infor3 mation as defined in such rules. 

4 ‘‘(2) PATIENT SAFETY DATA.— 

5 ‘‘(A) IN GENERAL.—The term ‘patient 

6 safety data’ means— 

7 ‘‘(i) any data, reports, records, memo8 randa, analyses (such as root cause anal9 yses), or written or oral statements that 

10 are— 

11 ‘‘(I) collected or developed by a 

12 provider for reporting to a patient 

13 safety organization, provided that they 

14 are reported to the patient safety or15 ganization within 60 days; 

16 ‘‘(II) requested by a patient safe17 ty organization (including the con18 tents of such request), if they are re19 ported to the patient safety organiza20 tion within 60 days; 

21 ‘‘(III) reported to a provider by a 

22 patient safety organization; or 

23 ‘‘(IV) collected by a patient safe24 ty organization from another patient 
73 

•S 1503 IS 

1 safety organization, or developed by a 

2 patient safety organization; 

3 that could result in improved patient safe4 ty, health care quality, or health care out5 comes; or 

6 ‘‘(ii) any deliberative work or process 

7 with respect to any patient safety data de8 scribed in clause (i). 

9 ‘‘(B) LIMITATION.— 

10 ‘‘(i) COLLECTION.—If the original 

11 material from which any data, reports, 

12 records, memoranda, analyses (such as 

13 root case analyses), or written or oral 

14 statements referred to in subclause (I) or 

15 (IV) of subparagraph (A)(i) are collected 

16 and is not patient safety data, the act of 

17 such collection shall not make such original 

18 material patient safety data for purposes 

19 of this part. 

20 ‘‘(ii) SEPARATE DATA.—The term ‘pa21 tient safety data’ shall not include infor22 mation (including a patient’s medical 

23 record, billing and discharge information 

24 or any other patient or provider record) 

25 that is collected or developed separately 
74 

•S 1503 IS 

1 from and that exists separately from pa2 tient safety data. Such separate informa3 tion or a copy thereof submitted to a pa4 tient safety organization shall not itself be 

5 considered as patient safety data. Nothing 

6 in this part, except for section 922(f)(1), 

7 shall be construed to limit— 

8 ‘‘(I) the discovery of or admissi9 bility of information described in this 

10 subparagraph in a criminal, civil, or 

11 administrative proceeding; 

12 ‘‘(II) the reporting of information 

13 described in this subparagraph to a 

14 Federal, State, or local governmental 

15 agency for public health surveillance, 

16 investigation, or other public health 

17 purposes or health oversight purposes; 

18 or 

19 ‘‘(III) a provider’s recordkeeping 

20 obligation with respect to information 

21 described in this subparagraph under 

22 Federal, State, or local law. 

23 ‘‘(3) PATIENT SAFETY ORGANIZATION.—The 

24 term ‘patient safety organization’ means a private or 
75 

•S 1503 IS 

1 public entity or component thereof that is currently 

2 listed by the Secretary pursuant to section 924(c). 

3 ‘‘(4) PATIENT SAFETY ORGANIZATION ACTIVI4 TIES.—The term ‘patient safety organization activi5 ties’ means the following activities, which are 

6 deemed to be necessary for the proper management 

7 and administration of a patient safety organization: 

8 ‘‘(A) The conduct, as its primary activity, 

9 of efforts to improve patient safety and the 

10 quality of health care delivery. 

11 ‘‘(B) The collection and analysis of patient 

12 safety data that are submitted by more than 

13 one provider. 

14 ‘‘(C) The development and dissemination 

15 of information to providers with respect to im16 proving patient safety, such as recommenda17 tions, protocols, or information regarding best 

18 practices. 

19 ‘‘(D) The utilization of patient safety data 

20 for the purposes of encouraging a culture of 

21 safety and of providing direct feedback and as22 sistance to providers to effectively minimize pa23 tient risk. 
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•S 1503 IS 

1 ‘‘(E) The maintenance of procedures to 

2 preserve confidentiality with respect to patient 

3 safety data. 

4 ‘‘(F) The provision of appropriate security 

5 measures with respect to patient safety data. 

6 ‘‘(G) The utilization of qualified staff. 

7 ‘‘(5) PERSON.—The term ‘person’ includes Fed8 eral, State, and local government agencies. 

9 ‘‘(6) PROVIDER.—The term ‘provider’ means— 

10 ‘‘(A) a person licensed or otherwise author11 ized under State law to provide health care 

12 services, including— 

13 ‘‘(i) a hospital, nursing facility, com14 prehensive outpatient rehabilitation facil15 ity, home health agency, hospice program, 

16 renal dialysis facility, ambulatory surgical 

17 center, pharmacy, physician or health care 

18 practitioner’s office, long term care facility, 

19 behavior health residential treatment facil20 ity, clinical laboratory, or health center; or 

21 ‘‘(ii) a physician, physician assistant, 

22 nurse practitioner, clinical nurse specialist, 

23 certified registered nurse anesthetist, cer24 tified nurse midwife, psychologist, certified 

25 social worker, registered dietitian or nutri-
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•S 1503 IS 

1 tion professional, physical or occupational 

2 therapist, pharmacist, or other individual 

3 health care practitioner; or 

4 ‘‘(B) any other person specified in regula5 tions promulgated by the Secretary. 

6 ‘‘SEC. 922. PRIVILEGE AND CONFIDENTIALITY PROTEC7 TIONS. 

8 ‘‘(a) PRIVILEGE.—Notwithstanding any other provi9 sion of Federal, State, or local law, patient safety data 

10 shall be privileged and, subject to the provisions of sub11 section (c)(1), shall not be— 

12 ‘‘(1) subject to a Federal, State, or local civil, 

13 criminal, or administrative subpoena; 

14 ‘‘(2) subject to discovery in connection with a 

15 Federal, State, or local civil, criminal, or administra16 tive proceeding; 

17 ‘‘(3) disclosed pursuant to section 552 of title 

18 5, United States Code (commonly known as the 

19 Freedom of Information Act) or any other similar 

20 Federal, State, or local law; 

21 ‘‘(4) admitted as evidence or otherwise disclosed 

22 in any Federal, State, or local civil, criminal, or ad23 ministrative proceeding; or 

24 ‘‘(5) utilized in a disciplinary proceeding 

25 against a provider. 
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1 ‘‘(b) CONFIDENTIALITY.—Notwithstanding any other 

2 provision of Federal, State, or local law, and subject to 

3 the provisions of subsections (c) and (d), patient safety 

4 data shall be confidential and shall not be disclosed. 

5 ‘‘(c) EXCEPTIONS TO PRIVILEGE AND CONFIDEN6 TIALITY.—Nothing in this section shall be construed to 

7 prohibit one or more of the following uses or disclosures: 

8 ‘‘(1) Disclosure by a provider or patient safety 

9 organization of relevant patient safety data for use 

10 in a criminal proceeding only after a court makes an 

11 in camera determination that such patient safety 

12 data contains evidence of a wanton and criminal act 

13 to directly harm the patient. 

14 ‘‘(2) Voluntary disclosure of non-identifiable pa15 tient safety data by a provider or a patient safety 

16 organization. 

17 ‘‘(d) PROTECTED DISCLOSURE AND USE OF INFOR18 MATION.—Nothing in this section shall be construed to 

19 prohibit one or more of the following uses or disclosures: 

20 ‘‘(1) Disclosure of patient safety data by a per21 son that is a provider, a patient safety organization, 

22 or a contractor of a provider or patient safety orga23 nization, to another such person, to carry out pa24 tient safety organization activities. 
79 

•S 1503 IS 

1 ‘‘(2) Disclosure of patient safety data by a pro2 vider or patient safety organization to grantees or 

3 contractors carrying out patient safety research, 

4 evaluation, or demonstration projects authorized by 

5 the Director. 

6 ‘‘(3) Disclosure of patient safety data by a pro7 vider to an accrediting body that accredits that pro8 vider. 

9 ‘‘(4) Voluntary disclosure of patient safety data 

10 by a patient safety organization to the Secretary for 

11 public health surveillance if the consent of each pro12 vider identified in, or providing, such data is ob13 tained prior to such disclosure. Nothing in the pre14 ceding sentence shall be construed to prevent the re15 lease of patient safety data that is provided by, or 

16 that relates solely to, a provider from which the con17 sent described in such sentence is obtained because 

18 one or more other providers do not provide such con19 sent with respect to the disclosure of patient safety 

20 date that relates to such nonconsenting providers. 

21 Consent for the future release of patient safety data 

22 for such purposes may be requested by the patient 

23 safety organization at the time the data is sub24 mitted. 
80 

•S 1503 IS 

1 ‘‘(5) Voluntary disclosure of patient safety data 

2 by a patient safety organization to State of local 

3 government agencies for public health surveillance if 

4 the consent of each provider identified in, or pro5 viding, such data is obtained prior to such disclo6 sure. Nothing in the preceding sentence shall be con7 strued to prevent the release of patient safety data 

8 that is provided by, or that relates solely to, a pro9 vider from which the consent described in such sen10 tence is obtained because one or more other pro11 viders do not provide such consent with respect to 

12 the disclosure of patient safety date that relates to 

13 such nonconsenting providers. Consent for the fu14 ture release of patient safety data for such purposes 

15 may be requested by the patient safety organization 

16 at the time the data is submitted. 

17 ‘‘(e) CONTINUED PROTECTION OF INFORMATION

18 AFTER DISCLOSURE.— 

19 ‘‘(1) IN GENERAL.—Except as provided in para20 graph (2), patient safety data that is used or dis21 closed shall continue to be privileged and confiden22 tial as provided for in subsections (a) and (b), and 

23 the provisions of such subsections shall apply to 

24 such data in the possession or control of— 
81 

•S 1503 IS 

1 ‘‘(A) a provider or patient safety organiza2 tion that possessed such data before the use or 

3 disclosure; or 

4 ‘‘(B) a person to whom such data was dis5 closed. 

6 ‘‘(2) EXCEPTION.—Notwithstanding paragraph 

7 (1), and subject to paragraph (3)— 

8 ‘‘(A) if patient safety data is used or dis9 closed as provided for in subsection (c)(1), and 

10 such use or disclosure is in open court, the con11 fidentiality protections provided for in sub12 section (b) shall no longer apply to such data; 

13 and 

14 ‘‘(B) if patient safety data is used or dis15 closed as provided for in subsection (c)(2), the 

16 privilege and confidentiality protections pro17 vided for in subsections (a) and (b) shall no 

18 longer apply to such data. 

19 ‘‘(3) CONSTRUCTION.—Paragraph (2) shall not 

20 be construed as terminating or limiting the privilege 

21 or confidentiality protections provided for in sub22 section (a) or (b) with respect to data other than the 

23 specific data used or disclosed as provided for in 

24 subsection (c). 

25 ‘‘(f) LIMITATION ON ACTIONS.— 
82 

•S 1503 IS 

1 ‘‘(1) PATIENT SAFETY ORGANIZATIONS.—Ex2 cept to enforce disclosures pursuant to subsection 

3 (c)(1), no action may be brought or process served 

4 against a patient safety organization to compel dis5 closure of information collected or developed under 

6 this part whether or not such information is patient 

7 safety data unless such information is specifically 

8 identified, is not patient safety data, and cannot oth9 erwise be obtained. 

10 ‘‘(2) PROVIDERS.—An accrediting body shall 

11 not take an accrediting action against a provider 

12 based on the good faith participation of the provider 

13 in the collection, development, reporting, or mainte14 nance of patient safety data in accordance with this 

15 part. An accrediting body may not require a provider 

16 to reveal its communications with any patient safety 

17 organization established in accordance with this 

18 part. 

19 ‘‘(g) REPORTER PROTECTION.— 

20 ‘‘(1) IN GENERAL.—A provider may not take an 

21 adverse employment action, as described in para22 graph (2), against an individual based upon the fact 

23 that the individual in good faith reported informa24 tion— 
83 

•S 1503 IS 

1 ‘‘(A) to the provider with the intention of 

2 having the information reported to a patient 

3 safety organization; or 

4 ‘‘(B) directly to a patient safety organiza5 tion. 

6 ‘‘(2) ADVERSE EMPLOYMENT ACTION.—For 

7 purposes of this subsection, an ‘adverse employment 

8 action’ includes— 

9 ‘‘(A) loss of employment, the failure to 

10 promote an individual, or the failure to provide 

11 any other employment-related benefit for which 

12 the individual would otherwise be eligible; or 

13 ‘‘(B) an adverse evaluation or decision 

14 made in relation to accreditation, certification, 

15 credentialing, or licensing of the individual. 

16 ‘‘(h) ENFORCEMENT.— 

17 ‘‘(1) PROHIBITION.—Except as provided in sub18 sections (c) and (d) and as otherwise provided for in 

19 this section, it shall be unlawful for any person to 

20 negligently or intentionally disclose any patient safe21 ty data, and any such person shall, upon adjudica22 tion, be assessed in accordance with section 934(d). 

23 ‘‘(2) RELATION TO HIPAA.—The penalty pro24 vided for under paragraph (1) shall not apply if the 

25 defendant would otherwise be subject to a penalty 
84 

•S 1503 IS 

1 under the regulations promulgated under section 

2 264(c) of the Health Insurance Portability and Ac3 countability Act of 1996 (42 U.S.C. 1320d–2 note) 

4 or under section 1176 of the Social Security Act (42 

5 U.S.C. 1320d–5) for the same disclosure. 

6 ‘‘(3) EQUITABLE RELIEF.— 

7 ‘‘(A) IN GENERAL.—Without limiting rem8 edies available to other parties, a civil action 

9 may be brought by any aggrieved individual to 

10 enjoin any act or practice that violates sub11 section (g) and to obtain other appropriate eq12 uitable relief (including reinstatement, back 

13 pay, and restoration of benefits) to redress such 

14 violation. 

15 ‘‘(B) AGAINST STATE EMPLOYEES.—An 

16 entity that is a State or an agency of a State 

17 government may not assert the privilege de18 scribed in subsection (a) unless before the time 

19 of the assertion, the entity or, in the case of 

20 and with respect to an agency, the State has 

21 consented to be subject to an action as de22 scribed by this paragraph, and that consent has 

23 remained in effect. 

24 ‘‘(i) RULE OF CONSTRUCTION.—Nothing in this sec25 tion shall be construed to— 
85 

•S 1503 IS 

1 ‘‘(1) limit other privileges that are available 

2 under Federal, State, or local laws that provide 

3 greater confidentiality protections or privileges than 

4 the privilege and confidentiality protections provided 

5 for in this section; 

6 ‘‘(2) limit, alter, or affect the requirements of 

7 Federal, State, or local law pertaining to informa8 tion that is not privileged or confidential under this 

9 section; 

10 ‘‘(3) alter or affect the implementation of any 

11 provision of section 264(c) of the Health Insurance 

12 Portability and Accountability Act of 1996 (Public 

13 Law 104–191; 110 Stat. 2033), section 1176 of the 

14 Social Security Act (42 U.S.C. 1320d–5), or any 

15 regulation promulgated under such sections; 

16 ‘‘(4) limit the authority of any provider, patient 

17 safety organization, or other person to enter into a 

18 contract requiring greater confidentiality or dele19 gating authority to make a disclosure or use in ac20 cordance with subsection (c) or (d); and 

21 ‘‘(5) prohibit a provider from reporting a crime 

22 to law enforcement authorities, regardless of whether 

23 knowledge of the existence of, or the description of, 

24 the crime is based on patient safety data, so long as 
86 

•S 1503 IS 

1 the provider does not disclose patient safety data in 

2 making such report. 

3 ‘‘SEC. 923. PATIENT SAFETY NETWORK OF DATABASES. 

4 ‘‘(a) IN GENERAL.—The Secretary shall maintain a 

5 patient safety network of databases that provides an inter6 active evidence-based management resource for providers, 

7 patient safety organizations, and other persons. The net8 work of databases shall have the capacity to accept, aggre9 gate, and analyze nonidentifiable patient safety data vol10 untarily reported by patient safety organizations, pro11 viders, or other persons. 

12 ‘‘(b) NETWORK OF DATABASE STANDARDS.—The 

13 Secretary may determine common formats for the report14 ing to the patient safety network of databases maintained 

15 under subsection (a) of nonidentifiable patient safety data, 

16 including necessary data elements, common and consistent 

17 definitions, and a standardized computer interface for the 

18 processing of such data. To the extent practicable, such 

19 standards shall be consistent with the administrative sim20 plification provisions of Part C of title XI of the Social 

21 Security Act. 

22 ‘‘SEC. 924. PATIENT SAFETY ORGANIZATION CERTIFI23 CATION AND LISTING. 

24 ‘‘(a) CERTIFICATION.— 
87 

•S 1503 IS 

1 ‘‘(1) INITIAL CERTIFICATION.—Except as pro2 vided in paragraph (2), an entity that seeks to be a 

3 patient safety organization shall submit an initial 

4 certification to the Secretary that the entity intends 

5 to perform the patient safety organization activities. 

6 ‘‘(2) DELAYED CERTIFICATION OF COLLECTION

7 FROM MORE THAN ONE PROVIDER.—An entity that 

8 seeks to be a patient safety organization may— 

9 ‘‘(A) submit an initial certification that it 

10 intends to perform patient safety organization 

11 activities other than the activities described in 

12 subparagraph (B) of section 921(4); and 

13 ‘‘(B) within 2 years of submitting the ini14 tial certification under subparagraph (A), sub15 mit a supplemental certification that it per16 forms the patient safety organization activities 

17 described in subparagraphs (A) through (F) of 

18 section 921(4). 

19 ‘‘(3) EXPIRATION AND RENEWAL.— 

20 ‘‘(A) EXPIRATION.—An initial certification 

21 under paragraph (1) or (2)(A) shall expire on 

22 the date that is 3 years after it is submitted. 

23 ‘‘(B) RENEWAL.— 

24 ‘‘(i) IN GENERAL.—An entity that 

25 seeks to remain a patient safety organiza-
88 

•S 1503 IS 

1 tion after the expiration of an initial cer2 tification under paragraph (1) or (2)(A) 

3 shall, within the 3-year period described in 

4 subparagraph (A), submit a renewal cer5 tification to the Secretary that the entity 

6 performs the patient safety organization 

7 activities described in section 921(4). 

8 ‘‘(ii) TERM OF RENEWAL.—A renewal 

9 certification under clause (i) shall expire 

10 on the date that is 3 years after the date 

11 on which it is submitted, and may be re12 newed in the same manner as an initial 

13 certification. 

14 ‘‘(b) ACCEPTANCE OF CERTIFICATION.—Upon the 

15 submission by an organization of an initial certification 

16 pursuant to subsection (a)(1) or (a)(2)(A), a supplemental 

17 certification pursuant to subsection (a)(2)(B), or a re18 newal certification pursuant to subsection (a)(3)(B), the 

19 Secretary shall review such certification and— 

20 ‘‘(1) if such certification meets the require21 ments of subsection (a)(1), (a)(2)(A), (a)(2)(B), or 

22 (a)(3)(B), as applicable, the Secretary shall notify 

23 the organization that such certification is accepted; 

24 or 
89 

•S 1503 IS 

1 ‘‘(2) if such certification does not meet such re2 quirements, as applicable, the Secretary shall notify 

3 the organization that such certification is not accept4 ed and the reasons therefor. 

5 ‘‘(c) LISTING.— 

6 ‘‘(1) IN GENERAL.—Except as otherwise pro7 vided in this subsection, the Secretary shall compile 

8 and maintain a current listing of patient safety or9 ganizations with respect to which the Secretary has 

10 accepted a certification pursuant to subsection (b). 

11 ‘‘(2) REMOVAL FROM LISTING.—The Secretary 

12 shall remove from the listing under paragraph (1)— 

13 ‘‘(A) an entity with respect to which the 

14 Secretary has accepted an initial certification 

15 pursuant to subsection (a)(2)(A) and which 

16 does not submit a supplemental certification 

17 pursuant to subsection (a)(2)(B) that is accept18 ed by the Secretary; 

19 ‘‘(B) an entity whose certification expires 

20 and which does not submit a renewal applica21 tion that is accepted by the Secretary; and 

22 ‘‘(C) an entity with respect to which the 

23 Secretary revokes the Secretary’s acceptance of 

24 the entity’s certification, pursuant to subsection 

25 (d). 
90 

•S 1503 IS 

1 ‘‘(d) REVOCATION OF ACCEPTANCE.— 

2 ‘‘(1) IN GENERAL.—Except as provided in para3 graph (2), if the Secretary determines (through a re4 view of patient safety organization activities) that a 

5 patient safety organization does not perform one of 

6 the patient safety organization activities described in 

7 subparagraph (A) through (F) of section 921(4), the 

8 Secretary may, after notice and an opportunity for 

9 a hearing, revoke the Secretary’s acceptance of the 

10 certification of such organization. 

11 ‘‘(2) DELAYED CERTIFICATION OF COLLECTION

12 FROM MORE THAN ONE PROVIDER.—A revocation 

13 under paragraph (1) may not be based on a deter14 mination that the organization does not perform the 

15 activity described in section 921(4)(B) if— 

16 ‘‘(A) the listing of the organization is 

17 based on its submittal of an initial certification 

18 under subsection (a)(2)(A); 

19 ‘‘(B) the organization has not submitted a 

20 supplemental certification under subsection 

21 (a)(2)(B); and 

22 ‘‘(C) the 2-year period described in sub23 section (a)(2)(B) has not expired. 

24 ‘‘(e) NOTIFICATION OF REVOCATION OR REMOVAL

25 FROM LISTING.— 
91 

•S 1503 IS 

1 ‘‘(1) SUPPLYING CONFIRMATION OF NOTIFICA2 TION TO PROVIDERS.—Within 15 days of a revoca3 tion under subsection (d)(1), a patient safety organi4 zation shall submit to the Secretary a confirmation 

5 that the organization has taken all reasonable ac6 tions to notify each provider whose patient safety 

7 data is collected or analyzed by the organization of 

8 such revocation. 

9 ‘‘(2) PUBLICATION.—Upon the revocation of an 

10 acceptance of an organization’s certification under 

11 subsection (d)(1), or upon the removal of an organi12 zation from the listing under subsection (c)(2), the 

13 Secretary shall publish notice of the revocation or 

14 removal in the Federal Register. 

15 ‘‘(f) STATUS OF DATA AFTER REMOVAL FROM LIST16 ING.— 

17 ‘‘(1) NEW DATA.—With respect to the privilege 

18 and confidentiality protections described in section 

19 922, data submitted to an organization within 30 

20 days after the organization is removed from the list21 ing under subsection (c)(2) shall have the same sta22 tus as data submitted while the organization was 

23 still listed. 

24 ‘‘(2) PROTECTION TO CONTINUE TO APPLY.—If 

25 the privilege and confidentiality protections de-
92 

•S 1503 IS 

1 scribed in section 922 applied to data while an orga2 nization was listed, or during the 30-day period de3 scribed in paragraph (1), such protections shall con4 tinue to apply to such data after the organization is 

5 removed from the listing under subsection (c)(2). 

6 ‘‘(g) DISPOSITION OF DATA.—If the Secretary re7 moves an organization from the listing as provided for in 

8 subsection (c)(2), with respect to the patient safety data 

9 that the organization received from providers, the organi10 zation shall— 

11 ‘‘(1) with the approval of the provider and an12 other patient safety organization, transfer such data 

13 to such other organization; 

14 ‘‘(2) return such data to the person that sub15 mitted the data; or 

16 ‘‘(3) if returning such data to such person is 

17 not practicable, destroy such data. 

18 ‘‘SEC. 925. TECHNICAL ASSISTANCE. 

19 ‘‘The Secretary, acting through the Director, may 

20 provide technical assistance to patient safety organiza21 tions, including convening annual meetings for patient 

22 safety organizations to discuss methodology, communica23 tion, data collection, or privacy concerns. 
93 

•S 1503 IS 

1 ‘‘SEC. 926. PROMOTING THE INTEROPERABILITY OF 

2 HEALTH CARE INFORMATION TECHNOLOGY 

3 SYSTEMS. 

4 ‘‘(a) DEVELOPMENT.—Not later than 36 months 

5 after the date of enactment of the Patient Safety and 

6 Quality Improvement Act of 2005, the Secretary shall de7 velop or adopt voluntary standards that promote the elec8 tronic exchange of health care information. 

9 ‘‘(b) UPDATES.—The Secretary shall provide for the 

10 ongoing review and periodic updating of the standards de11 veloped under subsection (a). 

12 ‘‘(c) DISSEMINATION.—The Secretary shall provide 

13 for the dissemination of the standards developed and up14 dated under this section. 

15 ‘‘SEC. 927. AUTHORIZATION OF APPROPRIATIONS. 

16 ‘‘There is authorized to be appropriated such sums 

17 as may be necessary to carry out this part.’’. 

18 SEC. 144. STUDIES AND REPORTS. 

19 (a) IN GENERAL.—The Secretary of Health and 

20 Human Services shall enter into a contract (based upon 

21 a competitive contracting process) with an appropriate re22 search organization for the conduct of a study to assess 

23 the impact of medical technologies and therapies on pa24 tient safety, patient benefit, health care quality, and the 

25 costs of care as well as productivity growth. Such study 

26 shall examine— 
94 

•S 1503 IS 

1 (1) the extent to which factors, such as the use 

2 of labor and technological advances, have contrib3 uted to increases in the share of the gross domestic 

4 product that is devoted to health care and the im5 pact of medical technologies and therapies on such 

6 increases; 

7 (2) the extent to which early and appropriate 

8 introduction and integration of innovative medical 

9 technologies and therapies may affect the overall 

10 productivity and quality of the health care delivery 

11 systems of the United States; and 

12 (3) the relationship of such medical technologies 

13 and therapies to patient safety, patient benefit, 

14 health care quality, and cost of care. 

15 (b) REPORT.—Not later than 18 months after the 

16 date of enactment of this Act, the Secretary of Health and 

17 Human Services shall prepare and submit to the appro18 priate committees of Congress a report containing the re19 sults of the study conducted under subsection (a). 

20 Subtitle D—Fraud and Abuse 

21 SEC. 151. NATIONAL EXPANSION OF THE MEDICARE-MED22 ICAID DATA MATCH PILOT PROGRAM. 

23 (a) REQUIREMENT OF THE MEDICARE INTEGRITY

24 PROGRAM.—Section 1893 of the Social Security Act (42 

25 U.S.C. 1395ddd) is amended— 
95 

•S 1503 IS 

1 (1) in subsection (b), by adding at the end the 

2 following: 

3 ‘‘(6) The Medicare-Medicaid data match pro4 gram in accordance with subsection (g).’’; and 

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

6 ‘‘(g) MEDICARE-MEDICAID DATA MATCH PRO7 GRAM.— 

8 ‘‘(1) EXPANSION OF PROGRAM.— 

9 ‘‘(A) IN GENERAL.—The Secretary shall 

10 enter into contracts with eligible entities for the 

11 purpose of ensuring that, beginning with 2006, 

12 the Medicare-Medicaid data match program 

13 (commonly referred to as the ‘Medi-Medi Pro14 gram’) is conducted with respect to the pro15 gram established under this title and the appli16 cable number of State Medicaid programs 

17 under title XIX for the purpose of— 

18 ‘‘(i) identifying vulnerabilities in both 

19 such programs; 

20 ‘‘(ii) assisting States, as appropriate, 

21 to take action to protect the Federal share 

22 of expenditures under the Medicaid pro23 gram; and 

24 ‘‘(iii) increasing the effectiveness and 

25 efficiency of both such programs through 
96 

•S 1503 IS 

1 cost avoidance, savings, and recoupments 

2 of fraudulent, wasteful, or abusive expendi3 tures. 

4 ‘‘(B) APPLICABLE NUMBER.—For pur5 poses of subparagraph (A), the term ‘applicable 

6 number’ means— 

7 ‘‘(i) in the case of fiscal year 2006, 10 

8 State Medicaid programs; 

9 ‘‘(ii) in the case of fiscal year 2007, 

10 12 State Medicaid programs; and 

11 ‘‘(iii) in the case of fiscal year 2008, 

12 15 State Medicaid programs. 

13 ‘‘(2) LIMITED WAIVER AUTHORITY.—The Sec14 retary shall waive only such requirements of this sec15 tion and of titles XI and XIX as are necessary to 

16 carry out paragraph (1).’’. 

17 (b) FUNDING.—Section 1817(k)(4) of the Social Se18 curity Act (42 U.S.C. 1395i(k)(4)) is amended— 

19 (1) in subparagraph (A), by striking ‘‘subpara20 graph (B)’’ and inserting ‘‘subparagraphs (B) and 

21 (C)’’; and 

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

23 ‘‘(C) EXPANSION OF THE MEDICARE-MED24 ICAID DATA MATCH PROGRAM.—Of the amount 

25 appropriated under subparagraph (A) for a fis-
97 

•S 1503 IS 

1 cal year, the following amounts shall be used to 

2 carry out section 1893(b)(6) for that year: 

3 ‘‘(i) $10,000,000 of the amount ap4 propriated for fiscal year 2006. 

5 ‘‘(ii) $12,200,000 of the amount ap6 propriated for fiscal year 2007. 

7 ‘‘(iii) $15,800,000 of the amount ap8 propriated for fiscal year 2008.’’. 

9 Subtitle E—Miscellaneous 

10 Provisions 

11 SEC. 161. SENSE OF THE SENATE ON ESTABLISHING A MAN12 DATED BENEFITS COMMISSION. 

13 It is the sense of the Senate that— 

14 (1) there should be established an independent 

15 Federal entity to study and provide advice to Con16 gress on existing and proposed federally mandated 

17 health insurance benefits offered by employer-spon18 sored health plans and insurance issuers; and 

19 (2) advice provided under paragraph (1) should 

20 be evidence- and actuarially-based, and take into 

21 consideration the population costs and benefits, in22 cluding the health, financial, and social impact on 

23 affected populations, safety and medical efficacy, the 

24 impact on costs and access to insurance generally, 

25 and to different types of insurance products, the im-
98 

•S 1503 IS 

1 pact on labor costs and jobs, and any other relevant 

2 factors. 

3 SEC. 162. ENFORCEMENT OF REIMBURSEMENT PROVI4 SIONS BY FIDUCIARIES. 

5 Section 502(a)(3) of the Employee Retirement In6 come Security Act of 1974 (29 U.S.C. 1132(a)(3)) is 

7 amended by inserting before the semicolon the following: 

8 ‘‘(which may include the recovery of amounts on behalf 

9 of the plan by a fiduciary enforcing the terms of the plan 

10 that provide a right of recovery by reimbursement or sub11 rogation with respect to benefits provided to a participant 

12 or beneficiary)’’. 

13 TITLE II—EXPANDING ACCESS 

14 TO AFFORDABLE HEALTH 

15 COVERAGE THROUGH TAX IN16 CENTIVES AND OTHER INI17 TIATIVES 

18 Subtitle A—Refundable Health 

19 Insurance Credit 

20 SEC. 201. REFUNDABLE HEALTH INSURANCE COSTS CRED21 IT. 

22 (a) ALLOWANCE OF CREDIT.— 

23 (1) IN GENERAL.—Subpart C of part IV of sub24 chapter A of chapter 1 of the Internal Revenue Code 

25 of 1986 (relating to refundable personal credits) is 
99 

•S 1503 IS 

1 amended by redesignating section 36 as section 37 

2 and by inserting after section 35 the following new 

3 section: 

4 ‘‘SEC. 36. HEALTH INSURANCE COSTS FOR UNINSURED IN5 DIVIDUALS. 

6 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in7 dividual, there shall be allowed as a credit against the tax 

8 imposed by this subtitle for the taxable year an amount 

9 equal to the amount paid by the taxpayer during such tax10 able year for qualified health insurance for the taxpayer 

11 and the taxpayer’s spouse and dependents. 

12 ‘‘(b) LIMITATIONS.— 

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graphs (2) and (3), the amount allowed as a credit 

15 under subsection (a) to the taxpayer for the taxable 

16 year shall not exceed the lesser of— 

17 ‘‘(A) 90 percent of the sum of the amounts 

18 paid by the taxpayer for qualified health insur19 ance for each individual referred to in sub20 section (a) for coverage months of the indi21 vidual during the taxable year, or 

22 ‘‘(B) $3,000. 

23 ‘‘(2) MONTHLY LIMITATION.— 

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1), amounts paid by the taxpayer for 
100 

•S 1503 IS 

1 qualified health insurance for an individual for 

2 any coverage month of such individual during 

3 the taxable year shall not be taken into account 

4 to the extent such amounts exceed the amount 

equal to 1 5 ⁄12 of— 

6 ‘‘(i) $1,111 if such individual is the 

7 taxpayer, 

8 ‘‘(ii) $1,111 if— 

9 ‘‘(I) such individual is the spouse 

10 of the taxpayer, 

11 ‘‘(II) the taxpayer and such 

12 spouse are married as of the first day 

13 of such month, and 

14 ‘‘(III) the taxpayer files a joint 

15 return for the taxable year, 

16 ‘‘(iii) $1,111 if such individual has at17 tained the age of 24 as of the close of the 

18 taxable year and is a dependent of the tax19 payer for such taxable year, and 

20 ‘‘(iv) one-half of the amount described 

21 in clause (i) if such individual has not at22 tained the age of 24 as of the close of the 

23 taxable year and is a dependent of the tax24 payer for such taxable year. 
101 

•S 1503 IS 

1 ‘‘(B) LIMITATION TO 2 YOUNG DEPEND2 ENTS.—If there are more than 2 individuals de3 scribed in subparagraph (A)(iv) with respect to 

4 the taxpayer for any coverage month, the aggre5 gate amounts paid by the taxpayer for qualified 

6 health insurance for such individuals which may 

7 be taken into account under paragraph (1) shall 

8 not exceed 1/12 of the dollar amount in effect 

9 under subparagraph (A)(i) for the coverage 

10 month. 

11 ‘‘(C) SPECIAL RULE FOR MARRIED INDI12 VIDUALS.—In the case of a taxpayer— 

13 ‘‘(i) who is married (within the mean14 ing of section 7703) as of the close of the 

15 taxable year but does not file a joint return 

16 for such year, and 

17 ‘‘(ii) who does not live apart from 

18 such taxpayer’s spouse at all times during 

19 the taxable year, 

20 any dollar limitation imposed under this para21 graph on amounts paid for qualified health in22 surance for individuals described in subpara23 graph (A)(iv) shall be divided equally between 

24 the taxpayer and the taxpayer’s spouse unless 

25 they agree on a different division. 
102 

•S 1503 IS 

1 ‘‘(3) INCOME PHASEOUT OF CREDIT PERCENT2 AGE FOR ONE-PERSON COVERAGE.— 

3 ‘‘(A) PHASEOUT FOR UNMARRIED INDIVID4 UALS (OTHER THAN SURVIVING SPOUSES AND

5 HEADS OF HOUSEHOLDS).—In the case of an 

6 individual (other than a surviving spouse, the 

7 head of a household, or a married individual) 

8 with one-person coverage, if such individual has 

9 modified adjusted gross income— 

10 ‘‘(i) in excess of $15,000 for a taxable 

11 year but not in excess of $20,000, the 90 

12 percent under paragraph (1)(B) shall be 

13 reduced by the number of percentage 

14 points which bears the same ratio to 40 

15 percentage points as— 

16 ‘‘(I) the excess of modified ad17 justed gross income in excess of 

18 $15,000, bears to 

19 ‘‘(II) $5,000, or 

20 ‘‘(ii) in excess of $20,000 for a tax21 able year, the 90 percent under paragraph 

22 (1)(B) shall be reduced by the sum of 40 

23 percentage points plus the number of per24 centage points which bears the same ratio 

25 to 50 percentage points as— 
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•S 1503 IS 

1 ‘‘(I) the excess of modified ad2 justed gross income in excess of 

3 $20,000, bears to 

4 ‘‘(II) $10,000. 

5 ‘‘(B) PHASEOUT FOR OTHER INDIVID6 UALS.—In the case of a taxpayer (other than 

7 an individual described in subparagraph (A) or 

8 (C)) with one-person coverage, if the taxpayer 

9 has modified adjusted gross income in excess of 

10 $25,000 for a taxable year, the 90 percent 

11 under paragraph (1)(B) shall be reduced by the 

12 number of percentage points which bears the 

13 same ratio to 90 percentage points as— 

14 ‘‘(i) the excess of modified adjusted 

15 gross income in excess of $25,000, bears to 

16 ‘‘(ii) $15,000. 

17 ‘‘(C) MARRIED FILING SEPARATE RE18 TURN.—In the case of a taxpayer who is mar19 ried filing a separate return for the taxable year 

20 and who has one-person coverage, if the tax21 payer has modified adjusted gross income in ex22 cess of $12,500 for the taxable year, the 90 

23 percent under paragraph (1)(B) shall be re24 duced by the number of percentage points 
104 

•S 1503 IS 

1 which bears the same ratio to 90 percentage 

2 points as— 

3 ‘‘(i) the excess of modified adjusted 

4 gross income in excess of $12,500, bears to 

5 ‘‘(ii) $7,500. 

6 ‘‘(4) INCOME PHASEOUT OF CREDIT PERCENT7 AGE FOR COVERAGE OF MORE THAN ONE PERSON.— 

8 ‘‘(A) IN GENERAL.—Except as provided in 

9 subparagraph (B), in the case of a taxpayer 

10 with coverage of more than one person, if the 

11 taxpayer has modified adjusted gross income in 

12 excess of $25,000 for a taxable year, the 90 

13 percent under paragraph (1)(B) shall be re14 duced by the number of percentage points 

15 which bears the same ratio to 90 percentage 

16 points as— 

17 ‘‘(i) the excess of modified adjusted 

18 gross income in excess of $25,000, bears to 

19 ‘‘(ii) $35,000. 

20 ‘‘(B) MARRIED FILING SEPARATE RE21 TURN.—In the case of a taxpayer who is mar22 ried filing a separate return for the taxable year 

23 and who has coverage of more than one person, 

24 if the taxpayer has modified adjusted gross in25 come in excess of $12,500 for the taxable year, 
105 

•S 1503 IS 

1 the 90 percent under paragraph (1)(B) shall be 

2 reduced by the number of percentage points 

3 which bears the same ratio to 90 percentage 

4 points as— 

5 ‘‘(i) the excess of modified adjusted 

6 gross income in excess of $12,500, bears to 

7 ‘‘(ii) $17,500. 

8 ‘‘(5) ROUNDING.—Any percentage resulting 

9 from a reduction under paragraphs (3) and (4) shall 

10 be rounded to the nearest one-tenth of a percent. 

11 ‘‘(6) MODIFIED ADJUSTED GROSS INCOME.— 

12 The term ‘modified adjusted gross income’ means 

13 adjusted gross income determined— 

14 ‘‘(A) without regard to this section and 

15 sections 911, 931, and 933, and 

16 ‘‘(B) after application of sections 86, 135, 

17 137, 219, 221, and 469. 

18 ‘‘(c) COVERAGE MONTH.—For purposes of this sec19 tion— 

20 ‘‘(1) IN GENERAL.—The term ‘coverage month’ 

21 means, with respect to an individual, any month if— 

22 ‘‘(A) as of the first day of such month 

23 such individual is covered by qualified health in24 surance, and 
106 

•S 1503 IS 

1 ‘‘(B) the premium for coverage under such 

2 insurance for such month is paid by the tax3 payer. 

4 ‘‘(2) GROUP HEALTH PLAN COVERAGE.— 

5 ‘‘(A) IN GENERAL.—The term ‘coverage 

6 month’ shall not include any month for which 

7 if, as of the first day of the month, the indi8 vidual participates in any group health plan 

9 (within the meaning of section 5000 without re10 gard to section 5000(d)). 

11 ‘‘(B) EXCEPTION FOR CERTAIN PER12 MITTED COVERAGE.—Subparagraph (A) shall 

13 not apply to an individual if the individual’s 

14 only coverage for a month is coverage described 

15 in clause (i) or (ii) of section 223(c)(1)(B). 

16 ‘‘(3) EMPLOYER-PROVIDED COVERAGE.—The 

17 term ‘coverage month’ shall not include any month 

18 during a taxable year if any amount is not includible 

19 in the gross income of the taxpayer for such year 

20 under section 106 (other than coverage described in 

21 clause (i) or (ii) of section 223(c)(1)(B)). 

22 ‘‘(4) MEDICARE, MEDICAID, AND SCHIP.—The 

23 term ‘coverage month’ shall not include any month 

24 with respect to an individual if, as of the first day 

25 of such month, such individual— 
107 

•S 1503 IS 

1 ‘‘(A) is entitled to any benefits under part 

2 A of title XVIII of the Social Security Act or 

3 is enrolled under part B of such title, or 

4 ‘‘(B) is enrolled in the program under title 

5 XIX or XXI of such Act (other than under sec6 tion 1928 of such Act). 

7 ‘‘(5) CERTAIN OTHER COVERAGE.—The term 

8 ‘coverage month’ shall not include any month during 

9 a taxable year with respect to an individual if, as of 

10 the first day of such month at any time during such 

11 month, such individual is enrolled in a program 

12 under— 

13 ‘‘(A) chapter 89 of title 5, United States 

14 Code, or 

15 ‘‘(B) chapter 55 of title 10, United States 

16 Code. 

17 ‘‘(6) PRISONERS.—The term ‘coverage month’ 

18 shall not include any month with respect to an indi19 vidual if, as of the first day of such month, such in20 dividual is imprisoned under Federal, State, or local 

21 authority. 

22 ‘‘(7) INSUFFICIENT PRESENCE IN UNITED

23 STATES.—The term ‘coverage month’ shall not in24 clude any month during a taxable year with respect 

25 to an individual if such individual is present in the 
108 

•S 1503 IS 

1 United States on fewer than 183 days during such 

2 year (determined in accordance with section 

3 7701(b)(7)). 

4 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur5 poses of this section— 

6 ‘‘(1) IN GENERAL.—The term ‘qualified health 

7 insurance’ means health insurance coverage (as de8 fined in section 9832(b)(1)) which— 

9 ‘‘(A) is coverage described in paragraph 

10 (2), and 

11 ‘‘(B) meets the requirements of paragraph 

12 (3). 

13 ‘‘(2) ELIGIBLE COVERAGE.—Coverage described 

14 in this paragraph is the following: 

15 ‘‘(A) Coverage under individual health in16 surance. 

17 ‘‘(B) Coverage through a private sector 

18 health care coverage purchasing pool. 

19 ‘‘(C) Coverage through a State care cov20 erage purchasing pool. 

21 ‘‘(D) Coverage under a State high-risk 

22 pool described in subparagraph (C) of section 

23 35(e)(1). 

24 ‘‘(E) Coverage after December 31, 2006, 

25 under an eligible State buy in program. 
109 

•S 1503 IS 

1 ‘‘(3) REQUIREMENTS.—The requirements of 

2 this paragraph are as follows: 

3 ‘‘(A) COST LIMITS.—The coverage meets 

4 the requirements of section 223(c)(2)(A)(ii). 

5 ‘‘(B) MAXIMUM BENEFITS.—Under the 

6 coverage, the annual and lifetime maximum 

7 benefits are not less than $700,000. 

8 ‘‘(C) BROAD COVERAGE.—The coverage in9 cludes inpatient and outpatient care, emergency 

10 benefits, and physician care. 

11 ‘‘(D) GUARANTEED RENEWABILITY.—Such 

12 coverage is guaranteed renewable by the pro13 vider. 

14 ‘‘(4) ELIGIBLE STATE BUY IN PROGRAM.—For 

15 purposes of paragraph (2)(E)— 

16 ‘‘(A) IN GENERAL.—The term ‘eligible 

17 State buy in program’ means a State program 

18 under which an individual who— 

19 ‘‘(i) is not eligible for assistance under 

20 the State medicaid program under title 

21 XIX of the Social Security Act, 

22 ‘‘(ii) is not eligible for assistance 

23 under the State children’s health insurance 

24 program under title XXI of such Act, or 

25 ‘‘(iii) is not a State employee, 
110 

•S 1503 IS 

1 is able to buy health insurance coverage 

2 through a purchasing arrangement entered into 

3 between the State and a private sector health 

4 care purchasing group or health plan. 

5 ‘‘(B) REQUIREMENTS.—Subparagraph (A) 

6 shall only apply to a State program if— 

7 ‘‘(i) the program uses private sector 

8 health care purchasing groups or health 

9 plans, and 

10 ‘‘(ii) the State maintains separate risk 

11 pools for participants under the State buy 

12 in program and other participants. 

13 ‘‘(C) SUBSIDIES.— 

14 ‘‘(i) IN GENERAL.—A State program 

15 shall not fail to be treated as an eligible 

16 State buy in program merely because the 

17 State subsidizes the costs of an individual 

18 in buying health insurance coverage under 

19 the program. 

20 ‘‘(ii) EXCEPTION.—Clause (i) shall 

21 not apply if the State subsidy under the 

22 program for any adult for any consecutive 

23 12-month period exceeds the applicable 

24 dollar amount. 
111 

•S 1503 IS 

1 ‘‘(iii) APPLICABLE DOLLAR

2 AMOUNT.— 

3 ‘‘(I) IN GENERAL.—For purposes 

4 of clause (ii), the applicable dollar 

5 amount is $2,000. 

6 ‘‘(II) REDUCTION.—In the case 

7 of a family with annual income in ex8 cess of 133 percent of the applicable 

9 poverty line (as determined in accord10 ance with criteria established by the 

11 Director of the Office of Management 

12 and Budget) but not in excess of 200 

13 percent of such line, the dollar 

14 amount under clause (i) shall be rat15 ably reduced (but not below zero) for 

16 each dollar of such excess. In the case 

17 of a family with annual income in ex18 cess of 200 percent of such line, the 

19 applicable dollar amount shall be zero. 

20 ‘‘(e) ARRANGEMENTS UNDER WHICH INSURERS

21 CONTRIBUTE TO HSA.— 

22 ‘‘(1) IN GENERAL.—For purposes of this sec23 tion, health insurance shall not be treated as quali24 fied health insurance if the insurer makes contribu25 tions to a health savings account of the taxpayer un-
112 

•S 1503 IS 

1 less such insurance is provided under an arrange2 ment described in paragraph (2). 

3 ‘‘(2) ARRANGEMENTS DESCRIBED.— 

4 ‘‘(A) AMOUNTS PAID FOR COVERAGE EX5 CEED MONTHLY LIMITATION.—In the case of 

6 amounts paid under an arrangement for health 

7 insurance for a coverage month in excess of the 

8 amount in effect under subsection (b)(2)(A) for 

9 such month, an arrangement is described in 

10 this subparagraph if under the arrangement— 

11 ‘‘(i) the aggregate amount contributed 

12 by the insurer to any health savings ac13 count of the taxpayer does not exceed 90 

14 percent of the excess of— 

15 ‘‘(I) the amount paid by the tax16 payer for qualified health insurance 

17 under such arrangement for such 

18 month, over 

19 ‘‘(II) the amount in effect under 

20 subsection (b)(2)(A) for such month, 

21 and 

22 ‘‘(ii) the amount contributed by the 

23 insurer to a qualified health savings ac24 count of the taxpayer, reduced by the 

25 amount of the excess under clause (i), does 
113 

•S 1503 IS 

1 not exceed 27 percent of the amount in ef2 fect under subsection (b)(2)(A) for such 

3 month. 

4 ‘‘(B) AMOUNTS PAID FOR COVERAGE LESS

5 THAN MONTHLY LIMITATION.—In the case of 

6 an arrangement under which the amount paid 

7 for qualified health insurance for a coverage 

8 month does not exceed the amount in effect 

9 under subsection (b)(2)(A) for such month, an 

10 arrangement is described in this subparagraph 

11 if— 

12 ‘‘(i) under the arrangement the value 

13 of the insured benefits (excluding over14 head) exceeds 65 percent of the amount 

15 paid for qualified health insurance for such 

16 month, and 

17 ‘‘(ii) the amount contributed by the 

18 insurer to a qualified health savings ac19 count of the taxpayer does not exceed 27 

20 percent of the amount in effect under sub21 section (b)(2)(A) for such month. 

22 ‘‘(3) QUALIFIED HEALTH SAVINGS ACCOUNT.— 

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

24 health savings account’ means a health savings 

25 account (as defined in section 223(d))— 
114 

•S 1503 IS 

1 ‘‘(i) which is designated (in such form 

2 as the Secretary may prescribe) as a quali3 fied account for purposes of this section, 

4 ‘‘(ii) which may not include any 

5 amount other than contributions described 

6 in this subsection and earnings on such 

7 contributions, and 

8 ‘‘(iii) with respect to which section 

9 223(f)(4)(A) is applied by substituting 

10 ‘100 percent’ for ‘10 percent’. 

11 ‘‘(B) SUBACCOUNTS AND SEPARATE AC12 COUNTING.—The Secretary may prescribe rules 

13 under which a subaccount within a health sav14 ings account, or separate accounting with re15 spect to contributions and earnings described in 

16 subparagraph (A)(ii), may be treated in the 

17 same manner as a qualified health savings ac18 count. 

19 ‘‘(C) ROLLOVERS.—A contribution of a 

20 distribution from a qualified health savings ac21 count to another health savings account shall be 

22 treated as a rollover contribution for purposes 

23 of section 223(f)(5) only if the other account is 

24 a qualified health savings account. 

25 ‘‘(f) DEPENDENTS.—For purposes of this section— 
115 

•S 1503 IS 

1 ‘‘(1) DEPENDENT DEFINED.—The term ‘de2 pendent’ has the meaning given such term by section 

3 152 (determined without regard to subsections 

4 (b)(1), (b)(2), and (d)(1)(B) thereof). 

5 ‘‘(2) SPECIAL RULE FOR DEPENDENT CHILD OF

6 DIVORCED PARENTS.—An individual who is a child 

7 to whom section 152(e) applies shall be treated as 

8 a dependent of the custodial parent for a coverage 

9 month unless the custodial and noncustodial parent 

10 provide otherwise. 

11 ‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No 

12 credit shall be allowed under this section to any indi13 vidual with respect to whom a deduction under sec14 tion 151(c) is allowable to another taxpayer for a 

15 taxable year beginning in the calendar year in which 

16 such individual’s taxable year begins. 

17 ‘‘(g) INFLATION ADJUSTMENTS.— 

18 ‘‘(1) CREDIT AND HEALTH INSURANCE

19 AMOUNTS.—In the case of any taxable year begin20 ning after 2006, each dollar amount referred to in 

21 subsections (b)(1)(B), (b)(2)(A), (d)(3)(B), and 

22 (d)(4)(C)(iii)(I) shall be increased by an amount 

23 equal to— 

24 ‘‘(A) such dollar amount, multiplied by 
116 

•S 1503 IS 

1 ‘‘(B) the cost-of-living adjustment deter2 mined under section 213(d)(10)(B)(ii) for the 

3 calendar year in which the taxable year begins, 

4 determined by substituting ‘2005’ for ‘1996’ in 

5 subclause (II) thereof. 

6 If any amount as adjusted under the preceding sen7 tence is not a multiple of $10, such amount shall be 

8 rounded to the nearest multiple of $10. 

9 ‘‘(2) INCOME PHASEOUT AMOUNTS.—In the 

10 case of any taxable year beginning after 2006, each 

11 dollar amount referred to in paragraph (3) and (4) 

12 of subsection (b) shall be increased by an amount 

13 equal to— 

14 ‘‘(A) such dollar amount, multiplied by 

15 ‘‘(B) the cost-of-living adjustment deter16 mined under section 1(f)(3) for the calendar 

17 year in which the taxable year begins, deter18 mined by substituting ‘calendar year 2005’ for 

19 ‘calendar year 1992’ in subparagraph (B) 

20 thereof. 

21 If any amount as adjusted under the preceding sen22 tence is not a multiple of $50, such amount shall be 

23 rounded to the next lowest multiple of $50. 

24 ‘‘(h) ARCHER MSA CONTRIBUTIONS; HSA CON25 TRIBUTIONS.—If a deduction would be allowed under sec-
117 

•S 1503 IS 

1 tion 220 to the taxpayer for a payment for the taxable 

2 year to the Archer MSA of an individual or under section 

3 223 to the taxpayer for a payment for the taxable year 

4 to the Health Savings Account of such individual, sub5 section (a) shall not apply to the taxpayer for any month 

6 during such taxable year for which the taxpayer, spouse, 

7 or dependent is an eligible individual for purposes of either 

8 such section. 

9 ‘‘(i) OTHER RULES.—For purposes of this section— 

10 ‘‘(1) COORDINATION WITH MEDICAL EXPENSE

11 AND PREMIUM DEDUCTIONS FOR HIGH DEDUCTIBLE

12 HEALTH PLANS.—The amount which would (but for 

13 this paragraph) be taken into account by the tax14 payer under section 213 or 224 for the taxable year 

15 shall be reduced by the credit (if any) allowed by 

16 this section to the taxpayer for such year. 

17 ‘‘(2) COORDINATION WITH DEDUCTION FOR

18 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN19 DIVIDUALS.—No credit shall be allowable under this 

20 section for a taxable year if a deduction is allowed 

21 under section 162(l) for the taxable year. 

22 ‘‘(3) COORDINATION WITH ADVANCE PAY23 MENT.—Rules similar to the rules of section 

24 35(g)(1) shall apply to any credit to which this sec25 tion applies. 
118 

•S 1503 IS 

1 ‘‘(4) COORDINATION WITH SECTION 35.—If a 

2 taxpayer is eligible for the credit allowed under this 

3 section and section 35 for any taxable year, the tax4 payer shall elect which credit is to be allowed. 

5 ‘‘(j) EXPENSES MUST BE SUBSTANTIATED.—A pay6 ment for insurance to which subsection (a) applies may 

7 be taken into account under this section only if the tax8 payer substantiates such payment in such form as the Sec9 retary may prescribe. 

10 ‘‘(k) REGULATIONS.—The Secretary shall prescribe 

11 such regulations as may be necessary to carry out the pur12 poses of this section.’’. 

13 (b) INFORMATION REPORTING.— 

14 (1) IN GENERAL.—Subpart B of part III of 

15 subchapter A of chapter 61 of the Internal Revenue 

16 Code of 1986 (relating to information concerning 

17 transactions with other persons) is amended by in18 serting after section 6050T the following: 

19 ‘‘SEC. 6050U. RETURNS RELATING TO PAYMENTS FOR 

20 QUALIFIED HEALTH INSURANCE. 

21 ‘‘(a) IN GENERAL.—Any person who, in connection 

22 with a trade or business conducted by such person, re23 ceives payments during any calendar year from any indi24 vidual for coverage of such individual or any other indi25 vidual under creditable health insurance, shall make the 
119 

•S 1503 IS 

1 return described in subsection (b) (at such time as the 

2 Secretary may by regulations prescribe) with respect to 

3 each individual from whom such payments were received. 

4 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

5 is described in this subsection if such return— 

6 ‘‘(1) is in such form as the Secretary may pre7 scribe, and 

8 ‘‘(2) contains— 

9 ‘‘(A) the name, address, and TIN of the 

10 individual from whom payments described in 

11 subsection (a) were received, 

12 ‘‘(B) the name, address, and TIN of each 

13 individual who was provided by such person 

14 with coverage under creditable health insurance 

15 by reason of such payments and the period of 

16 such coverage, 

17 ‘‘(C) the aggregate amount of payments 

18 described in subsection (a), and 

19 ‘‘(D) such other information as the Sec20 retary may reasonably prescribe. 

21 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur22 poses of this section, the term ‘creditable health insurance’ 

23 means qualified health insurance (as defined in section 

24 36(d)). 
120 

•S 1503 IS 

1 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID2 UALS WITH RESPECT TO WHOM INFORMATION IS RE3 QUIRED.—Every person required to make a return under 

4 subsection (a) shall furnish to each individual whose name 

5 is required under subsection (b)(2)(A) to be set forth in 

6 such return a written statement showing— 

7 ‘‘(1) the name and address of the person re8 quired to make such return and the phone number 

9 of the information contact for such person, 

10 ‘‘(2) the aggregate amount of payments de11 scribed in subsection (a) received by the person re12 quired to make such return from the individual to 

13 whom the statement is required to be furnished, and 

14 ‘‘(3) the information required under subsection 

15 (b)(2)(B) with respect to such payments. 

16 The written statement required under the preceding sen17 tence shall be furnished on or before January 31 of the 

18 year following the calendar year for which the return 

19 under subsection (a) is required to be made. 

20 ‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE

21 MADE BY 2 OR MORE PERSONS.—Except to the extent 

22 provided in regulations prescribed by the Secretary, in the 

23 case of any amount received by any person on behalf of 

24 another person, only the person first receiving such 
121 

•S 1503 IS 

1 amount shall be required to make the return under sub2 section (a).’’. 

3 (2) ASSESSABLE PENALTIES.— 

4 (A) Subparagraph (B) of section 

5 6724(d)(1) of such Code (relating to defini6 tions) is amended by redesignating clauses (xiii) 

7 through (xviii) as clauses (xiv) through (xix), 

8 respectively, and by inserting after clause (xii) 

9 the following: 

10 ‘‘(xiii) section 6050U (relating to re11 turns relating to payments for qualified 

12 health insurance),’’. 

13 (B) Paragraph (2) of section 6724(d) of 

14 such Code is amended by striking ‘‘or’’ at the 

15 end of subparagraph (AA), by striking the pe16 riod at the end of the subparagraph (BB) and 

17 inserting ‘‘, or’’, and by adding at the end the 

18 following: 

19 ‘‘(CC) section 6050U(d) (relating to re20 turns relating to payments for qualified health 

21 insurance).’’. 

22 (3) CLERICAL AMENDMENT.—The table of sec23 tions for subpart B of part III of subchapter A of 

24 chapter 61 of such Code is amended by inserting 
122 

•S 1503 IS 

1 after the item relating to section 6050T the fol2 lowing: 

‘‘Sec. 6050U. Returns relating to payments for qualified health insurance.’’. 

3 (c) CRIMINAL PENALTY FOR FRAUD.—Subchapter B 

4 of chapter 75 of the Internal Revenue Code of 1986 (relat5 ing to other offenses) is amended by adding at the end 

6 the following: 

7 ‘‘SEC. 7276. PENALTIES FOR OFFENSES RELATING TO 

8 HEALTH INSURANCE TAX CREDIT. 

9 ‘‘Any person who knowingly misuses Department of 

10 the Treasury names, symbols, titles, or initials to convey 

11 the false impression of association with, or approval or en12 dorsement by, the Department of the Treasury of any in13 surance products or group health coverage in connection 

14 with the credit for health insurance costs under section 

15 36 shall on conviction thereof be fined not more than 

16 $10,000, or imprisoned not more than 1 year, or both.’’. 

17 (d) CONFORMING AMENDMENTS.— 

18 (1) Section 162(l) of the Internal Revenue Code 

19 of 1986 is amended by adding at the end the fol20 lowing: 

21 ‘‘(6) ELECTION TO HAVE SUBSECTION

22 APPLY.—No deduction shall be allowed under para23 graph (1) for a taxable year unless the taxpayer 

24 elects to have this subsection apply for such year.’’. 
123 

•S 1503 IS 

1 (2) Paragraph (2) of section 1324(b) of title 

2 31, United States Code, is amended by inserting be3 fore the period ‘‘, or from section 36 of such Code’’. 

4 (3) The table of sections for subpart C of part 

5 IV of subchapter A of chapter 1 of the Internal Rev6 enue Code of 1986 is amended by striking ‘‘35’’ and 

7 inserting ‘‘36’’ and by inserting after the item relat8 ing to section 35 the following: 

‘‘Sec. 36. Health insurance costs for uninsured individuals.’’. 

9 (4) The table of sections for subchapter B of 

10 chapter 75 of such Code is amended by adding at 

11 the end the following: 

‘‘Sec. 7276. Penalties for offenses relating to health insurance tax credit.’’. 

12 (e) EFFECTIVE DATES.— 

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section 

15 shall apply to taxable years beginning after Decem16 ber 31, 2005. 

17 (2) PENALTIES.—The amendments made by 

18 subsections (c) and (d)(4) shall take effect on the 

19 date of the enactment of this Act. 

20 SEC. 202. ADVANCE PAYMENT OF CREDIT TO ISSUERS OF 

21 QUALIFIED HEALTH INSURANCE. 

22 (a) IN GENERAL.—Chapter 77 of the Internal Rev23 enue Code of 1986 (relating to miscellaneous provisions) 

24 is amended by adding at the end the following: 
124 

•S 1503 IS 

1 ‘‘SEC. 7529. ADVANCE PAYMENT OF CREDIT FOR HEALTH 

2 INSURANCE COSTS OF ELIGIBLE INDIVID3 UALS. 

4 ‘‘Not later than July 1, 2007, the Secretary shall es5 tablish a program for making payments to providers of 

6 qualified health insurance (as defined in section 36(d)) on 

7 behalf of individuals eligible for the credit under section 

8 36. Such payments shall be made on the basis of modified 

9 adjusted gross income of eligible individuals for the pre10 ceding taxable year.’’. 

11 (b) CLERICAL AMENDMENT.—The table of sections 

12 for chapter 77 of the Internal Revenue Code of 1986 is 

13 amended by adding at the end the following: 

‘‘Sec. 7529. Advance payment of health insurance credit for purchasers of 

qualified health insurance.’’. 

14 Subtitle B—High Deductible Health 

15 Plans and Health Savings Accounts 

16 SEC. 211. DEDUCTION OF PREMIUMS FOR HIGH DEDUCT17 IBLE HEALTH PLANS. 

18 (a) IN GENERAL.—Part VII of subchapter B of chap19 ter 1 of the Internal Revenue Code of 1986 (relating to 

20 additional itemized deductions for individuals) is amended 

21 by redesignating section 224 as section 225 and by insert22 ing after section 223 the following new section: 
125 

•S 1503 IS 

1 ‘‘SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH 

2 PLANS. 

3 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi4 vidual, there shall be allowed as a deduction for the tax5 able year the aggregate amount paid by or on behalf of 

6 such individual as premiums under a high deductible 

7 health plan with respect to months during such year for 

8 which such individual is an eligible individual with respect 

9 to such health plan. 

10 ‘‘(b) DEFINITIONS.—For purposes of this section— 

11 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

12 individual’ has the meaning given such term by sec13 tion 223(c)(1). 

14 ‘‘(2) HIGH DEDUCTIBLE HEALTH PLAN.—The 

15 term ‘high deductible health plan’ has the meaning 

16 given such term by section 223(c)(2). 

17 ‘‘(c) SPECIAL RULES.— 

18 ‘‘(1) DEDUCTION ALLOWABLE FOR ONLY 1

19 PLAN.—For purposes of this section, in the case of 

20 an individual covered by more than 1 high deductible 

21 health plan for any month, the individual may only 

22 take into account amounts paid for 1 of such plans 

23 for such month. 

24 ‘‘(2) GROUP HEALTH PLAN COVERAGE.— 

25 ‘‘(A) IN GENERAL.—No deduction shall be 

26 allowed to an individual under subsection (a) 
126 

•S 1503 IS 

1 for any amount paid for coverage under a high 

2 deductible health plan for a month if, as of the 

3 first day of that month, that individual partici4 pates in any coverage under a group health 

5 plan (within the meaning of section 5000 with6 out regard to section 5000(d)). 

7 ‘‘(B) EXCEPTION FOR CERTAIN PER8 MITTED COVERAGE.—Subparagraph (A) shall 

9 not apply to an individual if the individual’s 

10 only coverage under a group health plan for a 

11 month is coverage described in clause (i) or (ii) 

12 of section 223(c)(1)(B). 

13 ‘‘(3) MEDICARE ELIGIBLE INDIVIDUALS.—No 

14 deduction shall be allowed under subsection (a) with 

15 respect to any individual for any month if the indi16 vidual is entitled to benefits under title XVIII of the 

17 Social Security Act for the month. 

18 ‘‘(4) HEALTH SAVINGS ACCOUNT REQUIRED.— 

19 A deduction shall not be allowed under subsection 

20 (a) for a taxable year with respect to an individual 

21 unless the individual is an account beneficiary of a 

22 health savings account during a portion of the tax23 able year. 

24 ‘‘(5) MEDICAL AND HEALTH SAVINGS AC25 COUNTS.—Subsection (a) shall not apply with re-
127 

•S 1503 IS 

1 spect to any amount which is paid or distributed out 

2 of an Archer MSA or a health savings account which 

3 is not included in gross income under section 220(f) 

4 or 223(f), as the case may be. 

5 ‘‘(6) COORDINATION WITH DEDUCTION FOR

6 HEALTH INSURANCE OF SELF-EMPLOYED INDIVID7 UALS.—The amount taken into account by the tax8 payer in computing the deduction under section 

9 162(l) shall not be taken into account under this 

10 section. 

11 ‘‘(7) COORDINATION WITH MEDICAL EXPENSE

12 DEDUCTION.—The amount taken into account by 

13 the taxpayer in computing the deduction under this 

14 section shall not be taken into account under section 

15 213.’’. 

16 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI17 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

18 of section 62 of the Internal Revenue Code of 1986 (defin19 ing adjusted gross income) is amended by inserting before 

20 the last sentence at the end the following new paragraph: 

21 ‘‘(21) PREMIUMS FOR HIGH DEDUCTIBLE

22 HEALTH PLANS.—The deduction allowed by section 

23 224.’’. 

24 (c) COORDINATION WITH HEALTH INSURANCE

25 COSTS CREDIT.—Section 35(g)(2) of the Internal Rev-
128 

•S 1503 IS 

1 enue Code of 1986 is amended by striking ‘‘or 213’’ and 

2 inserting ‘‘,213, or 224’’. 

3 (d) CLERICAL AMENDMENT.—The table of sections 

4 for part VII of subchapter B of chapter 1 of the Internal 

5 Revenue Code of 1986 is amended by redesignating sec6 tion 224 as section 225 and by inserting before such item 

7 the following new item: 

‘‘Sec. 224. Premiums for high deductible health plans.’’. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2005. 

11 SEC. 212. REFUNDABLE CREDIT FOR CONTRIBUTIONS TO 

12 HEALTH SAVINGS ACCOUNTS OF SMALL BUSI13 NESS EMPLOYEES. 

14 (a) IN GENERAL.—Subpart C of part IV of sub15 chapter A of chapter 1 of the Internal Revenue Code of 

16 1986, as amended by subtitle A, is amended by inserting 

17 after section 36 the following new section: 

18 ‘‘SEC. 36A. SMALL EMPLOYER CONTRIBUTIONS TO HEALTH 

19 SAVINGS ACCOUNTS. 

20 ‘‘(a) GENERAL RULE.—In the case of an eligible em21 ployer, there shall be allowed as a credit against the tax 

22 imposed by this subtitle an amount equal to the lesser of— 

23 ‘‘(1) the amount contributed by such employer 

24 to any qualified health savings account of any em-
129 

•S 1503 IS 

1 ployee who is an eligible individual (as defined in 

2 section 223(c)(1)) during the taxable year, or 

3 ‘‘(2) an amount equal to the product of— 

4 ‘‘(A) $200 ($500 if coverage for all months 

5 described in subparagraph (B)(i) is family cov6 erage), and 

7 ‘‘(B) a fraction— 

8 ‘‘(i) the numerator of which is the 

9 number of months that the employee was 

10 covered under a high deductible health 

11 plan maintained by the employer, and 

12 ‘‘(ii) the denominator of which is the 

13 number of months in the taxable year. 

14 ‘‘(b) ELIGIBLE EMPLOYER.—For purposes of this 

15 section— 

16 ‘‘(1) IN GENERAL.—The term ‘eligible em17 ployer’ means, with respect to any taxable year, an 

18 employer which— 

19 ‘‘(A) is a small employer, and 

20 ‘‘(B) maintains a high deductible health 

21 plan under which all employees of the employer 

22 reasonably expected to receive at least $5,000 

23 of compensation during the taxable year are eli24 gible to participate. 
130 

•S 1503 IS 

1 An employer may exclude from consideration under 

2 subparagraph (B) employees who are covered by an 

3 agreement described in section 410(b)(3)(A) if there 

4 is evidence that health benefits were the subject of 

5 good faith bargaining. 

6 ‘‘(2) EXCEPTION FOR GOVERNMENTAL AND

7 TAX-EXEMPT EMPLOYERS.—The term ‘eligible em8 ployer’ shall not include the Federal Government or 

9 any employer described in section 457(e)(1). 

10 ‘‘(3) SMALL EMPLOYER.— 

11 ‘‘(A) IN GENERAL.—The term ‘small em12 ployer’ means, with respect to any calendar 

13 year, any employer if such employer employed 

14 an average of 100 or fewer employees on busi15 ness days during either of the 2 preceding cal16 endar years. For purposes of the preceding sen17 tence, a preceding calendar year may be taken 

18 into account only if the employer was in exist19 ence throughout such year. 

20 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

21 PRECEDING YEAR.—In the case of an employer 

22 which was not in existence throughout the 1st 

23 preceding calendar year, the determination 

24 under subparagraph (A) shall be based on the 

25 average number of employees that it is reason-
131 

•S 1503 IS 

1 ably expected such employer will employ on 

2 business days in the current calendar year. 

3 ‘‘(C) SPECIAL RULE.—Any reference in 

4 this paragraph to an employer shall include a 

5 reference to any predecessor of such employer. 

6 ‘‘(c) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) HIGH DEDUCTIBLE HEALTH PLAN.—The 

8 term ‘high deductible health plan’ has the meaning 

9 given such term by section 223(c)(2). 

10 ‘‘(2) QUALIFIED HEALTH SAVINGS ACCOUNT.— 

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

12 health savings account’ means a health savings 

13 account (as defined in section 223(d))— 

14 ‘‘(i) which is designated (in such form 

15 as the Secretary may prescribe) as a quali16 fied account for purposes of this section, 

17 ‘‘(ii) which may not include any 

18 amount other than contributions described 

19 in subsection (a) and earnings on such 

20 contributions, and 

21 ‘‘(iii) with respect to which section 

22 223(f)(4)(A) is applied by substituting 

23 ‘100 percent’ for ‘10 percent’. 

24 ‘‘(B) SUBACCOUNTS AND SEPARATE AC25 COUNTING.—The Secretary may prescribe rules 
132 

•S 1503 IS 

1 under which a subaccount within a health sav2 ings account, or separate accounting with re3 spect to contributions and earnings described in 

4 subparagraph (A)(ii), may be treated in the 

5 same manner as a qualified health savings ac6 count. 

7 ‘‘(C) ROLLOVERS.—A contribution of a 

8 distribution from a qualified health savings ac9 count to another health savings account shall be 

10 treated as a rollover contribution for purposes 

11 of section 223(f)(5) only if the other account is 

12 a qualified health savings account. 

13 ‘‘(d) SPECIAL RULES.—For purposes of this sec14 tion— 

15 ‘‘(1) AGGREGATION RULES.—All persons treat16 ed as a single employer under subsection (a) or (b) 

17 of section 52, or subsection (n) or (o) of section 414, 

18 shall be treated as one person. 

19 ‘‘(2) DISALLOWANCE OF DEDUCTION.—No de20 duction shall be allowed for that portion of contribu21 tions to any health savings accounts for the taxable 

22 year which is equal to the credit determined under 

23 subsection (a). 

24 ‘‘(3) ELECTION NOT TO CLAIM CREDIT.—This 

25 section shall not apply to a taxpayer for any taxable 
133 

•S 1503 IS 

1 year if such taxpayer elects to have this section not 

2 apply for such taxable year.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Paragraph (2) of section 1324(b) of title 

5 31, United States Code, is amended by inserting be6 fore the period ‘‘, or from section 36A of such 

7 Code’’. 

8 (2) The table of sections for subpart C of part 

9 IV of chapter 1 of the Internal Revenue Code of 

10 1986, as amended by subtitle A, is amended by in11 serting after the item relating to section 36 the fol12 lowing new item: 

‘‘Sec. 36A. Small employer contributions to health savings accounts.’’. 

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

14 this section shall apply to contributions made in taxable 

15 years beginning after December 31, 2005. 

16 Subtitle C—Improvement of the 

17 Health Coverage Tax Credit 

18 SEC. 221. CHANGE IN STATE-BASED COVERAGE RULES RE19 LATED TO PREEXISTING CONDITIONS. 

20 (a) IN GENERAL.—Section 35(e)(2) of the Internal 

21 Revenue Code of 1986 (relating to requirements for State22 based coverage) is amended by adding at the end the fol23 lowing: 

24 ‘‘(C) LIMITATION ON PREEXISTING CONDI25 TION EXCLUSION PERIOD.—The term ‘qualified 
134 

•S 1503 IS 

1 health insurance’ does not include any coverage 

2 described in subparagraphs (C) through (H) of 

3 paragraph (1) that imposes a pre-existing con4 dition exclusion with respect to any individual 

5 unless— 

6 ‘‘(i) such exclusion relates to a phys7 ical or mental condition, regardless of the 

8 cause of the condition, for which medical 

9 advice, diagnosis, care, or treatment was 

10 recommended or received within the 6- 

11 month period ending on the date the indi12 vidual seeks to enroll in the coverage, 

13 ‘‘(ii) such exclusion extends for a pe14 riod of not more than 12 months after the 

15 individual seeks to enroll in the coverage, 

16 ‘‘(iii) the period of any such pre17 existing condition exclusion is reduced by 

18 the length of the aggregate of the periods 

19 of creditable coverage (as defined in sec20 tion 9801(c)) applicable to the individual 

21 as of the enrollment date, and 

22 ‘‘(iv) such exclusion is not an exclu23 sion described in section 9801(d).’’. 

24 (b) CONFORMING AMENDMENTS.— 
135 

•S 1503 IS 

1 (1) INTERNAL REVENUE CODE OF 1986.—Sub2 paragraph (A) of section 35(e)(2) of such Code is 

3 amended— 

4 (A) by striking clause (ii); and 

5 (B) by redesignating clauses (iii) and (iv) 

6 as clauses (ii) and (iii), respectively. 

7 (2) WORKFORCE INVESTMENT ACT OF 1998

8 AMENDMENTS.—Section 173(f)(2)(B) of the Work9 force Investment Act of 1998 (29 U.S.C. 

10 2918(f)(2)(B)) is amended— 

11 (A) in clause (i)— 

12 (i) by striking subclause (II); and 

13 (ii) by redesignating subclauses (III) 

14 and (IV) as subclauses (II) and (III), re15 spectively; and 

16 (B) by adding at the end the following: 

17 ‘‘(iii) LIMITATION ON PREEXISTING

18 CONDITION EXCLUSION PERIOD.—The 

19 term ‘qualified health insurance’ does not 

20 include any coverage described in clauses 

21 (iii) through (ix) of subparagraph (A) that 

22 imposes a pre-existing condition exclusion 

23 with respect to any individual unless— 

24 ‘‘(I) such exclusion relates to a 

25 physical or mental condition, regard-
136 

•S 1503 IS 

1 less of the cause of the condition, for 

2 which medical advice, diagnosis, care, 

3 or treatment was recommended or re4 ceived within the 6-month period end5 ing on the date the individual seeks to 

6 enroll in the coverage; 

7 ‘‘(II) such exclusion extends for a 

8 period of not more than 12 months 

9 after the individual seeks to enroll in 

10 the coverage; 

11 ‘‘(III) the period of any such pre12 existing condition exclusion is reduced 

13 by the length of the aggregate of the 

14 periods of creditable coverage (as de15 fined in section 9801(c) of the Inter16 nal Revenue Code of 1986) applicable 

17 to the individual as of the enrollment 

18 date; and 

19 ‘‘(IV) such exclusion is not an ex20 clusion described in section 9801(d) of 

21 such Code.’’. 

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

23 this section apply to taxable years beginning after Decem24 ber 31, 2005. 
137 

•S 1503 IS 

1 SEC. 222. ELIGIBILITY OF SPOUSE OF CERTAIN INDIVID2 UALS ENTITLED TO MEDICARE. 

3 (a) IN GENERAL.—Subsection (b) of section 35 of 

4 such Code (defining eligible coverage month) is amended 

5 by adding at the end the following: 

6 ‘‘(3) SPECIAL RULE FOR SPOUSE OF INDI7 VIDUAL ENTITLED TO MEDICARE.—Any month 

8 which would be an eligible coverage month with re9 spect to a taxpayer (determined without regard to 

10 subsection (f)(2)(A)) shall be an eligible coverage 

11 month for any spouse of such taxpayer, provided the 

12 spouse has attained age 55 and meets the require13 ments of clauses (ii), (iii), and (iv) of paragraph 

14 (1)(A).’’. 

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

16 subsection (a) applies to taxable years beginning after De17 cember 31, 2005. 

18 SEC. 223. ELIGIBLE PBGC PENSION RECIPIENT. 

19 (a) IN GENERAL.—Subparagraph (B) of section 

20 35(c)(4) of such Code (relating to eligible PBGC pension 

21 recipients) is amended by inserting before the period the 

22 following ‘‘, or, after August 6, 2002, received from such 

23 Corporation a one-time single-sum pension payment in 

24 lieu of an annuity’’. 

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

26 subsection (a) shall take effect as if included in the enact-
138 

•S 1503 IS 

1 ment of section 201 of the Trade Act of 2002 (Public Law 

2 107–210, 116 Stat. 954). 

3 SEC. 224. APPLICATION OF OPTION TO OFFER STATE4 BASED COVERAGE TO PUERTO RICO, NORTH5 ERN MARIANA ISLANDS, AMERICAN SAMOA, 

6 GUAM, AND THE UNITED STATES VIRGIN IS7 LANDS. 

8 (a) IN GENERAL.—Section 35(e) of such Code (relat9 ing to requirements for qualified health insurance) is 

10 amended by adding at the end the following: 

11 ‘‘(4) APPLICATION TO PUERTO RICO, NORTH12 ERN MARIANA ISLANDS, AMERICAN SAMOA, GUAM, 

13 AND THE UNITED STATES VIRGIN ISLANDS.—For 

14 purposes of this section, Puerto Rico, Northern Mar15 iana Islands, American Samoa, Guam, and the 

16 United States Virgin Islands shall be considered 

17 States.’’. 

18 (b) CONFORMING AMENDMENT.—Section 173(f)(2) 

19 of the Workforce Investment Act of 1998 (29 U.S.C. 

20 2918(f)(2)) is amended by adding at the end the following: 

21 ‘‘(D) APPLICATION TO NORTHERN MAR22 IANA ISLANDS, AMERICAN SAMOA, GUAM, AND

23 THE UNITED STATES VIRGIN ISLANDS.—For 

24 purposes of subsection (a)(4)(A) and this sub25 section, the term ‘State’ shall include the 
139 

•S 1503 IS 

1 Northern Mariana Islands, American Samoa, 

2 Guam, and the United States Virgin Islands.’’. 

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

4 this section apply to taxable years beginning after Decem5 ber 31, 2005. 

6 SEC. 225. CLARIFICATION OF DISCLOSURE RULES. 

7 (a) IN GENERAL.—Subsection (k) of section 6103 of 

8 such Code (relating to disclosure of certain returns and 

9 return information for tax administration purposes) is 

10 amended by adding at the end the following: 

11 ‘‘(10) DISCLOSURE OF CERTAIN RETURN IN12 FORMATION FOR PURPOSES OF CARRYING OUT A

13 PROGRAM FOR ADVANCE PAYMENT OF CREDIT FOR

14 HEALTH INSURANCE COSTS OF ELIGIBLE INDIVID15 UALS.—The Secretary may disclose to providers of 

16 health insurance, administrators of health plans, or 

17 contractors of such providers or administrators, for 

18 any certified individual (as defined in section 

19 7527(c)) the taxpayer identity and health insurance 

20 member and group numbers of the certified indi21 vidual (and any qualifying family member as defined 

22 in section 35(d), if applicable) and the amount and 

23 period of the payment, to the extent the Secretary 

24 deems necessary for the administration of the pro25 gram established by section 7527 (relating to ad-
140 

•S 1503 IS 

1 vance payment of credit for health insurance costs of 

2 eligible individuals).’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Section 6103 of such Code (relating to con5 fidentiality and disclosure of returns and return in6 formation) is amended— 

7 (A) in subsection (a)(3), by inserting 

8 ‘‘(k)(10),’’ after ‘‘(e)(1)(D)(iii),’’; 

9 (B) in subsection (l), by striking para10 graph (18); and 

11 (C) in subsection (p)— 

12 (i) in paragraph (3)(A)— 

13 (I) by striking ‘‘or (9)’’ and in14 serting ‘‘(9), or (10)’’; and 

15 (II) by striking ‘‘(17), or (18)’’ 

16 and inserting ‘‘or (17)’’; and 

17 (ii) in paragraph (4), by striking 

18 ‘‘(18)’’ after ‘‘(l)(16)’’ each place it ap19 pears. 

20 (2) Section 7213(a)(2) of such Code (relating 

21 to unauthorized disclosure of information) is amend22 ed by inserting ‘‘(k)(10)’’ before ‘‘(l)(6)’’. 

23 (3) Section 7213A(a)(1)(B) of such Code (re24 lating to unauthorized inspection of returns or re25 turn information) is amended by striking ‘‘sub-
141 

•S 1503 IS 

1 section (l)(18) or (n) of section 6103’’ and inserting 

2 ‘‘section 6103(n)’’. 

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

4 this section apply to taxable years beginning after Decem5 ber 31, 2005. 

6 SEC. 226. CLARIFICATION THAT STATE-BASED COBRA CON7 TINUATION COVERAGE IS SUBJECT TO SAME 

8 RULES AS FEDERAL COBRA. 

9 (a) IN GENERAL.—Section 35(e)(2) of such Code (re10 lating to state-based coverage requirements) is amended— 

11 (1) in subparagraph (A), in the matter pre12 ceding clause (i), by striking ‘‘(B)’’ and inserting 

13 ‘‘(C)’’; and 

14 (2) in subparagraph(B)(i), by striking ‘‘(B)’’ 

15 and inserting ‘‘(C)’’. 

16 (b) CONFORMING AMENDMENTS.—Section 

17 173(f)(2)(B) of the Workforce Investment Act of 1998 (29 

18 U.S.C. 2918(f)(2)(B)) is amended— 

19 (1) in clause (i), in the matter preceding sub20 clause (I), by striking ‘‘(ii)’’ and inserting ‘‘(iii)’’; 

21 and 

22 (2) in clause (ii)(I), by striking ‘‘(ii)’’ and in23 serting ‘‘(iii)’’. 

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

25 this section shall take effect as if included in the enact-
142 

•S 1503 IS 

1 ment of sections 201 and 203, respectively, of the Trade 

2 Act of 2002 (Public Law 107–210, 116 Stat. 954). 

3 SEC. 227. APPLICATION OF RULES FOR OTHER SPECIFIED 

4 COVERAGE TO ELIGIBLE ALTERNATIVE TAA 

5 RECIPIENTS CONSISTENT WITH RULES FOR 

6 OTHER ELIGIBLE INDIVIDUALS. 

7 (a) IN GENERAL.—Section 35(f)(1) of such Code (re8 lating to subsidized coverage) is amended by striking sub9 paragraph (B) and redesignating subparagraph (C) as 

10 subparagraph (B). 

11 (b) CONFORMING AMENDMENTS.—Section 

12 173(f)(7)(A) of the Workforce Investment Act of 1998 (29 

13 U.S.C. 2918(f)(7)(A)) is amended by striking clause (ii) 

14 and redesignating clause (iii) as clause (ii). 

15 Subtitle D—Long-Term Care 

16 Insurance 

17 SEC. 231. SENSE OF THE SENATE CONCERNING LONG-TERM 

18 CARE. 

19 It is the sense of the Senate that Congress should 

20 take steps to make long-term care more affordable by pro21 viding tax incentives for the purchase of long-term care 

22 insurance, support for family caregivers, and making nec23 essary public program reforms. 
143 

•S 1503 IS 

1 Subtitle E—Other Provisions 

2 SEC. 241. DISPOSITION OF UNUSED HEALTH BENEFITS IN 

3 CAFETERIA PLANS AND FLEXIBLE SPENDING 

4 ARRANGEMENTS. 

5 (a) IN GENERAL.—Section 125 of the Internal Rev6 enue Code of 1986 (relating to cafeteria plans) is amended 

7 by redesignating subsections (h) and (i) as subsections (i) 

8 and (j), respectively, and by inserting after subsection (g) 

9 the following: 

10 ‘‘(h) CONTRIBUTIONS OF CERTAIN UNUSED HEALTH

11 BENEFITS.— 

12 ‘‘(1) IN GENERAL.—For purposes of this title, 

13 a plan or other arrangement shall not fail to be 

14 treated as a cafeteria plan solely because qualified 

15 benefits under such plan include a health flexible 

16 spending arrangement under which not more than 

17 $500 of unused health benefits may be— 

18 ‘‘(A) carried forward to the succeeding 

19 plan year of such health flexible spending ar20 rangement, or 

21 ‘‘(B) to the extent permitted by section 

22 106(c), contributed by the employer to a health 

23 savings account (as defined in section 223(d)) 

24 maintained for the benefit of the employee. 
144 

•S 1503 IS 

1 ‘‘(2) HEALTH FLEXIBLE SPENDING ARRANGE2 MENT.— 

3 ‘‘(A) IN GENERAL.—For purposes of this 

4 subsection, the term ‘health flexible spending 

5 arrangement’ means a flexible spending ar6 rangement (as defined in section 106(c)) that is 

7 a qualified benefit and only permits reimburse8 ment for expenses for medical care (as defined 

9 in section 213(d)(1), without regard to subpara10 graphs (C) and (D) thereof). 

11 ‘‘(B) FLEXIBLE SPENDING ARRANGE12 MENT.—A flexible spending arrangement is a 

13 benefit program which provides employees with 

14 coverage under which— 

15 ‘‘(i) specified incurred expenses may 

16 be reimbursed (subject to reimbursement 

17 maximums and other reasonable condi18 tions), and 

19 ‘‘(ii) the maximum amount of reim20 bursement which is reasonably available to 

21 a participant for such coverage is less than 

22 500 percent of the value of such coverage. 

23 In the case of an insured plan, the maximum 

24 amount reasonably available shall be deter25 mined on the basis of the underlying coverage. 
145 

•S 1503 IS 

1 ‘‘(3) UNUSED HEALTH BENEFITS.—For pur2 poses of this subsection, with respect to an em3 ployee, the term ‘unused health benefits’ means the 

4 excess of— 

5 ‘‘(A) the maximum amount of reimburse6 ment allowable to the employee for a plan year 

7 under a health flexible spending arrangement, 

8 over 

9 ‘‘(B) the actual amount of reimbursement 

10 for such year under such arrangement.’’. 

11 (b) EFFECTIVE DATE.—The amendments made by 

12 subsection (a) shall apply to taxable years beginning after 

13 December 31, 2004. 

14 SEC. 242. MICROENTREPRENEURS. 

15 (Section 404(8) of the Assets for Independence Act 

16 (42 U.S.C. 604 note) is amended by adding at the end 

17 the following: 

18 ‘‘(F) HIGH DEDUCTIBLE HEALTH INSUR19 ANCE.— 

20 ‘‘(i) IN GENERAL.—The eligible indi21 vidual’s contribution (as an employer or 

22 employee) for coverage under a high de23 ductible health plan (as defined in section 

24 223(c)(2) of the Internal Revenue Code of 

25 1986). 
146 

•S 1503 IS 

1 ‘‘(ii) DEFINITION OF EMPLOYEE.— 

2 For purposes of clause (i), the term ‘em3 ployee’ includes an individual described in 

4 section 401(c)(1) of the Internal Revenue 

5 Code of 1986.’’. 

6 SEC. 243. STUDY ON ACCESS TO AFFORDABLE HEALTH IN7 SURANCE FOR FULL-TIME COLLEGE AND UNI8 VERSITY STUDENTS. 

9 (a) SENSE OF THE SENATE.—It is the sense of the 

10 Senate that, because a considerable number of the United 

11 States’ uninsured population are young adults who are en12 rolled full-time at an institution of higher education, Con13 gress should determine whether health care coverage pro14 posals targeting this population would be effective. 

15 (b) STUDY REQUIRED.—The Government Account16 ability Office shall provide for the conduct of a study to 

17 evaluate existing and potential sources of affordable health 

18 insurance coverage for graduate and undergraduate stu19 dents enrolled at an institution of higher education (as de20 fined in section 1201 of the Higher Education Act of 1965 

21 (20 U.S.C. 1141)). 

22 (c) REQUIRED ELEMENTS OF STUDY.—In con23 ducting the study under subsection (b), the Government 

24 Accountability Office shall, at a minimum, examine the 

25 following: 
147 

•S 1503 IS 

1 (1) STUDENT DEMOGRAPHICS.— 

2 (A) IN GENERAL.—The size and character3 istics of the insured and uninsured population 

4 of undergraduate and graduate students en5 rolled at institutions of higher education. Such 

6 data shall be differentiated as provided for in 

7 subparagraphs (B) and (C). 

8 (B) STATISTICAL BREAKDOWN.—The data 

9 concerning the uninsured student population 

10 collected under subparagraph (A) shall be dif11 ferentiated by— 

12 (i) the full-time, full-time equivalent, 

13 and part-time enrollment status of the stu14 dents involved; 

15 (ii) the type of institution involved 

16 (such as a public, private, non-profit, or 

17 community institution); 

18 (iii) the length and type of educational 

19 program involved (such as a certificate or 

20 diploma program, a 2-year or 4-year de21 gree program, a masters degree program, 

22 or a doctoral degree program); and 

23 (iv) the undergraduate and graduate 

24 student populations involved. 
148 

•S 1503 IS 

1 (C) COVERAGE.—The data concerning the 

2 insured student population collected under sub3 paragraph (A) shall be differentiated by the 

4 sources of coverage for such students, including 

5 the number and percentage of such insured stu6 dents who lose parental (or other) coverage dur7 ing the course of their enrollment at such insti8 tutions and the age at which such coverage is 

9 lost. 

10 (2) IMPACT ANALYSIS.—The financial and other 

11 impact of uninsured students at such institutions, as 

12 compared to insured students, on— 

13 (A) the health of students; 

14 (B) the student’s family; 

15 (C) the student’s educational progress; and 

16 (D) education and health care institutions 

17 and facilities. 

18 (3) ASSESSMENT OF EXISTING PROGRAMS.— 

19 The effect of mandatory and voluntary programs on 

20 the access of students to health insurance coverage, 

21 including— 

22 (A) the level and type of coverage provided 

23 through mandatory and voluntary State and in24 stitutionally-sponsored health care programs 
149 

•S 1503 IS 

1 currently providing health care insurance cov2 erage to students; 

3 (B) the average premium paid with respect 

4 to students covered under such plans; 

5 (C) the extent to which any State or insti6 tutional health insurance plan may serve as a 

7 model for the expansion of access to health in8 surance for all full-time undergraduate and 

9 graduate students attending an institution of 

10 higher education; and 

11 (D) whether such programs targeted to the 

12 student population would be more effective in 

13 reducing the overall rate of uninsured relative 

14 to proposals targeted to broader populations. 

15 (4) INCENTIVES AND DISINCENTIVES.—The ex16 istence of incentives and disincentives offered to in17 stitutions of higher education to expand access to 

18 health care coverage for students, including— 

19 (A) an assessment of the types of incen20 tives and disincentives that may be used to en21 courage or require an institution of higher edu22 cation to include health care coverage for all of 

23 its students on a mandatory basis, including fi24 nancial, regulatory, administrative, and other 

25 incentives or disincentives; 
150 

•S 1503 IS 

1 (B) a list of burdensome regulatory or ad2 ministrative reporting and other requirements 

3 (from the Department of Education or other 

4 governmental agencies) that could be waived 

5 without compromising program integrity as a 

6 means of encouraging institutions of higher 

7 education to provide uninsured students with 

8 access to health care coverage; 

9 (C) other incentives or disincentives that 

10 would increase the level of institutional partici11 pation in health care coverage programs; and 

12 (D) an analysis of the costs and effective13 ness (to reduce the number of uninsured stu14 dents) of including the cost of health insurance 

15 as an allowable cost of attendance under the 

16 Higher Education Act of 1965, and the impact 

17 of such inclusion on the student’s financial aid 

18 package. 

19 (e) CONSULTATION WITH CONGRESS.—In carrying 

20 out the study under subsection (b), the Government Ac21 countability Office shall consult on a regular basis with 

22 the Secretary of Education, the Secretary of Health and 

23 Human Services, the Committee on the Budget of the 

24 Senate, the Committee on Health, Education, Labor, and 
151 

•S 1503 IS 

1 Pensions of the Senate, and the Committee on Education 

2 and the Workforce of the House of Representatives. 

3 (f) REPORT.—Not later than 1 year after the date 

4 of enactment of this Act, the Government Accountability 

5 Office shall prepare and submit to the Committee on the 

6 Budget and the Committee on Health, Education, Labor, 

7 and Pensions of the Senate, and the Committee on Edu8 cation and the Workforce of the House of Representatives, 

9 a report concerning the results of the study conducted 

10 under this section. 

11 SEC. 244. EXTENSION OF FUNDING FOR OPERATION OF 

12 STATE HIGH RISK HEALTH INSURANCE 

13 POOLS. 

14 Section 2745 of the Public Health Service Act (42 

15 U.S.C. 300gg–45) is amended to read as follows: 

16 ‘‘SEC. 2745. PROMOTION OF QUALIFIED HIGH RISK POOLS. 

17 ‘‘(a) EXTENSION OF SEED GRANTS TO STATES.— 

18 The Secretary shall provide from the funds appropriated 

19 under subsection (d)(1)(A) a grant of up to $1,000,000 

20 to each State that has not created a qualified high risk 

21 pool as of the date of enactment of this section for the 

22 State’s costs of creation and initial operation of such a 

23 pool. 

24 ‘‘(b) GRANTS FOR OPERATIONAL LOSSES.— 
152 

•S 1503 IS 

1 ‘‘(1) IN GENERAL.—In the case of a State that 

2 has established a qualified high risk pool that— 

3 ‘‘(A) restricts premiums charged under the 

4 pool to no more than 150 percent of the pre5 mium for applicable standard risk rates; 

6 ‘‘(B) offers a choice of two or more cov7 erage options through the pool; and 

8 ‘‘(C) has in effect a mechanism reasonably 

9 designed to ensure continued funding of losses 

10 incurred by the State after the end of fiscal 

11 year 2004 in connection with operation of the 

12 pool; 

13 the Secretary shall provide, from the funds appro14 priated under subsection (d)(1)(B)(i) and allotted to 

15 the State under paragraph (2), a grant for the losses 

16 incurred by the State in connection with the oper17 ation of the pool. 

18 ‘‘(2) ALLOTMENT.—The amounts appropriated 

19 under subsection (d)(1)(B)(i) for a fiscal year shall 

20 be made available to the States (or the entities that 

21 operate the high risk pool under applicable State 

22 law) as follows: 

23 ‘‘(A) An amount equal to 50 percent of the 

24 appropriated amount for the fiscal year shall be 

25 allocated in equal amounts among each eligible 
153 

•S 1503 IS 

1 State that applies for assistance under this sub2 section. 

3 ‘‘(B) An amount equal to 25 percent of the 

4 appropriated amount for the fiscal year shall be 

5 allocated among the States so that the amount 

6 provided to a State bears the same ratio to 

7 such available amount as the number of unin8 sured individuals in the State bears to the total 

9 number of uninsured individuals in all States 

10 (as determined by the Secretary). 

11 ‘‘(C) An amount equal to 25 percent of the 

12 appropriated amount for the fiscal year shall be 

13 allocated among the States so that the amount 

14 provided to a State bears the same ratio to 

15 such available amount as the number of individ16 uals enrolled in health care coverage through 

17 the qualified high risk pool of the State bears 

18 to the total number of individuals so enrolled 

19 through qualified high risk pools in all States 

20 (as determined by the Secretary). 

21 ‘‘(c) BONUS GRANTS FOR SUPPLEMENTAL CON22 SUMER BENEFITS.— 

23 ‘‘(1) IN GENERAL.—In the case of a State that 

24 has established a qualified high risk pool, the Sec25 retary shall provide, from the funds appropriated 
154 

•S 1503 IS 

1 under subsection (d)(1)(B)(ii) and allotted to the 

2 State under paragraph (3), a grant to be used to 

3 provide supplemental consumer benefits to enrollees 

4 or potential enrollees (or defined subsets of such en5 rollees or potential enrollees) in qualified high risk 

6 pools. 

7 ‘‘(2) BENEFITS.—A State shall use amounts re8 ceived under a grant under this subsection to pro9 vide one or more of the following benefits: 

10 ‘‘(A) Low-income premium subsidies. 

11 ‘‘(B) A reduction in premium trends, ac12 tual premiums, or other cost-sharing require13 ments. 

14 ‘‘(C) An expansion or broadening of the 

15 pool of individuals eligible for coverage, includ16 ing eliminating waiting lists, increasing enroll17 ment caps, or providing flexibility in enrollment 

18 rules. 

19 ‘‘(D) Less stringent rules, or additional 

20 waiver authority, with respect to coverage of 

21 pre-existing conditions. 

22 ‘‘(E) Increased benefits. 

23 ‘‘(F) The establishment of disease manage24 ment programs. 
155 

•S 1503 IS 

1 ‘‘(3) LIMITATION.—In allotting amounts under 

2 this subsection, the Secretary shall ensure that no 

3 State receives an amount that exceeds 10 percent of 

4 the amount appropriated for the fiscal year involved 

5 under subsection (d)(1)(B)(ii). 

6 ‘‘(4) RULE OF CONSTRUCTION.—Nothing in 

7 this subsection shall be construed to prohibit States 

8 that, on the date of enactment of the State High 

9 Risk Pool Funding Extension Act of 2005, are in 

10 the process of implementing programs to provide 

11 benefits of the type described in paragraph (2), from 

12 being eligible for a grant under this subsection. 

13 ‘‘(d) FUNDING.— 

14 ‘‘(1) IN GENERAL.—Out of any money in the 

15 Treasury of the United States not otherwise appro16 priated, there are authorized and appropriated— 

17 ‘‘(A) $15,000,000 for the period of fiscal 

18 years 2005 and 2006 to carry out subsection 

19 (a); and 

20 ‘‘(B) $75,000,000 for each of fiscal years 

21 2005 through 2009, of which— 

22 ‘‘(i) two-thirds of the amount appro23 priated for a fiscal year shall be made 

24 available for allotments under subsection 

25 (b)(2); and 
156 

•S 1503 IS 

1 ‘‘(ii) one-third of the amount appro2 priated for a fiscal year shall be made 

3 available for allotments under subsection 

4 (c)(2). 

5 ‘‘(2) AVAILABILITY.—Funds appropriated 

6 under this subsection for a fiscal year shall remain 

7 available for obligation through the end of the fol8 lowing fiscal year. 

9 ‘‘(3) REALLOTMENT.—If, on June 30 of each 

10 fiscal year, the Secretary determines that all 

11 amounts appropriated under paragraph (1)(B)(ii) 

12 for the fiscal year are not allotted, such remaining 

13 amounts shall be allotted among States receiving 

14 grants under subsection (b) for the fiscal year in 

15 amounts determined appropriate by the Secretary. 

16 ‘‘(4) NO ENTITLEMENT.—Nothing in this sec17 tion shall be construed as providing a State with an 

18 entitlement to a grant under this section. 

19 ‘‘(e) APPLICATIONS.—To be eligible for a grant under 

20 this section, a State shall submit to the Secretary an appli21 cation at such time, in such manner, and containing such 

22 information as the Secretary may require. 

23 ‘‘(f) DEFINITIONS.—In this section: 

24 ‘‘(1) QUALIFIED HIGH RISK POOL.— 
157 

•S 1503 IS 

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

2 high risk pool’ has the meaning given such term 

3 in section 2744(c)(2), except that with respect 

4 to subparagraph (A) of such section a State 

5 may elect to provide for the enrollment of eligi6 ble individuals through— 

7 ‘‘(i) a combination of a qualified high 

8 risk pool and an acceptable alternative 

9 mechanism; or 

10 ‘‘(ii) other health insurance coverage 

11 described in subparagraph (B). 

12 ‘‘(B) HEALTH INSURANCE COVERAGE.— 

13 Health insurance coverage described in this 

14 subparagraph is individual health insurance 

15 coverage— 

16 ‘‘(i) that meets the requirements of 

17 section 2741; 

18 ‘‘(ii) that is subject to limits on the 

19 rates charged to individuals; 

20 ‘‘(iii) that is available to all individ21 uals eligible for health insurance coverage 

22 under this title who are not able to partici23 pate in a qualified high risk pool; and 

24 ‘‘(iv) the defined rate limit of which 

25 does not exceed the limit allowed for a 
158 

•S 1503 IS 

1 qualified risk pool that is otherwise eligible 

2 to receive assistance under a grant under 

3 this section. 

4 ‘‘(C) OTHER COVERAGE.—In addition to 

5 coverage described in subparagraph (B), a 

6 State may provide for the offering of health in7 surance coverage that provides first dollar cov8 erage, limits on cost-sharing, and comprehen9 sive medical, hospital and surgical coverage, if 

10 the limits on rates for such coverage do not ex11 ceed 125 percent of the limit described in sub12 paragraph (B)(iv). 

13 ‘‘(2) STANDARD RISK RATE.—The term ‘stand14 ard risk rate’ means a rate— 

15 ‘‘(A) determined under the State high risk 

16 pool by considering the premium rates charged 

17 by other health insurers offering health insur18 ance coverage to individuals in the insurance 

19 market served; 

20 ‘‘(B) that is established using reasonable 

21 actuarial techniques; and 

22 ‘‘(C) that reflects anticipated claims expe23 rience and expenses for the coverage involved. 

24 ‘‘(3) STATE.—The term ‘State’ means any of 

25 the 50 States and the District of Columbia.’’. 
159 

•S 1503 IS 

1 SEC. 245. SENSE OF THE SENATE ON AFFORDABLE HEALTH 

2 COVERAGE FOR SMALL EMPLOYERS. 

3 It is the sense of the Senate that Congress should 

4 pass legislation to support expanded, affordable health 

5 coverage options for individuals, particularly those who 

6 work for small businesses, by streamlining and reducing 

7 regulations and expanding the role of associations and 

8 other group purchasing arrangements. 

9 Subtitle F—Covering Kids 

10 SEC. 251. SHORT TITLE. 

11 This subtitle may be cited as the ‘‘Covering Kids Act 

12 of 2005’’. 

13 SEC. 252. GRANTS TO PROMOTE INNOVATIVE OUTREACH 

14 AND ENROLLMENT UNDER MEDICAID AND 

15 SCHIP. 

16 (a) GRANTS FOR EXPANDED OUTREACH ACTIVI17 TIES.—Title XXI of the Social Security Act (42 U.S.C. 

18 1397aa et seq.) is amended by adding at the end the fol19 lowing: 

20 ‘‘SEC. 2111. EXPANDED OUTREACH ACTIVITIES. 

21 ‘‘(a) GRANTS TO CONDUCT INNOVATIVE OUTREACH

22 AND ENROLLMENT EFFORTS.— 

23 ‘‘(1) IN GENERAL.—The Secretary shall award 

24 grants to eligible entities to— 

25 ‘‘(A) conduct innovative outreach and en26 rollment efforts that are designed to increase 
160 

•S 1503 IS 

1 the enrollment and participation of eligible chil2 dren under this title and title XIX; and 

3 ‘‘(B) promote understanding of the impor4 tance of health insurance coverage for prenatal 

5 care and children. 

6 ‘‘(2) PERFORMANCE BONUSES.—The Secretary 

7 may reserve a portion of the funds appropriated 

8 under subsection (g) for a fiscal year for the purpose 

9 of awarding performance bonuses during the suc10 ceeding fiscal year to eligible entities that meet en11 rollment goals or other criteria established by the 

12 Secretary. 

13 ‘‘(b) PRIORITY FOR AWARD OF GRANTS.— 

14 ‘‘(1) IN GENERAL.—In making grants under 

15 subsection (a)(1), the Secretary shall give priority 

16 to— 

17 ‘‘(A) eligible entities that propose to target 

18 geographic areas with high rates of— 

19 ‘‘(i) eligible but unenrolled children, 

20 including such children who reside in rural 

21 areas; or 

22 ‘‘(ii) racial and ethnic minorities and 

23 health disparity populations, including 

24 those proposals that address cultural and 

25 linguistic barriers to enrollment; and 
161 

•S 1503 IS 

1 ‘‘(B) eligible entities that plan to engage in 

2 outreach efforts with respect to individuals de3 scribed in subparagraph (A) and that are— 

4 ‘‘(i) Federal health safety net organi5 zations; or 

6 ‘‘(ii) faith-based organizations or con7 sortia. 

8 ‘‘(2) 10 PERCENT SET ASIDE FOR OUTREACH

9 TO INDIAN CHILDREN.—An amount equal to 10 per10 cent of the funds appropriated under subsection (g) 

11 for a fiscal year shall be used by the Secretary to 

12 award grants to Indian Health Service providers and 

13 urban Indian organizations receiving funds under 

14 title V of the Indian Health Care Improvement Act 

15 (25 U.S.C. 1651 et seq.) for outreach to, and enroll16 ment of, children who are Indians. 

17 ‘‘(c) APPLICATION.—An eligible entity that desires to 

18 receive a grant under subsection (a)(1) shall submit an 

19 application to the Secretary in such form and manner, and 

20 containing such information, as the Secretary may decide. 

21 Such application shall include— 

22 ‘‘(1) quality and outcomes performance meas23 ures to evaluate the effectiveness of activities funded 

24 by a grant awarded under this section to ensure that 

25 the activities are meeting their goals; and 
162 

•S 1503 IS 

1 ‘‘(2) an assurance that the entity shall— 

2 ‘‘(A) conduct an assessment of the effec3 tiveness of such activities against such perform4 ance measures; and 

5 ‘‘(B) cooperate with the collection and re6 porting of enrollment data and other informa7 tion determined as a result of conducting such 

8 assessments to the Secretary, in such form and 

9 manner as the Secretary shall require. 

10 ‘‘(d) DISSEMINATION OF ENROLLMENT DATA AND

11 INFORMATION DETERMINED FROM EFFECTIVENESS AS12 SESSMENTS; ANNUAL REPORT.—The Secretary shall— 

13 ‘‘(1) disseminate to eligible entities and make 

14 publicly available the enrollment data and informa15 tion collected and reported in accordance with sub16 section (c)(2)(B); and 

17 ‘‘(2) submit an annual report to Congress on 

18 the outreach activities funded by grants awarded 

19 under this section. 

20 ‘‘(e) SUPPLEMENT, NOT SUPPLANT.—Federal funds 

21 awarded under this section shall be used to supplement, 

22 not supplant, non-Federal funds that are otherwise avail23 able for activities funded under this section. 

24 ‘‘(f) DEFINITIONS.—In this section: 
163 

•S 1503 IS 

1 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en2 tity’ means any of the following: 

3 ‘‘(A) A State or local government. 

4 ‘‘(B) A Federal health safety net organiza5 tion. 

6 ‘‘(C) A national, local, or community-based 

7 public or nonprofit private organization. 

8 ‘‘(D) A faith-based organization or con9 sortia, to the extent that a grant awarded to 

10 such an entity is consistent with the require11 ments of section 1955 of the Public Health 

12 Service Act (42 U.S.C. 300x–65) relating to a 

13 grant award to non-governmental entities. 

14 ‘‘(E) An elementary or secondary school. 

15 ‘‘(2) FEDERAL HEALTH SAFETY NET ORGANI16 ZATION.—The term ‘Federal health safety net orga17 nization’ means— 

18 ‘‘(A) an Indian tribe, tribal organization, 

19 or an urban Indian organization receiving funds 

20 under title V of the Indian Health Care Im21 provement Act (25 U.S.C. 1651 et seq.), or an 

22 Indian Health Service provider; 

23 ‘‘(B) a Federally-qualified health center 

24 (as defined in section 1905(l)(2)(B)); 
164 

•S 1503 IS 

1 ‘‘(C) a hospital defined as a dispropor2 tionate share hospital for purposes of section 

3 1923; 

4 ‘‘(D) a covered entity described in section 

5 340B(a)(4) of the Public Health Service Act 

6 (42 U.S.C. 256b(a)(4)); and 

7 ‘‘(E) any other entity or a consortium that 

8 serves children under a federally-funded pro9 gram, including the special supplemental nutri10 tion program for women, infants, and children 

11 (WIC) established under section 17 of the Child 

12 Nutrition Act of 1966 (42 U.S.C. 1786), the 

13 head start and early head start programs under 

14 the Head Start Act (42 U.S.C. 9801 et seq.), 

15 the school lunch program established under the 

16 Richard B. Russell National School Lunch Act, 

17 and an elementary or secondary school. 

18 ‘‘(3) INDIANS; INDIAN TRIBE; TRIBAL ORGANI19 ZATION; URBAN INDIAN ORGANIZATION.—The terms 

20 ‘Indian’, ‘Indian tribe’, ‘tribal organization’, and 

21 ‘urban Indian organization’ have the meanings given 

22 such terms in section 4 of the Indian Health Care 

23 Improvement Act (25 U.S.C. 1603). 

24 ‘‘(g) APPROPRIATION.—There is appropriated, out of 

25 any money in the Treasury not otherwise appropriated, 
165 

•S 1503 IS 

1 $50,000,000 for each of fiscal years 2006 and 2007 for 

2 the purpose of awarding grants under this section. 

3 Amounts appropriated and paid under the authority of 

4 this section shall be in addition to amounts appropriated 

5 under section 2104 and paid to States in accordance with 

6 section 2105, including with respect to expenditures for 

7 outreach activities in accordance with subsection 

8 (a)(1)(D)(iii) of that section.’’. 

9 (b) EXTENDING USE OF OUTSTATIONED WORKERS

10 TO ACCEPT TITLE XXI APPLICATIONS.—Section 

11 1902(a)(55) of the Social Security Act (42 U.S.C. 

12 1396a(a)(55)) is amended by striking ‘‘or 

13 (a)(10)(A)(ii)(IX)’’ and inserting ‘‘(a)(10)(A)(ii)(IX), or 

14 (a)(10)(A)(ii)(XIV), and applications for child health as15 sistance under title XXI’’. 

16 SEC. 253. STATE OPTION TO PROVIDE FOR SIMPLIFIED DE17 TERMINATIONS OF A CHILD’S FINANCIAL ELI18 GIBILITY FOR MEDICAL ASSISTANCE UNDER 

19 MEDICAID OR CHILD HEALTH ASSISTANCE 

20 UNDER SCHIP. 

21 (a) MEDICAID.—Section 1902(e) of the Social Secu22 rity Act (42 U.S.C. 1396a(e)) is amended by adding at 

23 the end the following: 

24 ‘‘(13)(A) At the option of the State, the plan 

25 may provide that financial eligibility requirements 
166 

•S 1503 IS 

1 for medical assistance are met for a child who is 

2 under an age specified by the State (not to exceed 

3 21 years of age) by using a determination made 

4 within a reasonable period (as determined by the 

5 State) before its use for this purpose, of the child’s 

6 family or household income, or if applicable for pur7 poses of determining eligibility under this title or 

8 title XXI, assets or resources, by a Federal or State 

9 agency, or a public or private entity making such de10 termination on behalf of such agency, specified by 

11 the plan, including (but not limited to) an agency 

12 administering the State program funded under part 

13 A of title IV, the Food Stamp Act of 1977, the 

14 Richard B. Russell National School Lunch Act, or 

15 the Child Nutrition Act of 1966, notwithstanding 

16 any differences in budget unit, disregard, deeming, 

17 or other methodology, but only if— 

18 ‘‘(i) the agency has fiscal liabilities or re19 sponsibilities affected or potentially affected by 

20 such determination; and 

21 ‘‘(ii) any information furnished by the 

22 agency pursuant to this subparagraph is used 

23 solely for purposes of determining financial eli24 gibility for medical assistance under this title or 

25 for child health assistance under title XXI. 
167 

•S 1503 IS 

1 ‘‘(B) Nothing in subparagraph (A) shall be con2 strued— 

3 ‘‘(i) to authorize the denial of medical as4 sistance under this title or of child health as5 sistance under title XXI to a child who, without 

6 the application of this paragraph, would qualify 

7 for such assistance; 

8 ‘‘(ii) to relieve a State of the obligation 

9 under subsection (a)(8) to furnish medical as10 sistance with reasonable promptness after the 

11 submission of an initial application that is eval12 uated or for which evaluation is requested pur13 suant to this paragraph; 

14 ‘‘(iii) to relieve a State of the obligation to 

15 determine eligibility for medical assistance 

16 under this title or for child health assistance 

17 under title XXI on a basis other than family or 

18 household income (or, if applicable, assets or re19 sources) if a child is determined ineligible for 

20 such assistance on the basis of information fur21 nished pursuant to this paragraph; or 

22 ‘‘(iv) as affecting the applicability of any 

23 non-financial requirements for eligibility for 

24 medical assistance under this title or child 

25 health assistance under title XXI.’’. 
168 

•S 1503 IS 

1 (b) SCHIP.—Section 2107(e)(1) of the Social Secu2 rity Act (42 U.S.C. 1397gg(e)(1)) is amended by adding 

3 at the end the following: 

4 ‘‘(E) Section 1902(e)(13) (relating to the 

5 State option to base a determination of child’s 

6 financial eligibility for assistance on financial 

7 determinations made by a program providing 

8 nutrition or other public assistance).’’. 

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

10 this section take effect on October 1, 2005. 

11 TITLE III—IMPROVING CARE 

12 AND STRENGTHENING THE 

13 SAFETY NET 

14 Subtitle A—High Needs Areas 

15 SEC. 301. PURPOSE. 

16 It is the purpose of this subtitle to enhance the qual17 ity of life of residents of high need areas by increasing 

18 their access to the preventive and primary healthcare serv19 ices provided by community health centers and rural 

20 health centers. 

21 SEC. 302. HIGH NEED COMMUNITY HEALTH CENTERS. 

22 Section 330 of the Public Health Service Act (42 

23 U.S.C. 254b) is amended— 

24 (1) by redesignating subsections (k) through (r) 

25 as subsections (l) through (s), respectively; 
169 

•S 1503 IS 

1 (2) by inserting after subsection (j), the fol2 lowing: 

3 ‘‘(k) PRIORITY FOR RESIDENTS OF HIGH NEED

4 AREAS.— 

5 ‘‘(1) IN GENERAL.—In awarding grants under 

6 this section, the Secretary shall give priority to eligi7 ble health centers in high need areas. 

8 ‘‘(2) ELIGIBLE HEALTH CENTERS.—A health 

9 center is described in this paragraph if such health 

10 center— 

11 ‘‘(A) is a health center as defined under 

12 subsection (a) or a rural health clinic that re13 ceives funds under section 330A; 

14 ‘‘(B) agrees to use grant funds to provide 

15 preventive and primary healthcare services to 

16 residents of high need areas; 

17 ‘‘(C) specifically requests such priority in 

18 the grant application; 

19 ‘‘(D) describes how the community to be 

20 served meets the definition of high need area; 

21 and 

22 ‘‘(E) otherwise meets all other grant re23 quirements. 

24 ‘‘(3) HIGH NEED AREA.— 
170 

•S 1503 IS 

1 ‘‘(A) IN GENERAL.—In this subsection, the 

2 term ‘high need area’ means a county or a re3 gional area identified by the Secretary pursuant 

4 to the regulations promulgated under subpara5 graph (B). 

6 ‘‘(B) REGULATIONS.—The Secretary shall 

7 promulgate regulations that define the term 

8 ‘high need area’ for purposes of this subsection. 

9 Such regulations shall specify procedures that 

10 the Department shall follow in determining esti11 mates on a periodic basis in the United States 

12 of the number of medically uninsured persons 

13 and the national percentage of medically unin14 sured persons served by health centers (referred 

15 to in this subsection as the ‘ENP’) and for the 

16 designation of an area as a ‘high need area’ if 

17 the estimated percentage of medically uninsured 

18 individuals in the area is higher than the na19 tional average and the estimated percentage of 

20 medically uninsured individuals in the area 

21 served by health centers in the area is below the 

22 ENP. 

23 ‘‘(C) MEDICALLY UNDERSERVED AREA.— 

24 The Secretary shall designate residents of high 
171 

•S 1503 IS 

1 need areas as medically underserved for pur2 poses of this section. 

3 ‘‘(4) FUNDING PREFERENCE.—The Secretary 

4 may limit the amount of grants awarded to appli5 cants from high need areas as provided for in this 

6 subsection to not less than 25 percent of the total 

7 amount of grants awarded under this subsection for 

8 each grant category for each grant period.’’; 

9 (3) in subsection (e)(1)(B), by striking ‘‘sub10 section (k)(3)’’ and inserting ‘‘subsection (l)(3)’’; 

11 (4) in subsection (l)(3)(H)(iii) (as so redesig12 nated), by striking ‘‘or (p)’’ and inserting ‘‘or (q)’’; 

13 (5) in subsection (m) (as so redesignated), by 

14 striking ‘‘subsection (k)(3)’’ and inserting ‘‘sub15 section (l)(3)’’; 

16 (6) in subsection (q) (as so redesignated), by 

17 striking ‘‘subsection (k)(3)(G)’’ and inserting ‘‘sub18 section (l)(3)(G)’’; and 

19 (7) in subsection (s)(2)(A) (as so redesignated), 

20 by striking ‘‘subsection (k)’’ each place that such ap21 pears and inserting ‘‘subsection (l)’’. 

22 SEC. 303. GRANT APPLICATION PROCESS. 

23 Section 330(k) of the Public Health Service Act (42 

24 U.S.C. 254b(k)) is amended by adding at the end the fol25 lowing: 
172 

•S 1503 IS 

1 ‘‘(5) ECONOMIC VIABILITY OF APPLICANTS.— 

2 ‘‘(A) IN GENERAL.—In considering appli3 cations under this section, the Secretary shall 

4 ensure that an application that demonstrates 

5 economic viability, consistent with funding 

6 guidelines established by the Secretary for pur7 poses of this section, is not disadvantaged in 

8 the evaluation process on the basis that it relies 

9 solely on Federal funding. 

10 ‘‘(B) QUALIFICATION OF INDIVIDUALS RE11 VIEWING APPLICATIONS.—The Secretary shall 

12 require verification that all individuals who are 

13 evaluating community health center grant appli14 cations have completed within the 3-year period 

15 ending on the date on which the application is 

16 being evaluated a training course on the com17 munity health center program which addresses 

18 the purposes served by community health cen19 ters, the critical role of community health cen20 ters in the safety net, expectations for the eval21 uation of applications, and the criteria for 

22 awarding grant funding. 

23 ‘‘(C) MEDICALLY UNDERSERVED DESIGNA24 TIONS.—Not later than 6 months after the date 

25 of enactment of this paragraph, the Adminis-
173 

•S 1503 IS 

1 trator of the Health Resources and Services Ad2 ministration shall submit to the appropriate 

3 committees of Congress a report concerning the 

4 process for designating an area or population as 

5 medically underserved. Such report shall con6 tain recommendations for ensuring that such 

7 designations are current within the last 3 years. 

8 The report shall also detail plans for ensuring 

9 subsequent review to maintain an accurate re10 flection of community needs in areas and popu11 lations designated as medically underserved. 

12 Not later than 1 year after such date of enact13 ment, the Secretary shall promulgate regula14 tions based on the recommendations contained 

15 in the report.’’. 

16 Subtitle B—Qualified Integrated 

17 Health Care systems 

18 SEC. 321. GRANTS TO QUALIFIED INTEGRATED HEALTH 

19 CARE SYSTEMS. 

20 (a) ELIGIBILITY FOR GRANTS UNDER PHSA.—Part 

21 D of title III of the Public Health Service Act (42 U.S.C. 

22 254b et seq.) is amended by adding at the end the fol23 lowing new subpart: 
174 

•S 1503 IS 

1 ‘‘Subpart XI—Promotion of Integrated Health Care 

2 Systems Serving Medically Underserved Populations 

3 ‘‘SEC. 340H. GRANTS TO QUALIFIED INTEGRATED HEALTH 

4 CARE SYSTEMS. 

5 ‘‘(a) DEFINITIONS.—For purposes of this section: 

6 ‘‘(1) QUALIFIED INTEGRATED HEALTH CARE

7 SYSTEM.—The term ‘qualified integrated health care 

8 system’ means an integrated health care system 

9 that— 

10 ‘‘(A) has a demonstrated capacity and 

11 commitment to provide a full range of primary, 

12 specialty, and hospital care to a medically un13 derserved population in both inpatient and out14 patient settings, as appropriate; 

15 ‘‘(B) is organized to provide such care in 

16 a coordinated fashion; 

17 ‘‘(C) operates one or more integrated 

18 health centers meeting the requirements of sec19 tion 340I; 

20 ‘‘(D) meets the requirements of subsection 

21 (c)(3); and 

22 ‘‘(E) agrees to use any funds received 

23 under this section to supplement and not to 

24 supplant amounts received from other sources 

25 for the provision of such care. 
175 

•S 1503 IS 

1 ‘‘(2) MEDICALLY UNDERSERVED POPU2 LATION.—The term ‘medically underserved popu3 lation’ has the meaning given such term in section 

4 330(b)(3). 

5 ‘‘(b) OPERATING GRANTS.— 

6 ‘‘(1) AUTHORITY.—The Secretary may make 

7 grants to private nonprofit entities for the costs of 

8 the operation of qualified integrated health care sys9 tems that provide primary, specialty, and hospital 

10 care to medically underserved populations. 

11 ‘‘(2) AMOUNT.— 

12 ‘‘(A) IN GENERAL.—The amount of any 

13 grant made in any fiscal year under paragraph 

14 (1) to an integrated health care system shall be 

15 determined by the Secretary (taking into ac16 count the full range of care, including specialty 

17 services, provided by the system), but may not 

18 exceed the amount by which the costs of oper19 ation of the system in such fiscal year exceed 

20 the total of— 

21 ‘‘(i) State, local, and other operational 

22 funding provided to the system; and 

23 ‘‘(ii) the fees, premiums, and third24 party reimbursements which the system 
176 

•S 1503 IS 

1 may reasonably be expected to receive for 

2 its operations in such fiscal year. 

3 ‘‘(B) PAYMENTS.—Payments under grants 

4 under paragraph (1) shall be made in advance 

5 or by way of reimbursement and in such install6 ments as the Secretary finds necessary and ad7 justments may be made for overpayments or 

8 underpayments. 

9 ‘‘(C) USE OF NONGRANT FUNDS.— 

10 Nongrant funds described in clauses (i) and (ii) 

11 of subparagraph (A), including any such funds 

12 in excess of those originally expected, shall be 

13 used as permitted under this section, and may 

14 be used for such other purposes as are not spe15 cifically prohibited under this section if such 

16 use furthers the objectives of the project. 

17 ‘‘(c) APPLICATIONS.— 

18 ‘‘(1) SUBMISSION.—No grant may be made 

19 under this section unless an application therefore is 

20 submitted to, and approved by, the Secretary. Such 

21 an application shall be submitted in such form and 

22 manner and shall contain such information as the 

23 Secretary shall prescribe. 

24 ‘‘(2) DESCRIPTION OF NEED.— 
177 

•S 1503 IS 

1 ‘‘(A) IN GENERAL.—An application for a 

2 grant under subsection (b)(1) for an integrated 

3 health care system shall include— 

4 ‘‘(i) a description of the need for 

5 health care services in the area served by 

6 the integrated health care system; 

7 ‘‘(ii) a demonstration by the applicant 

8 that the area or the population group to be 

9 served by the applicant has a shortage of 

10 personal health services; and 

11 ‘‘(iii) a demonstration that the health 

12 care system will be located so that it will 

13 provide services to the greatest number of 

14 individuals residing in such area or in15 cluded in such population group. 

16 ‘‘(B) DEMONSTRATIONS.—A demonstra17 tion shall be made under clauses (ii) or (iii) of 

18 subparagraph (A) on the basis of the criteria 

19 prescribed by the Secretary under section 

20 330(b)(3) or on the basis of any other criteria 

21 which the Secretary may prescribe to determine 

22 if the area or population group to be served by 

23 the applicant has a shortage of personal health 

24 services. 
178 

•S 1503 IS 

1 ‘‘(C) CONDITION OF APPROVAL.—In con2 sidering an application for a grant under sub3 section (b)(1), the Secretary may require as a 

4 condition to the approval of such application an 

5 assurance that any integrated health center op6 erated by the applicant will provide any re7 quired primary health services and any addi8 tional health services (as defined in section 

9 340I) that the Secretary finds are needed to 

10 meet specific health needs of the area to be 

11 served by the applicant. Such a finding shall be 

12 made in writing and a copy shall be provided to 

13 the applicant. 

14 ‘‘(3) REQUIREMENTS.—The Secretary shall ap15 prove an application for a grant under subsection 

16 (b)(1) if the Secretary determines that the entity for 

17 which the application is submitted is an integrated 

18 health care system (within the meaning of subsection 

19 (a)) and that— 

20 ‘‘(A) the primary, specialty, and hospital 

21 care provided by the system will be available 

22 and accessible in the service area of the system 

23 promptly, as appropriate, and in a manner 

24 which assures continuity; 
179 

•S 1503 IS 

1 ‘‘(B) the system is participating (or will 

2 participate) in a community consortium of safe3 ty net providers serving such area (unless other 

4 such safety net providers do not exist in a com5 munity, decline or refuse to participate, or place 

6 unreasonable conditions on their participation); 

7 ‘‘(C) all of the centers operated by the sys8 tem are accredited by a national accreditation 

9 body recognized by the Secretary; 

10 ‘‘(D) the system will demonstrate its finan11 cial responsibility by the use of such accounting 

12 procedures and other requirements as may be 

13 prescribed by the Secretary; 

14 ‘‘(E) the system provides or will provide 

15 services to individuals who are eligible for med16 ical assistance under title XIX of the Social Se17 curity Act and to individuals who are eligible 

18 for assistance under title XXI of such Act; 

19 ‘‘(F) the system— 

20 ‘‘(i) has prepared a schedule of fees or 

21 payments for the provision of its services 

22 consistent with locally prevailing rates or 

23 charges and designed to cover its reason24 able costs of operation and has prepared a 

25 corresponding schedule of discounts to be 
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1 applied to the payment of such fees or pay2 ments, and which discounts are adjusted 

3 on the basis of the patient’s ability to pay; 

4 ‘‘(ii)(I) will assure that no patient will 

5 be denied health care services due to an in6 dividual’s inability to pay for such services; 

7 and 

8 ‘‘(II) will assure that any fees or pay9 ments required by the system for such 

10 services will be reduced or waived to enable 

11 the system to fulfill the assurance de12 scribed in subclause (I); and 

13 ‘‘(iii) has submitted to the Secretary 

14 such reports as the Secretary may require 

15 to determine compliance with this subpara16 graph; 

17 ‘‘(G) the system has established a gov18 erning board that selects the services to be pro19 vided by the center, approves the center’s an20 nual budget, approves the selection of a director 

21 for the center, and establishes general policies 

22 for the center; 

23 ‘‘(H) the system has developed— 
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•S 1503 IS 

1 ‘‘(i) an overall plan and budget that 

2 meets the requirements of the Secretary; 

3 and 

4 ‘‘(ii) an effective procedure for com5 piling and reporting to the Secretary such 

6 statistics and other information as the Sec7 retary may require relating to— 

8 ‘‘(I) the costs of its operations; 

9 ‘‘(II) the patterns of use of its 

10 services; 

11 ‘‘(III) the availability, accessi12 bility, and acceptability of its services; 

13 and 

14 ‘‘(IV) such other matters relating 

15 to operations of the applicant as the 

16 Secretary may require; 

17 ‘‘(I) the system will review periodically its 

18 service area to— 

19 ‘‘(i) ensure that the size of such area 

20 is such that the services to be provided 

21 through the system (including any sat22 ellite) are available and accessible to the 

23 residents of the area promptly and as ap24 propriate; 
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•S 1503 IS 

1 ‘‘(ii) ensure that the boundaries of 

2 such area conform, to the extent prac3 ticable, to relevant boundaries of political 

4 subdivisions, school districts, and Federal 

5 and State health and social service pro6 grams; and 

7 ‘‘(iii) ensure that the boundaries of 

8 such area eliminate, to the extent possible, 

9 barriers to access to the services of the 

10 system, including barriers resulting from 

11 the area’s physical characteristics, its resi12 dential patterns, its economic and social 

13 grouping, and available transportation; 

14 ‘‘(J) in the case of a system which serves 

15 a substantial proportion of individuals of lim16 ited English-speaking ability, the system has— 

17 ‘‘(i) developed a plan and made ar18 rangements for providing services, to the 

19 extent practicable, in the predominant lan20 guage or languages of such individuals and 

21 in the cultural context most appropriate to 

22 such individuals; and 

23 ‘‘(ii) identified one or more individuals 

24 on its staff who are fluent in such pre25 dominant language or languages and in 
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•S 1503 IS 

1 English and whose responsibilities shall in2 clude providing guidance to such individ3 uals and to other appropriate staff mem4 bers with respect to cultural sensitivities 

5 and bridging linguistic and cultural dif6 ferences; 

7 ‘‘(K) the system maintains appropriate re8 ferral relationships between its hospitals, its 

9 physicians with hospital privileges, and any in10 tegrated health center operated by the system 

11 so that primary, specialty care, and hospital 

12 care is provided in a continuous and coordi13 nated way; and 

14 ‘‘(L) the system encourages persons receiv15 ing or seeking health services from the system 

16 to participate in any public or private (includ17 ing employer-offered) health programs or plans 

18 for which the persons are eligible, so long as the 

19 center, in complying with this paragraph, does 

20 not violate the requirements of subparagraph 

21 (F)(ii)(I). 

22 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.— 

23 ‘‘(1) IN GENERAL.—There are authorized to be 

24 appropriated to carry out this section such sums as 
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•S 1503 IS 

1 may be necessary for each of fiscal years 2006 

2 through 2010. 

3 ‘‘(2) FUNDING REPORT.—The Secretary shall 

4 annually prepare and submit to the appropriate com5 mittees of Congress a report concerning the distribu6 tion of funds under this section that are provided to 

7 meet the health care needs of medically underserved 

8 populations, and the appropriateness of the delivery 

9 systems involved in responding to the needs of the 

10 particular populations. Such report shall include an 

11 assessment of the relative health care access needs 

12 of the targeted populations and the rationale for any 

13 substantial changes in the distribution of funds. 

14 ‘‘(e) RECORDS.— 

15 ‘‘(1) IN GENERAL.—Each entity which receives 

16 a grant under subsection (b)(1) shall establish and 

17 maintain such records as the Secretary shall require. 

18 ‘‘(2) AVAILABILITY.—Each entity which is re19 quired to establish and maintain records under this 

20 subsection shall make such books, documents, pa21 pers, and records available to the Secretary or the 

22 Comptroller General of the United States, or any of 

23 their duly authorized representatives, for examina24 tion, copying, or mechanical reproduction on or off 

25 the premises of such entity upon a reasonable re-
185 

•S 1503 IS 

1 quest therefore. The Secretary and the Comptroller 

2 General of the United States, or any of their duly 

3 authorized representatives, shall have the authority 

4 to conduct such examination, copying, and reproduc5 tion. 

6 ‘‘(f) AUDITS.— 

7 ‘‘(1) IN GENERAL.—Each entity which receives 

8 a grant under this section shall provide for an inde9 pendent annual financial audit of any books, ac10 counts, financial records, files, and other papers and 

11 property which relate to the disposition or use of the 

12 funds received under such grant and such other 

13 funds received by or allocated to the project for 

14 which such grant was made. For purposes of assur15 ing accurate, current, and complete disclosure of the 

16 disposition or use of the funds received, each such 

17 audit shall be conducted in accordance with gen18 erally accepted accounting principles. Each audit 

19 shall evaluate— 

20 ‘‘(A) the entity’s implementation of the 

21 guidelines established by the Secretary respect22 ing cost accounting; 

23 ‘‘(B) the processes used by the entity to 

24 meet the financial and program reporting re25 quirements of the Secretary; and 
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•S 1503 IS 

1 ‘‘(C) the billing and collection procedures 

2 of the entity and the relation of the procedures 

3 to its fee schedule and schedule of discounts 

4 and to the availability of health insurance and 

5 public programs to pay for the health services 

6 it provides. 

7 A report of each such audit shall be filed with the 

8 Secretary at such time and in such manner as the 

9 Secretary may require. 

10 ‘‘(2) RECORDS.—Each entity which receives a 

11 grant under this section shall establish and maintain 

12 such records as the Secretary shall by regulation re13 quire to facilitate the audit required by paragraph 

14 (1). The Secretary may specify by regulation the 

15 form and manner in which such records shall be es16 tablished and maintained. 

17 ‘‘(3) AVAILABILITY OF RECORDS.—Each entity 

18 which is required to establish and maintain records 

19 or to provide for an audit under this subsection shall 

20 make such books, documents, papers, and records 

21 available to the Secretary or the Comptroller Gen22 eral of the United States, or any of their duly au23 thorized representatives, for examination, copying, or 

24 mechanical reproduction on or off the premises of 

25 such entity upon a reasonable request therefore. The 
187 

•S 1503 IS 

1 Secretary and the Comptroller General of the United 

2 States, or any of their duly authorized representa3 tives, shall have the authority to conduct such exam4 ination, copying, and reproduction. 

5 ‘‘(4) WAIVER.—The Secretary may, under ap6 propriate circumstances, waive the application of all 

7 or part of the requirements of this subsection with 

8 respect to an entity. 

9 ‘‘SEC. 340I. INTEGRATED HEALTH CENTER. 

10 ‘‘(a) INTEGRATED HEALTH CENTER.—The term ‘in11 tegrated health center’ means an health center that is op12 erated by an integrated health care system and that serves 

13 a medically underserved population (as defined for pur14 poses of section 330(b)(3)) by providing, either through 

15 the staff and supporting resources of the center or through 

16 contracts or cooperative arrangements— 

17 ‘‘(1) required primary health services (as de18 fined in subsection (b)(1)); and 

19 ‘‘(2) as may be appropriate for particular cen20 ters additional health services (as defined in sub21 section (b)(2)) necessary for the adequate support of 

22 the primary health services required under para23 graph (1); 

24 for all residents of the area served by the center. 

25 ‘‘(b) DEFINITIONS.—For purposes of this section: 
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•S 1503 IS 

1 ‘‘(1) REQUIRED PRIMARY HEALTH SERVICES.— 

2 The term ‘required primary health services’ means— 

3 ‘‘(A) basic health services which, for pur4 poses of this section, shall consist of— 

5 ‘‘(i) health services related to family 

6 medicine, internal medicine, pediatrics, ob7 stetrics, or gynecology that are furnished 

8 by physicians and where appropriate, phy9 sician assistants, nurse practitioners, and 

10 nurse midwives; 

11 ‘‘(ii) diagnostic laboratory and 

12 radiologic services; 

13 ‘‘(iii) preventive health services, in14 cluding— 

15 ‘‘(I) prenatal and perinatal serv16 ices; 

17 ‘‘(II) appropriate cancer screen18 ing; 

19 ‘‘(III) well-child services; 

20 ‘‘(IV) immunizations against vac21 cine-preventable diseases; 

22 ‘‘(V) screenings for elevated 

23 blood lead levels, communicable dis24 eases, and cholesterol; 
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•S 1503 IS 

1 ‘‘(VI) pediatric eye, ear, and den2 tal screenings to determine the need 

3 for vision and hearing correction and 

4 dental care; 

5 ‘‘(VII) voluntary family planning 

6 services; and 

7 ‘‘(VIII) preventive dental serv8 ices; 

9 ‘‘(iv) emergency medical services; and 

10 ‘‘(v) pharmaceutical services and 

11 medication therapy management services 

12 as may be appropriate for particular cen13 ters; 

14 ‘‘(B) referrals to providers of medical serv15 ices (including specialty and hospital care refer16 rals when medically indicated) and other health17 related services (including substance abuse and 

18 mental health services); 

19 ‘‘(C) patient case management services (in20 cluding counseling, referral, and follow-up serv21 ices) and other services designed to assist 

22 health center patients in establishing eligibility 

23 for and gaining access to Federal, State, and 

24 local programs that provide or financially sup-
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•S 1503 IS 

1 port the provision of medical, social, housing, 

2 educational, or other related services; 

3 ‘‘(D) services that enable individuals to use 

4 the services of the center (including outreach 

5 and transportation services and, if a substantial 

6 number of the individuals in the population 

7 served by a center are of limited English-speak8 ing ability, the services of appropriate personnel 

9 fluent in the languages spoken by a predomi10 nant number of such individuals); and 

11 ‘‘(E) education of patients and the general 

12 population served by the center regarding the 

13 availability and proper use of health services. 

14 ‘‘(2) ADDITIONAL HEALTH SERVICES.—The 

15 term ‘additional health services’ means services that 

16 are not included as required primary health services 

17 and that are appropriate to meet the health needs 

18 of the population served by the center involved. Such 

19 term may include— 

20 ‘‘(A) behavioral and mental health and 

21 substance abuse services; 

22 ‘‘(B) recuperative care services; and 

23 ‘‘(C) environmental health services.’’. 

24 (b) COVERAGE UNDER THE MEDICARE PROGRAM.— 
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•S 1503 IS 

1 (1) PART B BENEFIT.—Section 1861(s)(2)(E) 

2 of the Social Security Act (42 U.S.C. 

3 1395x(s)(2)(E)) is amended— 

4 (A) by striking ‘‘services and’’ and insert5 ing ‘‘services,’’; and 

6 (B) by striking ‘‘services’’ the second place 

7 it appears and inserting ‘‘services, and inte8 grated health center services’’. 

9 (2) DEFINITIONS.—Section 1861(aa) of the So10 cial Security Act (42 U.S.C. 1395x(aa)) is amend11 ed— 

12 (A) in the heading— 

13 (i) by striking ‘‘SERVICES AND’’ and 

14 inserting ‘‘SERVICES,’’; and 

15 (ii) by striking ‘‘SERVICES’’ the sec16 ond place it appears and inserting ‘‘SERV17 ICES, AND INTEGRATED HEALTH CENTER

18 SERVICES’’; 

19 (B) in paragraph (1)(B), by striking 

20 ‘‘paragraph (5))’’ and inserting ‘‘paragraph 

21 (7)); 

22 (C) by redesignating paragraphs (5), (6), 

23 and (7) as paragraphs (7), (8), and (9), respec24 tively; and 
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•S 1503 IS 

1 (D) by inserting after paragraph (4) the 

2 following new paragraph: 

3 ‘‘(5) The term ‘integrated health center services’ 

4 means— 

5 ‘‘(A) services of the type described in subpara6 graphs (A) through (C) of paragraph (1); and 

7 ‘‘(B) preventive primary health services that a 

8 center is required to provide under section 340I of 

9 the Public Health Service Act, 

10 when furnished to an individual as an outpatient of an 

11 integrated health center, and for this purpose, any ref12 erence to a rural health clinic or a physician described in 

13 paragraph (2)(B) is deemed a reference to an integrated 

14 health center or a physician at the center, respectively. 

15 ‘‘(6) The term ‘integrated health center’ means a cen16 ter that is operated by a qualified integrated health care 

17 system (as defined in section 340H(a)(1) of the Public 

18 Health Service Act that— 

19 ‘‘(A) is receiving a grant under section 340H of 

20 such Act; or 

21 ‘‘(B) is determined by the Secretary to meet the 

22 requirements for receiving such a grant.’’. 

23 (3) PAYMENT.— 
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•S 1503 IS 

1 (A) IN GENERAL.—Section 1832(a)(2)(D) 

2 of the Social Security Act (42 U.S.C. 

3 1395k(a)(2)(D)) is amended— 

4 (i) by striking ‘‘and (ii)’’ and inserting 

5 ‘‘, (ii)’’; and 

6 (ii) by striking ‘‘services’’ the second 

7 place it appears and inserting ‘‘services, 

8 and (iii) integrated health center serv9 ices.’’. 

10 (B) PART B DEDUCTIBLE DOES NOT

11 APPLY.—Section 1833(b)(4) of the Social Secu12 rity Act (42 U.S.C. 13951(b)(4)) is amended by 

13 inserting ‘‘or integrated health center services’’ 

14 after ‘‘Federally qualified health center serv15 ices’’. 

16 (C) EXCLUSION FROM PAYMENT RE17 MOVED.—The second sentence of section 

18 1862(a) of the Social Security Act (42 U.S.C. 

19 1395y(a)) is amended by inserting ‘‘or inte20 grated health center services described in sec21 tion 1861 (aa)(5)(B)’’ after ‘‘section 

22 1861(aa)(3)(B)’’. 

23 (D) WAIVER OF ANTI-KICKBACK RESTRIC24 TION.—Section 1128B(b)(3)(D) of the Social 

25 Security Act (42 U.S.C. 1320a–7b(b)(3)(D)) is 
194 

•S 1503 IS 

1 amended by inserting ‘‘or by an integrated 

2 health center’’ after ‘‘Federally qualified health 

3 center’’. 

4 (4) CONFORMING AMENDMENTS.—(A) Clauses 

5 (ii) and (iv) of section 1834(a)(1)(E) of the Social 

6 Security Act (42 U.S.C. 1395m(a)(1)(E)) are each 

7 amended by striking ‘‘section 1861(aa)(5)’’ and in8 serting ‘‘section 1861(aa)(7)’’. 

9 (B) Section 1842(b)(18)(C)(i) of the Social Se10 curity Act (42 U.S.C. 1395u(b)(18)(C)(i)) is amend11 ed by striking ‘‘section 1861(aa)(5)’’ and inserting 

12 ‘‘section 1861(aa)(7)’’. 

13 (C) Section 1861(s)(2) of the Social Security 

14 Act (42 U.S.C. 1395x(s)(2)) is amended— 

15 (i) in subparagraph (H)(i), by striking 

16 ‘‘subsection (aa)(5)’’ and inserting ‘‘subsection 

17 (aa)(7)’’; and 

18 (ii) in subparagraph (K)— 

19 (I) by striking ‘‘subsection (aa)(5)’’ 

20 each place it appears and inserting ‘‘sub21 section (aa)(7)’’; and 

22 (II) by striking ‘‘subsection (aa)(6)’’ 

23 and inserting ‘‘subsection (aa)(8)’’. 

24 (D) Section 1861(dd)(3)(B) of the Social Secu25 rity Act (42 U.S.C. 1395x(dd)(3)(B)) is amended by 
195 

•S 1503 IS 

1 striking ‘‘subsection (aa)(5)’’ and inserting ‘‘sub2 section (aa)(7)’’. 

3 (c) RECOGNITION UNDER MEDICAID.— 

4 (1) COVERAGE.—Section 1905(a)(2) of the So5 cial Security Act (42 U.S.C. 1396d(a)(2)) is amend6 ed— 

7 (A) by striking ‘‘and (C)’’ and inserting ‘‘, 

8 (C)’’; and 

9 (B) by inserting ‘‘, and 

10 ‘‘(D) integrated health center services (as 

11 defined in subsection (1)(3)(A)) and any other 

12 ambulatory services offered by the integrated 

13 health center and which are otherwise included 

14 in the plan.’’ after ‘‘included in the plan’’ the 

15 second place it appears. 

16 (2) DEFINITIONS.—Section 1905(l) of such Act 

17 (42 U.S.C. 1396d(l)) is amended by adding at the 

18 end the following: 

19 ‘‘(3)(A) The term ‘integrated health center services’ 

20 means services of the type described in subparagraphs (A) 

21 through (C) of section 1861(aa) when furnished to an in22 dividual as a patient of an integrated health center and, 

23 for this purpose, any reference to a rural health clinic or 

24 a physician described in section 1861(aa)(2)(B) is deemed 
196 

•S 1503 IS 

1 a reference to an integrated health center or a physician 

2 at the center, respectively. 

3 ‘‘(B) The term ‘integrated health center’ means a 

4 center that is operated by a qualified integrated health 

5 care system that— 

6 ‘‘(i) is receiving a grant under section 340H of 

7 the Public Health Service Act; or 

8 ‘‘(ii) is determined by the Secretary, based on 

9 the recommendations of the Administrator of the 

10 Centers for Medicare & Medicaid Services, to meet 

11 the requirements for receiving such a grant.’’. 

12 (3) PAYMENT.—Section 1902(a) of such Act 

13 (42 U.S.C. 1396a(a)) is amended— 

14 (A) in paragraph (15), by inserting ‘‘and 

15 for services described in clause (D) of section 

16 1905(a)(2) in accordance with the provisions of 

17 subsection (cc)’’ after ‘‘subsection (bb)’’; and 

18 (B) by adding at the end the following: 

19 ‘‘(cc) PAYMENT FOR SERVICES PROVIDED BY INTE20 GRATED HEALTH CENTERS.— 

21 ‘‘(1) IN GENERAL.—Beginning with fiscal year 

22 2006 with respect to services furnished on or after 

23 January 1, 2006, and each succeeding fiscal year, 

24 the State plan shall provide for payment for services 

25 described in section 1905(a)(2)(D) furnished by an 
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•S 1503 IS 

1 integrated health center in accordance with the pro2 visions of this subsection. 

3 ‘‘(2) FISCAL YEAR 2006.—Subject to paragraph 

4 (4), for services furnished on and after January 1, 

5 2006, during fiscal year 2006, the State plan shall 

6 provide for payment for such services in an amount 

7 (calculated on a per visit basis) that is equal to 100 

8 percent of the average of the costs of the center of 

9 furnishing such services during fiscal years 2004 

10 and 2005 which are reasonable and related to the 

11 cost of furnishing such services, or based on such 

12 other tests of reasonableness as the Secretary pre13 scribes in regulations under section 1833(a)(3), or, 

14 in the case of services to which such regulations do 

15 not apply, the same methodology used under section 

16 1833(a)(3), adjusted to take into account any in17 crease or decrease in the scope of such services fur18 nished by the center during fiscal years 2004 and 

19 2005. 

20 ‘‘(3) FISCAL YEAR 2007 AND SUCCEEDING FIS21 CAL YEARS.—Subject to paragraph (4), for services 

22 furnished during fiscal year 2007 or a succeeding 

23 fiscal year, the State plan shall provide for payment 

24 for such services in an amount (calculated on a per 

25 visit basis) that is equal to the amount calculated for 
198 

•S 1503 IS 

1 such services under this subsection for the preceding 

2 fiscal year— 

3 ‘‘(A) increased by the percentage increase 

4 in the MEI (as defined in section 1842(i)(3)) 

5 for that fiscal year; and 

6 ‘‘(B) adjusted to take into account any in7 crease or decrease in the scope of such services 

8 furnished by the center during that fiscal year. 

9 ‘‘(4) ESTABLISHMENT OF INITIAL YEAR PAY10 MENT AMOUNT FOR NEW CENTERS.—In any case in 

11 which an entity first qualifies as an integrated 

12 health center after fiscal year 2006, the State plan 

13 shall provide for payment for services described in 

14 section 1905(a)(2)(D) furnished by the center in the 

15 first fiscal year in which the center so qualifies in 

16 an amount (calculated on a per visit basis) that is 

17 equal to 100 percent of the costs of furnishing such 

18 services during such fiscal year based on the rates 

19 established under this subsection for the fiscal year 

20 for other such centers located in the same or adja21 cent area with a similar case load or, in the absence 

22 of such a center, in accordance with the regulations 

23 and methodology referred to in paragraph (2) or 

24 based on such other tests of reasonableness as the 

25 Secretary may specify. For each fiscal year following 
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•S 1503 IS 

1 the fiscal year in which the entity first qualifies as 

2 an integrated health center, the State plan shall pro3 vide for the payment amount to be calculated in ac4 cordance with paragraph (3). 

5 ‘‘(5) ADMINISTRATION IN THE CASE OF MAN6 AGED CARE.— 

7 ‘‘(A) IN GENERAL.—In the case of services 

8 furnished by an integrated health center pursu9 ant to a contract between the center and a 

10 managed care entity (as defined in section 

11 1932(a)(1)(B)), the State plan shall provide for 

12 payment to the center by the State of a supple13 mental payment equal to the amount (if any) by 

14 which the amount determined under paragraphs 

15 (2), (3), and (4) exceeds the amount of the pay16 ments provided under the contract. 

17 ‘‘(B) PAYMENT SCHEDULE.—The supple18 mental payment required under subparagraph 

19 (A) shall be made pursuant to a payment 

20 schedule agreed to by the State and the inte21 grated health center, but in no case less fre22 quently than every 4 months. 

23 ‘‘(6) ALTERNATIVE PAYMENT METHODOLO24 GIES.—Notwithstanding any other provision of this 

25 section, the State plan may provide for payment in 
200 

•S 1503 IS 

1 any fiscal year to an integrated health center for 

2 services described in section 1905(a)(2)(D) in an 

3 amount which is determined under an alternative 

4 payment methodology that— 

5 ‘‘(A) is agreed to by the State and the cen6 ter; and 

7 ‘‘(B) results in payment to the center of an 

8 amount which is at least equal to the amount 

9 otherwise required to be paid to the center 

10 under this section.’’. 

11 (4) WAIVER PROHIBITED.—Section 1915(b) of 

12 the Social Security Act (42 U.S.C.1396n(b)) is 

13 amended in the matter preceding paragraph (1), by 

14 inserting ‘‘1902(cc),’’ after ‘‘1902(bb),’’. 

15 (d) PROTECTION AGAINST LIABILITY.—Section 

16 224(g) of the Public Health Service Act (42 U.S.C. 

17 233(g)) is amended— 

18 (1) In paragraph (4), by striking ‘‘An entity’’ 

19 and inserting ‘‘Subject to paragraph (6), an entity’’; 

20 and 

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

22 ‘‘(6) For purposes of this section— 

23 ‘‘(A) a qualified integrated health care system 

24 receiving a grant under section 340H and any inte25 grated health center operated by such system shall 
201 

•S 1503 IS 

1 be considered to be an entity described in paragraph 

2 (4); and 

3 ‘‘(B) the provisions of this section shall apply to 

4 such system and centers in the same manner as such 

5 provisions apply to an entity described in such para6 graph (4), except that— 

7 ‘‘(i) notwithstanding paragraph (1)(B), the 

8 deeming of any system or center, or of an offi9 cer, governing board member, employee, or con10 tractor of such system or center, to be an em11 ployee of the Public Health Service for purposes 

12 of this section shall apply only with respect to 

13 items and services that are furnished to a mem14 ber of the underserved population served by the 

15 entity; 

16 ‘‘(ii) notwithstanding paragraph (3), this 

17 paragraph shall apply only with respect to 

18 causes of action arising from acts or omissions 

19 that occur on or after January 1, 2006; and 

20 ‘‘(iii) the Secretary shall make separate es21 timates under subsection (k)(1) with respect to 

22 such systems and centers and entities described 

23 in paragraph (4) (other than such systems and 

24 centers), establish separate funds under sub25 section (k)(2) with respect to such groups of 
202 

•S 1503 IS 

1 entities, and any appropriations under this sub2 section for such systems and centers shall be 

3 separate from the amounts authorized by sub4 section (k)(2).’’. 

5 (e) EFFECTIVE DATE.—The amendments made sub6 sections (b) and (c) shall apply to items and services fur7 nished on or after October 1, 2005. 

8 Subtitle C—Miscellaneous 

9 Provisions 

10 SEC. 331. COMMUNITY HEALTH CENTER COLLABORATIVE 

11 ACCESS EXPANSION. 

12 Section 330 of the Public Health Service Act (42 

13 U.S.C. 254b) is amended by adding at the end the fol14 lowing: 

15 ‘‘(s) MISCELLANEOUS PROVISIONS.— 

16 ‘‘(1) RULE OF CONSTRUCTION WITH RESPECT

17 TO RURAL HEALTH CLINICS.— 

18 ‘‘(A) IN GENERAL.—Nothing in this sec19 tion shall be construed to prevent a community 

20 health center from contracting with a federally 

21 certified rural health clinic (as defined by sec22 tion 1861(aa)(2) of the Social Security Act) for 

23 the delivery of primary health care services that 

24 are available at the rural health clinic to indi25 viduals who would otherwise be eligible for free 
203 

•S 1503 IS 

1 or reduced cost care if that individual were able 

2 to obtain that care at the community health 

3 center. Such services may be limited in scope to 

4 those primary health care services available in 

5 that rural health clinic. 

6 ‘‘(B) ASSURANCES.—In order for a rural 

7 health clinic to receive funds under this section 

8 through a contract with a community health 

9 center under paragraph (1), such rural health 

10 clinic shall establish policies to ensure— 

11 ‘‘(i) nondiscrimination based upon the 

12 ability of a patient to pay; and 

13 ‘‘(ii) the establishment of a sliding fee 

14 scale for low-income patients.’’. 

15 SEC. 332. IMPROVEMENTS TO SECTION 340B PROGRAM. 

16 (a) ELIMINATION OF GROUP PURCHASING PROHIBI17 TION FOR CERTAIN HOSPITALS.—Section 340B(a)(4)(L) 

18 of the Public Health Service Act (42 U.S.C. 

19 256b(a)(4)(L)) is amended— 

20 (1) in clause (i), by adding ‘‘and’’ at the end; 

21 (2) in clause (ii), by striking ‘‘; and’’ and in22 serting a period; and 

23 (3) by striking clause (iii). 

24 (b) PERMITTING USE OF MULTIPLE CONTRACT

25 PHARMACIES.—Section 340B f the Public Health Service 
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•S 1503 IS 

1 Act (42 U.S.C. 256b) is amended by adding at the end 

2 the following: 

3 ‘‘(e) PERMITTING USE OF MULTIPLE CONTRACT

4 PHARMACIES.—Nothing in this section shall be construed 

5 as prohibiting a covered entity from entering into con6 tracts with more than one pharmacy for the provision of 

7 covered drugs, including a contract that— 

8 ‘‘(1) supplements the use of an in-house phar9 macy arrangement; or 

10 ‘‘(2) requires the approval of the Secretary.’’. 

11 (c) IMPROVEMENTS IN PROGRAM ADMINISTRA12 TION.—Section 340B of the Public Health Service Act (42 

13 U.S.C. 256b), as amended by subsection (b), is further 

14 amended by adding at the end the following: 

15 ‘‘(f) IMPROVEMENTS IN PROGRAM ADMINISTRA16 TION.— 

17 ‘‘(1) IN GENERAL.—The Secretary shall pro18 vide, from funds appropriated under paragraph (2), 

19 for improvements in the integrity and administration 

20 of the program under this section in order to pre21 vent abuse and misuse of discounted prices made 

22 available under this section. Such improvements 

23 shall include the following: 

24 ‘‘(A) The development of a system to verify 

25 the accuracy of information regarding covered 
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1 entities that is listed on the Internet website of 

2 the Department of Health and Human Services 

3 relating to this section. 

4 ‘‘(B) The establishment of a third-party 

5 auditing system by which covered entities and 

6 manufacturers are regularly audited to ensure 

7 compliance with the requirements of this sec8 tion. 

9 ‘‘(C) The conduct of such audits under 

10 subsection (a)(5)(C) that supplement the audits 

11 conducted under subparagraph (B) as the Sec12 retary determines appropriate and the imple13 mentation of dispute resolution guidelines and 

14 other compliance programs. 

15 ‘‘(D) The development of more detailed 

16 guidance regarding the definition of section 

17 340B patients and describing options for billing 

18 under the medicaid program under title XIX of 

19 the Social Security Act in order to avoid dupli20 cative discounts. 

21 ‘‘(E) The issuance of advisory opinions 

22 within defined time periods in response to ques23 tions from manufacturers or covered entities re24 garding the application of the requirements of 

25 this section in specific factual circumstances. 
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1 ‘‘(F) Insofar as the Secretary determines 

2 feasible, providing access through the Internet 

3 website of the Department of Health and 

4 Human Services on the prices for covered drugs 

5 made available under this section, but only in a 

6 manner (such as through the use of password 

7 protection) that limits such access to covered 

8 entities. 

9 ‘‘(G) The improved dissemination of edu10 cational materials regarding the program under 

11 this section to covered entities that are not cur12 rently participating in such programs including 

13 regional educational sessions. 

14 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

15 There are authorized to be appropriated to carry out 

16 this subsection, such sums as may be necessary for 

17 fiscal year 2006 and each succeeding fiscal year.’’. 

18 SEC. 333. FORBEARANCE FOR STUDENT LOANS FOR PHYSI19 CIANS PROVIDING SERVICES IN FREE CLIN20 ICS. 

21 (a) IN GENERAL.—Section 428(c)(3)(A) of the High22 er Education Act of 1965 (20 U.S.C. 1078(c)(3)(A)) is 

23 amended— 

24 (1) in clause (i)— 
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1 (A) in subclause (III), by striking ‘‘or’’ at 

2 the end; 

3 (B) in subclause (V), by adding ‘‘or’’ at 

4 the end; and 

5 (C) by adding at the end the following: 

6 ‘‘(V) is volunteering without pay 

7 for at least 80 hours per month at a 

8 free clinic as defined under section 

9 224 of the Public Health Service 

10 Act;’’; and 

11 (2) in clause (ii)(III), by inserting ‘‘or (i)(V)’’ 

12 after ‘‘clause (i)(III)’’. 

13 (b) PERKINS PROGRAM.—Section 464(e) of the High14 er Education Act of 1965 (20 U.S.C. 1087dd(e)) is 

15 amended— 

16 (1) in paragraph (1), by striking ‘‘or’’ at the 

17 end; 

18 (2) in paragraph (2), by striking the period and 

19 inserting ‘‘; or’’; and 

20 (3) by adding at the end the following: 

21 ‘‘(3) the borrower is volunteering without pay 

22 for at least 80 hours per month at a free clinic as 

23 defined under section 224 of the Public Health Serv24 ice Act.’’. 
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1 SEC. 334. AMENDMENTS TO THE PUBLIC HEALTH SERVICE 

2 ACT RELATING TO LIABILITY. 

3 Section 224 of the Public Health Service Act (42 

4 U.S.C. 233) is amended— 

5 (1) in subsection (g)(1)— 

6 (A) in subparagraph (A)— 

7 (i) in the first sentence, by striking 

8 ‘‘or employee’’ and inserting ‘‘employee, or 

9 (subject to subsection (k)(4)) volunteer 

10 practitioner’’; and 

11 (ii) in the second sentence, by insert12 ing ‘‘and subsection (k)(4)’’ after ‘‘subject 

13 to paragraph (5)’’; and 

14 (B) by adding at the end the following: 

15 ‘‘(I) For purposes of this subsection, the term ‘em16 ployee’ shall include a health professional who volunteers 

17 to provide health-related services for an entity described 

18 in paragraph (4).’’; 

19 (2) in subsection (k), by adding at the end the 

20 following: 

21 ‘‘(4)(A) Subsections (g) through (m) apply with re22 spect to volunteer practitioners beginning with the first 

23 fiscal year for which an appropriations Act provides that 

24 amounts in the fund under paragraph (2) are available 

25 with respect to such practitioners. 
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1 ‘‘(B) For purposes of subsections (g) through (m), 

2 the term ‘volunteer practitioner’ means a practitioner who, 

3 with respect to an entity described in subsection (g)(4), 

4 meets the following conditions: 

5 ‘‘(i) The practitioner is a licensed physician or 

6 a licensed clinical psychologist. 

7 ‘‘(ii) At the request of such entity, the practi8 tioner provides services to patients of the entity, at 

9 a site at which the entity operates or at a site des10 ignated by the entity. The weekly number of hours 

11 of services provided to the patients by the practi12 tioner is not a factor with respect to meeting condi13 tions under this subparagraph. 

14 ‘‘(iii) The practitioner does not for the provision 

15 of such services receive any compensation from such 

16 patients, from the entity, or from third-party payors 

17 (including reimbursement under any insurance pol18 icy or health plan, or under any Federal or State 

19 health benefits program).’’; 

20 (3) in subsection (o)(2)— 

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

22 clause (i) and inserting the following: 

23 ‘‘(i) The health care practitioner may pro24 vide the services involved as an employee of the 

25 free clinic, or may receive repayment from the 
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1 free clinic only for reasonable expenses incurred 

2 by the health care practitioner in the provision 

3 of the services to the individual.’’; and 

4 (B) by adding at the end the following: 

5 ‘‘(G) The health care practitioner is providing 

6 the services involved as a paid employee of the free 

7 clinic.’’; and 

8 (4) in each of subsections (g), (i), (j), (k), (l), 

9 and (m), by striking ‘‘employee, or contractor’’ each 

10 place such term appears and inserting ‘‘employee, 

11 volunteer practitioner, or contractor’’. 

12 SEC. 335. SENSE OF THE SENATE CONCERNING HEALTH 

13 DISPARITIES. 

14 It is the sense of the Senate that additional measures 

15 are needed to reduce or eliminate disparities in health care 

16 related to race, ethnicity, socioeconomic status, and geog17 raphy that affect access to quality health care. 

Æ