II 

110TH CONGRESS 

1ST SESSION S. 1408 

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

modern information technology. 

IN THE SENATE OF THE UNITED STATES 

MAY 16, 2007 

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

which was read twice and referred to the Committee on Finance 

A BILL 

To improve quality in health care by providing incentives 

for adoption of modern information technology. 

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

3 SECTION 1. SHORT TITLE. 

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

5 Technology Act of 2007’’. 

6 SEC. 2. INFORMATICS SYSTEMS GRANT PROGRAM. 

7 (a) GRANTS.— 

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

9 Human Services (in this section referred to as the 

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


jlentini on PRODPC74 with BILLS
2 

•S 1408 IS

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

3 purpose of assisting such entities in offsetting the 

4 costs incurred after December 31, 2006, that are re5 lated to clinical health care informatics systems and 

6 services designed to improve quality in health care 

7 and patient safety. 

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

9 to make grants under this section shall terminate on 

10 September 30, 2012. 

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

14 (A) purchasing, leasing, and installing 

15 computer software and hardware, including 

16 handheld computer technologies, and related 

17 services; 

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

20 (C) purchasing or leasing communications 

21 capabilities necessary for clinical data access, 

22 storage, and exchange; 

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

25 new or existing computer software and hardVerDate Aug 31 2005 01:36 May 18, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1408.IS S1408

jlentini on PRODPC74 with BILLS
3 

•S 1408 IS

1 ware and clinical health care informatics sys2 tems; 

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

5 technology designed to improve patient safety 

6 and quality of care; and 

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

9 tools that— 

10 (i) integrate patient-specific clinical 

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

13 (ii) provide ongoing, continuous qual14 ity improvement functions that allow pro15 viders to assess improvement rates over 

16 time and against averages for similar pro17 viders. 

18 (4) ELIGIBLE ENTITY DEFINED.—For purposes 

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

20 following entities: 

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

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

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

24 (B) CRITICAL ACCESS HOSPITAL.—A crit25 ical access hospital (as defined in section 


jlentini on PRODPC74 with BILLS
4 

•S 1408 IS

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

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

3 (C) SKILLED NURSING FACILITY.—A 

4 skilled nursing facility (as defined in section 

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

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

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

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

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

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

12 1395x(r))). 

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

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

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

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

19 (b) APPLICATION.— 

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

21 grant under this section shall submit an application 

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

23 manner, and containing the information described in 

24 paragraph (2). 


jlentini on PRODPC74 with BILLS
5 

•S 1408 IS

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

4 (A) A description of— 

5 (i) the clinical health care informatics 

6 system and services that the eligible entity 

7 intends to implement with the assistance 

8 received under this section; 

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

12 health of, and the health costs associated 

13 with the treatment of, patients with heart 

14 disease, cancer, stroke, diabetes, chronic 

15 obstructive pulmonary disease, asthma, or 

16 any other disease or condition specified by 

17 the Secretary; and 

18 (iii) how the system will ensure the 

19 privacy and security of individually identi20 fiable health information. 

21 (B) Any additional information that the 

22 Secretary may specify. 

23 (c) PRIORITY FOR CERTAIN ELIGIBLE ENTITIES.— 

24 In awarding grants under this section, the Secretary shall 

25 give priority— 


jlentini on PRODPC74 with BILLS
6 

•S 1408 IS

1 (1) first, to eligible entities— 

2 (A) that are exempt from tax under section 

3 501(a) of the Internal Revenue Code of 1986; 

4 and 

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

6 are eligible for benefits under the Medicare pro7 gram under title XVIII of the Social Security 

8 Act, the Medicaid program under title XIX of 

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

10 insurance program under title XXI of such Act 

11 make up a high percentage (as determined ap12 propriate by the Secretary) of the total patient 

13 population of the entity; or 

14 (ii) that provide services to a large number 

15 (as determined appropriate by the Secretary) of 

16 such individuals; 

17 (2) then, to eligible entities that meet the re18 quirement under clause (i) or (ii) of paragraph 

19 (1)(B); and 

20 (3) then, to other eligible entities. 

21 (d) RESERVE FUNDS FOR ENTITIES IN HEALTH

22 PROFESSIONAL SHORTAGE AREAS OR RURAL AREAS.— 

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

24 the Secretary shall ensure that at least 20 percent 


jlentini on PRODPC74 with BILLS
7 

•S 1408 IS

1 of the funds available for making grants under this 

2 section to— 

3 (A) hospitals and critical access hospitals 

4 are used for making grants to such hospitals 

5 that are located exclusively in an applicable 

6 area; 

7 (B) skilled nursing facilities are used for 

8 making grants to such facilities that are located 

9 exclusively in an applicable area; 

10 (C) Federally qualified health centers are 

11 used for making grants to such centers that are 

12 located exclusively in an applicable area; 

13 (D) physicians and physician group prac14 tices are used for making grants to physicians 

15 and such practices that are located exclusively 

16 in an applicable area; and 

17 (E) community mental health centers are 

18 used for making grants to such centers that are 

19 located exclusively in an applicable area. 

20 (2) AVAILABILITY OF RESERVE FUNDS IF LIM21 ITED NUMBER OF ENTITIES APPLY FOR RESERVED

22 GRANTS.—If the Secretary estimates that the 

23 amount of funds reserved under subparagraph (A), 

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

25 of entity involved exceeds the maximum amount of 


jlentini on PRODPC74 with BILLS
8 

•S 1408 IS

1 funds permitted for such entities under subsection 

2 (e), the Secretary may reduce the amount reserved 

3 for such entities by an amount equal to such excess 

4 and use such funds for awarding grants to other eli5 gible entities. 

6 (3) APPLICABLE AREA DEFINED.—For pur7 poses of paragraph (1), the term ‘‘applicable area’’ 

8 means— 

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

10 professional shortage area under section 

11 332(a)(1)(A) of the Public Health Service Act; 

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

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

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

15 (C) a rural census tract of a metropolitan 

16 statistical area (as determined under the most 

17 recent modification of the Goldsmith Modifica18 tion, originally published in the Federal Reg19 ister on February 27, 1992 (57 Fed. Reg. 

20 6725)). 

21 (e) AMOUNT OF GRANT.— 

22 (1) AMOUNT.— 

23 (A) IN GENERAL.—Subject to subpara24 graph (B) and paragraph (2), the Secretary 


jlentini on PRODPC74 with BILLS
9 

•S 1408 IS

1 shall determine the amount of a grant awarded 

2 under this section. 

3 (B) CONSIDERATION.—In determining the 

4 amount of a grant under this section, the Sec5 retary shall take into account the ability to take 

6 an expense deduction for health care 

7 informatics system expenses under section 

8 179F of the Internal Revenue Code of 1986, as 

9 added by section 5. 

10 (2) LIMITATION.— 

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

12 this section may not exceed the lesser of— 

13 (i) an amount equal to the applicable 

14 percentage of the costs incurred by the eli15 gible entity for the project for which the 

16 entity is seeking assistance under this sec17 tion; or 

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

19 (I) a hospital or a critical access 

20 hospital, $1,000,000; 

21 (II) a skilled nursing facility, 

22 $200,000; 

23 (III) a Federally qualified health 

24 center, $150,000; 

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


jlentini on PRODPC74 with BILLS
10 

•S 1408 IS

1 (V) a physician group practice, 

2 an amount equal to $15,000 multi3 plied by the number of physicians in 

4 the practice; or 

5 (VI) a community mental health 

6 center, $75,000. 

7 (B) APPLICABLE PERCENTAGE.—For pur8 poses of subparagraph (A)(i), the term ‘‘appli9 cable percentage’’ means, with respect to an eli10 gible entity for the period involved, the percent11 age of total revenues (excluding grants and 

12 gifts from Federal, State, local government, and 

13 private sources) for such period that consists of 

14 total revenues from the Medicare program, the 

15 Medicaid program, and the State children’s 

16 health insurance program under titles XVIII, 

17 XIX, and XXI, respectively, of the Social Secu18 rity Act. 

19 (f) REQUIREMENTS.— 

20 (1) COMPLIANT WITH STANDARDS.—A clinical 

21 health care informatics system funded under this 

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

23 standards are adopted under section 4 shall be com24 pliant with such standards. 


jlentini on PRODPC74 with BILLS
11 

•S 1408 IS

1 (2) NOTIFICATION.—An eligible entity receiving 

2 a grant under this section shall notify patients if 

3 their individually identifiable health information is 

4 wrongfully disclosed. 

5 (3) FURNISHING THE SECRETARY WITH INFOR6 MATION.— 

7 (A) IN GENERAL.—An eligible entity re8 ceiving a grant under this section shall furnish 

9 the Secretary with such information as the Sec10 retary may require to— 

11 (i) evaluate the project for which the 

12 grant is made; and 

13 (ii) ensure that assistance provided 

14 under the grant is expended for the pur15 poses for which it is made. 

16 (B) COORDINATION.—The Secretary shall 

17 ensure that the requirements for furnishing in18 formation under subparagraph (A) are coordi19 nated with other requirements for furnishing in20 formation to the Secretary that the eligible enti21 ty is subject to. 

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

23 to— 

24 (1) evaluate the use of clinical health care 

25 informatics systems and services implemented with 


jlentini on PRODPC74 with BILLS
12 

•S 1408 IS

1 assistance under this section to measure and report 

2 quality data based on accepted clinical performance 

3 measures; and 

4 (2) assess the impact of such systems and serv5 ices on improving patient care, reducing costs, and 

6 increasing efficiencies. 

7 (h) REPORTS.— 

8 (1) INTERIM REPORTS.— 

9 (A) IN GENERAL.—The Secretary shall 

10 submit, at least annually, a report to the appro11 priate committees of Congress on the grant pro12 gram established under this section. 

13 (B) CONTENTS.—A report submitted pur14 suant to subparagraph (A) shall include infor15 mation on— 

16 (i) the number of grants made; 

17 (ii) the nature of the projects for 

18 which assistance is provided under the 

19 grant program; 

20 (iii) the geographic distribution of 

21 grant recipients; 

22 (iv) the impact of the projects on the 

23 health of, and the health costs associated 

24 with the treatment of, patients with heart 

25 disease, cancer, stroke, diabetes, chronic 


jlentini on PRODPC74 with BILLS
13 

•S 1408 IS

1 obstructive pulmonary disease, asthma, or 

2 any other disease or conditions specified by 

3 the Secretary; 

4 (v) the results of the studies con5 ducted under subsection (g); and 

6 (vi) such other matters as the Sec7 retary determines appropriate. 

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

9 after the completion of all of the projects for which 

10 assistance is provided under this section, the Sec11 retary shall submit a final report to the appropriate 

12 committees of Congress on the grant program estab13 lished under this section, together with such rec14 ommendations for legislation and administrative ac15 tion as the Secretary determines appropriate. 

16 (i) FUNDING.— 

17 (1) HOSPITALS.—There are appropriated from 

18 the Federal Hospital Insurance Trust Fund under 

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

20 1395i) $250,000,000, for each of the fiscal years 

21 2008 through 2012, for the purpose of making 

22 grants under this section to eligible entities that are 

23 hospitals or critical access hospitals. 

24 (2) SKILLED NURSING FACILITIES.—There are 

25 appropriated from the Federal Hospital Insurance 


jlentini on PRODPC74 with BILLS
14 

•S 1408 IS

1 Trust Fund under section 1817 of the Social Secu2 rity Act (42 U.S.C. 1395i) $100,000,000, for each 

3 of the fiscal years 2008 through 2012, for the pur4 pose of making grants under this section to eligible 

5 entities that are skilled nursing facilities. 

6 (3) FEDERALLY QUALIFIED HEALTH CEN7 TERS.—There are appropriated from the Federal 

8 Supplementary Medical Insurance Trust Fund under 

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

10 1395t) $40,000,000, for each of the fiscal years 

11 2008 through 2012, for the purpose of making 

12 grants under this section to eligible entities that are 

13 Federally qualified health centers. 

14 (4) PHYSICIANS.—There are appropriated from 

15 the Federal Supplementary Medical Insurance Trust 

16 Fund under section 1841 of the Social Security Act 

17 (42 U.S.C. 1395t) $400,000,000, for each of the fis18 cal years 2008 through 2012, for the purpose of 

19 making grants under this section to eligible entities 

20 that are physicians or physician group practices. 

21 (5) COMMUNITY MENTAL HEALTH CENTERS.— 

22 There are appropriated from the Federal Supple23 mentary Medical Insurance Trust Fund under sec24 tion 1841 of the Social Security Act (42 U.S.C. 

25 1395t) $20,000,000, for each of the fiscal years 


jlentini on PRODPC74 with BILLS
15 

•S 1408 IS

1 2008 through 2012, for the purpose of making 

2 grants under this section to eligible entities that are 

3 community mental health centers. 

4 SEC. 3. ADJUSTMENTS TO MEDICARE PAYMENTS FOR 

5 HEALTH INFORMATION TECHNOLOGY EN6 ABLED QUALITY SERVICES. 

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

8 Human Services (in this section referred to as the ‘‘Sec9 retary’’) shall establish a methodology for making adjust10 ments in payment amounts under title XVIII of the Social 

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

12 of services and suppliers who— 

13 (1) furnish items or services for which payment 

14 is made under such title; and 

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

16 services, use health information technology and tech17 nology services with patient-specific applications that 

18 the Secretary determines improves the quality and 

19 accuracy of clinical decision-making, compliance, 

20 health care delivery, and efficiency, such as elec21 tronic medical records, electronic prescribing, clinical 

22 decision support tools integrating well-established 

23 national treatment guidelines with continuous qual24 ity improvement functions, and computerized physiVerDate Aug 31 2005 01:36 May 18, 2007 Jkt 059200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S1408.IS S1408

jlentini on PRODPC74 with BILLS
16 

•S 1408 IS

1 cian order entry with clinical decision-support capa2 bilities. 

3 (b) REQUIREMENTS.—The methodology established 

4 under subsection (a) shall— 

5 (1) include the establishment of new codes, 

6 modification of existing codes, and adjustment of 

7 evaluation and management modifiers to such codes, 

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

9 and maintaining health information technology and 

10 services with patient-specific applications; 

11 (2) first address adjustments for payments for 

12 items and services related to the diagnosis or treat13 ment of heart disease, cancer, stroke, diabetes, 

14 chronic obstructive pulmonary disease (COPD), and 

15 other diseases and conditions that result in high ex16 penditures under the Medicare program and for 

17 which effective health information technology exists; 

18 and 

19 (3) take into account estimated aggregate an20 nual savings in overall payments under such title 

21 XVIII attributable to the use of health information 

22 technology and services with patient-specific applica23 tions. 

24 (c) DURATION.—The Secretary may reduce or elimi25 nate adjustments made to payments pursuant to subVerDate Aug 31 2005 01:36 May 18, 2007 Jkt 059200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S1408.IS S1408

jlentini on PRODPC74 with BILLS
17 

•S 1408 IS

1 section (a) as payment methodologies under title XVIII 

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

3 adjusted to reflect provider quality and efficiency. 

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

5 coverage determinations under section 1862(a) of the So6 cial Security Act (42 U.S.C. 1395y(a)) with respect to 

7 maintaining health information technology and services 

8 with patient-specific applications, in determining whether 

9 the health information technology and services are reason10 able and necessary for the diagnosis or treatment of illness 

11 or injury or to improve the functioning of a malformed 

12 body member, the Secretary shall consider whether the 

13 health information technology and services improve the 

14 health of Medicare beneficiaries, including the improve15 ment of clinical outcomes or cost-effectiveness of treat16 ment. 

17 (e) DEFINITIONS.—In this section: 

18 (1) PROVIDER OF SERVICES.—The term ‘‘pro19 vider of services’’ has the meaning given that term 

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

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

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

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

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


jlentini on PRODPC74 with BILLS
18 

•S 1408 IS

1 SEC. 4. INTEROPERABILITY. 

2 (a) DEVELOPMENT AND ADOPTION OF STAND3 ARDS.— 

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

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

6 Health and Human Services (in this section referred 

7 to as the ‘‘Secretary’’) shall provide for the develop8 ment and adoption under programs administered by 

9 the Secretary of national data and communication 

10 health information technology standards that pro11 mote the efficient exchange of data between varieties 

12 of provider health information technology systems. 

13 In carrying out the preceding sentence, the Sec14 retary may adopt existing standards consistent with 

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

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

17 Act (42 U.S.C. 1395w–104). 

18 (2) REQUIREMENTS.—The standards developed 

19 and adopted under paragraph (1) shall be designed 

20 to— 

21 (A) enable health information technology 

22 to be used for the collection and use of clinically 

23 specific data; 

24 (B) promote the interoperability of health 

25 care information across health care settings, inVerDate Aug 31 2005 01:36 May 18, 2007 Jkt 059200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S1408.IS S1408

jlentini on PRODPC74 with BILLS
19 

•S 1408 IS

1 cluding reporting to the Secretary and other 

2 Federal agencies; and 

3 (C) facilitate clinical decision support 

4 through the use of health information tech5 nology. 

6 (b) IMPLEMENTATION OF PROCEDURES FOR THE

7 SECRETARY TO ACCEPT DATA USING STANDARDS.— 

8 (1) DATA FROM NEW HEALTH CARE REPORTING

9 REQUIREMENTS.—Not later than January 1, 2010, 

10 the Secretary shall implement procedures to enable 

11 the Department of Health and Human Services to 

12 accept the optional submission of data derived from 

13 health care reporting requirements established after 

14 the date of enactment of this Act using data stand15 ards adopted under this section. 

16 (2) DATA FROM ALL REQUIREMENTS.— 

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

18 1, 2012, the Secretary shall implement proce19 dures to enable the Department of Health and 

20 Human Services to accept the optional submis21 sion of data derived from all health care report22 ing requirements using data standards adopted 

23 under this section. 

24 (B) LIMITATION.— 


jlentini on PRODPC74 with BILLS
20 

•S 1408 IS

1 (i) IN GENERAL.—On and after Janu2 ary 1, 2012, if an entity or individual 

3 elects to submit data to the Secretary 

4 using data standards adopted under this 

5 section, the Secretary, subject to clause 

6 (ii), may not require such entity or indi7 vidual to also submit such data in an addi8 tional format. 

9 (ii) EXCEPTION.—The Secretary may 

10 provide for an exception, not to exceed 2 

11 years, to the limitation under clause (i) 

12 with respect to certain types of data if the 

13 Secretary determines that such an excep14 tion is appropriate. 

15 SEC. 5. ELECTION TO EXPENSE HEALTH CARE 

16 INFORMATICS SYSTEMS. 

17 (a) IN GENERAL.—Part VI of subchapter B of chap18 ter 1 of the Internal Revenue Code of 1986 (relating to 

19 itemized deductions for individuals and corporations) is 

20 amended by inserting after section 179E the following new 

21 section: 

22 ‘‘SEC. 179F. HEALTH CARE INFORMATICS SYSTEM EXPENDI23 TURES. 

24 ‘‘(a) TREATMENT OF EXPENDITURES.— 


jlentini on PRODPC74 with BILLS
21 

•S 1408 IS

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

2 to treat any qualified health care informatics system 

3 expenditure which is paid or incurred by the tax4 payer as an expense which is not chargeable to cap5 ital account. Any expenditure which is so treated 

6 shall be allowed as a deduction. 

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

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

9 section 179(c). 

10 ‘‘(b) LIMITATIONS.— 

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

12 any eligible entity, the aggregate cost which may be 

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

14 taxable year shall not exceed, when added to any 

15 cost taken into account under this section in any 

16 preceding taxable year, the dollar amount specified 

17 under section 2(e)(2)(A)(ii) of the Health Informa18 tion Technology Act of 2007. 

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

20 subsection, rules similar to the rules of paragraphs 

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

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

23 apply. 

24 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur25 poses of this section— 


jlentini on PRODPC74 with BILLS
22 

•S 1408 IS

1 ‘‘(1) QUALIFIED HEALTH CARE INFORMATICS

2 SYSTEM EXPENDITURES.— 

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

4 health care informatics system expenditure’ 

5 means, with respect to any taxable year, any di6 rect or indirect costs incurred and properly 

7 taken into account with respect to the purchase 

8 or installation of equipment and facilities relat9 ing to any qualified health care informatics sys10 tem. Such term shall include so much of the 

11 purchase price paid by the lessor of equipment 

12 and facilities subject to a lease described in 

13 subparagraph (B)(ii) as is attributable to ex14 penditures incurred by the lessee which would 

15 otherwise be described in the preceding sen16 tence. 

17 ‘‘(B) WHEN EXPENDITURES TAKEN INTO

18 ACCOUNT.— 

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

20 care informatics system expenditures shall 

21 be taken into account under this section 

22 only with respect to equipment and facili23 ties— 

24 ‘‘(I) the original use of which 

25 commences with the taxpayer, and 


jlentini on PRODPC74 with BILLS
23 

•S 1408 IS

1 ‘‘(II) which are placed in service 

2 after December 31, 2006, and before 

3 October 1, 2012. 

4 ‘‘(ii) SALE-LEASEBACKS.—For pur5 poses of clause (i), if property— 

6 ‘‘(I) is originally placed in service 

7 after December 31, 2006, and before 

8 October 1, 2012, by any person, and 

9 ‘‘(II) sold and leased back by 

10 such person within 3 months after the 

11 date such property was originally 

12 placed in service, 

13 such property shall be treated as originally 

14 placed in service not earlier than the date 

15 on which such property is used under the 

16 leaseback referred to in subclause (II). 

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

18 ‘qualified health care informatics system ex19 penditure’ shall not include any amount to the 

20 extent such amount is funded by any grant, 

21 contract, or otherwise by another person (or 

22 any governmental entity). 

23 ‘‘(2) QUALIFIED HEALTH CARE INFORMATICS

24 SYSTEM.—The term ‘qualified health care 

25 informatics system’ means a system which— 


jlentini on PRODPC74 with BILLS
24 

•S 1408 IS

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

2 Secretary of Health and Human Services for 

3 purposes of this section, 

4 ‘‘(B) consists of electronic health record 

5 systems and other health information tech6 nologies, and 

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

8 Secretary of Health and Human Services under 

9 section 4 of the Health Information Technology 

10 Act of 2007 by not later than the date which 

11 is 60 days after the date of the adoption of 

12 such standards. 

13 ‘‘(3) ELIGIBLE ENTITY.—The term ‘eligible en14 tity’ has the meaning given such term by section 

15 2(a)(4) of the Health Information Technology Act of 

16 2007. 

17 ‘‘(4) PROPERTY USED OUTSIDE THE UNITED

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

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

20 with respect to the portion of the cost of any prop21 erty referred to in section 50(b) or with respect to 

22 the portion of the cost of any property specified in 

23 an election under section 179. 

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

25 purposes of section 1245, the amount of the deducVerDate Aug 31 2005 01:36 May 18, 2007 Jkt 059200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\S1408.IS S1408

jlentini on PRODPC74 with BILLS
25 

•S 1408 IS

1 tion allowable under subsection (a)(1) with respect 

2 to any property which is of a character subject to 

3 the allowance for depreciation shall be treated as a 

4 deduction allowed for depreciation under section 

5 167.’’. 

6 (b) CONFORMING AMENDMENTS.— 

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

8 Code of 1986 (relating to capital expenditures) is 

9 amended by striking ‘‘or’’ at the end of subpara10 graph (K), by striking the period at the end of sub11 paragraph (L) and inserting ‘‘, or’’, and by adding 

12 at the end the following new subparagraph: 

13 ‘‘(M) expenditures for which a deduction is 

14 allowed under section 179F.’’. 

15 (2) The table of sections for part VI of sub16 chapter A of chapter 1 of such Code is amended by 

17 inserting after the item relating to section 179E the 

18 following new item: 

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

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

20 this section shall apply to property placed in service after 

21 December 31, 2006. 

22 SEC. 6. ENSURING PRIVACY AND SECURITY. 

23 Nothing in this Act (or the amendments made by this 

24 Act) shall be construed to affect the scope, substance, or 

25 applicability of— 


jlentini on PRODPC74 with BILLS
26 

•S 1408 IS

1 (1) section 264 of the Health Insurance Port2 ability and Accountability Act of 1996 (42 U.S.C. 

3 1320d–2 note); 

4 (2) the provisions of part C of title XI of the 

5 Social Security Act (42 U.S.C. 1320d et seq.); and 

6 (3) any regulation issued pursuant to any such 

7 section. 

Æ 


jlentini on PRODPC74 with BILLS